INSIGHTS: High Court determines that damages are not capped

Damages under the Compensation to Relatives Act are not capped by section 12(2) of the Civil Liability Act 2002 (NSW): The following litigation has ramifications for the way that high value dependency claims will be quantified at least in New South Wales and Victoria.

Taylor v Owners – Strata Plan No. 11564 & Ors in the High Court of Australia No. S179 of 2013

In February 2014, the High Court considered whether damages awarded under the Compensation to Relatives Act 1897 (NSW) were capped by section 12(2) of the Civil Liability Act 2002 (NSW) (“CLA”). Meridian Lawyers Legal Insights published in February 2014 discussed the litigation, and its history, in detail.

The litigation arises out of the tragic death of Mr Taylor who died after an awning under which he was seeking refuge during a violent storm collapsed. In December 2010, Mr Taylor’s wife commenced proceedings seeking, amongst other things, damages under the Compensation to Relatives Act. For the purpose of quantifying her loss of expectation of financial support, Mr Taylor’s wife alleged that the late Mr Taylor’s gross weekly earnings were in excess of three times the average weekly earnings.

The legislation

Section 12(2) of the CLA directs the Court to disregard the amount (if any) by which the claimant’s gross weekly earnings would (but for the injury or death) have exceeded an amount that is three times the amount of average weekly earnings.

Mrs Taylor sought an order that the Court determine, as a separate question, whether damages awarded under the Compensation to Relatives Act were capped by section 12(2) of the CLA. If the question was determined in the negative, the Court would disregard any amount of the late Mr Taylor’s gross weekly wage that exceeded three times the average weekly earnings.

High Court judgment

On 2 April 2014, the High Court (French CJ, Crennan, Bell, Gaegler and Keane JJ) handed down its judgment. By majority (French CJ, Crennan and Bell JJ) the High Court allowed Mrs Taylor’s appeal and answered the question in the negative. In considering principles of statutory interpretation the majority rejected the adoption of “rigid rules of statutory construction” and adopted an approach in the interpretation of statutory provisions as one involving “a judgment of matters of degree”. The majority stated that the addition or omission of words was favoured in cases of “simple, grammatical drafting errors which, if uncorrected, would defeat the object of the provision”. However, the majority did not favour the addition or omission of words if it involved filling “gaps disclosed in the legislation” or making an insertion that is “too big or too much at variance with the language used by the legislative”.

The majority determined that it was not necessary to consider whether the conditions outlined in Wentworth Securities v Jones ([1980] AC 74) were always, or usually, necessary and sufficient. The majority held that this was not necessary because its task was to construct the words that the legislature enacted and not embark upon a purposive construction, which may depart too far from the statutory text.

Applying those principles to the facts of this case, the majority considered that there was no basis upon which “claimant’s gross weekly earnings” should be read to refer to the gross weekly earnings of the deceased. The majority could not reconcile that interpretation with the language used in the section. While the majority accepted that the interpretation put forward by the Respondents was reasonably open, the majority did not consider that it was consistent with the language that was used by the legislature. The majority concluded that the purpose of section 12 of the CLA was to limit the component of an award that was assessed by reference to a claimant’s high earnings. The fact that that limitation may only apply in infrequent circumstances was insufficient reason for the Court to read words into the section.

By contrast, the minority (Gaegler and Keane JJ), adopted a more purposive approach to the construction of the section. The minority considered that the structure of section 12 provided a significant guide to the construction of section 12(2). The minority considered that section 12(1) identifies three categories of personal injury damages to which the limitation outlined in section 12(2) applies.

While the minority did not accept that the “claimant’s gross weekly earnings” could be read as the “claimant’s or deceased’s” gross weekly earnings, they considered that the “claimant’s gross weekly earnings” could legitimately be interpreted to mean the gross weekly earnings upon which the person making the claim for damages relied. The minority considered that the appellant’s submission that section12(2) could only refer to the claimant making the claim meant there would be no correlation between the gross weekly earnings of the claimant and the basis for obtaining damages for the loss of expectation of financial support as quantified under section 12(1)(c). Such an interpretation would deprive section 12(2) of any work to do in an award of damages under section 12(1)(c). The minority considered this would render section 12(1)(c) a statutory curiosity or “a target which could never be hit”. In such a situation the minority considered it was appropriate to adopt a more purposive interpretation of the section.

Implications

The High Court’s decision leads to a situation where claims for loss of expectation of financial support could be significantly greater in NSW and Victoria than in the remaining States and Territories of Australia, as the relevant legislation in the other States and Territories specifically place caps on the quantification of such claims. This anomaly will likely be remedied by the legislature in the near future; however in the meantime, the Courts in NSW and Victoria are not required to place any limitation on the earnings of a deceased high income earner when quantifying a claim for loss of expectation of financial support.

The reasoning of the majority also suggests that the High Court, whilst not adopting rigid rules of statutory construction, is reluctant to stray too far from the statutory text when interpreting statutory provisions.

Meridian Lawyers acted for the First to Fourth Respondents in the High Court Hearing. If you have any questions, please do not hesitate to contact our Insurance Law team.