Lockhart River Air Crash – Lord Campbell Action – arithmetical approach only a guide

Thornton v Lessbrook Pty Ltd [2010] QSC 308

CATCHWORDS

DAMAGES – MEASURE OF DAMAGES – FATAL ACCIDENTS LEGISLATION – action by de facto partner over death of fiancé in aircraft accident – assessment of pecuniary loss where the deceased was likely to maintain her career and earn more than the plaintiff – contingencies – possibility that the plaintiff and the deceased would have had children – possibility that the plaintiff will form a new relationship to his financial advantage or disadvantage – whether payments from life insurance and superannuation to be taken into account – whether order for costs is within statutory limit on liability of $500, 000.

Civil Aviation (Carriers’ Liability) Act 1959 (Cth)

Civil Aviation (Carriers’ Liability) Act 1964 (Qld)

Supreme Court Act 1995 (Qld), s 23A

Issues

There were a number of issues (paragraphs 5-14 of the judgment) concerning the quantification of the damages; the likely earnings of the deceased Ms Urquhart, to the amount and basis for the calculation of the ‘dependency’ past and future, including the possibility of children and other relationships, contingencies and discounts, and the statutory cap of $500,000 and whether interest and costs were part of it.

Applegarth J

[2] The plaintiff’s claim is for pecuniary loss pursuant to the Civil Aviation (Carriers’ Liability) Act 1964 (Qld) (“the State Act”). This claim resembles the statutory cause of action traditionally known as a Lord Campbell’s Act action. It involves a determination of the pecuniary value of the financial support and services that Ms Urquhart would have been expected to provide to the plaintiff if she had lived. The State Act applies Part 4 of the Civil Aviation (Carriers’ Liability) Act 1959 (Cth) (“the Commonwealth Act”). In essence, Part 4 of the Commonwealth Act creates a system of no fault liability for aircraft passengers who are injured in an accident. Section 31 limits the liability of a domestic carrier, such as the defendant, to $500,000.

 [9] One aspect is the loss of Ms Urquhart’s financial support, which in a case such as this is sometimes loosely and inaccurately described as the loss of “dependency”. More precisely, it is the loss of the chance that the plaintiff would have derived some material benefit from Ms Urquhart if she had lived. The plaintiff does not need to prove that he was or would have been dependent upon Ms Urquhart. Instead, he seeks to recover the value of the material benefit that he has lost because Ms Urquhart is not alive to supplement his own earnings.

 His Honour considered Ms Urquhart’s career and qualifications and accepted that she was likely to have received accelerated promotion to commissioned officer in the police service well in advance of the plaintiff’s career. As to when his Honour accepted at the date of trial she would have reached the position of sergeant:

 [46] The determination of Ms Urquhart’s likely rise through the ranks cannot be precise. However, on the basis of my conclusion that she would have had a relatively rapid rise through the ranks, I consider that the table included in the plaintiff’s submissions provides a reasonable representation of her likely career path. Ms Urquhart probably would have reached the rank of Senior Constable in the financial year ended 30 June 2007. Depending upon a period of service within the Police Prosecution Service and available positions as a Sergeant, she probably would have achieved the rank of Sergeant within the next few years. By now she would probably be a Sergeant at pay point 3.2 or 3.3, and would have progressed to the rank of Senior Sergeant within the next few years. After a period of about three years as a Senior Sergeant she probably would have gained promotion to an Inspector. This probably would have occurred some time after 1 July 2014. She may have remained an Inspector for between seven and ten years before being promoted to the rank of Superintendent and eventually Chief Superintendent. There is a distinct possibility that she would have achieved an even higher rank in the final stages of her career.

His Honour used as a guide Professors Luntz’ text and the tables:

[50] Various approaches to the calculation of pecuniary loss are discussed in the authorities and in Professors Luntz’ work.[5] In the case of two-income families in which incomes are pooled, one approach, in the absence of particular circumstances that tell to the contrary, is to assess loss on the basis that the surviving spouse received the benefit of 66 per cent of the joint income if there are no children.[6] The two incomes are added together, a dependency figure of 66 per cent is then applied if there are no children and then the survivor’s income is deducted. In

Halvorsen Boats Pty Ltd v Robinson the New South Wales Court of Appeal said that there was much to be said for adopting such a conventional approach in the absence of particular circumstances which tell to the contrary.[7]

[51] Another approach, guided by actuarial calculations based upon now somewhat dated Australian Bureau of Statistics figures for household expenditure, appears in Table 9.1 of Professor Luntz’ work. The parties in this matter helpfully used this table in their submissions along with calculations based upon the “conventional method” which can be summarised as:

“Weekly dependency = (d + p) x 0.66 – p

where d is the deceased’s weekly wage and p is the plaintiff’s weekly wage.”

Within the parties’ calculations were certain assumptions or contingencies, including those already addressed concerning the likely career paths of Ms Urquhart and the plaintiff.

The contingency of children being born

Significant controversy surrounded the approach to take in circumstances where the deceased and the plaintiff had contemplated a family, in this instance, 2 children a rough time line of when it was planned to start a family (paragraphs 52 -72), together with unpaid parental leave and the increased dependence on the plaintiff.

His Honour concluded:

[69] If, as I find, by now Ms Urquhart’s income would have exceeded that of the plaintiff’s a larger percentage than 40 per cent would be appropriate. It might be calculated by a process of linear interpolation of the kind adopted in Table 9.1 where the income of spouses are not equal or by a similar process of adjustment of the kind undertaken in the plaintiff’s calculations.[17]

[70] Calculations of the kind undertaken by the parties in their original submissions, and their supplementary submissions are at best a guide. One limitation on using percentages derived form Luntz’ Table 9.1 is that it is based upon the assumption that children were born at the time of trial. A calculation of the financial impact on dependency of children that were not born to the plaintiff and Ms Urquhart, and who will not now be born, is a calculation that assumes a hypothetical fact: that they would have had children by now or would have had them at some time in the future. Any assessment must take account of the contingency of infertility, the contingency of only one child being born, as well as the possibility that, contrary to their plans, they might have had more than two children. At some stage of the assessment of loss account must be taken of the contingency of a new relationship (to be discussed below) and that the plaintiff and a new partner may have three or more children, this being to the plaintiff’s financial disadvantage compared to his financial situation if he and Ms Urquhart had two children.

[71] Leaving such complexities aside, and assuming that the plaintiff and Ms Urquhart probably would have had two children by about this time or in the next few years, I consider that the percentage to be applied to the 75 per cent conventional calculation should be higher than 40 per cent, namely 45 per cent.

[72] An alternative is to simply adjust the conventional 66 per cent figure to take account of the contingency of the birth of children and its financial impact on the plaintiff’s loss of dependency. In the absence of actuarial evidence, a figure of 60 per cent seems reasonable.

[73] For ease of calculation the period of assumed dependency of children should be a period of 21 years from 1 July 2010: 21 years being the likely period that each child would have relied upon the plaintiff and Ms Urquhart for financial support.

The contingency of a new relationship

The parties agreed s 23A of the Supreme Court Act 1995 did not apply and hence the general law of De Sales v Ingrilli [18] applied. His Honour summarised the leading judgments from De Sales at paragraphs 76 -83. The plaintiff was currently in a relationship with Ms Hays and had previously been in a short term relationship for several months with Ms Jenns, neither of which were defacto relationships. His Honour found he was not in a position to conclude whether the new relationship “brings with it financial advantage or disadvantage” to the plaintiff.[39]

 His Honour concluded:

[92] There are uncertainties concerning the future duration of the plaintiff’s relationship with Ms Hay and at what point they may combine their financial resources in a mutually-supportive relationship and, if so, the extent of any financial advantage which the plaintiff will then enjoy. In any event, Ms Hay’s present gross income is substantially less than Ms Urquhart’s income would have been at present. Whilst the plaintiff’s relationship with Ms Urquhart was subject to the usual vicissitudes of life and the risk that it would end in separation or divorce, their relationship had endured for a substantial period including hardship postings in Far North Queensland, they had made a mutual commitment to a shared life and planned to marry in a few months. By contrast, the plaintiff’s relationship with Ms Hay is at an early stage.

[93] In the absence of evidence that the plaintiff’s new relationship with Ms Hay presently brings with it financial advantage or will bring to him financial advantage in the long-term, I do not consider that this is an appropriate case for a separate, let alone substantial, discount or deduction on account of the plaintiff’s new relationship with Ms Hay. I am not in a position to reach any conclusion based upon “evidence of the probable financial consequences” of the relationship.[43] The relationship may prove to be of significant financial benefit to the plaintiff. Even if this proves to be the case such financial benefit may not last long into the future. If the relationship proves to be a long-term relationship it may prove to be to the plaintiff’s financial disadvantage if, for example, Ms Hay ceases employment and relies upon the plaintiff to support her and any children of the relationship. Given the present duration of the relationship, the absence of financial arrangements between the parties to it and uncertainty concerning its long-term future, it is inappropriate to make a separate discount or deduction for what the defendant contends will be advantageous financial consequences to the plaintiff arising out of that relationship. Instead, I consider that account should be taken of the contingency of financial advantage to the plaintiff by increasing slightly the discount for contingencies that would have applied in the absence of evidence concerning the formation of a new relationship with Ms Hay. The increase in the discount for contingencies should be moderate.

[94] If I had adopted the defendant’s submission that there should be a separate discount or deduction on account of the new relationship then any separate discount or deduction would have been moderate because, to adopt the words of Gleeson CJ in De Sales, this is not a case in which there is “concrete evidence which suggests that part or all of the plaintiff’s loss will be replaced by benefits received from their new spouse.”[44] The evidence concerning the new relationship and its likely financial consequences for the plaintiff is not “sufficiently concrete to allow a special discount to be made.”[45]

Discount for contingencies

[99] In this case, the primary sum before allowing for further contingencies is based upon the probability of Ms Urquhart and the plaintiff pursuing their intended career paths and earning incomes over lengthy careers in the police force. The findings that I have made in respect of these matters are generally reflected in the table that appears in the plaintiff’s original written submissions. However, that table did not take account of the contingency of having children and the impact of children on the plaintiff’s financial dependency on Ms Urquhart’s income, or any period of unpaid maternity leave. It also did not bring into account any financial consequence of the plaintiff’s new relationship with Ms Hay.

[100] In the case of loss of past financial dependency, I consider that a discount for contingencies of 15 per cent is appropriate. In the case of loss of future financial dependency, I consider that a discount for contingencies of 20 per cent is appropriate after arriving at a figure that takes account of the financial consequences of the birth of children.

The calculation of past loss of financial “dependency”

 

His Honour noted the varying figures and submissions to take into account a number of factors over a period of time and concluded:

[106] As a rough guide to the past loss of dependency, and leaving aside possible periods of unpaid maternity leave and the financial impact of the arrival of any children in recent years, which I propose to deal with as part of a single discount for contingencies, I conclude that a reasonable figure for the past loss of dependency is one that averages $250 per week over the period of 5.25 years to 30 June 2010. A figure of $250 per week or $13,000 per annum over 5.25 years equates to $68,250. Applying a discount of 15 per cent to this figure produces an amount of slightly more than $58,000. I adopt the figure of $58,000 in respect of past loss of financial support or “dependency”.

Interest

His Honour found it was not necessary to decide the point as the compensation from WorkCover offset any interest.

The calculation of future loss of financial “dependency”

[111] The contingency of the birth of children needs to be taken into account. One approach is to attempt to take account of the advent of children by adjusted percentages, based upon the Luntz Table or a 75 per cent rule of thumb. Such an approach may give an inaccurate appearance of arithmetic precision. I have regard to those calculations. The plaintiff’s supplementary table of loss of pecuniary benefit after 1 July 2010[50] adopts a range of percentages. It generally reflects my findings concerning the career path that Ms Urquhart would have pursued. It calculates figures for future loss on different bases. It does not take into account periods when Ms Urquhart may not have received the operational shift allowance. However, I conclude that for most of her years in senior levels in the police force Ms Urquhart would have been entitled, like other senior officers, to such an allowance save for periods when she was performing policy work or other work that was performed during standard hours. The calculation of loss of future financial dependency cannot be undertaken with precision. However, I have found the plaintiff’s supplementary table a useful guide.

[112] It includes calculations which reduce what would otherwise be the 66 per cent dependency figure to 60 per cent and 50 per cent. It also calculates what would have been, in effect, the family’s dependency upon Ms Urquhart, by adopting the conventional dependency figure of 75 per cent for a parent and two children, and then applies a percentage of 45 per cent to the figure arrived at to reflect the plaintiff’s share of this dependency. I principally rely on these calculations as a guide in arriving at the plaintiff’s loss of “dependency” after 1 July 2010…

[113] I consider an appropriate figure which takes account of the birth of children is $300,000 before applying a discount of 20 per cent for a variety of other contingencies. This produces a figure of $240,000 for loss of future financial dependency.

Loss of superannuation

His Honour applied 18%, which was the employer’s allowance as opposed to the statutory entitlement and found Section 56 of the Civil Liability Act 2003 did not apply as damages were not being awarded to an employee.

Loss of services

[126] The parties agree that the commercial rate for care and assistance is $20 for past care and $22 for future care. Nguyen v Nguyen[57] and the authorities that have followed it recognise that a surviving spouse is not automatically entitled to the benefit of a substantial award of damages calculated at commercial rates in every case where the deceased provided, and was likely to continue to provide, gratuitous and substantial domestic services. I respectfully adopt the discussion of the authorities of Williams J (as his Honour then was) in White v Mt Isa Mines Ltd.[58] I have regard to the observations of Brennan and Deane JJ in Nguyen v Nguyen. The majority judgment of Dawson, Toohey and McHugh JJ accepted that quantification of the tangible advantage that has been lost by reason of the death of the deceased is not necessarily to be made by reference to the actual cost of providing substitute services.[59] A number of authorities proceed to value lost services on the same basis as personal injury cases, namely at the commercial rate.[60] Commercial rates are not to be treated as “the invariable yardstick of the assessment”,[61] and may only be “a starting point in assessing the plaintiff’s loss”.[62] This is not to say that damages should be assessed only where the lost services have been or are likely to be replaced by services that are paid for. Account must be taken of the value of the domestic services that Ms Urquhart would have provided for the plaintiff’s benefit even if they are now performed, or will be performed, by the plaintiff or by others voluntarily. The provision of these services by the plaintiff or by others voluntarily may involve a substantial opportunity cost. Still, as Mason CJ, Toohey and McHugh JJ stated in Nguyen,[63] in some cases the market cost may be too high to be the reasonable value of the services. Nguyen v Nguyen (No 2)[64] supports the proposition that the quantification of the loss must be kept within reasonable bounds.

[127] The domestic services that Ms Urquhart supplied for the plaintiff’s benefit, and which one might have expected her to continue to provide to him, were significant in their contribution to the plaintiff’s material comfort and welfare. I do not consider that a quantification of the value of those lost services that has reference to the commercial cost of substitute services is inappropriate or will lead to a quantification that is out of proportion to the loss actually suffered by the plaintiff.

Benefits received as a consequence of Ms Urquhart’s death

The issue was whether the principle in Public Trustee v Zoanetti was excluded by Section 38 of the Commonwealth Act as s 23 of the Supreme Court Act 1995 did not apply:

[131] The financial benefit which the plaintiff obtained on the intestacy should be taken into account in accordance with the statement of principle of Dixon J in Public Trustee v Zoanetti, subject to statutory exclusions. The benefit may be the value of the accelerated receipt of the deceased’s estate. The benefit to the claimant for which credit must be given is not simply the value of the assets that were received on the distribution of the estate since, typically, the claimant would have received similar assets on the later death of the deceased, if not more.[68] The authorities establish that in many cases the benefit from immediate receipt is likely to be far outweighed by the fact that if the deceased had lived longer a much larger estate would have been accumulated and passed on to the beneficiaries.[69] A strictly proper approach may be to make a deduction for the acceleration and then make an addition for the future savings lost.[70] However, I do not consider that such an approach is required in the circumstances of the present case. This is a case in which it is likely that the plaintiff would have received a much larger estate if

Ms Urquhart had lived for many decades and the loss of this benefit outweighs the accelerated receipt of the amount he received upon intestacy. Had Ms Urquhart not died in such tragic circumstances and had lived to a normal life expectancy then she may have survived the plaintiff. But for any number of reasons she may not have, and in that event the plaintiff would have, either alone or with others, stood to inherit what would have been, in some decades time, a substantial estate made up of assets acquired either in Ms Urquhart’s name, or jointly owned assets that the plaintiff had a reasonable expectation of acquiring by survivorship. In the circumstances, I do not consider it appropriate to give credit for the value of the acceleration of receipt of the benefits that the plaintiff has in fact gained as a result of Ms Urquhart’s death.

[137] The defendant submits that it should make a difference in the application of s 38 as to whether the benefit that is paid under a life insurance policy or out of a superannuation fund is paid to a claimant directly or indirectly. The plaintiff, however, submits that the language of s 38 is directed to the source of the payment, not the identity of the immediate payee. I accept the plaintiff’s submission that the interpretation contended for by the defendant adds a gloss to the words that appear in the statute, namely that the identity of the recipient is relevant to whether the payment is taken into account.

[140] I conclude that the benefits that the plaintiff received by reason of the payment of death and superannuation benefits should not be brought into account by way of reduction since, upon its proper construction, s 38 precludes this.

Costs and the limitation on liability

His Honour did not accept the cap of $500,000 included costs:

[147] In the absence of clear words that suggest that the $500,000 limit on liability extends to the discretionary power to award costs, I conclude that the statutory limit applies in this case to the plaintiff’s claim for damages but not to my discretion to order costs.

Conclusion

[148] The plaintiff has established his claim. Damages are assessed under the following heads:

  • Past loss of financial dependency in the sum of $58,000
  • Future loss of financial dependency in the sum of $240,000
  • Loss of superannuation benefits at 18 per cent of past and future economic loss in the sum of $53,640
  • Past loss of services in the sum of $46,750
  • Future loss of services in the sum of $127,842

These amounts total of $526,232.

[149] The assessment of damages is subject to the statutory limit of $500,000 imposed by s 31 of the Commonwealth Act. Subject to submissions on costs, including whether the order for costs should be other than on a standard basis, the orders of the Court will be:

  1. Judgment for the plaintiff against the defendant in the sum of $500,000.
  2. The defendant pay the plaintiff’s costs of and incidental to the proceeding to be assessed on a standard basis.

 

Brisbane Barrister – David Cormack

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