The Motor Accidents Compensation Act applies to injuries suffered in accidents occurring after midnight on 26 September 1995. Sections 131–134 (and s 135, repealed in 2020) deal with non-economic loss. To qualify for an award the plaintiff’s level of whole-person impairment must be assessed at greater than 10%. If the parties disagree on this question, a medical assessor, whose determination is binding on the parties and the courts, is appointed by the Motor Accidents Authority. Unlike the Motor Accidents Act and the Civil Liability Act, s 134 does not require that the court assess damages as a proportion of the maximum sum fixed for an award of non-economic loss. Damages are assessed with the application of common law principles up to the maximum provided for in s 134. This was explained by Heydon JA in Hodgson v Crane (2002) 55 NSWLR 199 when he said it was not possible to construe the concept of proportionality out of the language of ss 131–134. When the threshold of 10% permanent impairment was passed, the court was required to assess non-economic loss without statutory restraint except for the maximum that may be awarded: at [39].

The Motor Accidents Act first introduced the concept of significant impairment to an injured person’s ability to lead a normal life as the basis for assessment of non-economic loss and the assessment of the percentage of that impairment against a most extreme case.

As to the Motor Accident Injuries Act 2017, see [7-0085] under the subheading Non-economic loss.

The Civil Liability Act contains provisions similar to those of the Motor Accidents Act. The threshold for recovery of non-economic loss is an injury assessed by the court to be at least 15% of a most extreme case: s 16(1). Where the severity of the plaintiff’s injuries is assessed to be less than 33% of a most extreme case, the amount to be awarded is to be calculated by reference to the deductibles set out in s 16(3). If the assessment exceeds 33%, the plaintiff is entitled to receive in full the proportion of the maximum sum applicable.

A note appended to s 16 Civil Liability Act describes the following method of assessing damages in accordance with the table of deductibles:

The issue of what constitutes a most extreme case has been considered in a number of decisions arising out of provisions of the Motor Accidents Act that are identical to those now in the Civil Liability Act: Matthews v Dean (1990) 11 MVR 455; Dell v Dalton (1991) 23 NSWLR 528; Kurrie v Azouri (1998) 28 MVR 406. In each case, the courts involved confirmed that the use of the indefinite article “a” allowed for questions of fact and degree to be taken into account in determining whether the severity of injury was such that the maximum sum was to be awarded.

In Dell v Dalton, above, Handley JA said at 533:

Another issue that has been dealt with on several occasions is the manner in which damages as a proportion of the maximum are to be assessed. Cautions have been expressed against having regard to the consequences in monetary terms of deciding on a particular percentage, where assessments below 33% may have significant consequences. In Clifton v Lewis [2012] NSWCA 229 Basten JA said at [57]:

Consistent with the Dell approach, a trial judge, assessing the proportion of a most extreme case, is not required to arrive at an unrealistic level of precision provided the percentage falls within a reasonable range of assessment: Berkeley Challenge Pty Ltd v Howarth [2013] NSWCA 370, Basten JA.

The age of a plaintiff may have an effect on the assessment of non-economic loss under the Civil Liability Act. In Reece v Reece (1994) 19 MVR 103, the Court of Appeal remarked upon the need, when assessing, on a proportionate basis, the severity of injury, to consider the age of a plaintiff and the likely length of the period over which the pain and suffering of progressive disability would be suffered. The court held that the consequence of particular injuries were likely to be more severe in the case of a younger person than that of an elderly plaintiff who had a much shorter period of life expectancy.

The requirement to consider the age of the plaintiff was confirmed in Marshall v Clarke (unrep, 5/7/94, NSWCA) and Christalli v Cassar [1994] NSWCA 48 at [3]. In Varga v Galea [2011] NSWCA 76, McColl JA noted at [72] that age was only one of numerous matters to be taken into account in assessing non-economic loss by reference to the definition of that term in s 3 Civil Liability Act.

The principles adopted in Reece v Reece and Varga, above, did not apply to claims under the Motor Accidents Compensation Act or the Motor Accident Injuries Act 2017 where damages are not assessed by reference to a proportion of a most extreme case: RACQ Insurance Ltd v Motor Accidents Authority (NSW) (No 2) (2014) 67 MVR 551 per Campbell J.

The court is required to assess the totality of the plaintiff’s injuries rather than assessing each injury on an individual basis: Holbrook v Beresford (2003) 38 MVR 285. However, where the plaintiff suffered injury in multiple accidents, the assessment is to be made by reference to the injuries suffered in each individual accident: Muller v Sanders (1995) 21 MVR 309.

The plaintiff in Alameddine v Glenworth Valley Horse Riding Pty Ltd [2015] NSWCA 219 claimed for damages both under the Civil Liability Act and the Australian Consumer Law. The issue to be determined was whether her claim for non-economic loss should be calculated according to the more generous provisions of s 16 of the Civil Liability Act or in accordance with s 87M of the Competition and Consumer Act 2010. Macfarlan JA, with whom Simpson JA and Campbell AJA agreed, rejected the argument that the Commonwealth legislation prevailed. He said the Competition and Consumer Act did not purport to, nor did it, have the effect of excluding recovery of non-economic loss under the Civil Liability Act notwithstanding that causes of action were available to the plaintiff under both Acts.

The Court of Appeal dealt with the principles to be applied in the assessment of damages for false imprisonment in State of NSW v Smith [2017] NSWCA 194. The court referred to texts and authorities that emphasised that “[e]ven apparently minor deprivations of liberty are viewed seriously by the common law” (see Minister for Immigration and Multicultural and Indigenous Affairs v Al Masri (2003) 128 FCR 54 at [88]). Damages in such a case, therefore, are intended to take account of, in addition to the deprivation of liberty, the shock of the arrest and injury to feelings, dignity and reputation.

The authorities make it clear that damages for lost income, past and present, are awarded for impairment to income-earning capacity when the impairment is productive of income loss: Graham v Baker (1961) 106 CLR 340; Medlin v State Government Insurance Commission (1995) 182 CLR 1. There are therefore three questions to be answered in assessing income.

A very useful summary of the applicable principles, with reference to authority, was provided by McColl JA and Hall J in Kallouf v Middis [2008] NSWCA 61 at [44]–[61].

Tax treatment of a plaintiff’s income may be relevant to the assessment of his or her income-earning capacity. There are cases where tax returns do not reflect the full amount of that capacity. For example, the case of a husband and wife partnership, where income is divided equally although one partner performs the work necessary to generate the income while the other undertakes the administrative tasks associated with the operation of the business.

Husher v Husher (1999) 197 CLR 138 was an example of such a case. The plurality of the High Court noted:

These principles were applied by the Court of Appeal in Conley v Minehan [1999] NSWCA 432.

In Morvatjou v Moradkhani [2013] NSWCA 157, it was said that it was glaringly improbable that the plaintiff earned only the income disclosed in his tax returns at a time when he was supporting himself, his wife and two children. McColl JA referred to reasons of von Doussa J in Giorginis v Kastrati [1988] 49 SASR 371 in which he said that, while such a discrepancy reflected on a plaintiff’s credit so that his or her evidence generally needed to be scrutinised with special care, it did not necessarily disqualify him or her from recovering damages based on evidence of actual earnings. McColl JA did not endorse the proposition that a plaintiff must admit failure to disclose income to tax authorities but she continued the Court of Appeal’s emphasis on the need to assess diminution of income-earning capacity, acknowledging that evidence of actual income was the most useful guide when undertaking this exercise.

Malec v Hutton and Medlin v State Government Insurance Commission, above, were High Court decisions, the result of which was that, where a plaintiff demonstrates some loss of earning capacity extending beyond the date of trial, although difficult to assess, the courts are bound to award something unless, on the material before the court, it can be seen confidently that the damage suffered by the plaintiff will not in fact be productive of income loss.

The task of assessment of future loss, particularly where there is little or no evidence of loss to the date of hearing, was clarified in State of NSW v Moss (2002) 54 NSWLR 536 where the plaintiff’s injuries clearly pointed to an effect on his capacity to earn and there was therefore evidence of impaired earning capacity. Heydon JA said it was wrong to conclude that damages to compensate for this loss should be minimal. He referred at [69] to authorities that he said contained two uncontroversial themes.

His Honour’s summary at [89] was:

In Cupac v Cannone [2015] NSWCA 114 the Court of Appeal noted the extremely difficult task of assessment of income loss facing the trial judge when dealing with wildly differing medical opinion and the failure to call any medical expert for cross examination. The court rejected the contention that the award for past income loss should be increased to take account of inflation from the date of the plaintiff’s injury. This was because the trial judge was required to estimate loss when precise calculation was not possible and the figure arrived at took into account a range of factors, including the changing value of money.

In Jopling v Isaac [2006] NSWCA 299 the Court of Appeal confirmed that, notwithstanding the requirement of s 13(1) Civil Liability Act that the plaintiff’s most likely future circumstances, but for injury, be taken into account, the principles of State of NSW v Moss, above, continued to apply when the evidence was deficient and that the option of awarding a cushion or buffer as compensation for future economic loss remained available. This was confirmed in Black v Young [2015] NSWCA 71, where the court also confirmed the need to address specifically the provisions of Motor Accidents Compensation Act 1999 s 126 to the circumstances of each particular case.

In Thorn v Monteleone [2021] NSWCA 319 the Court of Appeal upheld the award of a buffer or cushion for economic loss to compensate the plaintiff for the future prospect of becoming a farm manager or operating his own farm. The buffer of $150,000 was awarded on top of an assessment that the plaintiff had an ongoing loss of $900 per week because he unfit to perform his pre-injury duties.

A similar problem arose in Younie v Martini (unrep, 21/3/95, NSWCA) when the plaintiff suffered no income loss to the date of trial. The court held, however, that an assessment that the plaintiff suffered significant impairment to the extent of 18% should have resulted in a finding of impaired income capacity. In this case, given the nature of the plaintiff’s duties as a nursing assistant, having found that the injury continued to the date of trial, some award ought to have been made for future economic loss. See also Chen v Kmart Australia Ltd [2023] NSWCA 96 where the eight-year-old plaintiff was awarded $5,000 as a buffer sum for loss of future earning capacity, the primary judge acknowledging the possibility of “some limitation of career choices” due to some degree of inhibition or diminished self esteem and an only slight chance of rejection or disapproval by others in the workforce on account of her scarring. In this case, where the assessment of the likely future economic loss of the child plaintiff was a “matter of intuition, or guesswork”, the scope for appellate intervention was limited: at [51]. However, in Clancy v Plaintiffs A, B, C and D [2022] NSWCA 119 at [274]–[278], the court found the primary judge’s assessment of C’s damages for future economic loss in the sum of $111,000, by way of a buffer, could not be sustained. Not only was it non-compliant with the requirements of s 13 of the Civil Liability Act, which are directed to supplying some meaningful and transparent basis for the award of damages for future economic loss, but the fact the damages awarded for this head of loss were identical to those awarded to plaintiff A reinforced the perception that the figure of $111,000 was not calculated by reference to the particular circumstances of C.

Nevertheless, as pointed out by Young AJA at [111] in Perisher Blue Pty Ltd v Harris [2013] NSWCA 38, there can be no compensation for loss of income-earning capacity unless it is also established that diminished capacity is productive or is likely to be productive of actual loss.

In Sharman v Evans (1977) 138 CLR 563 the High Court dealt with the question of the adjustment to be made to the award for income loss where the plaintiff’s injuries were such that she was not expected to live to retirement age. The court held that she was entitled to recover income loss during the lost years subject to the deduction of an amount to account for the expenses that she would have incurred in self maintenance. No deduction was required for the expense of maintaining dependants.

Wynn v NSW Insurance Ministerial Corporation (1995) 184 CLR 485 set aside any suggestion that a working mother’s income should be reduced to account for expenses of providing childcare or domestic help or for the prospect that she “would at some stage (choose) or (be) forced to accept a less demanding job” because she “would be unable or unwilling to remain in her job which placed such heavy demands on her time, energy and health and the love and patience of her husband”: Dawson, Toohey, Gaudron, Gummow JJ at [9]. They pointed out that it was necessary to call evidence that suggested a plaintiff was less able than any other career-oriented person, whether male or female, to combine successfully a demanding career and family responsibilities. Childcare and domestic-care responsibilities, they said, did not always involve expenditure. This was a matter of choice for the family and the expense involved was of a private or domestic nature.

White v Benjamin [2015] NSWCA 75 also rejected the proposition that a wife’s future income loss should be discounted because her husband’s secure employment in a flourishing business might persuade her to abandon her own career ambitions.

Specific evidence is required if a plaintiff proposes to work beyond retirement age: Roads and Traffic Authority v Cremona [2001] NSWCA 338. In that case the court accepted a general practitioner’s evidence that he would continue to work to the age of 70 years but the assessment of his income loss beyond retirement age was reduced to take account of the likelihood that, as he advanced in age, he would earn less.

A certificate of assessment of whole person impairment issued under Motor Accidents Compensation Act 1999 s 61 is not conclusive in respect of economic loss: Pham v Shui [2006] NSWCA 373, Brown v Lewis (2006) NSWLR 587; [2006] NSWCA 87, Motor Accidents Authority of NSW v Mills (2010) 78 NSWLR 125, El-Mohamad v Celenk [2017] NSWCA 242. While the content of the certificate may have some relevance, extreme caution was required in relying on the content of the certificate in assessing damages for economic loss: Brown v Lewis, above, Mason P at [23].

Difficulties arise in valuing a plaintiff’s loss when they are self-employed or operate a business through a partnership, trust or company. The starting point is the joint judgment of Gleeson CJ, Gummow, Kirby and Hayne JJ in Husher v Husher (1999) 197 CLR 138 at [16], which states that the basic principles for the assessment of damages are well known and should not be obscured by particular factual contexts. These principles require the “identification of what earning capacity has been impaired or lost and what financial loss has been occasioned by that impairment or loss”: at [17].

Poor accounting practices, lack of tax returns for previous years, variations in revenue and expenditure from year to year, inability to estimate capacity for expansion and economic downturns (including events such as pandemics) are examples of occurrences that cause particular problems. The problem may be aggravated where a plaintiff intends to start a business but has not done so at the time of injury.

Sometimes a plaintiff’s absence through injury may not adversely impact the profits of an established business, and it is difficult to estimate the financial loss incurred by the plaintiff’s absence. Conversely, the incurrence of a loss does not necessarily mean that it is recoverable by the plaintiff, or anyone else. Similarly, the wage drawn from a business by a self-employed person may not be a true reflection of earning capacity. A court is required to do its best on the material available to measure the loss that is due to the injury: Ryan v AF Concrete Pumping Pty Ltd [2013] NSWSC 113 at [211] and New South Wales v Moss (2000) 54 NSWLR 536 at [72] (Heydon JA).

The requirement to mitigate the loss will ordinarily mean that the damages cannot exceed the cost of employing someone to do what the injured plaintiff is unable to do. However, in an appropriate case the entrepreneurial efforts of a business proprietor may need to be rewarded by a percentage uplift on the wages of the replacement employee or employees. Alternatively, a loss of profit is recoverable if it reflects the pecuniary value of the plaintiff’s physical and intellectual labour, such as self-employed professionals who are dependent on rendering fees for services.

It is an acknowledged principle that life is not always certain and that unpredictable events can affect future income. These events or vicissitudes are dealt with by the application of a discount to the sum assessed as compensation for future income losses.

In State of NSW v Moss, above, Mason P at [33], referring to Wynn v NSW Insurance Ministerial Corporation, above, at 497, said that the negative consequences or vicissitudes that are normally taken into account are sickness, accident, unemployment and industrial disputes.

In Norris v Blake (No 2) (1997) 41 NSWLR 49 Clarke JA confirmed that it was in order to add a sum against the positive contingency of success or income-earning capacity beyond pension age.

In NSW, 15% is the conventional allowance made for vicissitudes. In FAI Allianz Insurance Ltd v Lang [2004] NSWCA 413 at [18] Bryson JA described the conventional allowance as “an expedient and approximate resolution of many imponderables, and the difficulty of producing a justification for any greater or lower figure in a particular case tells strongly against departing from the conventional figure”. In State of NSW v Moss at [100] Heydon JA described it as the starting point and the finishing point in most cases.

The conventional discount of 15% may be varied to take account of particular circumstances. For instance, where the plaintiff is of advanced age with a relatively short period over which the assessment of future income loss is to be made, the percentage applied for vicissitudes may be reduced. It is more common, however, that the percentage is increased, particularly where there is evidence of a pre-existing condition, unrelated to the injury that is the subject of the claim, that is likely to affect the plaintiff’s capacity to continue to earn income: Berkley Challenge Pty Ltd v Howarth [2013] NSWCA 370. See also, for example, Palmer v NSW [2024] NSWSC 179, in which the plaintiff was sexually abused by the third defendant as a child but had also undergone a series of other traumatic events that could not be said to have been caused by the defendant’s conduct. Garling J reduced the plaintiff’s award by 30% for vicissitudes, finding the other traumatic events contributed (and in a material way) to her mental illnesses and diagnoses and would have been likely to have adversely affected her working career: at [102]–[105].

In Taupau v HVAC Constructions (Qld) Pty Ltd [2012] NSWCA 293, Beazley JA at [190]–[192] said that the plaintiff’s past record of imprisonment should not have altered the principles on which his past and future income loss was assessed in any way differently from the principles applied to law abiding members of the community. However, it would have been appropriate to take the plaintiff’s propensity to crime and imprisonment into account by way of the discount for vicissitudes.

Care should be exercised to avoid double counting. In Smith v Alone [2017] NSWCA 287, the plaintiff’s pre-accident income had been limited by his pre-existing alcohol dependency. The trial judge took account of this factor in assessing the sum to be awarded for income loss and further decreased the award by 35% for vicissitudes. Macfarlan JA, with whom Meagher and White JJA agreed, said at [58]:

In re-assessing the deduction at 25%, Macfarlan JA at [63] said:

Care should exercised before departing from the conventional figure to identify and express reasons as to why the plaintiff’s future income is likely to be affected by contingencies to any different or greater degree than normal, notwithstanding that a trial judge’s conclusion is likely to be evaluative and impressionistic: Fuller v Avichem Pty Ltd t/as Adkins Building and Hardware [2019] NSWCA 305 at [69]–[70] (Macfarlan JA) and [105] (Payne JA, White JA agreeing).

The Workers Compensation Act places stringent limits on the recovery of common law damages from an employer, except where the claim is the result of a motor accident. Section 151G disallows any award of common law damages except that which arises out of past and future losses from impairment to income-earning capacity. In order to qualify for any right to claim, the plaintiff must have been assessed with a degree of permanent impairment of at least 15%: s 151H.

Any amount by which the plaintiff’s net weekly earnings exceed or are likely to exceed the amount of gross weekly compensation payments payable under s 34 of the Act is to be disregarded: s 151I. Damages are payable only to pension age as defined by the Social Security Act 1991: s 151IA.

No damages for pure mental harm, or nervous shock, may be claimed where the injury was not a work injury: s 151AD. This provision disallows any claim for nervous shock by, for instance, a relative of an injured worker.

Damages are not to be reduced on account of contributory negligence to the extent that the amount awarded is less than the court’s estimate of the value of the plaintiff’s entitlements by way of commutation of weekly payments of compensation: s 151N.

The defence of voluntary assumption of risk is not available to a claim under the Act but damages are to be adjusted to take account of the plaintiff’s negligence: s 151O.

The Civil Liability Act limits an award of damages for past or future income loss by providing that the court must disregard any amount by which the plaintiff’s gross weekly earnings exceed average weekly total earnings of all employees in NSW in the most recent quarter prior to the date of the award as published by the Australian Statistician: s 12.

In respect of future income loss, s 13 requires a plaintiff to establish assumptions about earning capacity that accord with his or her most likely future circumstances but for the injury. The calculation based on those assumptions must be discounted against the possibility that those circumstances might not eventuate. The court is required to state the assumptions on which the award is based and the percentage by which it has been adjusted. The same provision appears in s 126 Motor Accidents Compensation Act.

In Coles Supermarkets Australia Pty Ltd v Fardous [2015] NSWCA 82 Macfarlan JA said that the requirements of s 13 of the Civil Liability Act were in accordance with the principles established in Purkess v Crittenden (1965) 114 CLR 164 and Morvatjou v Moradkhani [2013] NSWCA 157, namely that a plaintiff at all times bears the onus of proof of the extent of injury and of consequential loss of income-earning capacity. They accorded also with the two-stage process of assessment described in Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 that required a plaintiff to establish his or her theoretical earning capacity but for injury and the extent to which that earning capacity would, but for injury, have been productive of income.

Notwithstanding these requirements, common law principles relating to the assessment of income loss, vicissitudes or contingencies continue to apply: Taupau v HVAC Constructions (Qld) Pty Ltd, above, where Beazley JA said ss 12 and 13 made no change to the common law principles, established in Graham v Baker and Medlin v SGIO, that damages for economic loss, past and future, are awarded for impairment to economic capacity resulting from the injury, provided the impairment is productive of income loss.

The Motor Accidents Compensation Act provides in s 125 for a limit on the weekly amount that may be awarded for income losses. The amount of the cap is indexed annually with effect from 1 October in each year. Section 130 requires the court to deduct from payments on account of income loss expenses paid to the plaintiff under the Victims Compensation Act 1996 (repealed, now Victims Rights and Support Act 2013) or by the insurer or Nominal Defendant.

As to the Motor Accident Injuries Act 2017, see [7-0085] under the subheading Economic loss.

The problems presented to a court in meeting the requirements of s 13 Civil Liability Act have been the subject of judicial comment in many decisions. In MacArthur Districts Motor Cycle Sportsmen Inc v Ardizzone [2004] NSWCA 145, Hodgson J noted that s 13 appeared to make no provision for the contingency that a plaintiff’s income might increase significantly. He said it was doubtful that the court could make allowance as in Norris v Blake (No 2), above, for the prospect of superstardom.

Hodgson J also expressed doubt about the power to award a lump sum or buffer when assessing income loss under s 13. This concern was put to rest in Dunbar v Brown [2004] NSWCA 103 where the court held that a buffer could be allowed to account for absences from work from time to time to allow for periods of respite or treatment. This principle has been applied in a number of subsequent decisions, including Allianz Australia Insurance Ltd v Kerr (2012) 83 NSWLR 302 where McColl JA said at [30]:

See also Penrith City Council v Parks [2004] NSWCA 201 at [5], [10], [58] (where the Court held that s 13 did not preclude the granting of a buffer for future economic loss when the impact of the injury upon the economic benefit from exercising earning capacity after injury is difficult to determine) and Chen v Kmart Australia Ltd [2023] NSWCA 96 (where a modest buffer was awarded to an eight-year-old plaintiff).

Each statute provides for the net present value of any lump sums paid on account of future income loss to be discounted at a prescribed rate, currently 5%: Workers Compensation Act, s 151J; Civil Liability Act, s 14; Motor Accidents Compensation Act, s 127.

The maximum recoverable for the loss of employer contributed superannuation is that required by law to be paid by the employer: Civil Liability Act, s 15C.

In general terms, where a claimant is injured during their working life, what is awarded in relation to superannuation benefits is the net present value of the court’s best estimate of the fund that the claimant would have had at the date of retirement but for the injury; namely, a fund which would have generated the “lost” superannuation benefits. The capital asset that is being valued (because it is lost) is the present value of the future rights: Amaca Pty Ltd v Latz (2018) 264 CLR 505 at [97] applying Zorom Enterprises Pty Ltd v Zabow (2007) 71 NSWLR 354 at [54], [59], [66]–[67]. The loss suffered is the diminution in value of the asset: Amaca Pty Ltd v Latz at [97].

In Amaca Pty Ltd v Latz, the respondent, who had retired, was in receipt of a superannuation pension and the Commonwealth age pension when diagnosed with terminal malignant mesothelioma. The Full Court of the Supreme Court of South Australia held the value of both pensions were compensable losses, but reduced the award to take into account a reversionary pension payable to his partner after death under the Superannuation Act 1988 (SA), s 38(1)(a). The High Court by majority held that the Full Court was correct to include in the damages award an allowance for the superannuation pension that he would have received for the remainder of his pre-illness life expectancy, less the reversionary pension. The majority held that that his superannuation benefits are a “capital asset”, which has a present value, and which can be quantified: at [101]. As a result of the respondent’s injury caused by the appellant, he would suffer an economic loss in respect of his superannuation pension, which is a capital asset and intrinsically connected to earning capacity. That loss was both certain and measurable by reference to the terms of the Superannuation Act — the net present value of the superannuation pension for the remainder of his pre-illness life expectancy, a further 16 years, and he should be entitled to recover that loss: at [109]. The age pension however is neither a part of remuneration, nor a capital asset. It is not a result of, or intrinsically connected to, a person’s capacity to earn and no sum should be allowed on account of the age pension in the calculation of damages for the respondent’s personal injuries: at [115].

In Najdovski v Cinojlovic (2008) 72 NSWLR 728 the court, by majority, confirmed the adopted practice of awarding 9% if the calculation is based on a gross earning figure or 11% if calculated on earning, net of tax.

This element of income loss arises in situations where a plaintiff has received weekly payments for loss of income under the workers compensation legislation upon which tax has been paid. The plaintiff when recovering common law damages is required to repay to the workers compensation insurer the gross amount of weekly payments received. The tax paid on those weekly payment was held to be recoverable in Fox v Wood (1981) 148 CLR 438 at 441.

Out-of-pocket expenses incurred by a plaintiff are recoverable to the extent that they are:

In many cases where liability is not in issue, the insurer will pay for or reimburse out-of-pocket expenses that meet these requirements. Section 83 Motor Accidents Compensation Act obliges an insurer, when liability is admitted in whole or in part, to meet the plaintiff’s reasonable expenses of medical care, rehabilitation and certain respite and attendant care services. Payment of these expenses is commonly raised as a defence to a claim.

In general, claims for out-of-pocket expenses centre on needs for treatment, past and future, rehabilitation and aids to assist a plaintiff in overcoming disability arising from injury. As with income loss, in determining the amount to be awarded, it is often necessary to take account of future requirements for treatment, particularly in the case of orthopaedic injuries that may involve ongoing degeneration and the need for surgery for fusion or replacement of joints.

The assessment for future needs involves consideration of the following:

Aids to assist in overcoming disability include items such as artificial limbs, crutches, wheelchairs and special footwear as well as the costs of providing or modifying accommodation to meet the plaintiff’s needs. In addition, allowance may be made for the cost of providing special beds, tools or equipment designed to assist an impaired plaintiff in the functions of everyday living.

Section 3 Motor Accidents Compensation Act includes in the definition of “injury” damage to artificial members, eyes or teeth, crutches and other aids or spectacle glasses. Thus, the cost of repair or replacement of these items is compensable. Other items held to be compensable include clothing damaged in the course of the accident or treatment.

As to the Motor Accident Injuries Act 2017, see [7-0085].

The fact that the treatment fails or is ineffective does not preclude recovery (Lamb v Winston (No 1) [1962] QWN 18) but the cost of experimental treatment that offers no cure will not be recoverable. Neal v CSR Ltd (1990) ATR ¶81-052 held that the cost of a treatment that remained at trial stage was disallowed.

The issue of whether an expense could be regarded as reasonable was discussed in Egan v Mangarelli [2013] NSWCA 413. The plaintiff claimed the considerable cost of a C-leg prosthesis, a specialised computerised device. He explained that he did not, prior to trial, use his conventional prosthesis regularly or for extended periods because it caused him pain. The cost of the C-leg prosthesis was held to be reasonable because, properly fitted, it would reduce the plaintiff’s pain, lead to greater use and improve his mobility.

McKenzie v Wood [2015] NSWCA 142 dealt with the issue of whether the plaintiff should recover the cost of a hip replacement. The evidence established that prior to his accident, the plaintiff suffered from symptoms of osteoarthritis and it was inevitable that he would at some stage require hip replacement that could have been undertaken in a public hospital at no expense to him. The Court of Appeal accepted that the replacement that would have been required as a result of the pre-accident progressive condition was unlikely to involve the urgent intervention necessitated by the injury suffered in the accident. Accordingly the plaintiff was entitled to recover the cost.

The capital costs of modifications to accommodation to meet the needs of a disabled plaintiff are recognised as recoverable out-of-pocket expenses and no allowance is to be made for the increase in the capital value of a property modified for that purpose: Marsland v Andjelic (1993) 31 NSWLR 162. In most cases, the cost of the basic accommodation itself is not recoverable. In Weideck v Williams [1991] NSWCA 346, the court said this was not a strict rule and that, in accordance with the principles of Todorvic v Waller (1981) 150 CLR 402, each case was to be decided on its facts. In Weideck, the injured plaintiff could no longer live in the caravan he occupied prior to his injury. He was allowed the full capital costs of modifications required to deal with his disability. In addition, he was allowed the costs of land and a basic house, heavily discounted to set off the rent he otherwise would have continued to pay and the income that ordinarily would have been diverted to the provision of a capital asset, such as a house.

The majority in the High Court in Cattanach v Melchior (2003) 215 CLR 1 awarded damages for the cost of raising and maintaining a child born as the result of medical negligence. In response to Cattanach v Melchior, s 71 Civil Liability Act, was enacted to prevent claims for economic loss for the cost of rearing or maintaining a child or the loss of earnings forgone while rearing the child, except where the child suffers from a disability, where the additional costs of rearing and maintaining a child who suffers from a disability are recoverable. Section 71 does not prevent the recovery of damages for pregnancy and birth of a child, where the pregnancy is the result of negligence, such as a failed sterilisation procedure: Dhupar v Lee [2022] NSWCA 15 at [172]. Further, s 71 does not prevent the recovery of damages for physical or psychiatric injury sustained during or as a consequence of the birth: Dhupar at [175]–[176].

There are two varieties of attendant care: those that are provided by friends or family on a gratuitous basis and those that are commercially provided and paid for. As with all heads of damage, a plaintiff may recover compensation for the loss of capacity for self and domestic care only if the need for the care arises out of injuries suffered as a result of the defendant’s negligence and provided that the amount claimed is reasonable.

The issue that has been most productive of judicial and legislative scrutiny is that arising out of claims for services provided on a gratuitous basis.

The High Court in Griffiths v Kerkemeyer (1977) 139 CLR 161 dealt with the issue of whether a plaintiff could be said to have suffered a compensable loss when her attendant care needs of a domestic and nursing nature were met by an unpaid third party and to whom she owed no obligation of payment. The argument was that the loss was in truth suffered by the person who provided the services. Gibbs CJ at [12], discarding prior authority, said that damages for gratuitously provided services were payable if three conditions were met.

Mason J at [30] set out the principle upon which compensation was payable to the plaintiff rather than the volunteer as follows:

The issue in Van Gervan v Fenton (1992) 175 CLR 327 was the basis upon which this element of compensation was to be valued. In a majority decision, the High Court rejected the argument that the plaintiff’s loss of capacity was to be valued by reference to the income lost by the person providing gratuitous services. Mason CJ, Toohey and McHugh JJ said at [16] that the true basis of a claim was the need of the plaintiff for gratuitous services and the plaintiff did not have to establish that the need was or might be productive of income loss. The value of the plaintiff’s loss, they said, was the ordinary market cost of providing the services.

Kars v Kars (1996) 187 CLR 354, where the defendant was the plaintiff’s husband and provided attendant care services, involved the argument that the defendant thereby met his obligations as a tortfeasor and no further compensation could be recovered. In rejecting the argument, the High Court confirmed that Griffiths v Kerkemeyer principles are directed at the loss of capacity suffered by a plaintiff and that, although the resulting need for care is quantified by reference to what the care provider does, the focus remains on the plaintiff’s needs.

Justices Toohey, McHugh, Gummow and Kirby said:

In CSR v Eddy (2005) 226 CLR 1, the High Court noted at [26] that the Griffiths v Kerkemeyer principles were anomalous and controversial. The anomaly arose from the departure from the general rule that damages, other than damages for loss not measurable in money, were not recoverable unless the injury involved resulted in actual financial loss. The controversy arose because the result could be disproportionately large awards when compared to sums payable under traditional heads of damage.

These principles were confirmed in Hornsby Shire Council v Viscardi [2015] NSWCA 417 and Smith v Alone [2017] NSWCA 287. In Smith Macfarlan JA at [75]–[77] referred to authority that supported the proposition that consideration must be given to a plaintiff’s family circumstances in deciding whether the provider of gratuitous care will continue to do so in the future. He also accepted that in appropriate circumstances a deduction for vicissitudes might be appropriate when assessing a claim for attendant care costs.

The legislation that attempts to address the concerns expressed by the High Court appears in ss 15, 15A and 15B Civil Liability Act at and in ss 141B, 141C and 142 Motor Accidents Compensation Act. There are some substantial differences between these provisions. The Civil Liability Act sets out in s 15(1) definitions of attendant care services and gratuitous attendant care services and, in s 15(2) specifies the conditions to be satisfied to qualify for compensation, namely: a reasonable need for the services, a need created solely because of the injury to which the damages relate, and services that would not be provided but for the injury.

Both statutes impose a threshold on the recovery of damages that requires that not less than six hours per week be provided for a period of at least six consecutive months: s 15(3) Civil Liability Act; s 141B(3) Motor Accidents Compensation Act. In each case the maximum amount recoverable is set, where services are provided for more than 40 hours per week at the weekly sum that is the Australian Statistician’s estimate of the average weekly total earnings of all employees in NSW, and where the weekly requirement is less than 40 hours, at the hourly rate that is one-fortieth of this figure: s 15(4) Civil Liability Act, s 141B(4) Motor Accidents Compensation Act.

As to the Motor Accident Injuries Act 2017, see [7-0085].

In Hill v Forrester (2010) 79 NSWLR 470, the Court of Appeal confirmed that both requirements of s 15(3), as amended following the decision in Harrison v Melham (2008) 72 NSWLR 380, must be met in order to qualify for compensation. The issue in Hill v Forrester was whether the right to compensation applied to services provided before the threshold of six hours per week of care over a period of six consecutive months was met. Sackville AJA held that only one six-month qualifying period was involved and it was not a continuing requirement. The result was that compensation was payable for services provided both before and after the threshold requirements were met.

The Civil Liability Act contains no equivalent provision to s 141C Motor Accidents Compensation Act where specific provision is made for the cost of reasonable and necessary respite care for a seriously injured plaintiff who is in need of constant care. It is probable however that these services would be covered within the definitions of attendant care services in s 15(1).

As to services that would have been provided in any event, the High Court in Van Gervan v Fenton, above, recognised that in the ordinary course of a marriage there is an element of give and take in the provision of mutually beneficial services. Deane and Dawson JJ at [4] said:

Ipp JA in Teuma v CP & PK Judd Pty Ltd [2007] NSWCA 166 at [64] noted that this part of the minority judgment supported the majority in Van Gervan to the effect that no reduction should be made to attendant care damages to take account of the mutual obligations of family life.

White v Benjamin [2015] NSWCA 75 involved issues of the extent to which the time required to meet the need for attendant services could be determined separately from the needs of a household as a whole. The principle accepted by both Beazley ACJ and Basten JA was that where the elements of the claim were severable as between a plaintiff and those who also benefit from those services, no aspects of those services may be commingled for the purpose of determining whether the thresholds of six hours per week for a continuous period of six months have been met. Where those elements are not severable, the element of mutuality referred to in Van Gervan v Fenton, CSR v Eddy, above, Hodges v Frost (1984) 53 ALR 373 and Coles Supermarkets Australia Pty Ltd v Haleluka [2012] NSWCA 343, applied so that the commingled needs of a plaintiff remained the plaintiff’s needs even if they were of mutual benefit.

Basten JA pointed out that s 15 of the Civil Liability Act did not apply to claims made under the Motor Accidents Compensation Act where they were dealt with in s 141B which did not mirror exactly the provisions of s 15. However, s 15B of the Civil Liability Act applied to motor accident claims so that it was necessary to distinguish between damages awarded for the plaintiff’s personal loss and those awarded for the loss of capacity to provide services to dependents and to apply the six hour/six month thresholds separately to each claim.

Nor is it permissible to aggregate the needs created by successive breaches of duty, for example, where those needs are generated by successive accidents, in order to meet the threshold requirements of the legislation: Muller v Sanders (1995) 21 MVR 309; Falco v Aiyaz [2015] NSWCA 202.

The question of whether the need for services was generated solely by the relevant injury was dealt with in Woolworths Ltd v Lawlor [2004] NSWCA 209 where it was argued that the plaintiff had a pre-existing asymptomatic degenerative condition that might at some later stage produce symptoms and generate the need for services. Thus, it was argued, the need for services did not arise solely out of the aggravation of the condition for which the defendant was responsible. Beazley JA, although she said the section was not without difficulty, preferred a construction that was based on the definition of injury. This included impairment of a person’s physical or mental condition so that gratuitous services provided solely as a result of such an injury, although an aggravation, were compensable. The same approach to this requirement was taken in Basha v Vocational Capacity Centre Pty Ltd [2009] NSWCA 409; Angel v Hawkesbury City Council [2008] NSWCA 130 and Westfield Shoppingtown Liverpool v Jevtich [2008] NSWCA 139.

Daly v Thiering (2013) 249 CLR 381 dealt with the issue of whether the plaintiff, a participant in the scheme established by the Motor Accidents (Lifetime Care and Support) Act 2006, was entitled to compensation for the gratuitous services provided by his mother. The plaintiff’s mother agreed with the Lifetime Care and Support Authority to provide domestic services for the plaintiff without pay. Although recovery of damages for gratuitously provided services is regarded as compensation for the plaintiff’s loss of capacity, the High Court held that the claim was for economic loss and was precluded by s 130A Motor Accidents Compensation Act (now repealed) for so long as the services were provided for under the scheme. It was irrelevant that the services provided by the plaintiff’s mother without expense might result in a windfall to the Authority.

Where care is not provided on a gratuitous basis, the reasonable cost of reasonably required commercially provided services is recoverable both for the past and future: Matcham v Lyons [2004] NSWCA 384. The issue of what was reasonable was dealt with in Dang v Chea [2013] NSWCA 80, where Garling J dealt with competing arguments concerning the services to be provided to the plaintiff who required 24-hour care. There was a considerable difference between the cost of 24-hour care in a rented apartment, as claimed by the plaintiff, and the cost of nursing-home care that the defendant argued would meet her reasonable requirements. Garling J rejected the plaintiff’s contention after consideration of authority, including:

Accepting that the need for care was demonstrated because, although the plaintiff continued to perform domestic tasks, he did so with difficulty, the court in Berkeley Challenge Pty Ltd v Howarth [2013] NSWCA 370 also accepted that his needs should be assessed on the basis that commercial services would be required after the plaintiff’s family would no longer be available to care for him gratuitously. Tobias AJA rejected the argument, as without legal basis, that the court must be satisfied that the amount awarded would actually be spent. It was contrary to the authority of Todorovic v Waller (1981) CLR 402 at 412 that the court has no concern as to the manner in which a plaintiff uses the amount awarded.

In Perisher Blue Pty Ltd v Nair-Smith (2015) 90 NSWLR 1 the Court of Appeal accepted that the plaintiff was entitled to recover damages for the cost of commercially provided services at the established market rate rather than at the lower rate she paid for domestic assistance at the time of trial. The court continued its practice of preferring the commercial rate on the basis that it was not known how much longer the current service provider would continue to work at the lower rate.

In Manly Fast Ferry Pty Ltd v Wehbe [2021] NSWCA 67 at [110] the Court of Appeal accepted that the award of future damages at the commercial rate was appropriate where the plaintiff gave evidence that by using a commercial provider he would take pressure off his brothers and where it could be inferred that if there were funds available that his brothers would cease to provide their services gratuitously.

In Sullivan v Gordon (1999) 47 NSWLR 319, the Court of Appeal held that the injured plaintiff was entitled to compensation for the lost capacity to care for a child on the same basis as that established in Griffiths v Kerkemeyer. This approach was set aside by the High Court in CSR v Eddy (2005) 226 CLR 1. The court reinstated the principles of Burnicle v Cutelli (1982) 2 NSWLR 26 that damages for loss of capacity to care for family members was compensable but as a component of general damages and not on Griffiths v Kerkemeyer principles.

Damages for the loss of capacity to provide domestic services are now dealt with in s 15B Civil Liability Act, a provision that applies also to claims brought under the Motor Accidents Compensation Act, unless the care needs have been met through the Motor Accidents (Lifetime Care and Support) Act or payments made by the insurer under s 83 Motor Accidents Compensation Act: s 15B(8), (9).

The section provides definitions of assisted care and dependants and in s 15B(2) lists four preconditions to the award of damages:

These requirements received scrutiny in State of NSW v Perez (2013) 84 NSWLR 570. Recognising the ambiguities of s 15B(2)(b), Basten JA said that the activities of a plaintiff prior to the date at which the liability arose set the upper limit of what can be claimed, provided the other requirements of the section are met. On the question of what was reasonable in all the circumstances (s 15B(2)(d)), he said the qualification did not apply to the word “need” in isolation. It qualified and required that a need for six hours of care per week for six consecutive months be reasonable. It was therefore necessary to consider the particular needs of the dependants involved.

Macfarlan JA at [39] said it was irrelevant that other family members took over the role of providing care because that care would always have to be provided by some alternative means. The right to damages addressed the needs of the dependants that would, but for injury, have been satisfied by the claimant and the question of whether those needs were reasonable in the circumstances.

The thresholds of six hours per week for six consecutive months apply and damages are quantified by reference to the limits imposed by s 15(5). The balance of s 15B is directed at avoiding duplication in the award of compensation so that:

In Amaca Pty Ltd v Novek [2009] NSWCA 50, the plaintiff lived with her daughter and partner and cared for their two children while they worked. The defendant challenged the claim that the children were the plaintiff’s dependants, arguing that the parents had partially delegated to her some of the moral and legal obligations for their care. Campbell JA, after reference to extensive authority dealing with the many aspects of dependency, said that the nature and extent of the care provided by the claimant to the children were such that a finding of dependence was open. On the same basis, he rejected the claim that the services were in fact provided to the parents and not to the children. Rejecting the claim that it was not reasonable nor within the intention of the legislation to compensate parents for the expense of providing childcare, Campbell JA said it was not clear that Parliament did not have this intention.

Liverpool City Council v Laskar (2010) 77 NSWLR 666 dealt with the situation where, prior to his injury, the plaintiff and his wife provided services in the nature of therapy for his profoundly disabled daughter. The defendant argued that these services were not services of a domestic nature so that they were not compensable. The defendant contrasted the definitions “attendant care services” contained in s 15 Civil Liability Act with the term “domestic services” appearing in the heading to s 15B. Whealy J rejected this argument. He said ss 15 and 15B addressed different objectives. Section 15B was directed, not at the care needs of an injured party, but the loss of capacity of a plaintiff to attend to the needs of dependants. Those needs, he said, should not be subjected to a restricted or narrow interpretation, they extended beyond cooking and cleaning to incorporate the very considerable personal care needs of young children and, as in this case, the needs of the plaintiff’s daughter.

In contrast to ss 15, 15B does not cap the number of hours for which compensation may be provided. It caps only the hourly rate by which compensation is to be assessed. The plaintiff in Amaca Pty Ltd v Phillips [2014] NSWCA 249 provided 18 hours per day of care for his wife, who was suffering from dementia. Following his diagnosis with mesothelioma, he lost the capacity to provide this care, and his wife was admitted to a nursing home. The Court of Appeal upheld the award of compensation for 18 hours per day at the statutory hourly rate, rejecting the defendant’s claim that the lesser cost of nursing home care should be adopted as the measure of damage and pointing out that compensation was awarded for the plaintiff’s loss of capacity to provide services, not the value of those services to the recipient. Ward JA, delivering the judgment of the court, said the partial reinstatement of Sullivan v Gordon damages created a new statutory entitlement that did not require the plaintiff’s loss of capacity to be measured by reference to the cost of providing alternative services, nor did it require account to be taken of how the plaintiff would spend the damages recovered in accordance with that entitlement.

The six hour/six month threshold must be separately assessed in respect of both the claim for the plaintiff’s personal loss of capacity and to the claim of lost capacity to care for others: White v Benjamin [2015] NSWCA 75.

Section 15B(2) imposes two conditions on recovery of damages. First, that the claimant was in fact providing services to a dependent who had a need for the services at the time that the liability of the tortfeasor arose. And second, absent the injury, the claimant would have continued to provide such services in respect of the continuing need of the dependent: Piatti v ACN 000 246 542 Pty Ltd [2020] NSWCA 168 at [12] (Basten JA). The assessment of damages must take into account variables relevant to the dependent’s need, for example the needs of a child will usually diminish over time where the needs of an elderly or infirm person may increase over time: Piatti at [15].

Damages awarded under s 15B survive the plaintiff’s death where the plaintiff is entitled to prosecute a claim after death, for example pursuant to s 12B Dust Diseases Tribunal Act 1989 and are otherwise recoverable by dependents under the Compensation to Relatives Act 1987: Piatti at [28].