The High Court recently handed down a majority (5 to 2) decision in Amaca Pty Limited v Latz, Latz v Amaca Pty Limited  HCA 22. This was an appeal from the Full Court of the Supreme Court of South Australia on an assessment of damages for the loss of expectation of receiving an age pension during the "lost years".
Mr Latz, now 71, had retired from the public service when, in October 2016, he was diagnosed with terminal mesothelioma. At that time, he was receiving a superannuation pension of $51,162 per annum and an age pension of $5,106 per annum. He sued Amaca alleging the negligent supply of asbestos fencing he had cut and installed some 40 years earlier had caused his mesothelioma. Liability was not contested. As to damages, he argued, but for Amaca's negligence, that he would have continued to receive both the superannuation and the age pensions for the rest of his pre-illness life expectancy, around a further 16 years past his post-illness life expectancy.
The Full Court of South Australia
The South Australian Full Court held the value of the superannuation and the age pensions were compensable losses. However, it then reduced his damages award to take into account the reversionary pension his partner would receive on his death under the Superannuation Act 1988 (SA). Amaca appealed the findings of compensable loss in relation to both the superannuation and the age pensions and Mr Latz cross-appealed the finding that the reversionary pension was to be deducted from his damages.
The High Court
The High Court was required to consider whether he was entitled to damages from Amaca for the loss of his superannuation and age pensions for those 16 years beyond his post-illness life expectancy and, if so, whether any reversionary pension that might be payable to his partner should be taken into account in the damages assessment. Those questions were to be resolved by the application of the fundamental principles of the assessment of damages for negligently caused personal injuries. The Court noted the inherent difficulties in the assessment of damages, it having been previously held that:
So-called principles of assessment of damages for personal injuries can be made the subject of almost endless discussion. The consequences of such injuries are not all susceptible of evaluation in money, and seeming logic can be pushed too far,
and then restated the basic heads of damage open to a plaintiff:
- certain non-pecuniary losses (even if no actual financial loss is caused and the damage caused by the defendant cannot be measured in money);
- loss of earning capacity; and
- actual financial loss.
If a plaintiff suffered a negligently caused injury during their working life and, as a result of that, suffered a reduction in their income or their life expectancy, then the objective was to award a sum of money that would, as nearly as possible, put them in the same position as if they had not sustained the injury. This was met by an award of damages which may include compensation for loss of superannuation. Superannuation was part of remuneration, and was a capital asset constituted by the body of rights resulting from national statutory superannuation requirements and the plaintiff's own superannuation arrangements.
Generally, when a plaintiff was injured during their working life, what was awarded in relation to superannuation was the net present value of the Court's best estimate of the fund available at the date of retirement, but for the injury (which would have generated the superannuation benefits lost by the loss of earnings generated by the injury). The lost capital asset being valued was the present value of future rights. The loss was not the loss of some opportunity to enjoy the asset, but the diminution in its value. At the date of judgment a plaintiff received, as part of the damages award, the net present value of a fund that they, prior to injury, would have expected to receive on retirement (subject to appropriate discounts).
However, Amaca said Mr Latz was in a different position and should not be compensated, as not only was he retired but he was also in receipt of a pension from a statutory superannuation scheme. Amaca said Mr Latz had not suffered a loss, as the loss was only one that could be suffered by his family after his death.
The Court considered Mr Latz had personally suffered a loss, with a present value, and which could be quantified. What he had, as a result of the exploitation of his capital asset, was a superannuation pension. On retirement he received and, but for his injury, would have continued to receive that pension for the whole of his pre-illness life expectancy. He would not now receive that pension for the full duration of his pre-illness life expectancy, due to Amaca's negligence. In short, the value of the capital asset constituted by his rights under the Superannuation Act had been diminished by Amaca's negligence. But for Amaca's conduct, those rights would have been more valuable than they would now be. What he had lost was the net present value of the benefit of the converted capital asset for the remainder of his pre-illness life expectancy, or a further 16 years.
The point was amplified when the nature of the converted capital asset was understood. His rights under the Superannuation Act could be conceptualised, as he had argued, as delayed remuneration for work he had done. This asset was intrinsically connected to earning capacity, representing, as it did, a type of remuneration/reward for work. Had his illness presented before he retired, he would have been awarded the net present value of that capital asset.
The Court considered there was no principled basis for denying compensation for a lost superannuation benefit just because the injury or illness which occasioned that loss became apparent only after retirement.
As a result of the injury Amaca had caused, Mr Latz would suffer a loss in respect of his superannuation pension. That loss was certain and able to be measured by reference to the terms of the Superannuation Act. He was entitled to recover that loss. The superannuation pension, unlike other forms of benefit, was a capital asset and intrinsically connected to earning capacity.
As to superannuation the Court held that if a plaintiff was of working age, a lump sum attributable to the superannuation pension would be awarded which included a component sufficient to generate the future expected income stream that had been lost, subject to the necessary deductions and discounts. If retired, then a similar calculation should be made.
As to the age pension, this stood in stark contrast. It was not part of remuneration and it was not a capital asset. It was not a result of, or intrinsically connected to, a person's capacity to earn, nor, contrary to Mr Latz's submission, was it a future income stream to which he had any present or future right or entitlement. No sum was to be allowed on account of the age pension in the calculation of damages for his personal injuries.
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