Australia: Court of Appeal in error in reducing award of damages for economic loss by taking into account benevolent payments made by charitable institution

Zheng v Cai (2009) HCA 52
Last Updated: 16 December 2009
Article by Nathan Morehead

Judgment date: 9 December 2009

High Court of Australia1

In Brief

  • When giving consideration to benevolent payments in the context of a claim for economic loss, the real intention of the person/entity making the benevolent payments, and public policy, are to be taken into account. The existence of a collateral benefit for the giving of benevolent payments will not override the real intention of the giver.
  • The ultimate question which is to be answered when considering benevolent payments is that which was stated in Redding v Lee, namely, whether the benefit was conferred on the claimant/plaintiff independently of any right or redress against others so that he/she might enjoy the benefit, even if he/she enforced the right. In other words, it must be remembered that damages are awarded for the benefit of the victim, not the wrongdoer. To find otherwise, and reduce an award of damages, would defeat the policy of law.
  • The "real intent" of the giver of the benevolent payments must be raised during trial, not for the first time on appeal, so as to avoid prejudice to either party.


The applicant was an active member of the Christian Assembly of Sydney ("the Assembly"), which has a church in Roseville. The Assembly was incorporated as a not-for-profit association, is accepted by the ATO as a charitable institution, has no employees, and all of its offices and functions are performed by volunteers.

The applicant was injured in a motor vehicle accident on 11 May 2000. Liability was admitted.

The applicant left Sydney and attended the church's bible college in Singapore between July 2001 and June 2005. After graduating with a Bachelor of Theology, the applicant returned to Sydney. The applicant then performed voluntary work for the church for approximately 20 hours a week, answering the telephone, speaking to people interested in the church, and preaching. The applicant received fortnightly payments from the Assembly.

District Court of NSW – Garling DCJ

The matter proceeded for assessment of damages. The respondent tendered a letter signed by the Public Officer and Treasurer of the Assembly dated 1 May 2006. That document relevantly stated that the Assembly had provided financial support to the applicant for her daily living and accommodation expenses "to allow her to function more effectively as a volunteer worker". During the trial the applicant denied she was employed by the church. Judge Garling accepted the applicant's evidence and the statement by the Assembly, found the applicant was not employed by the Assembly, rejected the respondent's case that the monies were received on account of the applicant's employment and awarded the applicant $300,681 in damages.

Court of Appeal – Giles and Basten JJA and Hoeben J

The respondent submitted that Judge Garling erred in failing to characterise the exertions of the applicant within the Assembly from July 2005 to the date of trial (August 2007) as employment, and the receipts as income gained through her personal exertion.

The reasons of Windeyer J in the National Insurance Co of New Zealand Ltd v Espagne2 were considered by the Court of Appeal:

"In assessing damages for personal injuries benefits that a plaintiff has received or is to receive from any source other than the defendant are not to be regarded as mitigating his loss, if:

  • (a) They were received or are to be received by him as a result of a contract he had made before the loss occurred and by the express or implied terms of that contract they were to be provided notwithstanding any rights of action he might have; or
  • (b) They were given or promised to him by way of bounty, to the intent that he should enjoy them in addition to and not in diminution of any claim for damages.
The first description covers accident insurances and also many forms of pensions and similar benefits provided by employers; in those cases it is immaterial that, by subrogation or otherwise, the contract may require a refund of monies paid, or an adjustment of future benefits, to be made after the recovery of damages. The second description covers a variety of public charitable aid and some forms of relief given by the State as well as the produce of private benevolence. In both cases the decisive consideration is, not whether the benefit was received in consequence of, or as a result of the injury, but what was its character; and that is determined, in the one case by what under his contract the plaintiff had paid for, and in the other by the intent of the person conferring the benefit. The test is by purpose rather than by cause."

The Court of Appeal referred to the words from the letter as indicative of "the real intent" of enabling the applicant to perform more effectively her volunteer work for the church, thereby taking the payments outside the second category identified in Espagne and rendering them more analogous to payments for services.

The Court of Appeal set aside the verdict entered by Judge Garling and entered judgment for the applicant in the sum of $17,447.91.

High Court

The applicant submitted that the Court of Appeal was in error in reducing the damages by taking into account certain benevolent payments made by the Assembly to her, and by making for itself findings of fact in response to a new argument raised by the respondent. As far as the latter ground was concerned, the applicant submitted that the intention of the church had not been an issue at trial and, if it was, it would have been open to her to object to the tender of the letter and, if that had failed, to call evidence on the issue.

The Court considered the nature of the payments made by the Assembly to the applicant, noting previous decisions not to deduct from damages receipts from voluntary funds had been "put either on public policy or the intention of the subscribers". In this regard, the Court stated "it is the policy of the law which informs the importance of the wishes of those providing the benefaction".

The Court gave consideration to the comments by Windeyer J in Espagne, making the following remarks:

"His Honour began with the propositions that damages for personal injuries are not to be assessed by constructing a profit and loss account and that the compassion, kindness and sympathy of friends and the gifts of charitable persons cannot be weighed against pain and suffering caused by the wrongdoer, such that the balance of account favours that wrongdoer. From that basis his Honour reasoned that voluntary gifts should not diminish damages because 'they are given for the benefit of the sufferer and not for the benefit or the wrongdoer'."

From this passage it became clear that the "intent" of the donor was of great importance, contrasting an intention to benefit the wrongdoer with an intention to benefit the victim. The Court went on to quote a further passage from the judgment of Windeyer J in Espangne:

"If, out of sympathy for a man unfortunately responsible for a motor accident, someone gives money to the victim, stating that he does so in the interest of the tortfeasor and to diminish the damages he must pay, effect must be given to his intention. If, on the other hand the donor's expressed intention is that the injured man shall enjoy his bounty in addition to whatever rights he may have to recover damages from the tortfeasor, effect must in my opinion, be given to that intention. And if nothing be said, the intention of the giver may be inferred from the circumstances."

The Court then noted the following observation in relation to tort law in the United States:

"Often of course the intent was never even thought out by the donor, certainly not expressed. In these cases of private generosity the best solution seems to be a rule of thumb that would give greatest scope to the donor's generosity and to the adjustment of moral obligations within the more or less intimate relationships that usually bring such generosity into play. The gift should be disregarded in assessing damages."

The Court considered the wording, and proper construction, of the letter before making the following observations in relation to the decision of the Court of Appeal and, in particular, the leading judgment of Justice Hoeben:

  • The judgment did not address whether the payments by the Assembly were intended by it to operate in the interest of the respondent and to diminish the damages he would otherwise be liable to pay;
  • Whilst his Honour concluded that the intention of the Assembly was to benefit the applicant in her circumstances after the accident, he denied the legal consequence which Espagne would attach to that conclusion by finding in the Assembly an additional intention with respect to voluntary work.

As far as the latter is concerned, the Court, at paragraph 24, made the following remarks:

"The presence of a collateral benefit of this kind to the Assembly could not substitute for the necessary intention on its part to benefit the respondent by diminishing his liability for damages at the expense of the award recovered by the applicant, the object of the bounty provided by the Assembly. Reducing the applicant's award without finding such an intention would defeat rather than advance the policy of the law in this area."

The Court partially justified its conclusion by reference to the applicant's evidence, which was that she welcomed the opportunity to assist at the church as an activity to fill her time and a response to the kindness which had been shown to her by members of the church.

The Court went on to distinguish this case from the payment of unemployment benefits and payments made by the Protective Commissioner by reference to the intention of the legislature, which differs with private benefaction by a donor, such as the Assembly in this case. In so doing, the Court made the following comments at paragraph 29:

"What these situations, whether or not arising under statute, have in common is the need to answer the ultimate question, framed by Mason and Dawson JJ in Redding v Lee as being:

'Was the benefit conferred on the plaintiff independently of any right or redress against others and so that he might enjoy the benefit even if he enforced the right?'

In Evans v Muller (reported with Redding v Lee) their Honours, who were part of the majority, concluded that unemployment benefits provided by the Federal law had the character of a partial substitute for wages. But that holding does not support the denial by the Court of Appeal that the private benefaction conferred upon the applicant by the Assembly was to be enjoyed by her independently of redress against the respondent."


Benevolent payments will be disregarded from the assessment of damages for economic loss if the Court is satisfied that the real intention of the giver, and public policy, dictate this should be the case, irrespective of whether a collateral benefit exists.

If a party seeks to question the real intent behind benevolent payments, it must be raised at trial so that any objection in relation to the admissibility of evidence can be raised and further witnesses can be called. A failure to do so will arguably result in prejudice to the respondent in any potential appeal proceedings, which would likely be dismissed for that reason.

1 French CJ, Gummow, Crennan, Kiefel and Bell JJ

2 (1961) 105 CLR 569

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.