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.

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