In Zheng v Cai [2009] HCA 52 the High Court held that payments made by a church to an injured plaintiff were not to be considered in the plaintiff's economic loss assessment.

Key Points

  • Truly charitable donations for the benefit of a plaintiff may not be taken into account when assessing economic loss.
  • If it is the intention of the benefactor to reduce the damages payable by the tortfeasor, rather than to aid the plaintiff, only then may payments diminish the award.

Facts

The Chinese speaking plaintiff suffered spinal injuries in a car accident in May 2000. Subsequently she was unable to sit or stand for long periods of time or continue her employment as a seamstress. Lack of proficiency in English also limited her options in non-manual work.

After the incident, she attended a bible college in Singapore and obtained a bachelor degree in theology in 2005. On returning to Sydney in 2005 she performed volunteer work for the Christian Assembly of Sydney's church in Roseville. For approximately 20 hours per week the plaintiff would answer the Church phone, speak to people interested in the Church and do some preaching.

During this time, she received payments from the Church of about $580 per week to assist with rent and living expenses. The money was sourced from donations made to the Church. The trial judge held the plaintiff was not an employee of the Church and that the monies were not received due to the volunteer services she performed.

The Court of Appeal held that the decision to characterise the payments in this way was incorrect. The Court found that the payments were gained through the plaintiff's employment.

Decision

In overturning the appeal decision, the High Court maintained that damages for personal injuries are not to be calculated by simply constructing a profit and loss account where the compassion, kindness and sympathy of friends and the gifts of charitable persons are weighed against pain and suffering caused by the wrongdoer.

Voluntary gifts should not diminish damages because they are given for the benefit of the sufferer and not to relieve the wrongdoer of a liability. The critical question when assessing damages with reference to charitable payments is whether it is the intention of the donor for the monies to operate in the interest of a tortfeasor and diminish the damages the tortfeasor would otherwise be liable to pay, or to benefit the plaintiff in their circumstances after an accident.

The decision makes good sense in encouraging true charity without fear that the gesture will be negated by the compensation process. However, there will always be a fine evidentiary line to establish the gift is not an attempt to conceal earnings where voluntary services are rendered. In each case this will come down to a factual analysis of the true nature of the whole arrangement.

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