Damages for loss of the age pension?

Legal Directions

Dibb v Amaca Pty Limited; Londos v Amaca Pty Limited

Introduction

On 22 August 2017, Judge Russell of the NSW Dust Diseases Tribunal held that Australian law did not recognise an entitlement to recover damages for loss of the Commonwealth age pension because that benefit did not have the requisite character of a loss of economic capacity. In doing so, His Honour did not follow the decision of Judge Gilchrist of the District Court of South Australia in Latz v Amaca Pty Limited [which decision is the subject of an appeal].

Judge Russell also held that if his assessment was wrong such that it was ultimately decided by an appeal court that the age pension potentially sounded in damages, it was appropriate to offset those damages by both the cost of living expenses had the claimant not died of mesothelioma (‘the lost years deduction’) together with the quantum of the entitlement to no-fault compensation payments arising in NSW under the Workers Compensation (Dust Diseases) Act 1942 (NSW). In both cases, His Honour’s findings as to the appropriately weekly ‘lost years’ expense together with the value of the 1942 Act benefits exceeded the quantum of the anticipated receipt of the age pension.

As the quantum of the deductions arising from the ‘lost years deduction’ and the
1942 Act payments will in almost all circumstances result in a deduction exceeding the value of the quantum of the lost age pension, it is expected that very few cases would result in an entitlement to damages, even if the age pension is ultimately held to be of a character giving rise to an entitlement to damages.

Background

Both plaintiffs are men aged in their late 70s who developed mesothelioma as a consequence of inhalation of asbestos dust and fibre emanating from Amaca’s asbestos-containing building products. At the time of development of the disease, each plaintiff was retired and in receipt of the Commonwealth age pension. Mesothelioma is inevitably fatal and it was uncontroversial that mesothelioma would shorten the life expectancy of each plaintiff such that, but for the mesothelioma, each plaintiff could have reasonably expected to continue to receive the age pension subsequent to the date on which death would occur as a consequence of mesothelioma.

The question for consideration was whether the receipt of the age pension was of a character to give rise to an entitlement to damages in the period postdating death.

Judgement

It is uncontroversial that the plaintiff is potentially entitled to recover damages for losses sustained as a consequence of impending death for a period subsequent to that death. The plaintiff relied upon the judgment of Justice Windeyer in Skelton v Collins being that:

… the next rule that, as I see the matter, flows from the principle of compensation is that anything having a money value which the plaintiff has lost should be made good in money.

The plaintiff asserted that the loss of age pension was effectively a loss of money and should be compensated in money, that loss having the requisite character of ‘economic loss’. Further, the plaintiff submitted that the loss of the age pension was analogous to the loss of a ‘state pension’ and referred to a number of authorities where such pensions had been assessed as having the requisite character to give rise to an entitlement to damages.

Judge Russell did not accept that approach. Rather, he accepted the submissions made by Amaca as to the distinction to be drawn under Australian law between ‘economic loss’ – being the actual loss of some monetary sum (which may or may not be compensable depending on the character of the loss) – and ‘loss of economic capacity’ being the foundation of compensable entitlement under Australian law.

Judge Russell accepted that the state pension authorities considered a monetary loss of different character than an age pension. That is, the character of the entitlement to a state pension is a loss of economic capacity because the entitlement to the state pension arises as a consequence of the recipient having either paid money periodically into a fund giving rise to a direct entitlement regardless of means at the time the entitlement arises, or otherwise have ‘earned’ the entitlement. Then again, the entitlement to an age pension may arise merely because of a recipient reaching a certain age and satisfying a means test.

In those circumstances, Judge Russell found that the age pension did not carry with it the characterisation of a loss of economic capacity and thus held that it did not sound in damages.

Conclusion

It will be interesting to follow the course of these decisions. Latz is the subject of an appeal in South Australia. In the event that the South Australian appeal is unsuccessful such that the decision of Judge Gilchrist allowing damages for loss of an age pension after death is sustained, there is potential for a difference in judicial approach between NSW and South Australia giving rise to an appeal to the High Court of Australia.

Authored by Stephen Taylor-Jones, Partner, Sydney


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