GOVERNMENT INSURANCE OFFICE OF NEW SOUTH WALES V. JOHNSON AND ANOTHER

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GOVERNMENT INSURANCE OFFICE

OF NEW SOUTH WALES

JOHNSON AND ANOTHER

JUDGMEN' MASON A-C.J. (Oral) WILSON J.

DEANE J.

GOVERNMENT INSURANCE OFFICE

OF NEW SOUTH WALES

JOHNSON AND ANOTHER

Both appeals by the Government Insurance Office of New South Wales have been brought pursuant to special leave from orders made by the New South Wales Court of Appeal in actions brought by or on behalf of the estates of a deceased husband and wife under s.2(1) of the Law Reform (Miscellaneous Provisions) Act, 1944 (N.S.W.), as amended. There is a cross-appeal by the representatives of the

husband's estate.

In the action on behalf of the husband's estate the Court of Appeal increased the award of damages made by the primary judge from $312,587 to $764,811 by adding an amount of $62,635 for damages to the date of trial (which had been inadvertently overlooked by the primary judge) and by calculating loss of future earning capacity without applying any discount rate. In this respect the approach adopted does not conform with the discount rate of 3 per cent

approved by this Court subsequently in Todorovic v. Waller

(1981) 56 A.L.J.R. 59, This circumstance provided the chief

ground for the grant of special leave.

However, the appellant challenges the assessment of damages on two additional grounds. The first is that the primary judge and the Court of Appeal erred in calculating the deceased's loss of earning capacity by reference to the profits earned to the date of trial and by reference to estimates of future profits to. be earned by a sawmilling business owned by the deceased's father. The primary judge found that some time before the deceased's death the father had agreed to make over the business to the deceased on the footing that for the first twelve months after 1 January 1978 the deceased would receive $180 per week and 25 per cent of the profits and thereafter he would become sole owner of the business entitled to all its profits. The business, the capital assets of which exceeded $200,000 in value, prospered - so much so that the primary judge found that its annual profits were and would be of the order of $100,000. He made no attempt to dissect this sum with a view to characterizing part of it as a return on the capital assets employed in the business and part as a reflection of