PRITCHARD v NEW SOUTH WALES INSURANCE MINISTERIAL CORPORATION SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY, CLARKE and MEAGHER JJA 4 July 1995, 4 July 1995 [1995] NSWCA 379 COMPENSATION TO RELATIVES ACT — APPEAL — AMOUNT AWARDED CHALLENGED AS GROSSLY INADEQUATE — NO ERROR SHOWN AS MASTER PROCEEDED ON INADEQUATE EVIDENCE Mahoney JA I will ask Mr Justice Clarke to deliver the first judgment. Clarke JA This is an appeal arising from a judgment of Master Malpass given on 14 December 1994 in respect of a claim brought by a widower and two children under the Compensation to Relatives Act. The Master allowed a total figure of $92,820 plus funeral expenses. The primary sum provided was $30,000 as to past loss of benefits and $45,000 for future loss of benefits. The difference between the total of those figures and the amount awarded represents interest on the past loss. The appellant has raised in all eight grounds of appeal to which I will return but claims, in essence, that the amount awarded is grossly inadequate. I should add that the Master apportioned the loss as to $28,000 equally to the children but there has been no ground of appeal raised suggesting error in the approach to apportionment. The plaintiff was born in Canada in 1945 and he was married to the deceased Helen Marchant, who was born in 1946, on 29 December 1973. They were married in Brisbane but apparently left Australia for some time before returning again in 1976. The two children Camille and Charles were born on 2 December 1977 and 30 September 1981 respectively. The plaintiff was a graduate of business technology from Ryerson Institute of Technology, Toronto, and up to the time of the death of the deceased had been employed in various positions including self employment as a computer sales manager. In 1978 he established his own business with Grosvenor computers and Grosvenor Leasing. In 1983 he terminated his arrangement with the computer company and took the leasing company on a separate path. The deceased was a graduate and social worker. When she returned to Australia in 1976 she was employed as a social worker for the Inter Church Trade and Industry Mission then worked part-time for the Australian Lebanese Association. In March 1979 she commenced work as a lecturer in social work at Sydney University. In August 1985 the plaintiff and the deceased went with their family to live in Boston in the United States. There the deceased attended Radcliffe College as a visiting scholar. Upon her return to Australia in June 1986 she was again employed as a lecturer in Sydney University. At the time she was working on a thesis as a candidate for a doctorate of philosophy at the University of New South Wales and at the time of her death had nearly completed the thesis. Indeed the plaintiff completed the bibliography for the thesis with the permission of the 2 UNREPORTED JUDGMENTS University of New South Wales and as a result the degree of Doctor of Philosophy was awarded posthumously to the deceased on 2 May 1989. On their return to Sydney, the plaintiff had started a business with another person in the field of computers and he was working according to a business plan he had worked out. Although there was no clear evidence as to his earnings prior to the death of the deceased, it seems that they were relatively modest but that he had an expectation of building up the business and making a significant amount of money, something of the order of $50,000 to $75,000 before tax, each year. However, there is no evidence to suggest that he reached that figure and he claimed in a separate personal injuries action that he was forced to give up the business as a result of injuries he received in the accident that occurred on 11 January 1987 and from which the deceased died five days later on 16 January. From the time of her death until 28 April 1990 the plaintiff brought up his children alone although he did have some help from a paid helper. On 28 April he married Louise Neil who was employed as a legal secretary three days per week earning about $20,000 per year prior to tax. Louise Neil had two children about the same age as the appellant's two children. There was no evidence as to what the deceased had received by way of salary in the six months after she returned to Australia. There was, however, some documentary evidence relating to projected earnings which would indicate that at the date of her death she was earning $23,792 nett (I mean by that after tax) per year. That evidence was supplemented by oral evidence given by the appellant to the effect that they all put their earnings into a joint bank account and that expenses were paid from that. There was no evidence of the state of the bank account except that as at January 1987 it had a very small credit balance. There was no evidence of the drawings from that bank account in the preceding six months. There was no evidence from which one could calculate what was drawn from the joint bank account by the deceased for her own purposes. There was no evidence what moneys were paid into that bank account by the appellant. The case which the appellant sought to make was that a substantial portion of that sum of $23,792 was earned by the deceased but was for the benefit of the appellant and the two children. Obviously enough some of the moneys may have gone into the payment of expenses which were of benefit to all members of the family and to that extent related to the benefit of the appellant and two children. There was also a complicating factor and that was that the deceased appears to have been a beneficiary under a trust set up by her father for the benefit of his children and grandchildren. We were told that the trust was a discretionary trust and that both the deceased and her children were beneficiaries under it. There was not, however, any clear evidence as to the nature of the trust, nor whom the actual beneficiaries were, for the simple reason that the trust deed was never tendered in evidence. What the Court did know was that the deceased and her family received $120,000 per year from that trust and that those payments continued from the trust from the time of her death until the hearing of the case. It was said, and I see no reason not to accept the statement, that the receipt of the monies by the appellant and the children was organised in the most beneficial way to minimise tax liabilities. That may be so but the relevance of that fact to the problem that the Master had to face is not immediately clear to me. What was of some importance was that the sum of $120,000 had been received each year prior to and following the death of the deceased. WARITCHARD v NEW SOUTH WALES INSURANCE MINISTERIAL CORPORATION (Clarké JA) I have indicated that in 1990 the appellant remarried and that his new wife works and earns the modest sum I have mentioned. She also owns a house which she rents out and currently the rent is paid into a bank account and used in settlement of taxation liabilities and the reduction of a mortgage on the property. I have not, in what I have said so far, sought to be comprehensive but I have, I think, covered most of the areas relevant to the assessment of damages which were covered by the evidence. The learned Master in a careful and comprehensive judgment turned to assess the monetary value of the claim that was made and when he did so he said this: "T now return to the unenviable task of endeavouring to quantify the compensation to be allowed under the Act. I have made frequent mention of evidentiary deficiency. This unhelpful situation may be a consequence of tactical decisions made in the conduct of the proceedings. The state of the evidence (or put more accurately, the lack of it) leaves the Court with a nearly impossible task. It is a task which forces the Court into the area of speculation and conjecture and inevitably involves an assessment that must be somewhat arbitrary. It cannot be performed with any mathematical precision." He continued: "T should mention that in an endeavour to obtain further assistance the proceedings were listed on 2 June 1994 and these difficulties were brought to the attention of the parties. Directions were given for the making of further submissions and written submissions were subsequently made by counsel. Unfortunately these submissions did not facilitate the task of quantification." With those introductory observations the Master proceeded to carry out the exercise which he indicated was necessary in the circumstances. The appellant says that there are a number of errors and they are reflected in the eight grounds of appeal. The eighth ground which asserted the Master erred in taking into account irrelevant considerations relating to the appellant's personal injuries action was the subject of but little comment during the oral argument. It was said that the learned Master had spent time referring in his judgment to the issues in that action and the appellant could not understand why that had been done unless those matters to which the Master referred were in some unexplained way taken into account in the final assessment. I do not think it is necessary to say any more about this ground than that there is no reason to believe that what the Master said about the personal injuries actions were given particular weight nor that his statements were irrelevant to an understanding of the position of the appellant himself. Nor is there any reason to believe that the Master wrongly relied on any of those matters in his final assessment. The oral submissions commenced with a reference to ground 7 which raised a familiar ground of appeal in this Court and that is that the judgment disclosed inadequate reasons. Once more the Court has referred to the decision in Soulemezis v Dudley Holdings Pty Ltd (1987) 10 NSWLR 247 and other decisions which stand as authority for the well established principle that courts such as the Supreme Court are bound adequately to disclose the reasoning process which leads them to an ultimate conclusion in the making of an order. I would be disposed to deal with this ground very shortly for, in my opinion, the Master has explained fully and adequately the reasoning process which led him to adopt the fairly arbitrary figures as his final award. In his opinion there was simply inadequate evidence to take a more detailed approach to the case. The evidence, such as it was, left him in a situation in which he had to look at the whole picture, broadly taking account, as he was required to by a well known line 4 UNREPORTED JUDGMENTS of authority, of the results of the deceased's death thereby taking into account the pluses and minuses. I am completely unpersuaded that the Master fell into legal error for failing to provide adequate reasons. I turn then to ground 1 which was that the Master erred in finding that the quantum of moneys deposited by the deceased in a joint bank account held by her and the appellant was unknown. The ground refers to a passage in the judgment in which the Master pointed out that, save to the extent that guidance could be obtained from an exhibit in dealing with the earnings of a lecturer at the university, there was no evidence of either the moneys paid to the bank account or the moneys paid out and the nature of the expenses for which those moneys were paid out. The ground of appeal in terms seems to me to relate to a statement by the Master which was factually correct but its thrust was, I think, somewhat different. That was the evidentiary material constituted by the probable earnings of the deceased and the appellant's statement that the moneys were paid to the joint account for the use by the family constituted sufficient material to enable him to infer the probable value to the appellant and their children of the deceased's contribution. I reiterate that the totality of the evidence was no more than that to which I have referred and there was a total lack of material as to the amounts drawn out by the deceased for her own benefit notwithstanding the statement that she was not a high liver. In other circumstances, such as where the deceased's earnings constituted the only earnings of the family, an inference of the nature described by counsel for the appellant might arise but this was a very different case because the major source of funds for the family were not the deceased's earnings, or the appellant's earnings, but the trust to which I earlier referred. Having regard to the existence of that trust and the large sums of money which came to the family fund, I am quite unable to draw the inference which counsel suggests that the Court should have drawn and I concur with the Master in his approach that there was a factual deficiency in this area of the case. I did not think there was any error in pointing that factual deficiency out in the judgment nor do I think the Master was wrong to conclude that the deficiency caused significant problems in the final assessment. Ground 2 stated that the Master erred in finding that the evidence failed to give any real assistance to enable an estimate to be made of the deceased's personal and living expenses. The ground is in a sense tied up with the one I have just dealt with and I am unable to see that the error which is asserted exists. In my opinion there was the deficiency to which the Master pointed and the ground must fail. The next ground asserted that the Master erred in finding that the loss of domestic services resulting from the death of the deceased was of a limited nature and ceased with the remarriage of the appellant. Again the Master pointed out in his judgment that the appellant had not led evidence of the services provided by the deceased and he went on to say as follows: "She had become a career academic and she intended to pursue that career into the future. During a period preceding her death, it seems she may have been the principal bread winner for the family. Her concentration upon her career may have adversely affected her capacity to provide domestic services. The plaintiff probably had more time to provide to the performance of the domestic services than the deceased". The respondent at the trial contended that any loss of services were effectively replaced upon the appellant's remarriage. One can understand the force of that submission but the Master went on to say even here there was no evidence of the services provided by the appellant's second wife. Notwithstanding, the Master WARITCHARD v NEW SOUTH WALES INSURANCE MINISTERIAL CORPORATION (Clark6 JA) thought that the deceased may have made contribution to the services of the household but that the loss which had been suffered as a result of her death had not been established with the necessary specificity to enable him to assess the loss with mathematical precision. He thought, and I agree with him, that the best thing he could do was to take that loss into account in the ultimate balancing of the pluses and minuses. I would add that I see no reason why it should be thought wrong that any loss of services ceased upon the appellant's remarriage in the circumstances of the evidence in this case. The fourth ground was that the Master erred in finding that the defendant had established the continuing payments made under the trust brought pecuniary benefits to the appellant and his children which resulted from the death of the deceased and which could be offset. What I understand the Master was saying was that the payments continued from the date of the deceased's death and that they had not been diminished at all despite the fact, as the Court had been informed, the trust was for the benefit of the children and grandchildren of the deceased's father. He held that there may have been a pecuniary benefit to the appellant and his children resulting from her death in the sense that the sum of $120,000 continued to be paid and was then divisible amongst three and not four people. This, as a matter of fact, seems to be accurate and I see no error in his statement. Nor is there any error in the statement that at the time of death the survivors would have had a reasonable expectation of that increased share of the trust moneys. That that expectation was reasonable has been demonstrated by the events which have occurred since the death of the deceased. Although the ground of appeal is phrased in the way I have indicated, it seemed again to me that the appellant's argument was focusing on a different aspect and that was that there should be no offset from the loss suffered as a result of her death because of the continuing payments from the trust bearing in mind, particularly, that those payments were at the discretion, so it was said, of the trustee and may not continue in the future. In addition it was said there was no legal obligation to pay any moneys to the appellant as the father of the two of the beneficiaries. That latter matter was not a matter established by the evidence nor in the absence of the trust deed can the Court be confident as to the true position with the trust. What, however, should be said about this challenge to the Master's judgment is that it cannot be gainsaid that the payments from the trust were a factor which had to be taken into account in the assessment, both in assessing the pluses and minuses, and because in the extremely sparse state of the evidence they clouded the picture as to the extent of the benefits provided by the deceased, as a consequence of her earnings at the university, to the family. In all the circumstances I do not accept that the Master made any error in this regard. Grounds 5 and 6 really reiterated the submission that was made a number of times, that the extent of any offsetting benefits was a matter for the respondent to establish and that to the extent the evidence was deficient in relation to those matters, that deficiency could not properly be laid at the feet of the appellant. In a sense the grounds raised the fundamental point in the appeal that where it was proved that the deceased paid into a bank account a salary of more than $23,000 a year and where those moneys were drawn out regularly for use by the family, the other matters to which the Master referred, particularly the evidence relating to the trust payments, was not available to discount the extent of the deceased's contributions to such an extent so as to permit the Master to arrive at a sum as low as $30,000 for the period prior to the trial and $45,000 thereafter. 6 UNREPORTED JUDGMENTS This aspect of the appeal has caused me some concern because if a substantial portion of the deceased's annual salary was received for the benefit of the family rather than for herself alone, it would appear that the sums awarded by the Master were low. However, I have read the judgment more than once in order to understand the reasoning process which led the Master to his conclusions, and having regard to the state in which the appellant left the evidence at the end of the case, and even after the Master had brought the parties back and apprised them of the deficiency, I am bound to accept that the Master was required to proceed in the arbitrary manner in which he did and in those circumstances I am not in a position to say that the figures that he awarded represented an erroneous assessment of the loss of proven benefits. In all these circumstances I would be disposed to order that the appeal be dismissed with costs. Mahoney JA I agree with the judgment of Mr Justice Clarke but in deference to Mr Grey's earnest submissions I shall add some short observations of my own. It was necessary for the plaintiff and those he represented to establish, as I shall call the matter perhaps inaccurately, the dependency factors required by the legislation. The Master was of the opinion that those dependency factors were established only to the extent to which reference has been made in his judgment. It is that which I think it is the crux of the Master's decision. (I may say parenthetically that the principles of law involved have not been an issue in this case and it is not necessary to canvass them. Therefore, I am able to put the matter of the law in general terms and I need not stand upon the precise formulation of the principles.) The financial position of the parties as at the date of the deceased's death in February 1987 was that they had income of financial resources actually or potentially from four main sources. The deceased's income, then being net about $23,792 per annum, was being paid into the family bank account and was available for use by them. The plaintiff, her husband himself had the capacity to earn income although the income he was earning at the time was little or nothing. The parties had the capacity to derive income from a business which the husband was then in the course of developing. And the parties were in receipt of income from a trust to which Mr Justice Clarke has referred in the order of $10,000 per month. The result was that from the deceased's income about $500 per week more or less was available and from the trust an amount of about $2500 a week was in general terms available to them, in addition to such other moneys as may have been available for their use. It is necessary from this to form a judgment as to what in the future the position of the plaintiff parties would have been insofar as the benefits from the deceased were concerned. There is little doubt that for the future, had she not died, the amount of her income would, in the relevant sense, have remained available and that income, as the evidence has shown, would have arisen by 1993/1994 to something in the order of $30,344 per annum. But the real question which the Master had to determine was what were the advantages that the plaintiff and the children would have derived from that income. The evidence was that the plaintiff was in the course of developing a business from which the projection was, as Mr Justice Clarke has said, that he would have been deriving an income significantly larger than that derived by the deceased. The income from the business, in addition to his income, may or may not have been substantial. The evidence was vague as to these matters. However, it was to be expected that the income from the trust would continue. The fact was that as UARITCHARD v NEW SOUTH WALES INSURANCE MINISTERIAL CORPORATION (Meagher JA) at the date of the Master's judgment in December 1994, some seven and a half years after the death, the trust was still paying to the plaintiff and the children the amount of $10,000 a month. It was fair to expect that that amount therefore would have continued over the relevant period. What then was the benefit which the plaintiff and the children would have derived from the deceased's income? They would have had, on any reasonable projection, substantial other income from which to support themselves. It was not suggested that their lifestyle was expensive. I would remain in considerable doubt as to the extent to which they could and would have or have had reason to call upon the income of the deceased. There was other income from which it was to be expected that the plaintiff in particular would support himself and other income from which the children could and would have been supported. Therefore the extent to which they would have actually used the deceased's income was, to say the least, problematical or speculative. However, the income was there to be used if all else failed and they desired to use it. More accurately, it was available to be used notwithstanding that the other income was available if the parties had chosen to use it. What in the end the Master had to quantify was the benefit derived from it. It is not known whether the husband would in the future have actually used the deceased's income at all and it may be expected the children would have had available to them the trust income to support them. The problem essentially was for the Master to quantify and on a rehearing for this Court to quantify what was the benefit of that kind. The Master referred, as Mr Justice Clarke has emphasised, to the difficulties inherent in the state of the evidence and I would agree with the Master's view in that regard. In the end I would not differ from his assessment of the benefit which, in accordance with the terms of the legislation, has been shown to have been lost by the parties by reason of the death of the deceased. I would agree with the order that has been proposed. Meagher JA I agree with Mr Justice Clarke. Mahoney JA: The order of the Court is, therefore, the appeal is dismissed with costs. COUNSEL: Appellant: LT GREY and JA BURNET Respondent: JD HISLOP QC and GA LAUGHTON SOLICITORS: Appellant: McCLELLANDS Respondent! GM MEADOWS, NSW INSURANCE MINISTERIAL CORPORATION