New South Wales Court of Appeal CITATION: BI (CONTRACTING) PTY LTD v Eileen Sylvia STRIKWERDA & ANOR [2005] NSWCA 288 HEARING DATE(S): 10 June 2005 JUDGMENT DATE: 9 September 2005 JUDGMENT OF: Mason P at 1; Santow JA at 44; Bell J at 45 DECISION: Appeal upheld. CATCHWORDS: NEGLIGENCE - damages - death as a result of a dust-related condition - survival of cause of action - s3(2) Survival of Causes of Action Act 1940 (SA) - dependant's action per Civil Liability Act 1936 (SA) - damages offset because of pecuniary benefits passing to the plaintiff as beneficiary under an intestacy - estate swollen with the proceeds of the deceased's action - uncertainty as to the size of the distributable estate - onus of establishing the estate's capacity to pay the plaintiff - evidentiary stand-off at trial - location of evidentiary onus - computation of damages issue - whether mitigation of damages issue - persuasive burden and evidentiary burden - proof of financial loss required proof of share as a beneficiary of the deceased's estate. (ND) Dust Diseases Tribunal Act 1989, s32 Survival of Causes of Action Act 1940 (SA) Wrongs Act 1936 (SA) LEGISLATION CITED: Civil Liability Act 1936 (SA) Administration and Probate Act 1919 (SA) Luntz, Assessment of Damages for Personal Injury and Death 4th ed, [9.5.31] McCormick on Evidence 5th ed §338 BI (Contracting) Pty Ltd v PHR Pty Ltd [2005] NSWCA 304 Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970 Cattanach v Melchior (2003) 215 CLR 1 Davies v Powell Duffryn Associated Colleries Ltd [1942] AC 601 De Sales v Ingrilli (2002) 212 CLR 338 DP v Commonwealth Central Authority (2001) 206 CLR 401 CASES CITED: Nunan v Gerblich (1974) 10 SASR 39 at 53 Purkess v Crittenden (1965) 114 CLR 164 Public Trustee v Zoanetti (1945) 70 CLR 266 Russo v Aiello (2003) 215 CLR 643 at 647[11]. Strikwerda v B I (Contracting) Pty Ltd & Ors [2004] NSWDDT 50 Watts v Rake (1960) 108 CLR 158 BI (CONTRACTING) PTY LTD PARTIES: Eileen Sylvia STRIKWERDA & Anor FILE NUMBER(S): CA 41178/04 Appellant: J J E Fernon SC COUNSEL: First Respondent: A J Leslie QC Second Respondent: B Audsley (Sol) (Submitting) Appellant: Makinson & D'Apice SOLICITORS: First Respondent: Turner Freeman Second Respondent: Thompson Cooper LOWER COURT JURISDICTION: Dust Diseases Tribunal of NSW LOWER COURT FILE NUMBER(S): DDT 118/04 LOWER COURT JUDICIAL OFFICER: O'Meally P IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41178/04 DDT 118/2004 MASON P SANTOW JA BELL J Friday 9 September 2005 B I (CONTRACTING) PTY LIMITED v Eileen Sylvia STRIKWERDA & Anor JUDGMENT 1 MASON P: This appeal arises out of proceedings in the Dust Diseases Tribunal. It is limited as to points of law (Dust Diseases Tribunal Act 1989, s32). 2 Hans Jurgen Strikwerda (the deceased) contracted mesothelioma. He was a resident of South Australia. On 9 January 2004 he commenced proceedings in the Dust Diseases Tribunal of New South Wales against two defendants, claiming damages for negligence. The defendants were the appellant and second respondent in this Court. 3 The deceased died on 5 April 2004 before the Tribunal proceedings were completed. The first respondent, who is his widow, applied to be substituted as plaintiff on the basis that she was the executrix and sole beneficiary of the deceased's last will. An affidavit indicated her intention not to seek probate. 4 On 31 May 2004 the proceedings were amended by substitution of the widow as plaintiff and by consequential amendments to the pleadings. These proceedings (DDT 7 of 2004) are hereafter referred to as "the estate action". Their continuance, notwithstanding the death of the deceased, is authorised by the Survival of Causes of Action Act 1940 (SA). Section 3(2) of that Act provides that if a person commences an action for damages in respect of a dust-related condition and dies as a result of that condition before the action is finally determined, damages for pain and suffering, bodily and mental harm, and curtailment of expectation of life, are recoverable "for the benefit of the estate of the person". 5 On 16 April 2004 the deceased's widow commenced separate proceedings in the Tribunal against the same defendants claiming various heads of damages as the deceased's dependant. Her entitlement arose under the Wrongs Act 1936 (SA), subsequently renamed the Civil Liability Act 1936 (SA). These proceedings (DDT 118 of 2004) are hereafter referred to as "the dependant's action". 6 There were cross-claims between the defendants in each action. 7 By 30 September 2004 the plaintiff's claims were settled, subject to one matter. 8 In the estate action, there was to be judgment for $273,950, a sum that included $180,000 for general damages and $20,000 for loss of expectation of life. 9 The trial judge (O'Meally P) was informed that, in the dependant's action, $186,050 was an agreed sum that included $139,277 on account of the widow's loss of benefit from her husband's earnings (CB 17). The Tribunal was also told that this agreement was subject to a submission that judgment to be entered in favour of the plaintiff in the dependant's action should be reduced, taking into account the benefit she would receive from the estate of her late husband. 10 Counsel were not in a position to argue the offset issue on 30 September 2004. Accordingly, it was agreed that there should be a verdict in the dependant's action for the plaintiff jointly and severally against each defendant in the sum of $186,050.00, execution being stayed conditionally upon the first defendant (the present appellant) moving the Tribunal for reconsideration within 14 days (cf Dust Diseases Tribunal Act 1989, s13(6)). 11 Costs in each action were awarded to the plaintiff. 12 On 1 October 2004 O'Meally P apportioned liability as between the two defendants. He found the appellant to be responsible to bear 80% of the liability to satisfy the widow's damages in the two actions. Verdicts were entered in the various cross-claims accordingly (Red 82-3). These orders are the subject of a separate appeal (BI (Contracting) Pty Ltd v PHR Pty Ltd [2005] NSWCA 304). 13 Pursuant to the leave reserved, the appellant moved the Tribunal for orders in the dependant's action including the following: 1. That the Tribunal reconsider the matter of whether the plaintiff's damages in these proceedings should be reduced by the amount which the plaintiff will be entitled to receive from the award of general damages and damages for loss of expectation of life in the proceedings brought by the estate of the plaintiff's late husband, Hans Jurgen Strikwerda (DDT No 7 of 2004). 2. That the Tribunal amends the decision that judgment be entered against the first defendant, in these proceedings, in the sum of $186,050 and in lieu thereof the sum of $81,050 be entered. 14 The difference between $186,050 and $81,050 is $105,000. I shall explain below why this was the mathematically agreed sum for reducing the widow's verdict in the dependant's action, subject to determining the estate's capacity to pay that amount to the widow out of the proceeds of the estate action verdict. 15 The motion for reconsideration was heard and determined on 30 November 2004. The transcript reveals that the judge and all parties were aware of the uncertainty as to the size of the distributable estate, with reference to the capacity of the estate to pay the widow the mathematically agreed sum in full. 16 A forensic stand-off ensued, with counsel for the appellant and the first respondent each adopting the position that the other party bore the onus of establishing facts relevant to the estate's capacity to pay the widow. Senior counsel for the first defendant, the present appellant, submitted to the primary judge that evidence as to the solvency of the estate was within the domain of the widow and executrix of the deceased (CB 51). 17 At one stage, the judge expressed his dilemma when he told the first defendant's counsel (CB 64): You have proved a particular amount, but there are lots of things I do not know. The estate might have been worth more than the judgment, it may have been worth less. But surely it is relevant for me to know these things. 18 There were further submissions on both sides, but the judge was left in the dark as to the true facts. Each party stood their ground, adopting categorically opposed stances as to who bore the onus in the resolution of the issue (see CB 66-7). 19 O'Meally P proceeded to give reasons ex tempore (Strikwerda v B I (Contracting) Pty Ltd & Ors [2004] NSWDDT 50). His Honour set out the underlying facts, including the mathematically agreed proposition that if the estate comprised only the judgment sum (as awarded in the estate action) then the plaintiff would be entitled to receive $105,000 (J6). 20 His Honour referred to Davies v Powell Duffryn Associated Colleries Ltd [1942] AC 601 and Public Trustee v Zoanetti (1945) 70 CLR 266. He cited various passages including the following from the judgment of Dixon J in Zoanetti (at 281): In jurisdictions where the survival of causes of action for civil wrongs has been provided for by statute … the damages recoverable by the legal personal representative of the deceased go to swell the estate in which the widow or other relative may share, whether under his will or on intestacy. It will, therefore, operate to increase the interest which, in the absence of any legislative direction to the contrary, must be taken into account by way of reduction of the pecuniary loss otherwise resulting to the widow of the deceased or his relative. 21 Zoanetti, like the present case, involved the Wrongs Act 1936 (SA). 22 O'Meally P correctly concluded that in assessing damages under the Wrongs Act it was proper to take into account pecuniary benefits passing to a plaintiff (J23). His Honour then addressed the onus question in the following terms: 23. It is submitted by Mr Letcher that there is an onus upon BI, as upon any defendant seeking a "set off", to adduce evidence of the amounts and the nature of the benefits received from the estate. Moreover, he submits that had the deceased survived and recovered damages in his lifetime and continued to live for a period of years the present plaintiff would still have gained the benefit of general damages in whole or substantial part. That may or may not have been the case but more likely than not, bearing in mind the nature of their relationship, probably would have occurred. 24. It is put by Mr Letcher that the plaintiff's receipt of moneys by way of intestacy was partial, but accelerated by her husband's early death. There are factors, he submits, which would otherwise have led to Mr Strikwerda continuing to earn and with the prospect of promotion. He cited McCullagh v Lawrence [1989] 1 Qd R 163 as authority for the proposition that in appropriate cases the set off involves the exercise of a discretion and is not a matter of arithmetical calculation. That case concerned the accelerated benefits, occasioned by the death of a husband, of a property jointly owned by himself and his wife. The Full Court of the Supreme Court of Queensland determined that merely because there was an acceleration of a receipt of jointly owned property did not require that damages be reduced on that account. 25. There is another matter also; that is, there is no evidence before me of the value of the estate of the late Mr Strikwerda. I do not know whether his estate comprised valuable personal property or whether it was insolvent. Mr Fernon of Senior Counsel submits that the onus to establish the value of the estate lies upon the plaintiff. With all respect to him I am unable to agree. It is he who brings this application and were the matter argued before me in September it would have been his client who had the responsibility to demonstrate it was appropriate to adjust the judgment sum by reason of the financial benefits the plaintiff was to receive from the estate. There is no basis nor evidence upon which I can find that the plaintiff's share of the estate of her late husband is $105,000. 26. Accordingly, it is my view that this application should be refused. 23 As McHugh J put it in De Sales v Ingrilli (2002) 212 CLR 338 at 371[91] (citation omitted): … Damages are awarded under Lord Campbell's Act for the chance that the deceased would have provided the relative with financial support or its equivalent in the future. The damages are for the loss of the expectation of financial support by the deceased. Thus, the tribunal of fact in assessing damages must value the chance that each relative had of obtaining a financial benefit from the deceased if that person had not been killed by the defendant. 24 This exercise requires all pecuniary losses and gains resulting from the death to be brought into account (Zoanetti at 271, 279-81). The passage from Dixon J's judgment quoted above addresses a particular aspect of that exercise. This is the offsetting of any benefit passing to the dependant in consequence of being a beneficiary under the will or intestacy of the deceased whose estate is swollen by the award of damages payable under the survival of causes of action legislation. 25 Dixon J was examining the matter from the point of view of assessing damages in a dependant's action under Lord Campbell's Act provisions. The point he was making was that it is no injustice to the dependant to bring to account such benefit as accrues in consequence of being entitled to share in an estate that is swollen by the payment of damages recoverable under the survival of causes of action legislation. Such damages "cannot be regarded as more than an increment of the deceased's estate in which she takes her distributable share" (at 287). 26 The benefit is to be measured by the value of the acceleration of the dependant's receipt of the assets, with possibly some allowance for the certainty of the receipt as opposed to its prior contingency (cf Nunan v Gerblich (1974) 10 SASR 39 at 53). This last matter was properly disregarded in the present case, no doubt due to the duration and stability of the marriage. 27 The deceased was survived by his widow and three sons. He died partly intestate, because the only part of his estate disposed of by will (to his widow) was "my share of all personal furniture and effects". Under the South Australian law of intestacy, where an intestate is survived by a spouse and by issue, the spouse is entitled, if the value of the intestate estate exceeds $10,000, to the sum of $10,000 plus one-half of the balance of the intestate estate (Administration and Probate Act 1919 (SA), s72G(b)(i)(B)). 28 Only $200,000 of the damages awarded to the estate (ie $180,000 general damages plus $20,000 damages for loss of expectation of life) was brought into account as the relevant sum passing to the estate pursuant to the verdict in the estate action. Luntz, Assessment of Damages for Personal Injury and Death 4th ed, [9.5.31] explains the reason for not offsetting against the dependant widow's damages the sums recovered by the estate for loss of earning capacity before death or damages that will have to be expended by the estate (eg on medical and hospital expenses and funeral expenses). These heads of damages recoverable in the estate action will not be inherited by the widow and therefore must not be set off against her damages under Lord Campbell's Act. Therefore, if $200,000 represented the totality of the estate divisible as on intestacy, the widow would receive $10,000 plus half of the balance (ie $95,000), ie $105,000. 29 The widow contended before the Tribunal and in this Court that this mathematically agreed sum was too simplistic a way in which to value the benefit that would pass to her under the estate. The widow was and is completely correct. The estate was unlikely to consist solely of the proceeds of the estate action. On the credit side, there could be additional assets. On the debit side, it would be likely that there would be expenses, including testamentary expenses, not to mention possible claims by creditors of the deceased. 30 Before turning to the nub of the issue raised in this appeal, I wish to dispose of some of the first respondent's arguments that I consider to be without merit. As to the submission that the appellant was required to plead the estate's incapacity to pay the agreed $105,000.00, I reject this because (a) one is dealing with computation of damages and (b) the matter was squarely raised at the hearings in the Tribunal on 30 September and 30 November 2004. As to the submission that the appellant bore the onus because a question of mitigation of damages is involved, this is not the character of the instant dispute. It has nothing to do with avoidable loss. As to the submission that the rule in Browne v Dunn required the widow to be confronted with the issue, the issue was squarely flagged in submissions during the forensic stand-off in the Tribunal. Furthermore, the widow can scarcely complain that she was not cross-examined when she chose to give no evidence on the topic. It was at one stage suggested by the first respondent that the principles stated in Zoanetti were no longer applicable by reason of Cattanach v Melchior (2003) 215 CLR 1. I cannot accept this submission. Cattanach dealt with a different topic. Zoanetti was approved and distinguished by Kirby J in Cattanach at 38[87]-[90]. 31 I also reject the submission that the widow's ultimate onus to prove her damages shifted by virtue of the agreement to deal with the issue in the context of an application pursuant to s13(6). The point was fairly flagged at the time that the Tribunal was informed about the extent to which the parties had reached agreement on the quantification of damages in the two actions. It was up to the appellant to keep the issue alive in the Tribunal by filing a motion for reconsideration within 14 days, but if this happened then there was no agreement to vary the rules of combat. I take this point to be confirmed by the penultimate sentence in par 25 of his Honour's reasons. 32 In my opinion, the true issue to be decided in this appeal concerns the location of the evidentiary onus in the matter at hand. 33 It is undisputed that the widow bore the ultimate onus of establishing the damages she claimed in the dependant's action. Assessment of her damages involved proof of her financial loss stemming from the death, an exercise that required her to bring into account benefits she received under the estate, including her share as a beneficiary of an estate swollen by the proceeds of the verdict in the estate action. 34 I do not accept that there was "no evidence… of the value of the estate" (per O'Meally P at J25). Nor can I accept the correctness in law of the proposition that the onus lay upon the defendant in the Tribunal to establish the value of the estate (J25). These are the errors of law justifying appellate interference. 35 It is artificial to think that location of the evidentiary (as distinct from the persuasive) onus is a problem in every conceivable forensic contest. The evidentiary onus usually marches with the persuasive onus. It is particularly artificial in the present situation where relevant matters were actually established, including the estate's entitlement to receive $273,950 in the estate action $200,000 of which were on account of the deceased's general damages and his loss of expectation of life. The terms of the will, the effect of the intestacy law in South Australia and the widow's stated intention not to seek probate were also before the judge. 36 The present case is far removed from the causation disentanglement scenarios involved in the body of caselaw represented by Watts v Rake (1960) 108 CLR 158 and Purkess v Crittenden (1965) 114 CLR 164, upon which the widow placed some reliance. The guiding principle in those remarkable instances of judicial lawmaking appears to be a generous application of the notion that a wrongdoer should be responsible for unravelling a causation situation that has been complicated by the wrong in question. 37 The present case lies in a different area of discourse, but one in which the basal principle is well established. In a much quoted dictum Lord Mansfield said that: … all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted. Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970. See also DP v Commonwealth Central Authority (2001) 206 CLR 401 at 456[187], Russo v Aiello (2003) 215 CLR 643 at 647[11]. 38 McCormick on Evidence 5th ed §338 points out that the rules which assign proof of certain facts material to the enforceability of a claim to the defendant "owe their development partly to traditional happen-so and partly to considerations of policy". What I would describe as the Blatch v Archer principle is, as McCormick points out, a "consideration [that] should not be overemphasized. Very often one must plead and prove matters as to which his adversary has superior access to the proof". But the point remains that a party bearing the persuasive burden who seeks to cast the evidentiary burden on the other party must point to something out of the ordinary or to compelling precedent. None exists in the present case. 39 There is no reason why in the present case the defendant should have had any knowledge about the balance sheet of the deceased's estate. This information was known to the widow, who chose not to take out probate and to remain silent after the issue had been raised and in circumstances where a very substantial contribution to the estate had been made in the form of the estate action judgment. 40 It will be apparent from the foregoing that I do not accept the respondent's submission that par 25 of O'Meally P's reasons can be construed as a finding of fact and nothing more. At the very least it represents a conclusion resting upon clearly stated legal propositions with which I respectfully disagree. 41 This leads to the final point agitated at the hearing in this Court. Senior counsel for the respondent asked for a new trial were we minded to set aside the order of 30 November 2004. The interests of justice do not support that approach. The point that led to the evidentiary stand-off surfaced squarely during the negotiations that led to the conditional agreement about quantum that was announced on 30 September 2004. The widow was represented by senior counsel when the matter returned to the Tribunal two months later. The judge effectively pleaded for evidence to be led, yet the stance that was taken was taken. To this day there is no evidence suggesting the incapacity of the estate to pay the widow the arithmetically agreed sum. 42 For these reasons, I propose that the appeal be upheld. The plaintiff's verdict in the dependant's action should be reduced to $81,050. That verdict should continue to be accompanied by a general order for costs in the Tribunal. However, in lieu of the costs order relating to the reconsideration motion, those costs should be borne by the plaintiff. The first respondent should pay the appellant's costs of the appeal and have a certificate under the Suitors Fund Act 1951 if qualified. 43 The second respondent adopted a submitting stance in this Court and did not seek costs. 44 SANTOW JA: I agree with Mason P. 45 BELL J: I agree with Mason P. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.