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Economic loss

QBE Insurance v Peter Cowan [2010] NSWSC 933. Hislop J.

10 The settled principle governing the assessment of compensatory damages, whether in actions of tort or contract, is that the injured party should receive compensation in a sum which, so far as money can do, will put that party in the same position as he or she would have been in had the contract been performed or the tort had not been committed: Haines v Bendall [1991] HCA 15; (1991) 172 CLR 60 at 63.

11 A plaintiff in an action in negligence is not entitled to recover damages for loss of earning capacity unless he or she establishes

(a) his or her earning capacity has in fact been diminished by reason of the negligence-caused injury;

(b) “the diminution of...earning capacity is, or may be, productive of financial loss”: Medlin v State Government Insurance Commission [1995] HCA 5; (1995) 182 CLR 1.


28 In State of New South Wales v Moss [2000] NSWCA 133; (2000) 54 NSWLR 536 Heydon JA (with whom the other members of the court agreed) in reviewing the authorities said:

[68] ‘the task of assessing damages in personal injuries cases should be kept as simple as possible’...

[69] ...’[W]here a plaintiff has suffered a significantly disabling injury which obviously affects the range and nature of the work he can therefore perform, a tribunal of fact can, without specific evidence as to what other persons with that kind of disability can earn, make a judgment

The field is “an ‘uncertain’ one” and “very much ‘at large’” [70]:

“...’it is inevitable that individual opinions as to what amount may be said to constitute full compensation in any particular case will vary. Indeed within the bounds of reasonableness they may vary greatly’.”


44 The assessor, having regard to the many imponderables, assessed future loss by way of a buffer. This is permissible: Penrith City Council v Parks [2004] NSWCA 201 at [5] (a decision in respect of the Civil Liability Act 2003, s 13, a provision in the same terms as s 126 of the MAC Act).

45 The use of the buffer renders compliance with s 126(2) unnecessaryParks at [5]. The assessor stated the assumptions upon which his assessment was based. He did not in terms specify the percentage adjustment for the nominated adjustment factors of residual earning capacity and the impact of the pre-existing condition in calculating future loss but this is readily calculable from the assessment.

Miller v Galderisi [2009] NSWCA 353. The Court (Allsop P, Basten & Macfarlan JJA)

22 In Malec v JC Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638 at 643, Deane, Gaudron and McHugh JJ accepted that future events “may be predicted and the hypothetical may be conjectured” and required that the Court take its assessment of chance into account unless a particular chance was “so low as to be regarded as speculative – say less than 1 per cent”.

However, in most cases prediction and conjecture do not in practical terms allow for such precision. As explained by Brennan and Dawson JJ at 640, damages founded on “hypothetical evaluations defy precise calculation”. In most cases, the exercise is better described as a form of speculation guided by knowledge of the plaintiff’s past and expectations, derived from general experience, as to the future.

23 In Malec, the question was whether the damages caused by the accident would have occurred in any event. In the present case, the question is whether the damage which has occurred will result in a compensable loss at some future time, taking into account the contingencies referred to above. The possibility of such a loss is perhaps not entirely fanciful, but the chance of it occurring is slight.

24 In awarding damages for loss of earning capacity, allowance is routinely made for contingencies or vicissitudes which may, absent the tortious injury, have caused loss in any event.

Conventionally, a figure of 15% is allowed for such contingencies: see State of New South Wales v Moss [2000] NSWCA 133; (2000) 54 NSWLR 536 at [31]- [33] (Mason P) and the authorities referred to, including Wynn v NSW Insurance Ministerial Corporation [1995] HCA 53; (1995) 184 CLR 485 at 497-498 (Dawson, Toohey, Gaudron and Gummow JJ).

Arnott v Choy [2010] NSWCA 259. McColl JA, Basten JA agreeing. 6.10.10.

Having noted, in [51]: “Damages for both past loss and future economic loss are allowed to an injured plaintiff ‘because the diminution of his earning capacity is or may be productive of financial loss’: Graham v Baker[1961] HCA 48; (1961) 106 CLR 340 (at 347) per Dixon CJ, Kitto and Taylor JJ”, McColl JA said.


"The respondent retains a partial earning capacity, albeit that that capacity will be exercised in a supported environment. Whether that environment be one where his employment is supervised in work found on the open labour market, or in a supported environment, the best evidence available of what his earnings might be in such an environment is the figure advanced in the joint Ravagnani Report,” McColl JA said, such being $500 weekly gross, and “ … calculated on the basis of a 30% discount for vicissitudes to take into account the uncertainties of supported employment”: in [137], with probable earnings if uninjured $620 weekly.

Then, [149]: “In my view there should be no deduction from the past economic loss calculations to reflect the residual earning capacity I have concluded the respondent retains.

"It is apparent from head2work’s reports that during the period to the end of 2006 the respondent was undergoing rehabilitation with a view to returning to full-time employment.

"This meant undergoing work trials, seeking to regain his driver’s licence and, generally, accepting head2work’s assistance in securing employment. Those steps were necessary because of the disabilities he suffered in consequence of the accident.

"While he had, in my view, some earning capacity during this period, he failed to exploit that capacity as part of his reasonable attempts to return to employment in the open labour market.

"Further, as I explain below, the appellant has not made good his challenge to the primary judge’s finding on mitigation – in short it was not unreasonable for the respondent not to seek employment during the two years preceding the trial.”

Past superannuation loss was allowed at 11%.

Further,  Burden of mitigation 48 WCMS 1;

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