Personal injury damages in NSW and the case for Hunt v Severs style trusts
I’m a 2nd year JD student at the University of Technology Sydney. This semester the major assignment for Remedies, which I am taking, was a research essay on one of a selection of topics.
I wrote my essay on personal injury damages and the question:
Should the law allow: unrestricted recovery for gratuitous assistance; recovery subject to statutory maximums and minimums; or no recovery at all?
The essay was marked favourably so I’ve decided to publish it here.
Hopefully a discussion on the divergence of an area of personal liability law between NSW and England is the type of thing that excites you.
Apologies that it reads like a university essay; a 2000 word limit also means it’s a little superficial, but perhaps I’ll flesh it out more down the track.
Section 15 of the Civil Liability Act (‘the Act’), informed by the common law since Griffiths v Kerkemeyer, represents a broadly acceptable way of assessing and awarding damages for gratuitous care. One caveat on the suitability of the current state of the law is that a more equitable system could be obtained by instituting the English system of holding damages on trust for the plaintiff’s carer(s).
It will firstly be reasoned that judgments since Griffiths have expressed an interest in adopting the English system, and that the change should be effected by statute to avoid imputations of judicial activism in overturning well-established common law precedent. Additionally, it will be contended that these changes to s 15 damages should be accompanied by more thorough statutory instruments directed at reforming the law surrounding insurance as it pertains to damages under this head. Finally, it will be maintained that s 15 of the Act and the policy suggestions made in this paper sufficiently resolve lingering concerns such as those regarding claimants and carers engaged in a domestic relationship, and the resultant inclination to discount damages.
In the interest of giving sufficient attention to these select debates, the focus of this response will be on s 15 of the Act alone, and s 15B will not be considered.
Prior to the commencement of the Act in 2002, Griffiths v Kerkemeyer represented the strongest authority for gratuitous care damages claims in New South Wales. The case established the underlying principles for awarding damages in such cases, and, though the judgment of Mason J, refuted Cunningham v Harrison and other earlier English cases, stating that they suggested:
“that a plaintiff should hold that part of the damages awarded as is referable to services provided gratuitously in trust for the person providing the services,”
and describing such suggestions as ‘unacceptable’. In Grincelis v House, Kirby J reaffirmed that such trusts did not form part of the law in Australia, and Callinan J agreed, deriding the imputation that a moral obligation for a claimant to compensate a gratuitous carer out of damages could suffice.
The direction of the law has varied in other jurisdictions. In England, the suggestion of paying damages for gratuitous services into a trust, as advanced in Cunningham, was established as the prevailing law following Hunt v Severs. This judgment is problematic for reasons explained below, largely due to the divergence of tort law between the New South Wales and English jurisdictions, but it will be shown that the principle can be usefully appropriated for New South Wales law, subject to certain accompanying preconditions.
Australian courts have so far avoided a Hunt v Severs decision, in no small part because of the difficulty in making a judgment that can be reconciled with the ‘entrenched’ principle against such a system. Kirby J in Grincelis v House was especially strident in his view that the High Court’s ‘”novel legal doctrine”’ in Griffiths had led to all manner of ‘”anomalies”, artificiality” and even “absurdities”’, expanding upon an observation in the majority decision in Kars v Kars.
Lord Bridge of Harwich, in delivering the majority opinion in Hunt v Severs, followed earlier Australian authority in Gowling v Mercantile Mutual Insurance Co. Ltd., amongst others, in developing his judgment. Considering the issue of a tortfeasor and the plaintiff’s carer being one and the same person, his Lordship raised the apparent absurdity of “requiring the tortfeasor to pay to the plaintiff, in respect of the services which he himself has rendered, a sum of money which the plaintiff must then repay to him.” The principle enunciated by the majority in Kars v Kars quite clearly presents the means to a solution to this issue in the Australian context.
In Kars v Kars the majority gave an opinion in obiter that the consideration of insurances, including compulsory insurance required by statute, affecting recovery of damages where a tortfeasor was also the caregiver was a matter of legal principle most appropriately varied by statute. Reasoning particular to the facts of the case were given, as was the more general principle set out below:
Such basic principles of tort law should not be overturned simply to solve a suggested problem which is, in any case, not susceptible to a completely satisfactory solution, whichever rule is adopted.
This statement is useful as a general principle for considering modification of well-established doctrine. While the courts, in particular the High Court, play a central role in the development of legal doctrine, said doctrine, once established to the degree of the Griffiths principles, is most appropriately altered by statute. This should inform any approach to incorporate Hunt v Severs trusts into the law of damages for gratuitous care.
It is submitted that the most appropriate method of resolving this legal absurdity is through statutory consideration of the practical reality of the commonplace nature of insurance policies. Denuta Mendelson, in the Journal of Law and Medicine, pertinently notes the “inconsistency between the articulated legal fiction that damages are paid out of the defendant’s pocket, and an unarticulated cognisance of the fact that in great majority of cases damages are paid by the insurer.” In her article, Mendselon emphasised the High Court’s suggestion in Kars v Kars that a review into the interplay of insurance in the modern context and the ongoing ‘development of common law liability in tort’ would be welcomed.
The legal absurdity raised by Lord Bridge is a product of a similar but distinct legal system to that which operates in New South Wales, and must be treated as such. His concerns are valid to the present discussion inasmuch as they would affect the importation of Hunt v Severs trusts into New South Wales law. While Australian courts have not followed Hunt v Severs, at least as far as trusts are concerned, insisting the law is too far developed to accommodate such modification, there exists the possibility of statutory intervention.
The court having expressed a general preference for this means of altering established doctrine, the New South Wales government should provide in the Act a statutory regime for the establishment of Hunt v Severs trusts in the event of damages being awarded under this head. However, as is plain from the remarks of the High Court in Kars v Kars, restated by Mendelson, reform of the type necessary to require damages for gratuitous care be held in trust by the plaintiff for the carer would inherently demand a broad, statutory approach to tort reform.
Broader policy considerations: issues of discounting of damages and pre-Act concerns about legislative reform
Brennan J in Van Gervan raises a pertinent point in the consideration of whether or not unrestricted recovery for gratuitous care should be allowed. While Lord Bridge in Hunt v Severs took issue with tortfeasor and carer being one and the same in cases where damages for gratuitous care were to be paid, Brennan J stated that damages paid where the carer was the plaintiff’s spouse also merited consideration. His Honour’s argument was that incidental, minor personal services provided by a spouse to a plaintiff before an injury ought not to count towards services for which a defendant is liable to pay.
With respect to his honour, it seems as though the majority had adequately dealt with this issue in their reasoning, extracted below:
A defendant is no more entitled to have the pre-accident voluntary contribution of a spouse taken into account than a defendant would be entitled to have the pre-accident work of a paid housekeeper taken into account. If the defendant has created the need for the services, that person is not entitled to have the damages reduced…
Further, s 15(3) through s 15(5) of the Act now proscribe a formulaic assessment of the quantum of damages to be awarded, and it would seem apparent that incidental care provided by a spouse can be reasonably accounted for within these parameters.
There is an inherent risk of unreliability in assessing damages based primarily on testimony provided by the plaintiff and their carer. The 2002 Review of the Law of Negligence — Final Report (‘the Ipp Report’) noted that judges ‘are often required by the state of the evidence to make awards based on little more than… say-so’. This remains a legitimate concern, however the Ipp Report considered it to be subordinate to the broader purpose of what became the Act, as well as the ‘reasonable level of acceptance within the community’ for gratuitous services to attract compensation. This paper considers the approach by the Ipp Report in this regard to be sensible, while noting that any sufficiently broad re-assessment of tort law should consider submissions from medical practitioners in developing a standard of assessment.
The Queensland Law Reform Commission issued a draft report on Griffiths v Kerkemeyer in 1993, which largely avoided recommending ‘legislative interference with Griffiths v Kerkemeyer awards in that state. The report, while offering little by way of substantive reform suggestions, did raise several salient reasons why reform may be inadvisable. Perhaps the most convincing is the report’s 3rd argument against changing the law, which warns of the potential for ‘the making of contracts between relatives and friends and the injured person’, which ‘may not be desirable.’ However, it is submitted that any appropriately targeted legislative instrument would not demand that damages held in trust by the plaintiff for a carer or carers be held for a named person but rather for any suitable facilitator of care that the plaintiff should rely upon. This being the most appropriate way to proceed, the report’s 5th objection that a plaintiff’s sense of security would be adversely affected by reform likewise appears to be satisfied.
The process of enacting tort reform to provide for Hunt v Severs trusts and associated legislative instruments under New South Wales law necessarily involves wider policy considerations. Both the Ipp Report and the Queensland Law Reform Commission’s pre-Act report into Griffiths v Kerkemeyer damages raise concerns that should be considered by any potential change of gratuitous care doctrine. This paper considers these concerns to be relevant to the development of good, target legislation, but also contends that such concerns cannot be satisfied under the limited scope and resources of this paper and should be submitted alongside the policy recommendations contained above for a more substantial review.
It is submitted that s 15 of the Civil Liability Act represents an appropriate statutory regime for damages for gratuitous assistance, but that further statutory intervention to establish Hunt v Severs trusts for such awards is warranted. Such an amendment to the Act would preserve Mason J’s dictum in Griffiths v Kerkemeyer as to ‘true loss’, obviate the difficulty for judges inclined to follow Hunt but constrained by four decades of entrenched judicial principle, and require that damages be applied to the cause necessitating them.
Admittedly there is a difficulty presented in situations where the tortfeasor is also the plaintiff’s carer, if Lord Bridge’s determination in Hunt v Severs is to be followed in its entirety. The High Court has reiterated at several junctures the need for substantive changes to Griffiths principles to be conducted through the legislature. Additionally, per the majority in Kars v Kars, any accompanying broader tort reform necessitated by these changes would also be best effected by the parliament. This being the case, it is submitted that New South Wales could effectively adopt the Hunt v Severs principle relating to trusts, accommodating considerations regarding insurance, and deliver a thorough reform of state tort law via statute.
 Danuta Mendelson, ‘Jurisprudential Legerdemain: Damages for Gratuitous Services and Attendant Care’ (2005) 12 Journal of Law and Medicine 402, 402.
 (1977) 139 CLR 161 at 193.
 (2000) 201 CLR 321 at 332, 339.
  2 AC 350.
 Kars v Kars (1996) 187 CLR 354, at 372.
 (2000) 201 CLR 321 at 332.
  2 AC 350, at 358.
 Ibid 359.
 (1996) 187 CLR 354, at 378–379.
 Ibid 379.
 Mendelson, above n 1, 407.
 (1992) 175 CLR 327, at 340–341.
 Ibid 338.
 Civil Liability Act 2002 (NSW) ss 15(3) — 15(5).
 Australia, Review of the Law of Negligence — Final Report (Honourable David Ipp, Chairperson), 2002, 215.
 Queensland Law Reform Commission, Griffiths v Kerkemeyer, Miscellaneous Paper No 4 (1993), 43.
 Ibid 40.
 Ibid 41.
Mendelson, Danuta, ‘Jurisprudential Legerdemain: Damages for Gratuitous Services and Attendant Care’ (2005) 12 Journal of Law and Medicine 402
Griffiths v Kerkemeyer (1977) 139 CLR 161
Grincelis v House (2000) 201 CLR 321
Hunt v Severs  2 AC 350
Kars v Kars (1996) 187 CLR 354
Van Gervan v Fenton (1992) 175 CLR 327
Civil Liability Act 2002 (NSW)
Australia, Review of the Law of Negligence — Final Report (Honourable David Ipp, Chairperson), 2002
Queensland Law Reform Commission, Griffiths v Kerkemeyer, Miscellaneous Paper No 4 (1993)