In the last issue we discussed the assessment of personal injuries damages in the context of non-pecuniary loss. Non-pecuniary loss can broadly be called “pain and suffering” damages.
This article deals with the other category of damages recoverable in personal injuries cases, “pecuniary losses”.
Pecuniary or money losses can be divided into the following 4 categories:
- Past and future treatment expenses.
- Care expenses.
- “Other” expenses.
- Loss of earning capacity.
Past and Future Treatment Expenses
In many cases it is easy to calculate damages recoverable for past and future treatment expenses. Injuries usually require medical or hospital treatment and this treatment is usually at least paid in part by Medicare Australia. In cases of hospital treatment often a private health insurer will be involved.
To the extent past treatment expenses have been paid by Medicare Australia or a private health insurer, it is a requirement of the insurance policies that if compensation is recovered for those expenses it must be refunded to the insurer. Perhaps not surprisingly both Medicare Australia and private health insurers are very helpful in providing details of the amounts they have paid for treatment arising from personal injury in personal injuries claims!
When an individual requires assistance with matters such as the application of wound dressings, or assistance with household activities, etc., damages are recoverable.
It does not actually matter whether money is paid for the services provided or whether the services are provided free, compensation is still available. The way in which damages are calculated for care expenses is, firstly, to identify the care and assistance required by the injured person with the performance of household and other activities such as shopping, hanging out the washing, vacuuming and matters such as that and then to determine the equivalent commercial cost of those services. In this way assistance that is provided without fee by a partner of family member is valued in the same way as if the services had been paid for.
An issue that arises with care expenses is whether the damages recovered for those services must be paid by the injured person to the provider of the services (who may not have charged a fee for them), or whether the injured person can “keep” the damages recovered. There is a difference between Australian law and English law in this regard. In Australian law the damages recoverable for care are part of the damages paid to the injured person as part of their entire claim and it is a matter for the injured person to determine whether or not they wish to pay some or all of the damages recovered for care to the provider or providers of the care. In England the portion of the damages recovered for care is paid to the injured person who then becomes a trustee of those damages and must pay them to the provider of the services upon request.
There are statutory restrictions that apply to the damages recoverable for care. In motor vehicle accident claims the maximum recoverable for care expenses for each week of care is an amount equal to the average total weekly earnings for employed persons in Western Australia. This figure is published by the Australia Bureau of Statistics. The relevant figure as at May 2011 is $1,113.50 per week. A maximum of 40 hours per week can be claimed for care, so if less than 40 hours per week of care is provided then the amount is apportioned. Another restriction is that there must be a minimum of at least $7,000 of care for any care to be recoverable. If the total care exceeds this threshold, then the total is recoverable (i.e., the care figure is $10,000, the first $7,000 is not deducted).
Other out-of-pocket expenses claimable in personal injuries claims may be for specialised equipment such as wheelchairs, modified vehicles, rails for the house if a person becomes in infirm as a result of injury and pretty much any “other” expenses that could be imagined that comprises an out-of-pocket expense that is caused by the negligence which resulted in the injury.
It is important to realise that not everything can be recovered. The question is whether the expense is “reasonable”.
The concept of reasonableness at law is a complex issue and it is perhaps safest to say that the concept is fairly broad and most would say the concept exists for the purposes of enabling the law to respond to changes in society. What may have been reasonable 50 years ago may not be reasonable now and vice versa!
Loss of Earning Capacity
Loss of earning capacity is basically wage loss, but it is more complicated than that.
The law is interested in determining what “capacity” has been lost and the extent to which that loss will result in financial loss. If a tradesman such as a carpenter sustains a hand injury that restricts his ability to lift or to perform other carpentry activities then there is a “loss of capacity”. However, there may not be financial loss resulting from this lost capacity if the carpenter can earn the same income he earned as a carpenter in a different job. If retraining was required to learn the skills for the new job then the cost of retraining would be a recoverable pecuniary loss.
It can thus be very difficult to assess the damages to which an individual is entitled for loss of earning capacity. As with past and future treatment expenses, damages are also recoverable for loss of earnings that may be sustained in the future.
What About the Dinosaur?
The case of the mechanical dinosaur demonstrates that damages are recoverable for the loss of a chance of something happening. Such damages are calculated with reference to the approximate percentage likelihood of an event occurring.
The case of the mechanical dinosaur begins in 1979. In that year Mr Limb, a Tasmanian, decided to build a mechanical dinosaur. After a couple of years of construction the dinosaur was moved by boat to Queensland and construction was completed. When completed the dinosaur was about 12m tall and 30m long. The dinosaur was located on a Queensland property called “Prehistoric Park” and was the major attraction at the park. The park opened to the public in about September 1984 and closed 6 weeks later.
After the park closed the dinosaur was dismantled and moved to the Adelaide showground. A large enclosure was built around the dinosaur and the dinosaur was placed on show for one year during the 1985 Adelaide show. No profit was made on this occasion. Mr Limb then decided that he could make some money by selling the enclosure in which the dinosaur was housed. This was done but unfortunately during the course of dismantling the enclosure using oxy-acetylene cutting equipment the dinosaur caught fire and was totally destroyed.
A legal claim was brought alleging financial loss as result of the dinosaur being destroyed. Pecuniary loss was claimed on the basis the destruction of the dinosaur had resulted in the “loss of a commercial opportunity” that was of some value. It was alleged, amongst other things, that the opportunity lost was the opportunity to display the dinosaur in America and to make a film with the dinosaur (and much reliance was placed upon the gross takings at the box office of the Crocodile Dundee films).
Evidence suggested potential lost earnings from the destruction of the dinosaur were $100 million. Applying the legal principle of valuing the lost opportunity, damages were awarded of $5 million.
Not bad for a mechanical dinosaur that never turned a profit!
Who said you should never work with animals.
See you next issue.