The High Court has allowed an appeal in part from the Full Court of the Supreme Court of South Australia on the part of the appellant, Amaca Pty Ltd, and dismissed the cross-appeal of the respondent, Mr Latz. The case concerned an entitlement to damages reflecting the loss of an entitlement to a superannuation pension and an age pension as a result of a reduced life span.

Orders were pronounced on 11 May 2018, although reasons were published a month later on 13 June 2018, because of the parlous state of Mr Latz’s health. Mr Latz had contracted malignant mesothelioma at some time in 1976 or 1977 as a result of inhaling asbestos fibre while cutting and installing fencing which had been negligently manufactured by Amaca Pty Ltd. The mesothelioma did not become symptomatic until 2016. In October 2016, Mr Latz’s condition was diagnosed as terminal. He had retired from his job in the public service nine years earlier, and was receiving a superannuation pension under the Superannuation Act 1988 (SA) Part 5, and an age pension under the Social Security Act 1991 (Cth) Part 2.2. It was found that the mesothelioma had cut his life expectancy by 16 years. Mr Latz sought compensation for the reduction to his superannuation pension and age pension, which he would have continued to receive for a further 16 years but for the negligence of Amaca Pty Ltd.

At first instance, the trial judge awarded Mr Latz damages totalling $1,062,000. This sum included $30,000 in exemplary damages and $500,000 for future economic loss, including Mr Latz’s loss of an entitlement to the superannuation pension and age pension for the 16 years his lifespan had been shortened. The Full Court of the Supreme Court of South Australia held by a majority that the value of the superannuation pension and the age pension were “compensable loss”. However, the majority reduced the award to take into account the reversionary pension that Mr Latz’s partner would receive on his death pursuant to s 38(1)(a) of the Superannuation Act.

There were three issues on the appeal to the High Court:

1. Whether the loss of the superannuation pension by reason of a reduced life span was a compensable loss;
2. If the superannuation pension was a compensable loss, whether the reversionary pension available to Mr Latz’s partner should be deducted from any damages awarded for that loss; and
3. Whether the loss of the age pension by reason of a reduced life span was a compensable loss.

The majority (Bell, Gageler, Nettle, Gordon and Edelman JJ) found that the loss of the superannuation pension was a compensable loss (dismissing in part Amaca Pty Ltd’s appeal) but held that damages should be reduced to take account of Mr Latz’s partner’s entitlement to the reversionary pension upon his death (dismissing Mr Latz’s appeal). Kiefel CJ and Keane J dissented in a joint judgment, and would not have allowed Mr Latz an entitlement to damages reflecting the loss of his superannuation pension. The court unanimously found that the loss of the age pension was not a compensable loss (allowing in part Amaca Pty Ltd’s appeal).

The majority of the High Court distinguished between benefits which were derived from a plaintiff’s “capital asset” (namely, the capacity to earn money from the use of one’s personal skills) and benefits which were not. Superannuation benefits were said to be intrinsically linked to earning capacity and, like wages, are the product of exploitation of a claimant’s “capital asset” (at [94]). In the instance of superannuation benefits, the capital asset that is lost is the present value of the future rights to superannuation benefits (at [97]). If an injury occurs during employment, then a plaintiff will be entitled to damages reflecting the loss of superannuation benefits pursuant to the principles expressed by the High Court in Todorovic v Waller (1981) 150 CLR 402. Thus, if Mr Latz’s illness presented itself before he retired, he would have been awarded the value of those rights. Amaca Pty Ltd attempted to argue that Mr Latz had not suffered a loss, because any loss could only be suffered by his family after his death, and was therefore not his loss. However, the majority held that Mr Latz personally suffered a loss, which had a present value, and which could be quantified (at [101]). It was held that the value of the capital asset constituted by his rights under the Superannuation Act was diminished by the injury caused by Amaca Pty Ltd, and that but for the conduct of Amaca, Mr Latz’s rights under the Superannuation Act would have been more valuable (at [102]). At [105], the majority said:

There is no principled basis for denying Mr Latz compensation for his lost superannuation benefit just because the injury or illness which occasioned that loss became apparent only after he commenced retirement. That does not appeal to a sense of justice. It does not accord with principle.

However, in valuing Mr Latz’s loss, credit should be given for the reversionary pension because it was an offsetting or collateral benefit (at [112]).  The Court unanimously dismissed Mr Latz’s appeal regarding the reversionary pension. The dissenting judges did not find it necessary to resolve the question of whether beneficiaries of the estate of a deceased person should have their damages reduced by benefits received by other benefits received upon the death of the deceased ([37] – [40]) but said that it necessarily followed from their other conclusions that Mr Latz’s appeal was dismissed (at [11]).

The Court unanimously held that the loss of expectation of receiving the age pension is not compensable loss.  The majority considered that, unlike the superannuation pension, the age pension was not part of remuneration and was not a capital asset. It was not a result of, or intrinsically connected to, a person’s capacity to earn. Nor was it a future income stream to which Mr Latz had any present or future right or entitlement. Moreover, it was not a form of property even within the extended meaning given to that concept in the application of s 51(xxxi) of the Constitution. Consequently, an allowance for the loss of expectation of receiving the age pension should not have been included in Mr Latz’s damages award.

The dissenting judges, Kiefel CJ and Keane J, held that there was no entitlement either to the lost superannuation pension or age pension. They held that Mr Latz had suffered no loss of earning capacity during the years of life of which the injury deprived him. The  earning capacity of the deceased had ceased to be exercisable prior to and quite apart from the tortious injury that resulted in his death (at [70]). They held that the extension of damages to encompass a loss of entitlement to superannuation pensions and age pensions after retirement was an impermissible extension of the notion of loss of earning capacity ([73] – [76]). It would be a novel form of liability, and would also derogate from the principle of equality before the law, because the loss of the capacity to enjoy one’s financial resources might be given a different value depending upon the plaintiff’s situation and the value of those resources.