Superannuation benefits and the compensatory principle in the award of personal injury damages
This week the Full Court of the High Court handed down its decision in Amaca Pty Limited v Latz; Latz v Amaca Pty Limited  HCA 22. The appeal lay from the decision of the Full Court of the Supreme Court of South Australia, which held, by majority (Blue and Hinton JJ, Stanley J dissenting) had found, that the value of the superannuation pension and that of the age pension were compensable loss. The majority then reduced the damages awarded to Mr Latz to take into account the reversionary pension that Mr Latz’s partner will receive on his death under s 38(1)(a) of the Superannuation Act.
The decision of the Full Court of The Supreme Court of South Australia was considered controversial because it was said to recognise a new head of damage being that of “loss of a pension”. Unsurprisingly, the majority (Bell, Gageler, Nettle, Gordon and Edelman JJ, with Keifel CJ and Keane J diseenting) did not need to recognise a new head in order to find that Mr Latz’s loss of his superannuation pension should be taken into account in the assessment of his damages.
Mr Latz claimed compensation for negligently caused personal injury, which claim thereby focused attention upon his interests. Those interests are addressed by awarding damages as compensation for actual loss (either loss already suffered or loss that will probably be suffered). This award was to be guided by the compensatory principle. A claimant who has suffered negligently caused personal injury has traditionally been seen to recover damages calculated under three heads or types of loss: (1) certain non-pecuniary losses (even if no actual financial loss is caused and the damage caused by the defendant cannot be measured in money); (2) loss of earning capacity; and (3) actual financial loss. Where a claimant suffers a negligently caused personal injury during their working life, the objective of putting the claimant in the same position as if they had not sustained the injury is met by an award of damages which may include compensation for loss of superannuation benefits.
Superannuation benefits, like wages, are the product of the exploitation of the claimant’s capital asset. Relevantly, the majority explained at  “…where a claimant is injured during their working life, what is awarded in relation to superannuation benefits is the net present value of the court’s best estimate of the fund that the claimant would have had at the date of retirement but for the injury; namely, a fund which would have generated the “lost” superannuation benefits. The capital asset that is being valued (because it is lost) is the present value of the future rights. The label attached to those future rights – be it an accumulation fund, a defined benefit scheme, a pension scheme or some other descriptor – is not determinative. The particular rights – the future superannuation benefits – are assessed as if they had been converted into or replaced by a new asset – a fund reflecting the best estimate of what those rights would have generated at retirement, because that is the basis for assessing what has been lost. The loss is not the loss of some opportunity to enjoy the asset. The loss is the diminution in value of the asset.” The majority went on at  to clarify this further: “Put in different terms, at the date of judgment, the claimant receives, as an element of an award of damages, the net present value of a fund that the claimant prior to the injury would have expected to receive on retirement, subject to appropriate discounts.”
Bridie advises and appears regularly in personal injury matters under various statutory regimes and insurance disputes, including TPD, income protection, motor vehicle accidents, workers compensation, intentional torts, public liability and marine accidents.
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