Pension Losses – are they compensable to ill retirees?11 July 2018 | Damages
The entitlement of a terminally ill claimant for losses associated with a superannuation pension, aged pension and the impact of the reversionary pension.
- Whether it was appropriate for the Full Court of the Supreme Court of South Australia to award the claimant damages in relation to both a superannuation pension and aged pension.
- Whether the reversionary pension ought to be deducted from an award of damages.
The claimant, Mr Latz, commenced proceedings against Amaca Pty Ltd (Amaca) as a consequence of his exposure to asbestos dust and fibre from Amaca’s products which caused Mr Latz to contract terminal mesothelioma.
At the time of Mr Latz’s diagnosis he had retired from public service and was receiving both a superannuation pension and an aged pension under State and Commonwealth legislation. Mr Latz commenced proceedings in the District Court of South Australia seeking damages on the basis that but for the negligence of Amaca he would have continued to receive both a superannuation pension and an aged pension for the remainder of his pre-illness life expectancy of about 16 years.
The Decision in the Lower Courts
At trial in the District Court of South Australia Mr Latz succeeded in obtaining an award of damages for losses relating to both his superannuation and aged pension for a period of 16 years. Amaca failed in its argument in relation to the quantum of losses awarded to Mr Latz.
Amaca appealed to the Full Court of the Supreme Court of South Australia who rejected Amaca’s arguments that neither the superannuation or aged pension constituted compensable losses but agreed with Amaca that the losses ought to be reduced by taking into the account the value of the revisionary pension.
The Issues on Appeal
Amaca appealed to the High Court in relation to the availability of damages for both the aged pension and superannuation pension.
Mr Latz appealed to the High Court on the quantification of his superannuation pension and the effect of the reversionary pension.
The Decision on Appeal
The majority of the High Court held that the Full Court was correct to include in its award of damages an allowance for the superannuation pension that he would receive for the remaining 16 years of his pre-illness life expectancy less the reversionary pension. In doing so the majority concluded that superannuation benefits are linked to earning capacity in a similar manner to wages. The majority held that there was no basis for denying Mr Latz compensation by reason only that the illness which occasioned his losses was diagnosed after he retired in October 2016. However, the High Court also dismissed Mr Latz’s appeal and decided that the reversionary pension should be offset against his award of damages.
The High Court unanimously held that the loss of expectation of receiving the aged pension is not a compensable loss as it was not sufficiently connected to a person’s capacity to earn, and it accordingly reduced Mr Latz’s award of damages.
Implications for you
The important take outs from the decision are that there is no principled basis for denying a claimant loss of superannuation pension just because a medical condition becomes apparent after retirement. However, credit should be given for the reversionary pension as it is not a certain benefit and the loss of expectation of receiving the aged pension is not a compensable loss.