Amaca Pty Limited v Latz [2018] HCA 22: Expectation of Aged Pension

The High Court has published its reasons for the orders it made on 11 May 2018 in Amaca Pty Limited v Latz; Latz v Amaca Pty Limited [2018] HCA 22 (13 June 2018), allowing in part, an appeal brought by Amaca Pty Limited ("Amaca") from a decision of the Full Court of the Supreme Court of South Australia, and dismissing an appeal brought by Mr Anthony Latz from that decision (see Amaca Pty Ltd v  Latz  [2017] SASCFC 145 (30 October 2017)). 

Background

At 71 years of age Mr Latz was diagnosed with terminal malignant mesothelioma. At the time of his diagnosis (October 2016), he had retired from the public service. Mr Latz was receiving a superannuation pension under the Superannuation Act 1988 (SA) Part 5 ("the superannuation pension") and an age pension under the Social Security Act 1991 (Cth) Part 2.2 ("the age pension"). 

Proceedings were commenced by Mr Latz against Amaca as the manufacturer of asbestos fencing for whom Mr Latz had cut and installed fencing 40 years earlier. Mr Latz alleged that, if it had not been for the negligence of Amaca, he would have continued to receive both the superannuation pension and the age pension for the remainder of his pre-illness life expectancy, which was calculated as a further 16 years.

South Australian Full Court

The South Australian Full Court held, in a majority decision, that the value of the superannuation pension and the age pension “were compensable losses”. However, they reduced the damages awarded to take into account a reversionary pension payable to Mr Latz's partner on his death under the Superannuation Act 1988 (SA) section 38(1)(a). 

Appeal to the High Court of Australia

Amaca was granted special leave and appealed the findings of “compensable loss” in relation to both the superannuation pension and the age pension. Mr Latz was granted special leave and appealed the deduction of the reversionary pension. 

The majority of the High Court held that the South Australian Full Court was correct to include in Mr Latz's damages award, an allowance for the superannuation pension that he would have received for the remainder of his pre-illness life expectancy, less the reversionary pension.  The High Court found that the superannuation benefits are intrinsically linked to earning capacity and, like wages, are the product of exploitation of a claimant's "capital asset".  On his retirement, Mr Latz had, as a result of the exploitation of his capital asset, a superannuation pension under the Superannuation Act.  The value of the capital asset constituted by Mr Latz's rights under the Superannuation Act was diminished by the injury caused by Amaca.  Had Mr Latz's illness presented itself before he retired, he would have been awarded the value of those rights. 

The majority held that there was no principled basis for denying Mr Latz that compensation just because the illness which occasioned his loss became apparent only after he commenced retirement.  In valuing Mr Latz's loss, credit should be given for the reversionary pension as it is an offsetting or collateral benefit.  The Court unanimously dismissed Mr Latz's appeal regarding the reversionary pension.

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, it is not a capital asset.  It is not a result of, or intrinsically connected to, a person's capacity to earn.  It is also not a form of property.  An allowance for the loss of expectation of receiving the age pension should not have been included in Mr Latz's damages award. 

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Amaca Pty Limited v Latz; Latz v Amaca Pty Limited [2018] HCA 22 (13 June 2018)

Amaca Pty Ltd v  Latz  [2017] SASCFC 145 (30 October 2017)