Background
A significant component of any common law claim for damages is usually the claim for Future Economic Loss. Future Economic Loss usually constitutes a larger share of the total value (or Quantum) of any claim as it typically focuses on the loss of income the claimant will experience from the present until their retirement due to the injuries suffered in the subject accident. However, the calculation and subsequent argument for future economic loss present inherent challenges, particularly when a claimant has a pre-existing injury.
Before the decision in Malec v JC Hutton Pty Ltd (1990) 169 CLR 638, insurers and defendants were often successful in arguing for substantial discounts or the complete exclusion of awards for future economic loss in cases where claimants had pre-existing injuries or conditions.
The prevailing approach allowed the defendants to contend that, due to the claimant’s prior health issues, any future economic loss was inevitable and not attributable to the defendant’s negligence. Consequently, damages awarded to injured persons in such circumstances were frequently minimal, reflecting the assumption that their future employability would have been compromised regardless of the incident in question.
Malec v Hutton would prove to challenge the way in which courts assess the discounting value of pre-existing injuries.
Facts
The plaintiff, Malec, was employed by the defendant, J C Hutton Pty LTD (“Hutton”), as a labourer in a meatworks plant. While employed by Hutton, Malec contracted an infectious disease transmitted to him by the animal carcasses on site. As a result of this illness, Malec allegedly developed a degenerative spinal condition and, eventually, a depressive illness.
At the initial trial, the Supreme Court of Queensland took a pessimistic view of Malec’s case, awarding him only a minimal amount for future economic loss.
The court determined that Malec had a pre-existing spinal condition (osteoarthritis) and “personality symptoms” that would have likely rendered him unemployable, regardless of the injuries he obtained while working for the defendant. Consequently, the court concluded that Malec would not have suffered any loss of income attributable to Hutton’s negligence from the date his pre-existing conditions would have likely rendered him unemployable.
The initial decision was appealed and eventually heard in the High Court of Australia, which found that the Queensland Supreme Court had erred in its assessment of Malec’s future economic loss.
Decision
The High Court determined that when evaluating future loss, courts must consider the likelihood that a pre-existing condition could have impacted a claimant’s ability to work, doing so on the balance of probabilities.
The Supreme Court had stated that Malec’s pre-existing conditions would “likely” have rendered him unemployable, indicating a probability between 51% and 99% that this would have occurred. However, this also meant there was a 1% to 49% chance that he would have remained employable despite his pre-existing injuries and, therefore, would have lost income solely due to the injuries caused by Hutton.
The decision in Malec clarified that courts must not only look at the likelihood of a pre-existing condition affecting a claimant’s future income but also assess the likelihood of it not affecting their income and, from this, provide the fair and just apportionment for the claim of future economic loss.
An example of this is that if there was an 80% chance that Malec’s pre-existing conditions would have led him to stop working, he would be entitled to 20% of his future economic loss to account for the possibility that he would have continued in employment.
Significance
The decision made by the High Court in Malec established an important principle in assessing damages for future economic loss, ensuring that claimants are not unfairly denied compensation merely because of pre-existing injuries or conditions and preventing defendants from escaping liability by overstating the impact of such conditions. The decision in Malec remains a critical reference point in personal injury law, particularly in cases involving complex causation and the assessment of future economic loss.
Despite the age of the decision, the principles of Malec remain relevant, having been used in more recent cases such as McQuitty v Midgley & Anor [2016] QSC 36 and Peebles v WorkCover Queensland [2021] QCA 21.
