HCA – classification/assessment of gratuitous payments & assessment of damages

Zheng v Cai [2009] HCA 52 (9 December 2009)

The central issue on appeal was whether charitable payments to the injured plaintiff for living and other expenses in her capacity as a volunteer with her church (“Assembly”) should reduce her damages.


The court comprised of FRENCH CJ, GUMMOW, CRENNAN, KIEFEL AND BELL JJ and delivered a unanimous decision that they should not.


In coming to this conclusion the court reviewed the seminal judgment of Windeyer J in The National Insurance Co of New Zealand Ltd v Espagne[1] at paragraph 14, which was considered by the Court of Appeal in the matter:

“In assessing damages for personal injuries, benefits that a plaintiff has received or is to receive from any source other than the defendant are not to be regarded as mitigating his loss, if: (a) they were received or are to be received by him as a result of a contract he had made before the loss occurred and by the express or implied terms of that contract they were to be provided notwithstanding any rights of action he might have; or (b) they were given or promised to him by way of bounty, to the intent that he should enjoy them in addition to and not in diminution of any claim for damages. The first description covers accident insurances and also many forms of pensions and similar benefits provided by employers: in those cases it is immaterial that, by subrogation or otherwise, the contract may require a refund of moneys paid, or an adjustment of future benefits, to be made after the recovery of damages. The second description covers a variety of public charitable aid and some forms of relief given by the State as well as the produce of private benevolence. In both cases the decisive consideration is, not whether the benefit was received in consequence of, or as a result of the injury, but what was its character: and that is determined, in the one case by what under his contract the plaintiff had paid for, and in the other by the intent of the person conferring the benefit. The test is by purpose rather than by cause.” (emphasis added)


Their Honours in coming to an interpretation contrary to the Court of Appeal on the construction of the letter from the Assembly explaining the payments considered the intent of the donor as of primary importance:


The “intent” of the donor thus assumed great importance, but it was an intent of a particular character, contrasting an intention to benefit the wrongdoer with an intention to benefit the victim. Thus, Windeyer J said[7]:

“If, out of sympathy for a man unfortunately responsible for a motor accident, someone gives money to the victim, stating that he does so in the interest of the tortfeasor and to diminish the damages he must pay, effect must be given to his intention. If, on the other hand, the donor’s expressed intention is that the injured man shall enjoy his bounty in addition to whatever rights he may have to recover damages from the tortfeasor, effect must in my opinion, be given to that intention. And if nothing be said, the intention of the giver may be inferred from the circumstances.”

To that there may be added the observation by Professors Harper, James and Gray in their treatise upon United States tort law[8]:


“Often of course the intent was never even thought out by the donor, certainly not expressed. In these cases of private generosity the best solution seems to be a rule of thumb that would give greatest scope to the donor’s generosity and to the adjustment of moral obligations within the more or less intimate relationships that usually bring such generosity into play. The gift should be disregarded in assessing damages.”


It is here that the decision of the Court of Appeal encounters well-founded complaints of error. The leading judgment was delivered by Hoeben J. Speaking of the letter of 1 May 2006, his Honour said:

“That letter makes it clear that the payments were intended not merely to benefit [the applicant] insofar as her daily living and accommodation expenses were concerned, but to enable her to function more effectively as a volunteer church worker.” (emphasis added)


The court concluded:


The presence of a collateral benefit of this kind to the Assembly could not substitute for the necessary intention on its part to benefit the respondent by diminishing his liability for damages at the expense of the award recovered by the applicant, the object of the bounty provided by the Assembly. Reducing the applicant’s award without finding such an intention would defeat rather than advance the policy of the law in this area.



Brisbane Barrister – David Cormack

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