Return of the paramount principle:
Stewart v Metro North Hospital and Health Service
By Kirsten Van Der Wal, Principal Lawyer, Maurice Blackburn and Joshua Liddle, Barrister, Carbolic Chambers
The result in Stewart will be of enormous benefit to seriously injured plaintiffs who require compensatory damages to receive care at home.
The principle that damages in tort are to restore the injured plaintiff to the position he or she would have been in, as best as damages can, but for the negligence of the wrongdoer, is so well-accepted it is commonly stated without the citation of any authority. It has been uncontroversial at least since Livingstone v Rawyards Coal Co in 1880.1 It is referred to as the paramount principle, signifying its role in guiding the development of legal rules that apply in particular circumstances.2
And yet, in 2025, the High Court of Australia had to decide whether compensatory damages in tort ought to be awarded in a sum sufficient to allow the injured party to return to living in his own (rented) home, rather than the nursing home that he had needed to move to because of his disabilities.3 The injured plaintiff, Michael Stewart, had been unsuccessful at trial and on intermediate appeal in his claim for such damages, despite factual findings that care at home would improve his overall quality of life, allow him to live with his son and a dog – or at least allow them to stay – and would be at least as good as a care facility for maintaining and improving his health.
Mr Stewart was successful in his appeal, with the High Court reasserting the primacy of the compensatory principle and providing clarity to the notion that damages must be reasonable.
But why did this point need to be taken up by the High Court for Mr Stewart to succeed? The incongruity between the compensatory or paramount principle and its application in the context of damages for care and accommodation is immediately apparent. The answer, in short, is the acceptance, by numerous intermediate appellate courts, of a particular passage in Sharman v Evans4 (Sharman) as a binding statement of the common law.
Sharman v Evans
Both the trial judge and the Court of Appeal in Mr Stewart’s case followed an often-cited passage from the judgment of Gibbs and Stephen JJ in Sharman, a 1977 decision addressing the recoverability of damages to live at home rather than in an institution:
“The appropriate criterion must be that such expenses as the plaintiff may reasonably incur should be recoverable from the defendant; as Barwick C.J. put it in Arthur Robinson (Grafton) Pty. Ltd. v. Carter (1968) 122 CLR 649, ‘The question here is not what are the ideal requirements but what are the reasonable requirements of the respondent’ … The touchstone of reasonableness in the case of the cost of providing nursing and medical care for the plaintiff in the future is, no doubt, cost matched against health benefits to the plaintiff.”5
In the half-century since Sharman was decided, this passage has been taken, by numerous trial and intermediate appellate courts, as a test of reasonableness, judged having regard to the cost of the care and its health benefits narrowly construed. As in Mr Stewart’s case, this has been of special prominence when courts have been asked to consider whether damages for care at home are reasonable when faced with the often much cheaper alternative of the plaintiff being cared for in an institution such as an aged-care facility or shared accommodation for the disabled.
Micheal Stewart's case
Mr Stewart was 63 and was living in his family home, in which he held a life interest, when he suffered the abdominal pains that led to him presenting to the defendant’s hospital. He had a young-adult son with whom he had a close relationship. His son visited regularly and would often stay, bringing the family dog who was shared between Mr Stewart and his ex-partner (and later litigation guardian) with whom he remained on good terms. Mr Stewart had a particular affinity for animals, having had many pets throughout his life. On holidays, he enjoyed camping trips with his son.
By reason of the defendant’s negligence, Mr Stewart suffered serious avoidable surgical complications, which led to bowel perforations, sepsis, cardiac arrest and stroke. He was left with brain damage causing pain and paralysis of the right side of his body, need for a colostomy bag, and severe speech deficits. He needed around-the-clock care and required assistance to transfer from his bed to his wheelchair. His communication was limited to “yes” and “no”, expressed by making a raised sound with a nod of his head (yes) or a low sound with a shake (for no).
Mr Stewart was discharged to an aged-care facility and remained in that kind of accommodation at the time of trial. He could not keep a dog and it was, at the very least, difficult for his son to stay – that happened only once, on a Christmas Eve, in the six years before trial.
At no fault of the staff of the facility, Mr Stewart was miserable in an aged-care home. He was much younger than most of the residents (63 at the time of moving in) and did not have any interest in the kinds of social and other activities offered. He had been a professional artist earlier in his life and was very independently minded. He spent most of his time poring over the thousands of photographs he had from his life before his disabilities. He almost always refused to be transferred out of his bed unless his family were coming to visit or take him on an outing.
While Mr Stewart’s speech deficits precluded him from giving evidence of whether he understood fully what moving out of aged care might entail, there was substantial evidence of him having expressed a desire to move out of the aged-care facility and into a home of his own. The trial judge was sufficiently satisfied to proceed on the basis that Mr Stewart would prefer to live in his own home.
Independent living or enhanced care at the facility?
The defendant admitted liability, however, contended that Mr Stewart would derive no health benefits from moving into his own home. While it failed on its primary case theory that Mr Stewart would not participate in any therapy regardless of where he lived, despite him having regularly participated in the limited physiotherapy available to him, the defendant succeeded initially on the basis that Mr Stewart could, rather than move into his own home, have external carers and therapists attend him at the aged-care facility, to allow him to have enhanced therapy and additional outings.
The only demonstrated benefit of the hybrid approach adopted by the learned trial judge was that it came at substantially lower cost to the defendant. It offered no benefit to Mr Stewart’s health and was probably worse, at least in terms of his long-term psychological health.
Critically, despite finding that moving into his own home would greatly improve Mr Stewart’s quality of life overall (presumably restoring it closer to, although inevitably still far from, the quality he had before his injuries) the trial judge did not accept that the health benefits to Mr Stewart of moving to his own home were sufficient to make the significant additional cost of that approach reasonable. His Honour’s approach, following the passage of Gibbs and Stephen JJ from Sharman set out above, limited the ultimate analysis to health benefits and costs, eschewing as “amenity” aspects of the whole person such as independence, autonomy and privacy.
The Queensland Court of Appeal upheld the trial judge’s approach, treating the critical passage of Gibbs and Stephen JJ as an authoritative statement of the law.
A house built on sand
While the judgment of Gibbs and Stephen JJ in Sharman was subsequently adopted by courts as imposing a legal test for the award of care damages (that is, health benefits must be weighed against cost) it is doubtful that Sharman ever actually stood as authority for such a test. If their Honours actually intended to lay down such a rule, it certainly had no basis in historical precedent.
If Mr Stewart had been earning a high income at the time of his injuries, and his loss been one of a substantial earning capacity, the common law, absent the statutory caps that now exist, would disregard as absurd and not-legal in character any argument by the defendant that it should not have to fully compensate Mr Stewart for that loss because it was too expensive.
This is well-settled. In 1877, a medical practitioner named Dr Phillips was injured in a train crash. Presumably, he was not the only person injured, although he probably earned far more than most of his fellow injured passengers. The House of Lords (Phillips v London & South Western Railway Co (Phillips)6 was asked to decide whether damages for Mr Phillips’ loss of earnings were to be awarded in a sum so as to compensate the full loss of earning capacity. At the time Phillips was decided, it was still controversial that a person could be awarded far more in damages than others in the same position, despite having paid the same fare as other passengers, a portion of which went to covering the railway company’s insurance premiums.
The House of Lords confirmed that the corrective, compensatory measure of damages was the correct one, despite its tendency to result in greater damages to the otherwise wealthy.
The approach suggested by Gibbs and Stephen JJ in Sharman sits uncomfortably alongside the Phillips approach: why should the common law be so concerned to ensure that high-earners have their large incomes restored to them at the expense of defendants (and, ultimately, society via insurance premiums and taxes) while refusing to restore (as best as money can) ordinary domestic life to the most severely injured plaintiffs?
This challenge to Sharman is supported by the fact that, read carefully, it is difficult to see that Gibbs and Stephen JJ actually intended to lay down the kind of test that came to be adopted in the cases after it was decided.
On the facts of Sharman, it was never a realistic possibility for the injured plaintiff, June Evans, to live in her own home. The trial judge had observed that there were “grave practical problems”7 with Ms Evans living entirely at home and it was, in effect, impossible. It was on that basis that the High Court (Barwick CJ, Gibbs and Stephen JJ; Jacobs and Murphy J dissenting) held that the cost of caring for Ms Evans full-time in her own home was not recoverable, although amounts for regular outings and day visits to her mother’s home were recoverable. Because home care was never a real possibility for Ms Evans and could not have been a reasonable choice to repair the consequences of the tort, the outcome should be seen as concerning no “more than propositions of fact which were relevant to the case in hand”.8
The difficulty with Gibbs and Stephen JJ’s test in Sharman as a precedent is further undermined by the fact that the remaining judges of the Court delivered separate reasons. Although Jacobs J agreed with the approach they took, his Honour was in the minority on the outcome. It is very difficult to discern a clear ratio from the case as a whole.
Cracks emerge
While intermediate appellate courts in Australia generally regarded Sharman as imposing a limit to compensatory damages, a different approach was taken to the common law overseas, where emphasis was given to the reasonableness of the plaintiff’s choice of where to live. In Andrews v Grand & Toy Alberta Ltd,9 Dickson J of the Supreme Court of Canada said it was “difficult to conceive of any reasonably-minded person of ample means who would not be ready to incur the expense of home care, rather than institutional care”.10 In Sowden v Lodge,11 Pill LJ in the England and Wales Court of Appeal said that “paternalism does not replace the right of a claimant, or those with responsibility for the claimant, making a reasonable choice”.12
In 2021, another High Court decision about damages, albeit in a very different context, gave further reason to doubt the prevailing interpretation of Sharman. In Arsalan v Rixon (Arsalan),13 the claimants sought damages for the costs of renting replacements for their respective cars, an Audi and a BMW, while under repair after being negligently damaged. The tortfeasors in each case argued that the claimants could have, at lower cost, rented Toyota Corollas instead of the more prestigious cars in fact rented. The High Court allowed the cost of renting the more expensive vehicles. In a joint judgment, the Court stated:
“[A] plaintiff will usually be able to recover … the reasonable costs incurred in hiring, for the period of repair, a substitute vehicle that is broadly equivalent to their damaged vehicle.”14
Undoubtedly, the cost of giving luxury car owners expensive rental cars will be borne to some degree by wider society via insurance premiums.
If the common law was to take such a principled approach to compensatory damages, undeterred by policy concerns, surely the rejection of damages for in-home care absent significant health benefits was untenable?
The compensatory principle applied
In allowing Mr Stewart’s appeal, the High Court (Gageler CJ, Gordon, Edelman, Jagot, and Beech-Jones JJ) affirmed the primacy of the paramount compensatory principle. While reasonableness has a role to play, it is not a general limiting factor based on whether the damages are thought to be proportionate to health benefits.
Rather, there are two ways that the concept of reasonableness limits the compensatory principle. First, the plaintiff must prove the reasonable cost of steps reasonably required to repair the consequences of the tort. That is, that the amount claimed is actually the cost that has or will be properly incurred. Second, the defendant may establish that the plaintiff failed to avoid or mitigate that cost by taking some other course which it was reasonable for the plaintiff to take. That is, the defendant may show that the plaintiff’s failure to take a less expensive approach was unreasonable. In considering something as essential as where the plaintiff will live, the proper approach required an assessment of whether the choice to incur the expense of in-home care is a reasonable response. As the Court observed, “[w]here a person lived in their own home or in a home setting prior to the tort … it would be unusual to find that the choice by that person to receive treatment at home or in a home setting is unreasonable.”15
Applying this approach, there would need to be good reasons why it would be unreasonable for an injured plaintiff to wish to receive care at home, such as major risks to the plaintiff’s health. Otherwise, the defendant would need to show that there is some other, cheaper alternative that is so close to in-home care that the plaintiff would be acting unreasonably to reject that approach.
Progress in the law?
The result in Stewart will be of enormous benefit to seriously injured plaintiffs who require compensatory damages to receive care at home. In most cases, it seems, in-home care will now be the norm.
While the outcome is undoubtedly progressive, putting the interests of the seriously disabled before the fiscal interests of insurers and the State, it did not require judicial activism. Seen in its proper context, it is a correction of the law based on a return to the more fundamental principle of restitutio in integrum.
The application of Sharman as a limiting principle is, with respect, a misinterpretation of the decision. If the law was to respect the financial interests of high-earning professionals (as in Phillips) or the owners of luxury cars (as in Arsalan) it must respect the individual’s interest in living in their own home. The decision in Stewart is, in essence, an application of the principle of equality before the law.
Kirsten Van Der Wal is a Principal Lawyer and the head of Maurice Blackburn’s medical negligence department in Queensland and the Northern Territory. Kirsten was the instructing solicitor acting on behalf of Michael Stewart and for this work was awarded the ALA Civil Justice Award for 2025.
Joshua Liddle was called to the Bar in 2022. He is regularly briefed in tort/personal injury cases, professional and medical negligence cases, coronial inquests, professional disciplinary proceedings and related employment matters. Joshua was the junior counsel who appeared on behalf of Michael Stewart in the Supreme Court of Queensland, Court of Appeal of Queensland and the High Court of Australia.
1 5 App Cas 25.
2 Todorovic v Waller (1981) 150 CLR 402, 412; Haines v Bendall (1991) 172 CLR 60, 63.
3 Stewart v Metro North Hospital and Health Service [2025] HCA 34 (Stewart).
4 (1977) 138 CLR 563.
5 Ibid [14] (citations omitted).
6 (1879) 5 QBD 78.
7 Stewart, above note 3, citing Evans v Sharman (unreported, Supreme Court of New South Wales, 10 December 1973), 12, 14.
8 Stewart, above note 3, [41] citing Wieben v Wain (1990) Aust Torts Reports, 81–051, 68, 189.
9 [1978] 2 SCR 229.
10 Stewart, above note 3, [46].
11 [2005] 1 WLR 2129.
12 Stewart, above note 3, [47].
13 (2021) 274 CLR 606.
14 Ibid [2]
15 Stewart, above note 3, [45].