Some Silken Moment: Severed INXS Finger Worth $1.1 Million?

Valuation expert Eric Madsen looks at how competing economic damages calculations take center stage as Tim Farriss sues a boat company in Australia

INXS guitarist Tim Farriss is fighting in the New South Wales Supreme Court (Australia) for economic damages of $1.1 million due to his finger being severed in a 2015 boating accident. He also claims about $100,000 for medical expenses, for total damages of $1.2 million.

Yet the financial expert for the boat company claims Farriss’s economic damages are only $93,000.

While both damages figures assume a win on liability for Farriss, an award of $1.1 million would be heaven sent. But a payout of only $93,000 would have Farriss losing big on damages and pushing away bitter tears.

So what accounts for this more than 10-fold difference in expert estimates?

The first major factor is the number of shows INXS would have performed had the accident not occurred.

The figure of $1.1 million assumes INXS would have toured six more times, suggesting Farriss would have generated approximately $183,000 from each tour, net of taxes and other costs. Three tours would have occurred between the time of the accident and today. The other three would be in the future.

However, the defense pointed to a 2012 on-stage announcement from Jon Farriss—the plaintiff’s brother and fellow bandmate—that the band’s show that night in Perth, Australia, was “very likely to probably be the last show we ever do.”

An official statement followed the next day, declaring: “We have been performing as a band for 35 years, it’s time to step away from the touring arena.”

It’s not uncommon for aging bands to announce their end but later regroup for reunion tours. Despite the band’s end-of-travel announcement, the financial expert for the defense accepted that INXS could have performed two more tours.

Yet even on a per-tour basis, substantial differences remain in touring compensation: $183,000 for Tim Farriss versus $46,500.

One possible, albeit partial, explanation for this difference is varying discount rates. For the three shows that INXS would have performed in the future—beyond 2021—a discount rate must be applied to calculate Farriss’s lost compensation as a present-value figure that can be paid out as a court-ordered award in today’s dollars.

Even for Farriss, who is 64 years old, variance in the discount rate can make a substantial difference in the payout. Mick Jagger and Keith Richards—approaching their eighties—are still on the road, suggesting a discount period for Farriss that could extend as much as 16 years.

But it’s highly unlikely that discount rates alone explain a per-tour difference of four times.

Testimony from Farriss offers another possibility for the difference in damages estimates—INXS’s popularity could have surged under a new lead singer. He stated that he “had a vision of us getting a singer of great notoriety.” They could “find someone much like Queen with Adam Lambert.”

True, having Lambert, or someone of similar caliber, as the new INXS front man would likely mean greater ticket sales.

But this is where critical questions of possible versus probable arise.

Unfortunately for Farriss’s case, INXS has long attempted to find its next star after the 1997 death of famed singer Michael Hutchence. That search included the 2005 reality show Rock Star: INXS, which led to JD Fortune at the mic until he and the band parted ways in 2011. INXS had two other lead singers as well: one for a couple years before Fortune and one for a couple years after.

That INXS would attract a singer comparable to Lambert after cycling through lead singers and years after announcing an end to touring is unlikely.

Farriss’s team will have to respond to other challenges. One is why INXS never performed between its “very likely” last show in 2012 through the time of the boating accident in 2015—and never announced plans to do so. Yet the plaintiff’s damages calculation assumes one tour every two years from the time of the accident through 2021.

Another question is why, even without Farriss on guitar, INXS still has not toured or attracted a “singer of great notoriety,” as its estimate of economic damages suggests it would have done. The Beach Boys, as one example, have long been touring without founding members Dennis Wilson and Carl Wilson, who died in 1984 and 1998, respectively. And they still attract crowds without Brian Wilson, who performs separately.

Some silken moment might go on forever. This one probably won’t. To the extent the plaintiff’s $1.1 million damages estimate is based on the narrative that Farriss’s severed finger is the only difference between INXS doing nothing since 2012 versus touring six more times with a star lead singer, Farriss should expect a payout closer to $93,000. And, perhaps, a few bitter tears.

This article is based on publicly reported information and without the benefit of reviewing expert reports or all facts relevant to the matter.