Unformatted text preview: loss for purposes of recovery in litigation, but noted that it seemed wrong for a
court to base compensation interest rates on the real rate of interest,62 for in times of negative real interest rates, it would be wrong to refuse to award a plaintiff interest, and
plaintiff who receives interest as a real-life investor also must pay income tax on that
interest, where the court's interest award is tax-free.63 M.B.P. v Gogic was affirmed by
the High Court again in Andjelic v Marsland,64 (1996) where the court was called upon to
determine whether the 'full' interest rate should apply to pre-trial non-economic losses.
In bowing to statutory intervention, the court limited the rule in Hungerfords by
affirming the judgment of Brennan and Deane JJ.65 in that case. The Court took a narrow
view of Hungerfords in that it maintained that there was a strict difference between an
award for the loss of the use of money which was paid away as a result of the defendant's
wrongful conduct, and "the power of a common law court to award a payment of interest
to compensate for the delay in obtaining payment of what the court determines to be the
appropriate measure of damages in tort or for breach of contract."66 This distinction
appears to have little meaningful difference, and highlights the difficulties in seeking to
establish recognition of the concept of opportunity cost in the common law. 61 (1982) 31 S.A.S.R. 1. Wheeler was a tort case in South Australia which set an interest rate of 4 % on past
non-economic loss for purposes of recovery.
This is defined to m ean an interest rate after incorporating an inflationary factor consistent with financial
[1990-1991] 171 C.L.R. 657 at 666.
(1989) 171 C.L.R. 125 at 152.
(1996) 70 A.L.J.R. 435 at 443. 333 In Nominal Defendant v Gardikiotis67 ( 1996) the High Court refused to uphold an award for the additional cost to a plaintiff in managing the sum of her award in a personal injur
payout. Invoking the once-for-all-time attitude of common law damages awards, their Honours asserted that the opportunity costs to the plaintiff of the additional sums paid to
money-managers was beyond the role of the court. "To the inadequate extent that
monetary compensation can compensate for the effects of personal injury, a court has
done its duty when it makes its award of damages. What the plaintiff does with the
verdict moneys is a matter entirely for the plaintiff."68 In this respect, the court was
differentiating between the opportunity cost incurred as a result of damage inflicted by
the defendant, and the opportunity cost inflicted simply because the plaintiff now has
compensation in money form. The former, by implication, may be recoverable, and the
latter, expressly, is prohibited. In SCI Operations v Commonwealth of Australia69 (1996), involving two companies, SCI
and ACI, as plaintiffs70, the majority of the Federal Court (Beaumont and Einfeld JJ.,
Sackville J. dissenting) ordered interest be paid upon the refund sum due to the
taxpayers, despite the fact that evidence was led that the taxpayers had already passed on
the amount of the burden of tax to purchasers/The implication was that no opportunity
cost had been borne by the taxpayer plaintiffs. The court wished to illumine the fact that
the taxpayer had suffered for seven years by waiting for the Comptroller-General of
Customs to issue a Commercial Tariff Concession Order under s. 269C(1) of the
Customs Act 1901 (Cth), an intolerable period. The court took the stance that "the court 67 (1996)70A.LJ.R.450.
(1996) 70 A.L.J.R 450 at 456; also see Todorovic v Waller (1981) 150 C.L.R. 402 at 412 covered m the
section regarding the applicable rules.
(1996) 139 A.L.R. 595.
T wo cases were heard together involving the same point in law against the same statutory authority
giving rise to the amalgamation of the cases.
68 334 should not at all embrace a situation where the Crown, as the model litigant, should be
seen to take advantage of its own default".71 On appeal, the High Court of Australia
reversed the decision, holding that the plaintiff SCI was not entitled to the claimed
opportunity cost (as interest), but only held this position from a narrow statutory
interpretation of the plaintiffs specific right to claim back money paid to the customs
department.72 The Commonwealth was therefore able to take an advantage from its own
delay. In contrast, the Federal Court refused to allow an insurance company to take advantage
of its own delay in Mowie Fisheries Pty. Ltd. v Switzerland Insurance Australia Ltd.
(1996) where an insurance company delayed settlement of a claim on a lost fishing vessel
on technical grounds. Compound interest rates were awarded on an insured sum of
$640,000.00. This was done, according to Tamberlin J., to "accurately reflect the
applicant's loss". 'Accuracy' as a goal of the court, still eludes a legal theoretical grasp. Inconsistency the reception of evidence with regard to the opportunity cost suffered by a plaintiff and of course, a subsequent rebuttal by a defendant, still sits in an uneasy juxtaposition wi...
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