By incorporating a probabilistic decision procedure

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Unformatted text preview: best way to uphold the integrity of the judicial system. The recent incorporation of mathematical probabilities into uncertain aspects of damages claims has additionally weakened the policy of determining accurate damages awards. When assessing hypothetical events, both past events and future events, the courts, in th manner discussed in Chapter Six regarding the causation issue, have now assumed a (1981) 145 C.L.R. 625. Luntz 1990, p. 306. (1968) 118 C.L.R. 540. 307 probabilistic decision procedure. A n economic approach which defines an expected value of a plaintiffs loss according to the probability of different events, favourable and unfavourable, would derive a final figure through the sum of the probability-adjusted return for each event. This is now the method which the courts use to assess future losses which are uncertain, and past hypothetical losses. The procedure, however, overlooks one important point. Regardless of the number of considerations incorporated into the hypothetical scenario, only one of the considerations (or perhaps none of them) will eventuate. Even if all possible scenarios could be incorporated into the probabilistic model, only one path will finally be borne out as the accurate assessment of the future loss. By incorporating a probabilistic decision procedure, the courts have entrenched a method by which accuracy cannot be achieved in any circumstance. To illustrate the preceding concerns, assume that a contractor is prevented from fulfillin a contractual obligation through the actions of the defendant. Assuming all other evidential objections are overcome, the court may assess the loss and award 80% of the claimed loss because the court is intuitively convinced that there is a 20% chance that th plaintiff might not have undertaken the contract if the defendant had not defaulted. If th contract loss is assessed at, say, $1 million, the court awards $800,000 in compensation.123 This scenario overlooks the criticism that the plaintiff would have invested, or not, and would have received the profit, or not. Thus, the imposition of a probabilistic assessment ensures that every award will certainly be inaccurate. For if the plaintiff had invested s/he would have received $1 million, and if s/he had not invested, s/he would have received nothing. S/he neither receives the lost million, nor receives nothing under the probabilistic model. Hungerfords v Walker (1989) 171 C.L.R. 125. 308 In contrast to the entrenched error in the probabilistic model above, it is well-known that courts go to great lengths to ascertain losses and award proper compensation in cases where this can be done. Chapter Five argued that in the common law system two or more special interest groups argue in stark opposition to each other before judges as third party adjudicators. This creates the situation where judges who award overtly large or small sums in contrast to the claims of the litigators may be charged with appellable error. Courts go to significant lengths to avoid this criticism and judgments routinely focus very carefully upon the amounts to be awarded.124 Summary When courts decide cases they apply social policies. In the early formation period of the common law, public policy, especially in the form of Christian Church doctrine, permeated decisions of the judges. Insightful observers have recognised that judges have always made law in this way. This chapter presented material which argues that judges make law quite prolifically according to identifiable policies of predictability, efficiency and accuracy. The impact of public policy application in case judgments may, therefore, be inescapable with the result that there is conflict in the application of underlying policies in the disposition of cases regarding opportunity cost recovery. The consideration of other economic principles, with common characteristics of intangibility 124 Examples are, Sharman v Evans (1977) 138 C.L.R. 563 (High Court of Australia), Fuller v Meehan [1999] Q C A 37 (Queensland Court of Appeal), LED Builders Pty. Ltd. v Eagle Homes Pty. Ltd. [1999] F C A 584 (Federal Court of Australia). Indeed the examples would be far too numerous to list here, for perusal of nearly any significant damages case shows the prominence which the effort to achieve an accurate award holds within the judgment, bearing in mind that opposing parties are contending for generally opposite outcomes in damages. It does not seem to be necessary to examine this point, as i is so t well known. 309 and hypothetical occurrence which have been litigated in the courts shows the difficulties facing the courts when considering opportunity cost, which also possesses these traits. The legal contradictions may not be settled in a consistent fashion in the courts until a coherent underlying theoretical framework can be established. As the subjective notion of 'justice' is influenced by the underlying motive of each special interest group in litigation, court policies of efficiency, accuracy, and predictability cannot always be easily reconciled between cases, and the vast array of...
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This note was uploaded on 09/03/2012 for the course LAW 1501 taught by Professor Garva during the Three '12 term at University of Adelaide.

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