Henry viii introduced subsequent legislation in

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Unformatted text preview: litigious issues coming before the courts might not be the best way for judges to gain a deep understanding of complex economic theory. There is, however, a changing legal environment. The High Court of Australia has recognized the underlying conflicts and the lingering influence of many of the points raised above. Almost like a funnel carrying oil and water which are inevitably mixed but not dissolved, the evidential issues, applicable rules of law, and recognition of conflicting social policies were mixed together in the case of Hungerfords v Walker, which comprises the seminal leading case regarding opportunity cost recovery in Australia. This case, examined in the next chapter, preceded the probabilistic decision model mentioned in antecedent sections of this thesis. Hungerfords comprehensively altered the common law approach to damages awards specifically affecting opportunity cost, and arguably made a fatal, if not final, assault against the classification dilemma. 310 C HAPTER NINE: PARTIAL RESOLUTION OF THE CLASSIFICATION DILEMMA, THE RULE IN HUNGERFORDS Introduction Chapter Two examined how the church promulgated hatred for the practice of usury from the time of the fall of Rome to the Protestant Reformation. Henry VIII introduced subsequent legislation in England which redefined usury to be loans with interest outsid the statutory limits. Chapter Three examined how the common law was vaccinated against acceptance of commercial practices through the use of clerics as judges and the formation of doctrine through the church teachings which were socially predominant during the relevant formation period of the 12th to the 14th centuries. Chapter Four showed how a classification dilemma took firm root in the common law and circumscribed the growing judicial practice of leaving interest components of damages awards to juries to decide. Salient methodological conflicts were examined in Chapter Five and the subsequent three chapters examined conflicts which originate from the burdens placed upon parties to litigation, rules which are drawn from past cases, and the underlying conflicts of applying public policy in court decisions, respectively. The direction and content of the material has attempted to systematically expose difficultie which have confronted plaintiffs who sought recovery of the whole loss incurred as a result of a defendant's actions, many of which have their origins in the influence of religious doctrine. 311 T he High Court embraced modern commercial reality through the decision, in 1989, to recognise a common law remedy for the loss of the use of money which is lost or otherwise paid out by the plaintiff from the act or omission of the defendant. In recognising the church's condemnation of usury and the subsequent historical prohibitions of lending at interest, which resulted in curial refusal to allow recovery opportunity cost, the court acknowledged subsequent obstacles facing litigants who sought recovery of the consequential opportunity losses of a sum of money. The loss of the use of money is the opportunity cost of a capital sum, and would have been proscribed from recovery in the past on the basis that the additional award was usurious and beyond common law courts' powers to award. After examining the leading case of Hungerfords v Walker,1 subsequent cases will be examined which will show how the leading case removed the judicial reticence to acceptance of economic theory in Australian courts. Making the Rule in Hungerfords v Walker Facts and Background of the Case The plaintiffs were originally a partnership, operating a rental business in South Austr for electrical goods, Radio Electrix. They hired a firm of accountants who had also been the accountants for Radio Rental, a firm in a similar line of business owned by a related party, to do the taxes for the partnership starting in the year ending 30 June, 1974. The amounts allowable for depreciation of the assets of the business for accounting purposes are different from that allowed depreciation for tax purposes. An adjustment was necessary for the income tax returns of the partnership to properly account for the 1 (1989) 171 C.L.R. 125. The section recounting the facts was taken from the High Court 312 differences. For the year ending 30 June 1 974, the accountants properly adjusted the tax return amounts to account for the allowable differences between the tax return and the partnership accounts. For the next year, the accountants added back an amount, which, in the circumstances, turned out to be an error. The accountants added back the entire amount of accumulated depreciation, not the adjustment from the prior year. This overstated the next year's income, and the partnership overpaid the tax for that year. T error was carried over for each successive year, resulting in the partners overpaying income tax and provisional taxes each successive year. In 1982, the partnership sought to incorporate, and in the process of the incorporation, another accountant was consulted who discovered the mistake. The tax return for the year ending 30 June 1981 was amended, and for the years ending 30 June 1980, 1979, and 1...
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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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