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Is the co to award only a fraction of the value of

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Unformatted text preview: to receive present value. This distinction contains an inherent contradiction. Suppose for a moment that a landowner has a small mill which produces high quality sawn timber in modest quantities. After some time of operating the mill a sizeable quantity of timber is neatly stacked on the mill owner's land. Because of the defendant's negligence, the entire wood stack is burnt and, therefore, rendered unusable. It is not t the point to argue that damages should be less than the full value of the timber simply because there is a likelihood that the landowner might not have used or sold it. The landowner is entitled to receive the full value of the asset which was destroyed without any consideration for what his intentions might have been for the timber. In addition, suppose that the mill was capable of producing, say, one thousand lineal metres of sawn timber per twenty four hour period, and the mill is also destroyed in the fire. Is the co to award only a fraction of the value of the mill on the grounds that the landowner only operated the mill at half its capacity? It is submitted that the landowner is entitled t value of the assets which were destroyed by the defendant's actions. Returning to Windeyer J's comments, His Honour may have correctly identified that the lost asset was earning capacity, but contradicted himself by denying both the incorporation of unused capacity in the calculations of lost future earnings, and then returned to the actual weekly sums earned in the past to derive the figures necessary to assign damages. The plaintiff was manifestly under-compensated, the injustice of the damages award escaping the notice of Windeyer J. It would be the rare person able to 284 assess that the full personal earning capacity has been reached. Subsequently, to assess the loss in the light of Windeyer J's comments, surplus personal earning capacity should have been included as an integral part of the loss. The better view of the case above is that His Honour simply did not understand the implications of his decision. This is supported by his first objection to the actuary's evidence. This appears true despite the fact that by 1967, when this case was decided, inflation had become an economic pariah.47 Windeyer J. introduces an internal contradiction which indicates that the issues may not have been carefully considered. In 1968, in Tzouvelis v Victorian Railways Commissioners,48 the court held that evidence regarding future aspects of lost earnings capacity, which were generated by an actuary regarding the past increases in the basic wage, and inflation, were inadmissible. His Honour, Smith J., argued that if 5% inflation were considered and then discounted at the (then) conventional 5% discount rate, the plaintiff would be over-compensated, being able to enjoy presently, the future goods of which present payment for future losses would buy. This view, as Luntz49 points out, although theoretically true, ignores that the consumption of future goods, especially needed medical services, cannot be purchased for instant consumption. In addition, it is not immediately clear why this consideration should be relevant, given that the court's decision should be centred upon what the plaintiff has lost, and not what he can consume. The rejection of the evidence, and the entrenched posture of reticence in the courts is strikingly similar to aspects of the courts behaviour in cases dealing with opportunity cost recovery. 47 Twigger, 1999, table 1, shows succinctly that inflation had been entrenched deeply into the economic environment since at least World War I, and to have excluded expert evidence designed to inform the court of the future trends of inflation m ay be open to the criticism that the bench exercised a wilful ignorance regarding the evidence of future inflation. 48 [1968] V R 112. 49 Luntz 1990, pp. 304-5. 285 T he influence o f the underlying public policy o f prediction a nd the resultant rising contradictions which have plagued the courts were succinctly illustrated by Barwick CJ. in Pennant Hills Restaurants Pty. Ltd. v Barrell Insurances Pty. Ltd.50 (1981) His Honour recognized the reluctance of Australian Courts to allow evidence of future inflation: The attitude of Australian courts has hitherto been substantially to disregard questions of the impact of future inflation upon awards of d amages. T hey have been influenced by the obvious difficulty of predicting the future, by the speculative nature of the evidence upon which predictions of the economic future must rest, and by the added complexity which accounting for inflation would introduce into trials.51 Although courts may be justified hi raising objections to criticism that the task of administering justice in cases where the issue of time and hypothetical events is very difficult, it does not mean that there is justification in courts avoiding the issues when cases which require scrutiny of time-related issues are brought for consideration. Although a case may contain circumstances which require elements of speculation, or calculations which require future considerations which cannot be predicted with certainty, the cou...
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