Kornhauser argues that the law and economics analysis

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Unformatted text preview: where the professed goal of accuracy in compensation can be seen to be in conflict with an underlying policy of efficiency. In Scott v. Heathwood115 (1953) the Queensland Supreme Court was entitled, as plaintiffs counsel argued, to take into account the changed value of money between the date of the tortious conduct and the trial date, and with respect to the loss of future earnings. Stanley J. refused to consider the changed value of money, stating: In arriving at m y decision I am not taking into consideration the fact that in awarding general damages the court can take into consideration the decreased value of money. . . [I]f a m an can . t only pay £ X to the support of his wife and child, then their damages cannot exceed £ X. I m ay be a matter of great hardship to them that £(X-Y) are needed now to buy what £ X would have bought at the date of the deceased breadwinner's death. But I fail to see on what principle I can make a 113 Eg Kornhauser, L. A. 1979, "A Guide to the Perplexed Claims of Efficiency in the Law", [1979] Hofstra Law Review, 591-639, where the author comments that "[components of wealth, the amounts of various goods and their prices, therefore, do not fluctuate with the acts of sheep". Kornhauser argues that the Law and Economics analysis is actually an heir of legal realism, which asserts a reciprocal relationship on community behaviour and the direction and support of law. See pp. 635 et seq. 114 Atiyah 1979, chapters 17-21. 115 [1953] St. R .Qd. 91. 305 wrongdoer in a case like this pay more than the amount of money that would have been available to the dependants from the deceased's earning capacity.116 If an attempt to compensate for the 'true' loss is a policy of the court, and the aim of restitutio in integrum, then the approach of the court in Scott ensures that these will certainly not be met. To avoid any evidence which would value the loss with respect to what money could buy as opposed to the money itself, is to value all goods in life with a static nominalistic theory of money (see above). This theory, which equates a currency's unit at one point in time with its nominal unit at another point in time is largely discredited in the courts today, but would have appeared appropriate to the courts prior to the 20 century where inflation was not such an endemic economic factor.118 In the 1968 High Court case of O'Brien v McKean,119 Barwick CJ refused to allow evidence with respect to future inflation and the impact on lost future earnings, but was willing to allow evidence with respect to the probability of merit advances for the plaintiff. The philosophical logic of the distinction in His Honour's reasoning is difficult to substantiate, given that both of the categories involved future earnings, the effluxion of time, and probability. The conservatism of the judiciary was confronted by litigants in 1981 in the case of Pennant Hills Restaurants Pty. Ltd. v Barrell Insurances Pty. Ltd}20 where the plaintiff sued an insurance broker who negligently failed to obtain indemnity insurance for a restaurant. The consequence of this made the restaurant owners liable for the workers 116 [1953] St. R .Qd.91at94. M ann 1992, pp. 85-102, outlines the history and acceptance of nominalism in English Law. His contention that the most repugnant form of nominalism is with respect to taxation is well taken, especially the power asymmetry which can be inferred from his account regarding capital gains taxation and the effects of inflation and the losses involved for income tax purposes. 118 Twigger 1999, table 1. 119 [1968] 118 C.L.R. 540. 117 306 compensation payments to an injured employee for life. In the case, the High Court of Australia was confronted with the indexation clause in the worker's compensation legislation which ensured that the benefits to the paraplegic employee were indexed to inflation and the weekly minimum earnings. The High Court refused to abrogate its earlier ruling with respect to evidence on future inflation despite, in the intervening period, Murphy J. drawing attention "to the injustice to plaintiffs that was being perpetrated by ignoring future wage increases while discounting at comparatively high rates of interest" . It would seem, in light of the facts of the case, that the court was confronted with the legislature's opinion on the certainty of some measure of future inflation, yet despite this evidence, refused to allow further evidence to establish a 199 forward-looking view. The High Court distinguished O 'Brien v McKlean, as a "rule of practice," rather than a "rule of law". In light of past intransigence, this was a major concession for the High Court, and although Murphy J. was the only dissenter, the High Court adopted a discount rate of 3%. The inference that the court considered the inflationary factor, without addressing the evidentiary issues with respect to the discou rate, is inescapable. The court was able to avoid the issue while dealing with it in a ve manner. This, in the end, may not be the...
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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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