Past courts adopted rules which precluded interest

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Unformatted text preview: p. 245. 45 Atiyah 1979, Chapters 17-21. 46 Allen and Hiscock 1992, The Law of Contract in Australia, 2nd edition, C CH, Appendix 1. 44 248 Interest o n D a m a g e s or Interest a s D a m a g e s Whether the court views extra sums claimed for time delay in late payment as part of original damage, or whether it awards the extra sum as an extemporary consideration separate from the original damage done by the defendant may be seminal in its theoretical justification in law. Past courts adopted rules which precluded interest, from statutory interest, (mentioned in Chapter Four as a compromise between the previous common law incorporation of the religious objection to its award, and growi commercial practice which demanded its inclusion into damages awards) on sums of money awarded in damages to a plaintiff. The courts awarded, as a result of legislat interest on the damages, without recognition that the interest itself represented an i damage suffered by the plaintiff. This legal distinction is difficult to justify, for plaintiff suffers the loss whether or not it is characterized as a continuing integral the damages, or given as an added compensation on damages. Past courts, even in the very recent past, have been unwilling to even deal with this point. Norwest Refrigerat Services Pty. Ltd. V Bain Dawes (W.A.) Pty. Ltd. 41 (1984) provides a particularly cl expression of the contradiction pertaining to the treatment of interest in damage clai [the plaintiff] claims that the interest [on the overdue sum] is an integral part of the damages themselves. It is not merely a case of seeking interest on a sum assessed as the damages flowing from a tort. In our opinion, h owever it b e put, the argument cannot succeed. At c o m m o n law, n o court could award interest in a case such as this, whether by way of interest on damages or as damages.48 The damage done to plaintiffs by unscrupulous defendants who withheld funds due was certainly foreseeable, and undoubtedly recognisable as a common problem in modern terms at least from 1893 when the House of Lords handed down the judgment in London 47 Norwest Refrigeration Services Pty. Ltd. v Bain Dawes (W.A.) Pty. Ltd. (1984) 157 C.L.R. 149 Norwest Refrigeration Services Pty. Ltd. v Bain Dawes (W.A.) Pty. Ltd. (1984) 157 C.L.R. 149 at 162; Hungerfords v Walker (\9S9) 171 C.L.R. 125 at 139. 48 249 Chatham & Dover Railway Co. v South Eastern Railway Co. All the L a w Lords in this seminal case expressed dissatisfaction with the state of the law, and yet refused to de a clear and workable rule which would circumvent the philosophical tension erected in the classification dilemma. This narrow approach reflects the parochial nature of the common law's inability to be innovative and the propensity to sift all actions through t historic forms of action. This may be seen nearly a century after the decision in the London and Chatham case was handed down in President of India v Lips Maritime Corporation5® (1988) where Lord Brandon of Oakbrook said "there is no such thing as a cause of action in damages for late payment of damages. The only remedy which the law affords for delay in paying damages is the discretionary award of interest pursuant to statute."51 It may be possible to portray this statement as a rule against making a rule. In view of the changes in English society, the predominant commercial nature and large scale growth of business, and the momentous advances in economic knowledge during the 20th century, the position taken by the court above is difficult to justify. The sum withheld by a defendant inflicts an economic loss upon the plaintiff, and as long as the sum is withheld, the economic loss continues. The recovery of the losses incurred by a plaintiff from the pure time value of a sum withheld does not magically begin on the day of the defendant's default, and the artificial divergence which the court imposed upon classification is another piece of evidence which analogically fits the description of a lingering legal influence from prior ecclesiastical rule. From an economic perspective a plaintiff suffers loss as soon as s/he parts with the money. The courts refused to embra this concept. A wider effect was that this lingering melancholy supported cases where 49 [1893] AC. 429. Cases in the mid 1700's were shown in Chapter Four to have incorporate consideration of this problem and to have dealt with i in a far lessrigidmanner. t 50 (1988) A C . 395. 250 pure economic loss w a s precluded from recovery in other areas. Until recently, the courts historically eschewed awards where a defendant's detrimental action did not involve physical harm but which inflicted purely economic loss upon a plaintiff.52 Starting in 1964,53 however, the English courts widened the scope of economic loss recovery to include actions for negligent misstatement. Encroachment upon the historic antipathy to the recognisance that an inflicted money loss was a real loss slowly altered how courts char...
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