The result of this dichotomy is that the courts

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: time value of the economic loss inflicted, yet an interest component solely denied for the recovery of the time value of an economic loss because the defendant inflicted an economic loss by refusing to pay a sum due, would have been intolerable. Obviously, if the courts had previously viewed interest as part of the ongoi damages attached to a capital sum, as opposed to a component awarded which was related to but still essentially divorced from the capital sum, it would have rendered t area of the law moribund and obsolete. The result of this dichotomy is that the courts carried an illogical distinction within the prohibition of pure economic loss recovery, if interest which is related to a capital sum is not economic loss, it is difficult to theoretically justify its award. If the underlying basis of damages be restitutionary, th how can an additional sum in the form of an interest component be awarded in any circumstance if no loss can be theoretically attached to that element of the damages award? The recognition that there is a loss attached to the delay in payment of a principl sum just as certainly as there is a loss attached to the purely financial impact of a defendant's negligence, however uncertain in its theoretical classification, shows that t area of law urgently needed a reconciliatory intervention from the judicial hierarchy. In curial terms, from the time of the Caltex Oil case, the continuing prohibition stated above lasted for only the shortest time, a mere blink of the eye, before it was resolved b the High Court through the Hungerfords case. Caltex Oil opened the doorway to judicial recognition, and it was further flung open by the rule in Hungerfords. There are two posited reasons why the denial survived for the intervening period between the Caltex Oil case in 1976, and Hungerfords in 1989. Firstly, courts normally cannot simply rule on any subject they please. A case must come before the court with the necessary factual circumstances which allows the court, in effect, to 'legislate' upon this area of law. 258 Secondly, an intervening, judicially liberating event in 1 986, the Australia Act 1986 and its associated United Kingdom legislation preventing appeals to the UK courts, enabled the High Court of Australia to be able to intellectually consider legal issues apart from previously constricting English common law precedent. There are other rules which the common law maintains which also inhibit the court's freedom to tailor justice to meet individual circumstances presented by litigants. Notabl the time value of money has always presented problems for the courts, which are bound by the rule to pay damages in a one-time payment to plaintiffs and that litigation be settled once-and-for-all between parties. Once-For-AII-Time Rule of Payment of Damages Some rules applying to damages awards are so entrenched in the common law, that the courts have taken them for granted.73 These include the rule of restitutio in integrum covered above and the rule that the plaintiff must prove the loss claimed. In addition, th courts have stated: • the payment of damages to a party to litigation must be assessed and awarded in a lump sum, that is, they must be "recovered once and forever".74 The court has no power, other than a once-for-all-time award, to award periodical payments to a plaintiff; and • the court has no interest in how the plaintiff actually spends the award given. ^Johnson and Others v Perez; Creed v Perez (1988-1989) 166 C.L.R. 351 at 412 et seq.; Todorovic Waller (1981) 150 C.L.R. 402 at 412 per Gibbs CJ, and Wilson J ; Luntz and Hambly 1992, pp. 345-6. , 74 A s Gibbs C.J. and Wilson, J. note in the text of the case the lump sum rule in c ommon law is mitigated in some jurisdictions by statute, the most prominent of which is normally in motor vehicle accident awards. 259 T he defendant cannot ask the court to oversee the manner in which a n a ward is spent after judgment, the plaintiff also cannot come again to the court to ask for additional damages because, in hindsight, the damages awarded by court in final judgment proved to be inadequate. The once-for-all-time rule is to promote a finality of litigation. The requires the court to assess all the injury of which the plaintiff complains, and bring th 'value' of the past injury to the present, and likewise discounting the future aspect of t injury, to arrive at a present value payment for all the injury caused by the defendant. As in finance, the discount and interest rates applied are crucial in determining the outcome of the figure assigned to damages. A small change in the rate applied to cash flows over a significant period will have quite significant effects upon the present value of any sum awarded. The court applies an interest rate to the past aspect of the damage in an apparent recognition of the "abstention" theory of interest,75 although, as examined in the previous section and in Chapter Five, the methods used by courts seeking to resolv...
View Full Document

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.

Ask a homework question - tutors are online