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Unformatted text preview: integrum was highlighted by the court. To uphold this conflict as
matter of policy, and refuse to recognise that a continuous economic loss was suffered a plaintiff who is waiting for a sum to be paid by a debtor in default was not, in thei
Honours' opinion, a defensible position:
[S]uch a policy would be at odds with the fundamental principle that a plaintiff is entitled to
restitutio in integrum. According to that principle, the plaintiff is entitled to full compensation for
the loss which he sustains in consequence of the defendant's wrong, subject to the rules as to
remoteness of damage and the plaintiffs duty to mitigate his loss. In principle he should be
awarded the compensation which would restore him to the position he would have been in but for
the defendant's breach of contract or negligence. Judged from a commercial viewpoint, the
plaintiff sustains an economic loss if his d amages are not paid promptly, just as he sustains such a
loss w h e n his debt is not paid on the due date. T he loss m a y arise in the form of the investment
cost of being deprived of money which could have been invested at interest or used to reduce an
existing indebtedness. Or the loss m a y arise in the form of the borrowing cost, i.e., interest
payable on borrowed money or interest foregone because an existing investment is realized or
reduced.31 This loss, according to their Honours, was "a plainly foreseeable loss because, accordin
to common understanding, it represents the market price of obtaining money". As a 29 Kirby J. 1996, pp. 1095 - 1098; M ason, A , 1993, p. 570-571.
 171 C.L.R. 125 at 143.
(1989) 171 C.L.R. 125 at 143.
30 323 result, opportunity cost could n o w be a "loss or d amage flowing naturally a nd directly
from the defendant's wrongful act or omission, particularly when that act or omission results in the withholding of money from a plaintiff or causes the plaintiff to pay away
money."33 On this view, the distinction between interest on damages, and interest as damages was
rejected by their Honours. The artificial distinction between damages for late payment
which formed part of the original action, and damages in addition to the principal sum and, therefore, not part of the original action,34 was abandoned. Differentiating between
the case where a defendant disputes the action and the situation where the incurred
expense and opportunity cost arise from paying money away due to the defendant's
wrong, Mason CJ. and Wilson J. held that "they are pecuniary losses suffered by the plaintiff as a result of the defendant's wrong and therefore constitute an integral elem
of the loss for which he is entitled to be compensated by an award of damages". The
former was concerned with finding a cause of action, and the latter was concerned with
the limits of recoverable damages. The fact that the courts did not recognise claims for pure economic loss in tort until w
into the 20th century36 did not escape the court's attention.37 The distinction between
economic loss attached to injury to a plaintiffs property or person, and economic loss 33 (1989) 171 C.L.R. 125 at 143-4.
London, Chatham & Dover Railway Co. v South Easter Railway Co.  A.C. 429; Sanrod v
Dainford (1984) 54 A.L.R. 179 at 191; President of India v Lips Maritime Corp.  A.C. 395; Norwest
Refrigeration Services Pty. Ltd. v Bain Dawes (W.A.) Ltd. (1984) 157 C.L.R. 149.
(1989) 171 C.L.R. 125 at 144.
Caltex Oil (Australia) Pty. Ltd. v The Dredge "Willemstad" (1976) 136 C.L.R. 429. This case was
examined in Chapter Eight.
(1989)171C.L.R. 125 at 140.
34 324 negligently inflicted without attached d a m a g e , seemed an empty distinction. T o M a s o n
CJ and Wilson J:
Once it is accepted that the cost of borrowing money to replace money paid away or withheld is
not too remote, i is pointless to insist on a distinction between the award of damages for loss of
the use of money in the case of a liquidated claim and the award of such interest in an
unliquidated claim.38 In their Honours' opinion, there was now no longer any reason to delay in awarding
opportunity cost by reference to an appropriate interest rate, for the loss of the use of
money. "[T]he argument for denying the recovery of incurred expense and opportunity
cost ... [a]s a matter of logic and principle, as well as commercial reality, ...has little to
commend it". Brennan and Deane JJ were slightly more ambivalent on this particular
point. They incorporated a conservative element in relation to the award of interest in
compensation for the delay in obtaining payment, but they concurred with Mason CJ and
Wilson J in that:
there is no acceptable reason why the ordinary principles governing the recovery of c ommon law
damages should not, in an appropriate case, apply to entitle a plaintiff to an actual award of
damages as compensation for a wrongfully and foreseeably caused loss of the use of money. T o
the extent that the reported cases support the proposition that damages cannot be awarded as
compensation for th...
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