Kumaragamage v McLoughlin and Ors S4/2001

The High Court of Australia heard an appeal from the Supreme Court of Victoria in *Kumaragamage v McLoughlin and Ors*. The dispute concerned the proper interpretation and application of the *Wrongs Act 1958* (Vic) in relation to the assessment of damages for personal injury, specifically concerning the interplay between the statutory cap on damages for non-economic loss and the calculation of interest on that loss.

The central legal issue before the High Court was whether the statutory limitation on damages for non-economic loss, as imposed by section 28LE of the *Wrongs Act 1958* (Vic), applied to the *total* amount of damages awarded, including any pre-judgment interest, or whether interest could be awarded on top of the statutory cap. The court was required to determine how the statutory cap interacted with the court's power to award interest on damages.

The High Court held that the statutory cap on damages for non-economic loss under section 28LE of the *Wrongs Act 1958* (Vic) applied to the *sum of damages* awarded for non-economic loss, and that pre-judgment interest on that loss was to be calculated on the amount of damages *after* the statutory cap had been applied. The court reasoned that the purpose of the statutory cap was to limit the quantum of damages recoverable for non-economic loss, and that to allow interest to be added to the capped amount would effectively circumvent this legislative intention. The court affirmed that interest is a separate component of damages, awarded to compensate for the delay in receiving the principal sum, and that its calculation should not inflate the statutory limit on the underlying loss itself.