Nominal Defendant for the Australian Capital Territory v Smith, T

[1985] FCA 174

Re: THE NOMINAL DEFENDANT FOR THE AUSTRALIAN CAPITAL TERRITORY
And: TANYA SMITH
No. A.C.T. G332 of 1984
Damages

COURT

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY
DISTRICT REGISTRY
GENERAL DIVISION
Bowen C.J.
Lockhart J.
Kelly J.

CATCHWORDS

Damages - Statutory duty to award interest (unless good cause shown to the contrary) upon the whole or part of general damages for the whole or part of the period up to judgment - approach to be adopted in making award of interest.

Australian Capital Territory Supreme Court Act 1933, s.53A

HEARING

CANBERRA
#DATE 26:4:1985

ORDER

1. The appeal be dismissed.

2. The Nominal Defendant for the Australian Capital Territory pay to Tanya Smith her costs of the appeal.

JUDGE1

This appeal concerns a question of law relating to the award of interest under s. 53A of the Supreme Court Act 1933 (A.C.T.) in an action for damages for personal injuries.

1. The respondent sued in the Supreme Court of the Australian Capital Territory to recover damages for personal injuries which she sustained arising out of a motor car accident on 13 June 1981. The learned trial Judge awarded damages totalling $82,014.77, made up of: (i) $30,000 for loss of earning capacity; (ii) $25,000 general damages; (iii) $6,865.32 for interest on $15,000 of the total of $25,000 awarded for general damages; (iv) other items which are not relevant for present purposes.

2. The trial Judge dissected the sum of $25,000 awarded for general damages or non-economic loss into detriment suffered to the date of judgment and future detriment. His Honour attributed $15,000 of the $25,000 to past detriment and awarded interest on the $15,000 at the rate of 14% per annum for approximately 3.25 years (ie. from about the date of the accident to the date of judgment), namely, $6,865.32. This award of interest is the only matter contested on appeal by the appellant. Counsel for the appellant submitted that his Honour should have applied a rate of 7% not 14% which would have produced an amount for interest of $3,432.66.

3. It was conceded that the rate of 14% was the rate of interest adopted by the Supreme Court of the Australian Capital Territory prevailing at all material times in cases of this nature and that it was a proper commercial rate. It was submitted by counsel for the appellant, however, that, as pain and suffering and loss of amenities generally accrue gradually over a period from the date of the accident to the date of judgment and not all immediately after the accident, it would over-compensate the respondent to award interest at the full rate of 14% from the date of the accident to the date of judgment. Hence the rate of 7% was said to be the appropriate rate.

4. The Supreme Court's authority to award interest in proceedings for the recovery of damages stems from s. 53A of the Supreme Court Act 1933 which provides:
   
   

"53A.(1) In any proceedings for the recovery of any money (including any debt or damages or the value of any goods) the Supreme Court or the Judge shall, upon application, unless good cause is shown to the contrary, either -

(a) order that there be included in the sum for which judgment is given interest at such rate as the Court or the Judge, as the case may be, thinks fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date as of which the judgment is entered; or

(b) without proceeding to calculate interest in accordance with paragraph (a), order that there be included in the sum for which judgment is given a lump sum in lieu of any such interest.

(2) Sub-section (1) does not -

(a) authorize the giving of interest upon interest or of a sum in lieu of such interest;

(b) apply in relation to any debt upon which interest is payable as of right whether by virtue of an agreement or otherwise; or

(c) affect the damages recoverable for the dishonour of a bill of exchange.

(3) Where the sum for which judgment is given (in this sub-section referred to as the 'relevant sum') includes, or where the Court or the Judge in its or his absolute discretion determines that the relevant sum includes, any amount for -

(a) compensation in respect of liabilities incurred which do not carry interest as against the person claiming interest or claiming a sum in lieu of interest;

(b) compensation for loss or damage to be incurred or suffered after the date on which judgment is given; or

(c) exemplary or punitive damages,

interest, or a sum in lieu of interest, shall not be given under sub-section (1) in respect of any such amount or in respect of so much of the relevant sum as in the opinion of the Court or the Judge represents any such amount."

1. This Court and the Supreme Courts of most of the States of Australia have authority to award interest on verdicts for damages: s. 51A of the Federal Court of Australia Act 1976, s. 94 of the Supreme Court Act 1970 of the State of New South Wales, s. 79A of the Supreme Court Act 1958 of the State of Victoria, s. 72 of the Common Law Practice Act 1867 of the State of Queensland, s. 30C of the Supreme Court Act 1935 of the State of South Australia, s. 32 of the Supreme Court Act 1935 of the State of Western Australia and s. 84 of the Supreme Court Act 1979 of the Northern Territory. The State of Tasmania does not authorise the award of interest upon a verdict for damages.

2. Section 53A (like s. 51A of the Federal Court Act and s. 79A of the Victorian Act) differs from s. 94 of the New South Wales Act, s. 72 of the Queensland Act and s. 32 ofthe West Australian Act in a number of respects. First, s. 53A provides that the Court shall award interest unless good cause is shown to the contrary and not that it "may" do so. Second, s. 53A, unlike ss. 94, 72 and 32, expressly prohibits the allowance of interest on that part of the damages which is awarded as compensation for loss or damage to be incurred or suffered after the date of the judgment (para. 53A(3)(b)).

3. Section 30C of the South Australian Act combines features of both s. 94 and s. 53A in that, like s. 53A, it provides that, unless good cause is shown to the contrary, the Court shall, if asked, award interest. However, in addition, like ss. 94 and 53A interest may be awarded on the whole or part only of the verdict. Unlike s. 53A, however, s. 30C does not expressly prohibit the allowance of interest on that part of the damages which is awarded as compensation for loss or damage to be incurred or suffered after the date of the award.

4. There has been divergence of judicial opinion in Australia on the construction and practical application of the various sections of the kind to which we have just referred, authorising an award of interest.

5. Opinion has differed, for example, on the question whether para. 79A(3)(b) of the Victorian Act is concerned with the juristic concept of damages or a practical one: Ruby v. Marsh (1975) 132 CLR 642. The divergence of opinion has arisen in particular with reference to assessments of damages under Lord Campbell's Act. In Ruby v. Marsh Barwick C.J., with whose reasons for judgment McTiernan J. substantially agreed, said at p 646 that damages under Lord Campbell's Act are for the loss of a reasonable expectation of pecuniary benefits consequent upon death. The Chief Justice said that in attempting to fix a sum to compensate for the loss of that expectation there will be included, amongst the circumstances to be considered, an estimation of what the deceased might have contributed for the future during which it is decided he would have continued to contribute financially to or for his dependants. That estimation is merely a factor to be weighed in evaluating in financial terms the loss which has been suffered. It is not a present determination of damages for a loss yet to be suffered. Consequently, it cannot be said that because regard is thus had to the possibilities of the future, there is any amount included in the relevant award of damages as compensation for loss or damage to be incurred or suffered after the date of the award. Hence, in his Honour's view the express prohibition imposed by para. 79A(3)(b) (which is in substantially the same terms as para. 53A(3)(b) of the Supreme Court Act of the A.C.T.) was inapplicable to claims for damages under Lord Campbell's Act. Gibbs J. in a separate judgment agreed with this approach of the Chief Justice on that question. Jacobs J., with whose reasons for judgment on this question Stephen J. agreed, said at p. 667 that para. 79A(3)(b) is concerned not with the juristic concept of damages but with the practical concept that a plaintiff receives damages by way of compensation for loss or damage incurred or suffered up to the date of trial and verdict and in respect of loss or damage, if any, which he will incur or suffer in the future.

6. Another question on which judicial opinion has differed is whether there is any relevant distinction between the case of an assessment of damages under Lord Campbell's Act and that of an assessment of damages for personal injuries involving a claim for economic loss by reason of the destruction, by the injury, wholly or partially, of the capacity to earn. In Ruby v. Marsh Barwick C.J. said at p 648 that in each case the loss is wholly suffered at the one time, in the first case at the date of death and in the second at the date of the receipt of the injury. His Honour declined to accept the correctness of the judgment of the English Court of Appeal in Jefford v. Gee (1970) 2 QB 2130 in which that Court treated so much of the general damages as represented the present value of future earnings, less a discount for contingencies, as an amount for compensation for loss to be suffered in the future and therefore as compensation for a loss yet to be suffered. Gibbs, Stephen and Jacobs JJ., on the other hand, said that the principles upon which damages are awarded under Lord Campbell's Act differ from those governing the award of damages for personal injury in respect of loss of earning capacity and that damages for personal injuries may include loss incurred or damages suffered in the future in which event para. 79A(3)(b) of the Victorian Act would apply.

7. Full discussion of questions relating to the authority of courts to order interest in the nature of damages and the principles to be applied by courts in considering awards of interest may be found in the judgments of the High Court in Ruby v. Marsh (supra); Fire & All Risks Insurance Co. Limited v. Callinan (1977-1978) 140 CLR 427; Cullen v. Trappell (1980) 54 ALJR 295; and State Government Insurance Office (Qld) v. Biemann (1983) 49 ALR 247.

8. We do not find it necessary to consider the differences between the various approaches as to the effect of para. 53A(3)(b) because it was not suggested in the present case that the trial Judge erred in including in the sum for which judgment was entered, interest on that component of the award which represented general damages for past pain and suffering and loss of amenities and which the trial Judge assessed at $25,000. Nor was it suggested that his Honour erred in dissecting the amount of $25,000 so that a proportion of $15,000 represented his assessment of general damages sustained before judgment. The only challenge was, as we have said, to the rate of interest applied by his Honour to cover the period from the date of the accident to the date of judgment.

9. In considering the rate of interest to be allowed in a particular case between the date of accrual of the cause of action and the date of judgment, it must be borne in mind that not all the pain and suffering and loss of amenities which constitutes the whole or part of the award for general damages will have been suffered immediately at the date when the injuries were sustained. This loss will often occur gradually. So it would in some cases over-compensate the plaintiff to award interest in full from the date of the accident to the date of judgment. In Cookson v. Knowles (1979) AC 556 Lord Diplock suggested at p 572 that a "rough and ready" method of compensating the plaintiff for the delay in receipt of the monies payable in respect of the loss - a delay which might range from weeks or months to years - would be either to halve the period for which interest is given at the short term interest rates current at the time or to give interest for the whole period at half those rates. It should be noted that his Lordship was dealing with an element of economic loss flowing at a constant rate during the period up to trial.

10. There is no justification for treating a formula which was itself described by Lord Diplock as "rough and ready" as a necessary formula to be inflexibly applied in each case where severance between loss or damage sustained before judgment and thereafter is required. It was said by all five judges of the High Court who decided Callinan's case at p. 432:
    
    

"Of course, to arrive at an appropriate award of interest does not call for any nice apportionment of the various detriments into their pre-and-post trial segments, the process should not be permitted to assume an importance incommensurate with its relative effect upon the total sum for which judgment is given. Those passages from the authorities which the Full Court (of the Supreme Court of Queensland) has cited and which refer to the matter being 'dealt with in quite a broad way'; 'broadly and without bothering about too exact calculations' - De Nitis v. Seekts (1962) VR 417 at 418 and Murphy v. Murphy (1963) VR 610 at 614 respectively - sufficiently make this point."

1. Although the trial Judge did not say why he applied the full rate of 14% to the $15,000 component of the award for general damages we do not accept that he did so per incuriam. Whether it was appropriate for his Honour to give interest for the whole period before judgment at half the current rate of 14% or to otherwise discount that rate is a matter on which minds may perhaps differ. But in our opinion it has not been established that his Honour erred in applying the rate of 14% over the whole period before judgment. Doubtless, some of the respondent's pain and suffering and loss of enjoyment of life was not attributable to the whole period after the accident and before judgment. But much of her pain and suffering and loss of amenities appears to have arisen soon after the accident and continued thereafter, though doubtless fluctuating in intensity from time to time. This conclusion is supported by the trial Judge's findings of the damage attributable to the injuries sustained by her, namely:
   
   

- a wound to the medial aspect of the left lower leg producing skin loss which required two skin grafts. The two operations were performed in July and August 1981 (the accident occurred in June 1981). The respondent was left with a permanent scar on the medial aspect of the left lower leg.

- Multiple pelvic bone fractures to both rami of both pubic bones extending into the acetabular component of the right hip joint;

- large retroperitoneal haematoma;

- gross bruising and swelling of the left leg, blistering of the left leg - difficulty in walking. Some time before the first skin graft operation in July 1981 the plaintiff was encouraged to move about with the help of a walking frame. She made slow progress. She was discharged from the Royal Canberra Hospital on 14 September 1981, following her second skin graft operation and she walked with the aid of a stick which she used for the next six months. She returned to work on 4 November 1981.

- Pain in the lower back and left knee.

The trial Judge found:-

"I am satisfied that prior to the accident the plaintiff was able to run her household and care for her elderly mother. She also played some golf and was a reasonably active person. Since returning to work (4 November 1981) she is nowhere near as agile as before. She has been assisted since her discharge from hospital by her daughter and a boarder, Mr. Walter Gover. Whereas before the accident she was doing all her own housework she now cannot do housework to the same extent because she cannot bend or kneel and is generally slow. Household chores such as cooking, vacuum cleaning, washing and ironing are performed either by her daughter or the boarder. The plaintiff does manage a little dusting but otherwise performs no household work."

1. It seems plain that his Honour thought that, in those circumstances, it was pointless to discount by some small arbitrary percentage the usual rate of 14%. He correctly dissected the amount awarded for general damages into those sustained before judgment and those likely to be sustained thereafter and allowed an interest rate on the former only. He approached the award of interest in "a broad and practical way", doubtless having in mind the observations of the High Court in Fire & All Risks Insurance Co. Limited v. Callinan in the passage to which we have referred, and of Gibbs J. in Cullen v. Trappell (supra) at p 302:-
   
   

"However, the award of interest should always be approached in a broad and practical way, and this matter should not be allowed to assume disproportionate importance either at the trial or in the judge's consideration of the matter."

1. The appeal should be dismissed with costs.