Shaw Savill and Albion Co Ltd v Commonwealth

The High Court of Australia considered a special case stated by its Principal Registrar concerning an Admiralty action between Shaw Savill and Albion Co. Ltd. (plaintiff) and the Commonwealth of Australia (defendant). The dispute arose from a collision between the plaintiff's vessel, the M.V. Coptic, and the defendant's vessel, H.M.A.S. Adelaide, in 1940. Following initial proceedings and appeals, a decree was made in 1947 finding the defendant at fault and referring the assessment of damages to the Principal Registrar. The parties subsequently agreed on the quantum of damages, £24,263 7s. 7d., which had been paid, but disagreed on whether interest was payable on this sum.

The legal issue before the Court was whether interest was payable on the agreed sum of damages by way of damages or otherwise. The defendant contended that the Admiralty rule allowing interest as part of damages was a matter of practice or procedure, which was not carried over into the Admiralty jurisdiction of the High Court under its existing rules. The plaintiff argued for the inclusion of interest as a substantive component of the damages awarded in Admiralty collision cases.

Dixon C.J. held that the Admiralty rule allowing interest as part of damages in collision cases is a rule of substantive law, not merely procedure. He explained that this rule, derived from the civil law, compensates for the loss incurred by the obligee when payment is not made at the proper time. The Court affirmed that this principle is well-settled in Admiralty jurisdiction and is not excluded by the rules of the High Court. Therefore, the Court determined that interest was payable on the agreed sum by way of damages. The defendant was ordered to pay the costs of the reference.