Supreme Court Act 1986, ss.60, 101.

Solicitors for the Appellant Purves Clarke Richards

BROOKING JA On 22 August 1995 we heard and determined an appeal by the defendant against the assessment of damages for non-pecuniary loss by a County Court jury arising out of an industrial accident which had occurred in September 1985. The assessment was in the sum of $220,000, the verdict being returned on or about 12 October 1994. We held that to be a manifestly excessive award and at the invitation of the parties re-assessed damages. The result of s.135 of the Accident Compensation Act 1985 was that at the trial judgment was given for the plaintiff (on 14 December 1994) for $184,740. The trial judge awarded in addition agreed damages in the nature of interest of $16,349 pursuant to s.60 of the Supreme Court Act 1986, made applicable to the County Court by s.33 of that Act. Pursuant to s.74(4) of the County Court Act 1958, the judge stayed execution pending the determination of an appeal or further order. This stay was expressed to be conditional upon the defendant's giving notice of appeal within the time allowed by s.74 of the County Court Act and giving security for the judgment debt of $201,089 within 14 days, either by payment into court or by the lodgment of a bond.

2. Having given reasons for its conclusion that the appeal should succeed and that damages should be re-assessed at $120,000, the court raised with counsel questions concerning costs and damages in the nature of interest. (For the sake of brevity I shall hereafter speak of interest instead of damages in the nature of interest.) Counsel were not able to agree on interest and at their request we put the matter over to the following day to enable agreement to be reached on the amount to be allowed for interest. In doing this we said:

1. Appeal allowed. Verdict set aside. Judgment thereon varied by

substituting for the sum of $184,740 as the amount for which

judgment is given for the plaintiff the sum of $120,000, and by

substituting for the sum of $16,349 for which damages in the

nature of interest were awarded, the sum of (blank) dollars as

damages in the nature of interest down to 23 August 1995.

2. Order that respondent pay two thirds of appellant's costs of

the appeal.

There will have to be a third minute providing for payment out

of the County Court of the amount paid in by way of security

together with accrued interest. We will make an order along

those lines tomorrow on the attendance of counsel or the

solicitors for the parties at half-past ten ... ".

3. On the following day, 23 August, we were told that the expected agreement on interest had not been reached. Counsel for the appellant invited us to make an order in accordance with the minutes we had formulated, inserting $12,924.49 as the amount of the interest and ordering payment out to the appellant's solicitors of the money paid into court together with accrued interest. It later appeared that counsel for the appellant did not resist an order for payment out to the respondent of the sum of $120,000 together with the amount suggested by the appellant for interest. We were told by both counsel that the money paid into court had earned interest at the rate of about 7.5% per annum. It was common ground that the figure suggested by the appellant - $12,924.49 - was arithmetically correct as a calculation of interest at 4% on 65% of $120,000 from the filing of the writ on 2 July 1991 to 23 August 1995. It was also agreed by counsel that, for the purposes of an award of interest, 65% of the damages of $120,000 should be taken to relate to loss suffered before the date of the award, and that 4% was the appropriate rate. See, as to the rate of interest, M.B.P. (S.A.) Pty. Ltd. v. Gogic (1991) 171 ALR 657; Clarke v. Foodland Stores Pty. Ltd. [1993] VicRp 81; (1993) 2 VR 382 at p 396. A rough calculation suggests that the agreed interest of $16,349 allowed by the trial judge represented 4% on 65% of $184,740 for the period from filing of writ to judgment.

4. The respondent's counsel submitted that the amount allowed for interest should be, not $12,924.49, but $17,200. This last figure was arrived at by dividing the period from the issue of the writ into two parts, separated by the date of the judgment below, 14 December 1994. In respect of the first of these parts we were invited by the respondent to award interest on 65% of $120,000 - $78,000 - at the rate of 4% for 3.42 years, giving, it was said, an amount of $10,670. In respect of the second part, from 14 December 1994 to the determination of the appeal, we were invited to allow interest on $130,670, being the assessed damages of $120,000 together with the $10,670 interest already calculated down to the date of the judgment. The submission was that interest should be allowed on this sum of $130,670 at 7.5% for eight months, giving an amount of $6,530 which, added to the $10,670, gave a total award of interest of $17,200.

5. It will be noted that the respondent's approach has the result that, in respect of the period after the judgment below, interest is to be allowed on the whole of the $120,000, not 65% of it as the percentage representing past pain and suffering and past loss of enjoyment of life, that interest on interest is to be awarded, by the allowance of interest on the sum of $10,670, and that the suggested rate of interest is increased from 4% to 7.5%, the latter rate being taken as the estimated interest earned by the sum paid into court. By s.s.(2)(a) of s.60 of the Supreme Court Act, nothing in the section authorises the granting of interest on interest.

6. We were told by counsel that the making of orders granting stays of execution on condition of the giving of security for the amount of the jury's verdict has of late become common in the County Court.

7. Very little was said in support of the competing contentions about interest. No authority was cited to us. The respondent's contention was in substance that, interest having in fact been earned at a rate much in excess of 4% on the money paid into court, he should receive a corresponding benefit on such part of the amount paid in as might be regarded as dedicated, so to speak, to the substituted judgment which will result from the re-assessment of damages.

8. The principles governing the award of interest where an appeal succeeds against the assessment of damages for personal injuries by a jury or a judge and damages are re-assessed by the appellate court appear to have received little attention in this State. It is unfortunate that the question now arises in a case in which the argument has been so limited. In my own experience, where an assessment of damages for personal injuries by a judge or jury is set aside as manifestly excessive or inadequate and damages are forthwith re-assessed, the appellate court in this State has on a few occasions, in the course of determining the appeal, itself arrived at a substituted figure for interest, which from the amounts concerned - seems to me to have been based on the adoption of the same interest rate as that used by the trial judge. (The complication of money paid into court as security has not existed, or at all events been raised, in these cases.) In my experience it is, however, the usual course for the appellate court to do what was done in this case, namely, invite the parties to reach agreement on the amount of interest. So far as I am aware, agreement has then usually if not indeed invariably been reached by the parties, and the court has in consequence not been required to determine the question itself.

9. When in Victoria the appellate court re-assesses damages on appeal, the judgment which the court substitutes by its order for the judgment below takes effect from the date of the order made on appeal, unless the court, either expressly or by implication, directs that the judgment as substituted by its order take effect from some other date, and in particular from the date of the judgment below. That this is so is shown by L. Shaddock and Associates Pty. Ltd. v. Council of the City of Parramatta (No. 2) (1982) 151 ALR 590, Gould v. Vaggelas (1985) 157 ALR 215 at pp 272-4, Nicol v. Allyacht Spars Pty. Ltd. (No. 2) (1988) 165 ALR 306 and Official Receiver v. Schultz (1990) 170 ALR 306.

10. Although I have made no search, I am not aware of any case in Victoria in which the Full Court or Court of Appeal has directed that the judgment below for damages for personal injuries substituted by its order take effect from the date of the original judgment. It is my belief that when appellate courts have in this State re-assessed damages for personal injuries they have done so on the basis that the substituted judgment will take effect from the date of the order made on appeal, and on the basis that the adjustment to the award of interest below should reflect not only the alteration to the amount of damages awarded but also the period for which interest is allowed so as to treat that period as ending on the day on which the appellate court makes its order, and on the basis that the rate employed should be the same as that used by the trial judge. This understanding is reflected in the minutes suggested by the court on 22 August in this case, which contemplated that the agreed interest would be in respect of the period ending with the making of the order allowing the appeal. In what I say I am throughout assuming that the position is not complicated by the making of a payment to the plaintiff which represents the whole or part of the original award of damages.

11. An assessment of damages for personal injuries is made by having regard to the purchasing power of the currency at the date of the award: O'Brien v. McKean (1968) 118 ALR 540 at pp 544-5 per Barwick CJ, p 553 per Taylor and Menzies, JJ. and at p 559 per Windeyer J; Ruby v. Marsh (1975) 132 ALR 642 at p 647 per Barwick CJ and at p 665 per Stephen J; Wright v. British Railways Board (1983) 2 AC 773 at pp 777-8 per Lord Diplock; Johnson v. Perez (1988) 166 ALR 351 at p 356 per Mason CJ, at pp 373-6 per Brennan J, at p 381 per Deane J and at pp 387-8 per Dawson J; M.B.P. (S.A.) Pty. Ltd. V. Gogic (1991) 171 ALR 657 at p 663.

12. Accordingly, the appellate court, while having regard to the value of money at the time of the challenged award in considering whether it should be set aside as excessive or inadequate, will, if it comes to re-assess damages, do so in the light of the value of money at the time of the re-assessment: Meade v. Mantell, an unreported decision of the Court of Appeal of New South Wales given on 27 March 1975. There the judgment below was 28 months old and the purchasing power of money had declined substantially in the meantime. Similarly, in Beneke v. Franklin (1975) 1 NSWLR 571 (another decision given during the same period of very high inflation) Moffitt, P at pp 587-8 and Samuels JA at pp 613-4 both accepted that, if damages were to be re-assessed by the Court of Appeal, it would be necessary to have regard to the value of money at the time of the re-assessment. That damages must be re-assessed on appeal by having regard to the value of money at the time of the re-assessment is recognised by Professor Luntz, Assessment of Damages for Personal Injury and Death, 3rd Ed., paras.12.1.2 and 12.2.8, who regards this is the consequence of the principle that the assessment of damages must be in the money of the day.

13. In the present case, in accordance with the usual if not indeed the invariable practice in this State, the court re-assessed the damages in the light of the purchasing power of money at the time of the re-assessment, that is, August 1993. That this was done is indeed shown by the absence of any indication that the order proposed to be made on appeal was intended to vary the judgment below as from the date on which that judgment was itself given and by the positive indication in the draft minutes of order that interest should be allowed down to 23 August 1995, that date being thus treated as "the date of the judgment" for the purposes of s.60(1) of the Supreme Court Act. The court had power to take the unusual course in the present case of reassessing damages as at the date of the jury's verdict, on the footing that it would by its order make its reassessment take effect from the date of the judgment below. It did not do so, adhering instead to the practice of reassessing damages by an assessment which will take effect only upon the making of the order on appeal. There was no reason for departing from this practice.

14. Where this practice is followed, the judgment for damages substituted by the order on appeal bears interest under s.101 of the Supreme Court Act only from the date of the order made on appeal, since that is the date on which the judgment is given. The early case of Keogh v. Dalgety and Co. Ltd. [1917] VicLawRp 47; (1917) VLR 309 should not be regarded as authority to the contrary; compare the doubt expressed in Craine v. Conlonial Mutual Fire Insurance Co. Ltd. [1923] VicLawRp 78; (1923) VLR 623 at p 629. A plaintiff cannot recover in respect of the same damages and the same period both interest under s.60 and interest under s.101.

15. Prima facie, having re-assessed the damages, and no payment on account of the damages having been made to the respondent, the court should now allow interest at the appropriate rate - 4% - on the agreed percentage - 65% - of the damages as re-assessed for the whole of the period between the institution of the action and the date on which the re-assessment takes effect, that is, the date of this court's order. This is what the appellant invites us to do. It does not ask us to make some adjustment to reflect the gradual accruing of loss which might be said to have occurred between the date of the writ and the date of this Court's order.

16. The fact that security has been given for the amount of the judgment below and the fact that this security took the form of a payment into court which has earned interest at a rate much in excess of 4% is no reason for departing from what would ordinarily be done. The proper assessment of damages has been deferred in consequence of the jury's erroneous estimate. Unhappily this is a not uncommon incident of litigation. If the court had ordered a new trial instead of making the assessment itself the fresh jury would have assessed damages according to the value of money at the time of the re-trial and, the existing verdict and judgment having been set aside, there would have been no reason for requiring in the meantime the continued provision of security by the appellant in any sum: the appropriate order would have been for payment out to the appellant of the amount in court together with accrued interest. The amount paid in was earmarked or dedicated only in the sense that it stood as security for the judgment for $201,089, which judgment has now fallen. The payment in might have been made by bond, in which case no interest would have been earned. Interest at the rate of 4% under s.60 of the Supreme Court Act is the fair legal measure of compensation to the respondent for being kept out of his money for the period from the institution of proceedings until the judgment takes effect: M.B.P. (S.A.) Pty. Ltd. v. Gogic (1991) 171 ALR 657; Haines v. Bendall. (1991) 172 ALR 60 at p 66; Clarke v. Foodland Stores Pty. Ltd. [1993] VicRp 81; (1993) 2 VR 382 at p 396. It is not to be regarded as an imperfect measure of compensation and as liable to be replaced as to part of the period by a "commercial" rate of interest because of what has happened in the present case, any more than if the assessment of damages had been delayed because a re-trial became necessary in consequence of the discharge without verdict of the jury at the first trial.

17. Since the making of the order of this court has been deferred by several days from 23 August, I would round off the award of interest to $13,000 and make an order in accordance with the first two minutes proposed on 22 August, inserting the sum of $13,000 into minute 1. The appellant in the end not, as I understood it, opposing this course, minute 3 should order that the sum of $133,000, being the total sum payable by the appellant to the respondent for damages and interest pursuant to the substituted judgment, be forthwith paid to the respondent's solicitors for the respondent out of the County Court from the sum of $201,089, paid into court by the appellant and that the balance of the sum of $201,089, together with all interest accrued on the sum of $201,089, be forthwith paid out to the appellant's solicitors for the appellant.

18. I mention again the fact that the appellant has not suggested that interest should not be allowed at 4% for the whole of the period from writ to determination of appeal by reason of the fact that part only (although no doubt a large part) of the 65% of the $120,000 damages attributed by the parties to loss suffered before the determination of the appeal had been suffered by the date of the writ, the rest of the 65% having gradually accrued over the period of more than four years which elapsed between writ and determination of appeal. For the view taken of the proper course for trial judges in New South Wales (where the period available for the award of interest commences with the injury), see Metropolitan Meat Industry Board v. Williams (1991) 24 NSWLR 54 and Government Insurance Office of New South Wales v. Rosniak (1992) 27 NSWLR 665.

19. The Court accordingly makes an order in accordance with the first two minutes of order proposed on 22 August, inserting the sum of $13,000 into minute 1.

20. Minute 3 orders that the sum of $133,000, being the total sum payable by the appellant to the respondent for damages and interest pursuant to the substituted judgment, be forthwith paid to the respondent's solicitors for the respondent out of the County Court from the sum of $201,089 paid into court by the appellant, and further orders that the balance of the sum of $201,089, together with all interest accrued on the sum of $201,089, be forthwith paid out to the appellant's solicitors for the appellant.

21. Although this, of course, does not form any part of the order, the Court grants the respondent an indemnity certificate under s.13 of the Appeal Costs Act.

HAYNE JA I have had the advantage of reading in draft the reasons for judgment of his Honour Brooking JA. I agree in those reasons and the order which his Honour proposes.