Hodge v TCN Channel Nine & Anor No 2 - Interest and Costs - [2006] NSWSC 1272 - NSWSC 2006 case summary

Hodge v TCN Channel Nine & Anor No 2 - Interest and Costs - [2006] NSWSC 1272 - NSWSC 2006 case summary — Zoe

[13]

Both parties started with the judgment of the High Court in MPB(SA) Limited v Gogic (1991) 171 CLR 657. The effect of that decision is captured in the headnote: "… interest on damages for non-economic loss sustained before trial should not be calculated on current interest rates or the real rate of interest, which would have been available to the plaintiff in the relevant period, but on a rate which represents the difference between the prevailing rate for secure investments and the rate of inflation."
After referring to various economic factors the Court said at pp 663-664: "Damages for pre-trial non-economic loss, however, are assessed in accordance with the value of money as at the time of the award. In no way is any loss which a plaintiff incurs by reason of being deprived of his or her damages for pre-trial non-economic loss brought about by inflationary factors. In those circumstances, to award interest on damages for non-economic loss during the pre-trial period by reference to commercial rates is to compensate the plaintiff for a 'loss' which he or she has not sustained. No doubt whatever interest rate is used to compensate a plaintiff, it can be at best only a rough guide as to the value of the plaintiff's loss during the period when he or she was deprived of the use of his or her money."
After further reference to economic factors the Court explained the basis of the award of interest thus at 666: "A plaintiff is awarded interest because he or she has been deprived of the use of his or her money, not because he or she has forgone investment opportunities. It would be wrong, for example, to refuse to award a plaintiff interest simply because the real rate of interest during the relevant period was zero or a negative figure. Moreover, to award interest calculated by reference to the real rate of interest, when it has been a positive figure, ignores the important fact that the return to the real-life investor from his or her investment is diminished by income tax on both the inflationary and real profit components of that return. Thus, the use of the real rate of interest figure as the measure of a plaintiff's loss in being deprived of his or her damages for pre-trial pain and suffering does not seem inherently superior to the use of a fixed figure."
In Gogic the Court commented at 666 that the South Australian Supreme Court had selected a figure of 4 per cent, although somewhat arbitrary, as being fair and reasonable compensation for a plaintiff for being deprived of the use of his or her money and acted upon it for over seven years. The Court further commented that in the circumstances the use of the 4 per cent figure was more likely to achieve fair and reasonable compensation for plaintiffs than the use of the real rate of interest figure.

[19]

Both parties relied heavily on the judgment of McHugh JA in John Fairfax and Sons Ltd v Kelly (1987) 8 NSWLR 131. Kirby P agreed with McHugh JA. Interest is awarded for real and practical and not merely theoretical losses (p142). At p 143 McHugh JA said: "The correct approach in theory would seem to be that, since the plaintiff was entitled to damages immediately upon publication, the proper inquiry is first to determine to what extent the award was increased by reason of continuing injury. In strict theory the interest, in respect of this additional sum, would need to take account of the fact that the injury was spread over a period after publication. However, that amount has to be reduced for any sum additional to 'vindication damages' awarded in consequence of injury suffered between publication and verdict. This approach gives rise to obvious difficulties of assessment. But if, as I think is the case, the plaintiff is entitled to at least part of his damages from the date of publication, the choice is between awarding no interest at all or attempting to calculate interest on a basis which, although not mathematically perfect, achieves a measure or justice. Since it unfair to plaintiffs to deprive them of interest for the period in which they have been deprived of their money, interest ought to be awarded to the extent that is fair and proper." and "Speaking generally, the best approach is to treat the award as though the damages represent a loss spread over the period from the date of publication to trial. It is a process which does not achieve perfect justice for the plaintiff since he may have ceased to suffer actual injury well before the trial but it seems to be the most practical approach to a difficult problem."
McHugh JA stated the correct theoretical approach, recognised the difficulties in applying it and then formulated "the most practical approach". Australian Consolidated Press v Driscoll (1988) Aust Torts Reports, 80-175 p.67,645 was a defamation case dealing with the computation of interest. The leading judgment was delivered by Hope JA with whom Priestley JA agreed. At p 67,647-8 Hope JA said that in Kelly: "…This Court decided that interest is awarded to compensate the plaintiff for the loss which he suffers in being kept out of his money and as, except in exceptional circumstances, an award of damages in a defamation action has, or is to be treated as containing no award for loss after verdict, the plaintiff is prima facie entitled to such interest as is fair and proper on the whole of the award. Damages for vindication would ideally carry interest from the date of publication, but damages for injury to feelings and reputation may relate to the whole period from publication to trial. This gives rise to problems in calculating interest when the jury does not identify how its award is made up - a course which it was suggested should not be adopted. The practical solution adopted in these circumstances was to assume that the whole of the award represented a loss spread over the period from publication to trial."
Hope JA set out the two passages from Kelly quoted earlier.

[73]

In Hughes v Western Australia Cricket Association & Ors 1986 ATPR 40-748 at p 48,136, after noting a similar statutory provision in s 43.3 of the Federal Court of Australia Act 1976 Toohey J said: "The discretion must of course be exercised judicially. There are decisions, both of Australian and English courts, that throw light on the way in which the discretion is to be exercised. I shall not refer to those decisions in any detail; I shall simply set out in a summary way what I understand to be their effect. 1. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order. Ritter v Godfrey (1920) 2 KB 47. 2. Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed. Forster v Farquhar (1893) 1 QB 564. 3. A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party's costs of them. In this sense, 'issue' does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law. Cretazzo v Lombardi (1975) 13 SASR. 4 at p 12. There is no difficulty in stating the principles; their application to the facts of a particular case is not always easy. Also it is necessary to keep in mind the caveat by Jacobs J in Cretazzo v Lombardi at p 16. His Honour sounded what he described as 'a note of cautious disapproval' of applications to apportion costs according to the success or failure of one party or the other on the various issues of fact or law which arise in the course of a trial. His Honour commented: 'But trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judge goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues."
This is also a case where the application of the principles is not easy. The credit of the witnesses was important and that involved a certain degree of overlappinhg so far as the various issues were concerned. It was a case where I examined the evidence on each of the many points in issue in some detail without losing sight of the overall picture.

Hodge v TCN Channel Nine & Anor No 2 - Interest and Costs

At a glance

Court

Decision date

Before

Source

Judgment (81 paragraphs)

Parties

Cases Cited (3)