REASONS FOR JUDGMENT
BURCHETT J
This tax appeal turns not so much on any point of tax law as on a correct understanding of the law governing aspects of the assessment of damages in litigation in respect of personal injuries. The principal question debated upon the appeal was the character of an amount included, pursuant to s 94 of the Supreme Court Act 1970(NSW), in a judgment for damages for a personal injury. The character of the amount so included in the judgment must determine whether it was received by the successful plaintiff as capital or as income liable to tax.
Section 94(1) of the Supreme Court Act provides:
"In any proceedings for the recovery of any money (including any debt or damages or the value of any goods), the Court may order that there shall be included, in the sum for which judgment is given, interest at such rate as it 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 when the judgment takes effect."
Pursuant to this section, a sum of $65,514.38 was included in a total award of damages in favour of the appellant of $808,564.38, given by Campbell J in the Supreme Court of New South Wales in an action for damages for medical negligence. The appellant (it is convenient to call her the plaintiff), who had been virtually without sight in one eye as a result of an injury suffered as a child, in middle age became quite blind in the other eye also, by reason of the onset of a condition known as sympathetic ophthalmia following surgery performed on the injured eye. The plaintiff, now almost totally blind, sued the surgeon on the basis that he had negligently failed to advise her there was a very small risk of this happening, a risk which she asserted she would not have run had she known of it. The evidence showed that, while some reputable medical experts would have warned the plaintiff, other reputable medical experts would not. In those circumstances, difficult questions of the law of medical negligence were raised by the case, and it ultimately reached the High Court of Australia, which affirmed the plaintiff's success in the Courts below: Rogers v Whitaker (1992) 175 CLR 479; and see Rogers v Whitaker (1991) 23 NSWLR 600, and Whitaker v Rogers (1990) Aust Torts Reports 68,288, the decision at first instance.
In accordance with the normal practice, Campbell J apportioned the general damages of $120,000 so as to specify that $50,000 related to the period prior to judgment, and likewise divided loss of earning capacity between the past and the future, apportioning the sum of $78,074 to the past. These figures appear in the judgment at 68,337. Utilising them together with a relatively small amount of $2,025 apportioned to past transport costs, the parties were able to agree on the inclusion in the judgment of the sum of $65,514.38, previously mentioned. That amount was made up of the following components: a sum of $39,190.26, being 8.61 per cent per annum calculated on $78,074 over a period of 5.83 years to 30 June 1990, the date of the plaintiff's operation having been 1 August 1984; a sum of $25,307.64, being 8.56 per cent per annum calculated on $50,000 over a period of 5.913 years; and a sum of $1,016.47 calculated at 8.61 per cent per annum on $2,025 over a period of 5.83 years. The total seems to involve an error of 1 cent. Although these calculations reveal slight differences in the periods and interest rates, it is apparent that, in broad terms, the conventional practice was adopted of taking an interest rate (in this case about 17 per cent per annum) and then halving it for the purposes of a calculation over the approximate period between the injury and the date of the assessment, so that the amount of interest allowed would reflect the accrual of the damages over that period. The rationale of this practice is explained in Bennett v Jones [1977] 2 NSWLR 355 at 371-372, 374, and 380-381. So far as concerns the choice of a rate of about 17 per cent in respect of all the calculations, including that relating to general damages for the past, this was no doubt due to the date of the assessment, which was made at a time when the view of the majority of the High Court in Cullen v Trappell (1980) 146 CLR 1 at 21 required the adoption of interest "at ordinary commercial rates", in the application of s 94, whether past economic loss or past pain and suffering and loss of amenity was in question. Since the decision in M.B.P. (S.A.) Proprietary Limited v Gogic (1991) 171 CLR 657, a conventional rate of 4 per cent has generally been utilised in the calculation of interest in respect of sums apportioned to general damages for the past, although a commercial rate has been retained in respect of loss or impairment of earning capacity during the past. Precision has never been required: Fire and All Risks Insurance Co. Limited v Callinan (1978) 140 CLR 427 at 432-433.
"Whether or not a particular receipt is income depends upon its quality in the hands of the recipient": Scott v The Commissioner of Taxation of the Commonwealth of Australia (1966) 117 CLR 514 at 526; G.P. International Pipecoaters Proprietary Limited v The Commissioner of Taxation of the Commonwealth of Australia (1990) 170 CLR 124 at 136; The Commissioner of Taxation of the Commonwealth of Australia v Rowe (1997) 187 CLR 266 at 279. Therefore, the question whether the appellant must bring the amount awarded under s 94 to account for income tax purposes requires an examination of the nature of such an award. That, as I have already suggested, does not depend upon the law of income tax; it depends upon the law applicable to the assessment of damages in a case of this kind. In Haines v Bendall (1991) 172 CLR 60 at 66-67, Mason CJ, Dawson, Toohey, and Gaudron JJ stated the principles governing the exercise of the power to award interest under s 94. Their Honours said:
"The power to award interest on damages for the period between the date when the cause of action arose and the date on which a judgment takes effect is conferred by s. 94 of the Supreme Court Act. The section confers power on the Supreme Court to order that there shall be included, in the sum for which judgment is given, interest at such rate as it thinks fit on the whole or any part of the money between the date when the cause of action arose and the date when the judgment takes effect.
An award of interest up to the date of judgment is an award of interest in the nature of damages: Fire and All Risks Insurance Co. Ltd. (1978) 140 C.L.R., at p. 431. This statement acknowledges that the award of interest is an integral element in the attainment of the object of damages, namely, to compensate a plaintiff for injury sustained. Hence the award of interest is compensatory in character. While '[i]nterest should not be awarded as [I have added the emphasis which is missing from the C.L.R. report - see corrigenda p. xi] compensation for the damage done' (emphasis added) (Jefford v. Gee [1970] 2 Q.B. 130, at p.146), the award of interest is nevertheless an essential element in the achievement of true compensation for that damage. In Thompson v. Faraonio (1979) 54 A.L.J.R. 231, at p. 233; 24 A.L.R 1, at p.7, the Privy Council stated that '[t]he reason for awarding interest is to compensate the plaintiff for having been kept out of money which theoretically was due to him at the date of his accident' (emphasis added): see also Batchelor v. Burke (1981) 148 C.L.R., at p.455, per Gibbs C.J.; M.B.P. (S.A.) Pty. Ltd. v. Gogic (1991) 171 C.L.R., at pp. 663-665; cf. Ruby v. Marsh (1975) 132 C.L.R. 642, at pp. 652-653, per Barwick C.J. The award of interest for the period of delay in payment between the date of accrual of the cause of action and judgment affords the fair legal measure of compensation: Pheeney v. Doolan [1977] 1 N.S.W.L.R. 601, at p.613, per Reynolds J.A. Thus, it is the award of damages and, where appropriate, interest awarded on damages for the period up until the judgment takes effect which allows the plaintiff to be placed in or restored to the situation, as far as money can do, in which he or she would have been but for the defendant's negligence.
Section 94(1) of the Supreme Court Act confers a wide discretion on a court awarding interest. That discretion must, however, be exercised in accordance with legal principle: Cullen v. Trappell (1980) 146 C.L.R., at p. 17, per Gibbs J. That means that the discretion must be exercised in conformity with the general principles governing the award of damages so that an award of interest on damages for personal injury should do no more than assist in the restoration of a plaintiff to the position in which he or she would have been but for the defendant's negligence."
It is worthy of note that when, in this passage, their Honours make the statement "the award of interest is an integral element in the attainment of the object of damages, namely, to compensate a plaintiff for injury sustained", they are echoing the words which Evershed J (as he then was) used in the decision at first instance in Westminster Bank, Ltd v Riches [1945] 1 All ER 466 at 479 to distinguish the case of an assessment of "damages for fraud or negligence", including an amount for pre-judgment interest, from the case of a judgment allowing recovery of a debt with interest. His Lordship said that "in the case, for example, of a claim for damages for fraud or negligence it is plainly easier to conceive of an award calculated in terms of interest being in reality an integral part of a single award of damages as such." Riches involved an award of interest upon the taking of an account of profits. When the case reached the House of Lords as Riches v Westminster Bank Limited [1947] AC 390, the amount allowed as interest was held, in the words of Lord Wright at 402, to fall "within the scope of the charging words of sch. D to the Income Tax Act 1918... which charges 'all interest of money.'" Lord Wright made it clear (at 402-403) that cases of this kind depended on the distinction "whether the payments were payments of profits, that is, were income, or were payments on capital account estimated in terms of interest. ... This distinction depends on substance not on the mere name."
In Gogic, the joint judgment of all members of the High Court stated (at 663) that "[t]he function of an award of interest is to compensate a plaintiff for the loss or detriment which he or she has suffered by being kept out of his or her money during the relevant period: Batchelor v Burke (1981) 148 CLR 448, at p. 455, per Gibbs CJ." Their Honours went on (at 666) to state specifically that it would be erroneous "to assume... that the purpose of the award of interest is to compensate a plaintiff for being deprived of the opportunity to invest his or her money". The true position, they made clear, is that "[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". In the later decision Andjelic v Marsland (1996) 186 CLR 20 at 25, Brennan CJ, Dawson, Toohey and Gaudron JJ referred to Gogic, and said (at 25):
"In that case, the reason for allowing interest was identified as the 'depriv[ation] of the use [by a plaintiff] of his or her money', not the fact that 'he or she has forgone investment opportunities'."
That a plaintiff in a personal injuries case receives interest as compensation for being kept out of his money has also been held in England: Pickett v British Rail Engineering Ltd [1980] AC 136 at 151, 158, 164, 173.
In Metropolitan Meat Industry Board v Williams (1991) 24 NSWLR 54, the New South Wales Court of Appeal (Samuels AP, Mahoney JA and Hunt AJA) commented on Gogic. Their Honours said (at 56-57):
"The notion that the recovery of a verdict turns the plaintiff into an investor... has been... effectively demolished in [Gogic]... An award of damages for non-economic loss is designed to provide solace to a plaintiff for the pain and other disabilities which the defendant's tort has inflicted. In Thatcher v Charles (1961) 104 CLR 57 at 75-76, Windeyer J said that 'in very many cases damages are given, not to meet particular needs, but so that the injured person may use the money as he wishes: so that by it he may get things, tangible or intangible, that he otherwise could not have had to make up for the loss of the things that he now can never have again.' And in Teubner v Humble (1963) 108 CLR 491 at 507, he observed: 'But in so far as the possession of money can in a particular case give pleasure or provide comfort, money can properly be said to compensate for pain and suffering.' It is by no means easy, to our minds, to work out a means of assessing a rate of interest capable of satisfactorily valuing the delay in receiving a sum destined for use for such a purpose.
...
We would, for our own part, respectfully adopt the reasoning of Lord Diplock in Wright v British Railways Board [1983] 2 AC 773 at 781 and 784. In the first of those passages, his Lordship said:
'My Lords, just as the lump sum of money assessed as being the appropriate compensation for past and future pain and suffering and loss of amenities cannot be other than a conventional figure, since such non-economic loss is not susceptible of measurement in money, so too an award of simple "interest" at a particular rate on that lump sum as the method of assessing compensation for the temporary loss of the use of it between the date of service of writ and the date of judgment is wholly conventional; but it is the method that the court is commanded by the statute to adopt. To what use the particular plaintiff would have actually put that capital sum during the period for which "interest" is to be given is utterly irrelevant. It is most unlikely that if he had received it he would have invested and kept it in income-earning securities throughout that period'.
He went on to add that investment by the plaintiff of his damages is 'the assumption that judges are called upon to make'; but now, in Australia, that assumption has been excluded."
In NSW Department of Technical & Further Education v Pitt (1993) 9 NSWCCR 309, the question whether compensation, if received in due time, would have been invested so as to earn income was raised in a somewhat different context. The appeal came from the Compensation Court, which had ordered the payment of a lump sum in respect of permanent impairment, and had ordered that interest be paid on that sum from a date nearly three years past. It was argued that the interest should be scaled down "to take account of the taxation on the notional investment and the elimination of the risk of loss of capital during the relevant period". Cripps JA (with whom on this point Priestley and Meagher JJA agreed) declined to do that. His Honour said (at 319):
"It would seem to me, with respect, that upon the assumption that interest is being awarded to compensate Mr Pitt for being kept out of his money, it is irrelevant to consider what he might have done with that money had he had it."
Meagher JA referred to this case in his judgment (with which relevantly Priestley JA agreed and with which Cole JA also agreed) in Golec v Scott (1995) 38 NSWLR 168 at 171. He there quoted with approval the statement of Priestley JA in an earlier unreported case:
"I do not see why the plaintiff should be treated as having invested the judgment moneys in such a way as to earn taxable interest; he might have bought a home to live in; he might have bought shares with fully franked dividends; he might have bought vacant land with a view to holding it as a gift for his children in 20 years time; the possibilities are endless, and not all have the same tax consequences. Further, I take the award of interest as a form of compensation for the plaintiff's not having received his damages when he should have done in the ordinary course of events; the interest rate calculation is a convenient way of estimating this compensation, but does not require that the plaintiff be held to the hypothesis upon which its reasonableness is based."
Similarly, in Alvorac General Engineering Pty Ltd v Arlotta (1993) 29 NSWLR 734, like Pitt an appeal from the Compensation Court, Cripps JA said (at 747):
"It would seem to me, with respect to people who have other views, that upon the assumption that interest is awarded to compensate a person for being kept out of money due, it is not relevant to consider what that person might have done with the money."
Priestley JA agreed (at 743). Mahoney JA, who dissented from the decision of the majority, nevertheless, commenting on Gogic, said (at 741):
"It is, of course, correct that, in the ordinary case, a plaintiff who receives damages for non-economic loss does not use it, or use it merely, to invest at interest: common knowledge or conjecture would suggest that some or all of it is used to achieve more personal satisfactions. It is therefore, in a sense, incongruous to award compensation for a loss of interest which the plaintiff would in fact not have suffered."
What Mahoney JA said of damages for non-economic loss would be equally true of weekly or fortnightly wages, in a case where interest under section 94 is awarded because they have not been received between the date of injury and the date of assessment.
These various statements of the position under s 94 of the Supreme Court Act and similar provisions in Australia are consistent with the statement of White J, delivering the opinion of the Supreme Court of the United States in Monessen Southwestern Railway Co. v Morgan (1988) 486 US 330 at 335:
"Prejudgment interest is normally designed to make the plaintiff whole and is part of the actual damages sought to be recovered."
In my opinion, it follows from the principle upon which pre-judgment interest is awarded in respect of past pain and suffering and loss of the amenities of life that it is not in any sense of an income character. It does not replace any actual income lost, and the statements of principle in the High Court and in the Court of Appeal of New South Wales make it clear that it does not replace notional income lost either. Whether by the adoption of a commercial interest rate or, as has been the practice since Gogic, by the adoption of a conventional interest rate, the use of an interest rate is no more than a guide to the determination of an appropriate figure. When determined, the figure is part of the total amount awarded by the judgment in order to achieve the law's object - to put the plaintiff back, so far as money can do so, in the position he would have been in but for the injury. That cannot be done without making up in some way for the fact that some parts of the award compensate the plaintiff for losses suffered, perhaps, years previously. But to do that it is not necessary to assume, contrary to human experience, that if moneys had been received earlier they would necessarily, or even probably, have been invested at interest. It is more likely that a solace for pain and suffering would have gone into immediate expenditure to relieve a pressing need, or to provide some comfort. The law is not so foolish as to suppose otherwise. It compensates the plaintiff for not having been able to do what he would have done, not what he would not have done.
While the award of interest upon so much of the general damages as is apportioned to past pain and suffering and loss of the amenities of life provides the most obvious illustration of this point, I think the position is the same with reference to interest calculated upon past economic loss. It is not ordinary experience that the wage earner invests the whole, or even any substantial part, of his wages to earn interest. Wages are normally spent as they are earned. The amount added to the award is to compensate the plaintiff for being kept out of his money. It is a matter of common observation that, in many cases, needy plaintiffs, unable to work, have had to borrow from friends or relatives or from less generous lenders. They may have to make repayments with interest. They may have had to buy household requirements pursuant to deferred payment arrangements involving significant expense, or they may have had a motor car or appliance repossessed because no wages were coming in. Even if a particular plaintiff suffered no special difficulty, the loss of the opportunity to do what he wished with his own wages when they should have been received, and the loss in the value of the money over the period until receipt, require compensation. That compensation has nothing to do with a notional investment at interest. It is, in Lord Wright's phrase, "estimated in terms of interest", but interest it is not.
Indeed, the apportioned award itself of damages for loss of earning capacity for the past does not necessarily imply an imputed receipt by the plaintiff of a particular sum of wages which could be notionally invested. That may be the normal case, but in principle the award is for the loss of an earning capacity, not for particular wages. The point is made succinctly, and the position in England is contrasted, in the joint judgment of Mason and Dawson JJ in Redding v Lee (1983) 151 CLR 117 at 133-134. McLaughlin v Chicago, Milwaukee, St. Paul & Pacific Ry. Co. (1966) 143 NWR 2d 32 is, I think, good law in Australia as well as in the United States. There it was held that a plaintiff, who was a teacher, was entitled to damages for the loss of his earning capacity notwithstanding that he had taken a vow of poverty as a priest of a religious order, for which he taught at no salary. That the same decision would be reached in Australia is confirmed by the judgment of Gallop J in McMillan v Territory Insurance Office (1988) 57 NTR 24 at 32-33. The legal theory which justifies such a result has been repeatedly stated by members of the High Court, and a number of the cases will be found collected in a footnote to para. 5.1.3 of Luntz, Assessment of Damages for Personal Injury and Death (3rd ed., 1990). One of those cases is cited in Fleming, The Law Of Torts (8th ed., 1992) at 231 for the proposition that damages for the loss of earnings relate to the impairment of a plaintiff's capacity to earn. The case is O'Brien v McKean (1968) 118 CLR 540, where Windeyer J said (at 557) that "the true ground of damages for what is called economic loss is the destruction or impairment of earning capacity". Barwick CJ had asserted the same view at 546. The position was restated by Brennan J, when he was a member of this Court, in Tinkler v Federal Commissioner of Taxation (1979) 29 ALR 663 at 667:
"[A]n award of damages is assessed to compensate not for loss of earnings but for loss or impairment of earning capacity: see Paff v Speed (1961) 105 CLR 549 at pp 559, 566; Bresatz v Przibilla (1962) 108 CLR 541 at 545; Arthur Robinson (Grafton) Pty Ltd v Carter (1968) 122 CLR 649 at 658. Although an injured plaintiff recovers 'not merely because his earning capacity has been diminished but because the diminution in his earning capacity is or may be productive of financial loss' (Graham v Baker (1961) 106 CLR 340 at 347), the award is assessed as a lump sum to include fair compensation for the affection of earning capacity over the entire post-accident period."
The conclusion has been drawn that an award of damages in respect of economic loss is not assessable to income tax. In Groves v United Pacific Transport Pty Ltd [1965] Qd.R. 62 at 65, Gibbs J said:
"Although it is usual and convenient in an action for damages for personal injuries to say that an amount is awarded for loss of wages or other earnings, the damages are really awarded for the impairment of the plaintiff's earning capacity that has resulted from his injuries. This is so even if an amount is separately quantified and described as special damages for loss of earnings up to the time of trial. Damages for personal injuries are not rightly described as damages for loss of income. It follows that in my opinion an award of damages for personal injuries does not come within the description of 'an indemnity for or in respect of any loss of income' within s.26(j) of the Income Tax and Social Services Contribution Assessment Act and that such an award is not income in accordance with ordinary concepts so as to be taxable apart from the special provisions of that section."
Gibbs J referred to this decision in his judgment in Atlas Tiles Limited v Briers (1978) 144 CLR 202 at 223, and added:
"I adhere to that view. Indeed so far as I am aware it has never been seriously challenged. The Commissioner does not attempt to assess tax on awards of damages for personal injuries. He is never likely to do so while the law remains as it is."
In the same case, Barwick CJ said (at 209):
"If the award of damages for such an injury destroying or diminishing his earning capacity were merely a matter of replacing those earnings, the amount of the award would be taxable: but it is not, for the reason that the award is for a capital loss, however much the amount of the award is quantified by a consideration of what the use or employment of that capacity might be expected to produce."
This proposition is accepted in Fleming op. cit. at 233. See also Daniels v Anderson (1995) 13 ACLC 614 at 726, per Clarke and Sheller JJA.
Since, as the authorities cited earlier make clear, the allowance of interest in respect of past economic loss is wholly ancillary to the assessment of the proper measure of damages in respect of that loss, the application of an interest rate being merely by way of estimation, the inclusion of the resulting sum in the total award cannot alter its nature. The total award is received in the character of damages for a personal injury, including the destruction or impairment of the injured person's earning capacity at a date preceding the date of the assessment. Accordingly, I think the dictum of Davies J in Commissioner of Taxation v Northumberland Development Co Pty Ltd (1995) 59 FCR 103 at 106 is correct:
"A court in this country would be unlikely to hold that an award of pre-judgment interest, included in an award of damages for personal injury, constituted a receipt in the nature of income."
His Honour added:
"The Court has indeed not been referred to any reported instance in Australia where pre-judgment interest has been assessed to tax as income."
What I have said so far would justify upholding the appellant's claim that the "interest" allowed under s 94 in respect of past economic loss, as well as that allowed in respect of past personal damages, does not have the character of income, even if included in an amount of damages assessed in respect of a claim based on inability to continue to earn in an employment held at the time of the injury. However, in fact the plaintiff was not working at the time of her injury. She had left paid employment three years before, in order to nurse her son who was ill. The claim for loss of earning capacity made in her case was supported by evidence that she intended to return to some employment, her son having recovered. But it could not be related to precise wages suspended by her injury. On the contrary, it was a pure example of a claim for destruction of an earning capacity which could have been, but was not being, converted into actual wages. That makes the principles I have been discussing even more clearly applicable.
I would accordingly allow the appeal, so far as it relates to s 94.
The learned trial judge also held that the appellant was liable to pay income tax in respect of the amount of interest received by her under s 95 of the Supreme Court Act. That section entitles a judgment creditor to receive interest on the judgment sum in respect of a period following the entry of judgment. Subsection (1) of s 95 provides that "[w]here judgment is given or an order is made for the payment of money, interest shall, unless the Court otherwise orders, be payable at the prescribed rate from the date when the judgment or order takes effect on so much of the money as is from time to time unpaid." The subsection is qualified by subsection (2) in a manner which is not relevant to the present case. In my opinion, s 95 is plainly distinguishable from s 94, understood as I have understood it. Section 95 is not concerned with the assessment of an amount fully compensating the plaintiff, but with the consequences of a delay in compliance with the order of the Court. Its remedy is to make the judgment bear interest. That interest is in no sense a means of calculating an appropriate lump sum, but is payable in its own character as interest. Accordingly, it is income, and assessable to tax. This part of the judgment under appeal must be upheld.
The final question relates to the claimed deductibility of solicitor and client costs. It will be remembered that the plaintiff's case was an unusually difficult one, which was not finally resolved without an appeal to the Court of Appeal of New South Wales, an application for special leave to appeal to the High Court of Australia and the hearing of an appeal in that ultimate Court. The solicitor and client costs incurred by the plaintiff, over and above the amounts of party and party costs allowed to her, amounted to the sum of $215,578.87. The learned trial judge, holding that both amounts of interest the assessability of which was in dispute were assessable to tax, held also that a proportion of the solicitor and client costs was deductible in relation to the s 94 interest. He considered that the s 95 interest was not at all related to the legal costs because "the proceedings which an applicant commences conclude once judgment is given".
It seems to me that the solicitor and client costs were incurred in order to obtain the whole benefit of the judgment of the Supreme Court of New South Wales. I do not understand how some part of that benefit can be split off and held to be outside the purpose for which the plaintiff entered upon the expenditure. As the learned trial judge recognised, it is the purpose for which legal costs are incurred which determines the character of the expenditure for income tax purposes: Hallstroms Pty Ltd v Commissioner of Taxation (1946) 72 CLR 634 at 647; Commissioner of Taxation v Rowe (1995) 60 FCR 99 at 113-114.
When the plaintiff incurred costs invoking the jurisdiction of the Supreme Court, those costs were expended in order to secure all the rights to which her claim might entitle her. One of those rights was the right to receive interest on any judgment until payment. That right may not generally be reflected in a large amount. But where a defendant appeals on issues including those of liability, and obtains a stay, whether by order or by the plaintiff's acquiescence in his right to it, interest under s 95 becomes a matter of importance. Even if the costs at first instance should be regarded as unrelated to that interest (which I do not think would be correct), the costs in relation to the appellate hearings were certainly incurred to establish or maintain the plaintiff's challenged entitlement to the whole amount due, that is, the verdict and the interest. The respondent to the appeals was not fighting to retain part only of the full amount due to her. If, for example, a year into the appeal process, which in this case in fact extended for over two years and three months (hence the large amount of interest involved), the plaintiff had received an offer of settlement and had considered the question whether the costs being expended in defence of the appeals were excessive in comparison with what she stood to gain, in the homely phrase whether the game was worth the candle, it would be absurd to suggest she would not have taken into account the large sum of s 95 interest as part of what those costs might achieve for her. And this amount of interest would have been a bargaining chip in any negotiation. Not only are the litigation and the interest inseparable in terms of the plaintiff's conduct; they also run together in time. What delayed the payment, and so led to the interest being incurred, was the succession of appeals; and, upon the High Court handing down its decision, payment was effected immediately. Interest calculations under s 95 were actually made to the very day of decision. In that situation, it is wrong to regard the costs as incurred to gain part only (the original verdict sum) of the daily accumulating amount, which in practical reality was the subject matter under dispute over the period occupied by the appeals, and to which the plaintiff became indisputably entitled when the High Court brought down the curtain on the litigation. At the very least, so much of the solicitor and client sum as related to the appeals was incurred to defend the right to the full sum due under the judgment, including the interest. But, in my opinion, the better view is to regard the litigation, from the beginning, as aimed at securing the plaintiff's full rights, including her rights under s 95 in the always likely event that an appeal or appeals should delay the receipt of any verdict. Accordingly, I think the appellant is entitled to a deduction of a proportion of the solicitor and client costs, being the same proportion as the s 95 interest bears to the total amount of the judgment and interest.
The appeal should be allowed to the extent I have indicated. In view of the Commissioner's agreement to pay the costs in any event, it is unnecessary to make an order as to the costs of the appeal.