3 I agree with the reasons for judgment prepared by Wright J which I have had the advantage of reading. I agree that the appeal should be adjourned for further argument.

4 The appellants operated a general store at Rossarden. On 30 August 1986 that store and its contents were destroyed by fire. At the time the appellants were insured by the respondent company in respect of loss or damage (inter alia) to their stock in trade, merchandise, business furniture, fixtures, fittings and the cost of removal of debris. The respondents resisted the appellants' claim for indemnity under the policy, alleging that the appellants had caused the fire to be deliberately lit. On 21 August 1987 the appellants instituted proceedings in this Court claiming $55,000 being the value of property destroyed by the fire, plus "Interest thereon at the rate of Twenty dollars ($20.00) per centum per annum from the date of the loss until the date of payment pursuant to Section 35(1)(b) of the Supreme Court Civil Procedure Act 1935" [sic]. No doubt this is intended to be a reference to the Supreme Court Civil Procedure Act 1932, s35(1)(b) which provides (inter alia):

"The jury ... on any assessment of damages in

(a) ...

(b) any action on any policy of insurance, may give damages in the nature of interest over and above the money recoverable on or under the policy".

5 During the course of the trial before Crawford J and a jury which took place in Launceston in November 1990, his Honour ruled that the only interest which could be awarded to the appellants, if they were successful on the claim, was simple interest at the rate of 11% pa commencing on the day "as from which it was unreasonable for" the respondent "to have withheld payment of the amount and ending on (a) the day on which payment is made; or (b) the day on which payment is sent by post to" the appellants "whichever is the earlier".

6 His Honour took the view that s57 of the Insurance Contracts Act 1984 (Cw) laid down a code for the payment of interest on insurance monies and that insofar as s35(1)(b) of the Supreme Court Civil Procedure Act 1932 authorized payment of a greater amount than that provided for in the Commonwealth Act, it was invalid by operation of s109 of the Australian Constitution. His Honour also held that insofar as the appellants may have been able to establish a claim to damages in the nature of interest in accordance with the principles established in the High Court's recent decision in Hungerfords v Walker [1989] HCA 8; (1989) 84 ALR 119, the common law basis for such a claim in respect of an insurance contract had been overridden by the Commonwealth legislation.

7 His Honour subsequently directed the jury in accordance with his ruling and a verdict was returned in the appellants' favour for $47,500 representing the value of the appellants' property which had been destroyed, together with interest amounting to $18,287 and continuing until payment at the rate of 11% pa on the capital sum recovered.

8 The appellants now appeal against the judgment entered pursuant to that verdict on the following grounds:

"1 The Learned Trial Judge erred in law in ruling that the Plaintiffs were entitled to receive interest on any amount of damages awarded to them by the jury at the rate of no greater than 11 per centum per annum simple interest.

2 The Learned Trial Judge erred in law in holding that the Plaintiffs were not entitled to damages by way of interest in respect of such amount as the jury may award the Plaintiffs for loss of contents and/or stock the said ruling being contrary to the decision of the High Court of Australia in Hungerfords v Walker [1989] HCA 8; 84 ALR 119.

3 The Learned Trial Judge erred in law in ruling that the interest payable to the Plaintiffs by the Defendant in respect of such amount as the jury awarded for damages in respect of stock and contents was to be simple interest and not compound interest.

4 The Learned Trial Judge erred in law in failing to leave to the jury the issue of damages by way of interest which might be awarded to the Plaintiffs and the manner of calculation of same and in failing to direct the jury that interest could be calculated by reference to the evidence contained in Exhibit P25.

5 The Learned Trial Judge erred in holding that the application of Section 57 of the Insurance Contracts Act 1984 prohibited the recovery by the Plaintiffs of damages by way of market rate interest in respect of monies withheld pursuant to a contract of insurance by the Defendant."

9 Counsel for the appellants submitted that if the appeal is upheld, this Court can, and should, dispose of the case by entering judgment in his clients' favour for an appropriate amount pursuant to the powers of a Full Court contained in s47(4) of the Supreme Court Civil Procedure Act 1932 which provides as follows:

"Notwithstanding anything contained in subsection (1), on the hearing of any appeal in any case in which a verdict has been found by a jury, a Full Court, if it is satisfied -

(a) that it has before it all the facts, and that no further material evidence could be produced at another trial; and

(b) that the verdict was one which a jury, viewing the whole of the evidence reasonably, could not properly find,

shall enter judgment for the party for whom the verdict should have been given at the trial, and for that purpose may exercise any of its powers under section 39 (5) (a), but if any damages have to be assessed any party interested in the assessment of the damages may require the same to be assessed by a jury."

10 However, on the material currently before the Court it would be difficult, if not impossible for the Court to exercise those powers. We have before us a limited amount of the evidence which was before the jury but even if all that material were to be placed before us, it may be difficult to conclude that the jury would have found the appellant's case as to damages entirely persuasive. Therefore, if the appeal succeeds the issue of damages may have to be remitted for retrial either with or without a jury depending upon what (if any) application is made by counsel under the concluding provisions of s47(4).

11 I have expressed my views tentatively only, because counsel for the respondent submitted that there was no evidence to support the appellant's claim to have suffered damage as a result of non-payment of funds by the respondent and when we come to consider this issue and we have before us this additional material we may find:

(a) that it supports the appellant's claim that the Full Court should act under s47(4);

or

(b) that it supports the respondent's claim that there was no evidence to justify an award of damages;

or

(c) that it is inconclusive of either contention.

12 Another preliminary matter requires mention before passing to the substance of the appeal. As already noted, the appellants' Statement of Claim sought interest pursuant to s35(1)(b) of the Supreme Court Civil Procedure Act. However, it was conceded by counsel for the respondents that the case had developed in such a way during the trial as to call in issue the appellants' entitlement to damages in the nature of interest at common law as well as under the Act. Consequently an amendment was made, without objection, at the hearing of the appeal, by adding the following words to the appellants' claim, "and/or in the alternative damages".

13 In NRMA Insurance Ltd v Tait & Anor (1988) 94 FLR 339, the New South Wales Court of Appeal held that s57 of the Insurance Contracts Act 1984 (Cw) lays down a code for the payment of interest on insurance claims. The principal judgment on this issue was delivered by McHugh JA (as he then was) at pp355-6 in the following terms:

"The evident purpose of s 57 is to lay down a code for the payment of interest on insurance claims. The section fixes the rate of interest payable and specifies the period for which interest is payable by reference to specific criteria. It is hardly conceivable that the federal Parliament intended that insurers could be made liable by State legislation to pay interest on a claim in respect of a period other than that which results from the application of the criteria specified in s 57(2). It is equally inconceivable that federal Parliament intended that State legislation could fix a different rate of interest from that prescribed under s 57(3) for a period calculated in accordance with s 57(2). I think that s 57 states completely, exhaustively and conclusively the law on the subject of interest payable for periods during which a person has been kept out of insurance moneys to which he is entitled. If it does, then a State law purporting to authorise the fixing of a different rate of interest is invalid: Ex Parte McLean [1930] HCA 12; (1930) 43 CLR 472 at 483.

It is no answer to a claim of s 109 inconsistency that it is possible to obey the federal law as well as the State law on the subject. In Clyde Engineering Co Ltd v Cowburn [1926] HCA 6; (1926) 37 CLR 466 the High Court expunged the 'simultaneous obedience' test from our s 109 jurisprudence. That decision established that inconsistency between a federal and State enactment could arise although it was possible to obey both laws. The reason for this doctrine was explained by Dixon J in Ex parte McLean (1930) (supra):

'... by prescribing the rule to be observed, the federal statute shows an intention to cover the subject-matter and provide what the law upon it shall be. If it appeared that the federal law was intended to be supplementary to or cumulative upon State law, then no inconsistency would be exhibited in imposing the same duties or in inflicting different penalties. The inconsistency does not lie in the mere coexistence of two laws which are susceptible of simultaneous obedience. It depends upon the intention of the paramount Legislature to express by its enactment, completely, exhaustively, or exclusively, what shall be the law governing particular conduct or matter to which its attention is directed. When a federal statute discloses such an intention, it is inconsistent with it for the law of a State to govern the same conduct or matter.'

I reach my conclusion by reference to the text of s 57. But it is proper to mention that the Law Reform Commission's Report on Insurance Contracts which preceded the making of the 1984 Act makes it plain that the purpose of s 57 was to achieve the object which I have stated."

14 Judgment in the NRMA case was delivered on 10 February 1989. It is therefore not surprising that his Honour makes no reference to the High Court's decision in Hungerfords v Walker (supra) which was delivered only the day before (9 February 1989).

15 However, there are two other aspects of his Honour's judgment which, in my respectful opinion, call for comment. Firstly, in the last portion of my citation from his Honour's reasons, he refers to and relies upon the purpose of s57 of the Insurance Contracts Act as mentioned in the Law Reform Commission's Report on Insurance Contracts which preceded the Act itself. The basis upon which he draws upon the contents of this document is not clear but I assume that he does so in reliance upon s15AB(2)(b) of the Acts Interpretation Act 1901 (Cw). With all respect, I think that s15AB cannot be relied upon in this way. As I see it, s15AB(1) makes it plain that material such as the Law Reform Commission's Report can only be considered for the purpose of interpreting a provision of a Commonwealth Act in the sense of giving that provision a meaning which is not ambiguous, obscure, manifestly absurd or unreasonable. No such problems arise with s57 of the Insurance Contracts Act. I might also say that having been referred by counsel for the respondent to passages in the Australian Law Reform Commission's Report on Insurance Contracts allegedly supporting McHugh JA's conclusions, I am unable to see that they do so.

16 Secondly, his Honour makes no mention of s7 of the Insurance Contracts Act 1984 which provides:

"7 It is the intention of the Parliament that this Act is not, except in so far as this Act, either expressly or by necessary intendment, otherwise provides, to affect the operation of any other law of the Commonwealth, the operation of law of a State or Territory or the operation of any principle or rule of the common law (including the law merchant) or of equity."

17 Obviously this provision does not necessarily avoid the operation of s109 of the Constitution or prevent a principle of common law being affected or excluded, but it is a material matter to be taken into account before reaching such a conclusion.

18 In Moss v Sun Alliance Australia Ltd (1990) 93 ALR 592, Bollen J of the Supreme Court of South Australia had occasion to consider whether s57 of the Insurance Contracts Act (Cw) was inconsistent with s30c of the Supreme Court Act (SA) which provides as follows:

"(1) Unless good cause is shown to the contrary, the court shall, upon the application of a party in favour of whom a judgment for the payment of damages, compensation or any other pecuniary amount has been, or is to be, pronounced, include in the judgment an award of interest in favour of the judgment creditor in accordance with the provisions of this section.

(2) The interest -

(a) shall be calculated at such rate of interest as may be fixed by the court;

(b) shall be calculated -

(i) where the judgment is given upon an unliquidated claim - from the date of the commencement of the proceedings to the date of the judgment;

or

(ii) where the judgment is given upon a liquidated claim - from the date upon which the liability to pay the amount of the claim fell due to the date of the judgment,

or in respect of such other period as may be fixed by the court;

and

(c) shall be payable in respect of the whole or any part of the amount for which judgment is given in accordance with the determination of the court.

(3) Where a party to any proceedings before the court is entitled to an award of interest under this section, the court may, in the exercise of its discretion, and without proceeding to calculate the interest to which that party may be entitled in accordance with sub-section (2) of this section, award a lump sum in lieu of that interest.

(4) This section does not -

(a) authorise the award of interest upon interest;

(ab) authorize the award of interest upon exemplary or punitive damages;

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

(c) affect the damages recoverable upon the dishonour of a negotiable instrument;

(d) authorize the award of any interest otherwise than by consent upon any sum for which judgment is pronounced by consent;

or

(e) limit the operation of any other enactment or rule of law providing for the award of interest."

"Section 57 plus the regulations permit an award of interest at 11 per cent. Section 30c of the Supreme Court Act 1935 (SA) permits an award of interest on damages or money due at a higher rate. Those two legislative provisions seem inconsistent. Section 109 of the Constitution would seem to compel the use of s 57 of the Insurance Contracts Act. In Tait v NRMA Insurance Ltd (1988) 5 ANZ Insurance Cases 60-836 Rogers J in the Supreme Court of New South Wales held that: 'It is possible to avoid inconsistency by so construing the Commonwealth Act and regulations as requiring the payment of interest at the rate of 11 per cent or more so long as the interest awarded is not less than that rate.' I respectfully disagree. The Act and regulations provide for payment of interest at 11 per cent. No more and no less. There is, I think, inconsistency between the Commonwealth Act and regulations and the Supreme Court Act (SA). The Commonwealth legislation prevails. Moreover, s 57 of the Insurance Contracts Act is a special provision dealing with payment at the stated rate by an insurer who has withheld due payment. It prevails over the generality of s 30c of the Supreme Court Act."

20 His Honour thus came to a similar conclusion to that arrived at by the members of the New South Wales Court of Appeal when reviewing the judgment of Rogers J at first instance in the NRMA case.

21 If the Tasmanian legislation was in similar or identical terms to that considered in Moss v Sun Alliance Australia Ltd (supra), I would come to the same conclusion as Bollen J But such is not the case. As pointed out by counsel for the appellants, s35(1)(b) of the Supreme Court Civil Procedure Act (Tas) provides for an award of "damages in the nature of interest", not merely "interest on damages". The distinction between "damages" (albeit in the nature of interest) and "interest" on damages is crucial. The provision of interest, particularly where the rate thereof is fixed by statute, may or may not compensate a plaintiff who has been kept out of his money by his insurers. In some cases he may be overcompensated by such an award, as he may be unable to show any consequential loss flowing from the insurer's default. In some cases he may be under-compensated as he may be obliged to obtain or continue loans to maintain his solvency at a higher rate of interest than the statute permits to be recovered from the opposing party.

22 That s57 of the Insurance Contracts Act is not concerned with damages as such, is clear. The insurer's liability to pay interest at the prescribed rate is not dependent upon the exercise of any discretion, judicial or otherwise. The statutory entitlement to interest does not even depend upon the recovery of a verdict or judgment by the insured. The obligation to pay is established as soon as it can be said that from a particular date it was unreasonable for the insurer to withhold payment.

23 In Hungerfords v Walker (supra) at p135, Brennan and Deane JJ said:

"There is, in our view, a critical distinction between an order that interest be paid upon an award of damages and an actual award of damages which represents compensation for a wrongfully caused loss of the use of money and which is assessed wholly or partly by reference to the interest which would have been earned by safe investment of the money or which was in fact paid upon borrowings which otherwise would have been unnecessary or retired. On the one hand, there is no common law power to make an order for the payment of interest to compensate for the delay in obtaining payment of what the court assesses to be the appropriate measure of damages for a wrongful act. If such interest is to be awarded at common law, it must be pursuant to statutory authority. On the other hand, there is no acceptable reason why the ordinary principles governing the recovery of common law damages should not, in an appropriate case, apply to entitle a plaintiff to an actual award of damages as compensation for a wrongfully and foreseeably caused loss of the use of money. To the extent that the reported cases support the proposition that damages cannot be awarded as compensation for the loss of the use of a specific sum of money which the wrongful act of a defendant has caused to be paid away or withheld, they are contrary to principle and commercial reality and should not be followed."

24 It is of interest that in Hungerfords' case the court was dealing with s30c of the Supreme Court Act (SA) and as to this, Mason CJ and Wilson J said at pp131-132:

"We see no reason for construing s 30c in such a way that it forecloses the authority of the courts to award damages in accordance with the principle established by Hadley v Baxendale and the measure of damages governing claims in tort. The section is not intended to erect a comprehensive and exclusive code governing the award of interest. It is a provision intended to provide a plaintiff with some protection against the late payment of damages. The section does not attempt to regulate the measure of compensation to be awarded for a specific head of loss."

This of course was a different point from the s109 inconsistency problem considered by McHugh JA in NRMA and by Bollen J in the passage already referred to in Moss.

25 However, in Moss, Bollen J also had to consider whether, notwithstanding the provisions of the State and Commonwealth legislation, damages over and above the prescribed rate of 11% could be recovered. After referring to Hungerfords v Walker (supra) he continued at p605:

"The idea behind an award of damages is to put the plaintiff in the same position as he would have been had he suffered no wrong or breach of contact. No wrong or breach of contract would have been done to the plaintiffs had they been paid the sum due by way of indemnity on 15 July 1987. A consequence of non-payment here was that there was a lengthy period whilst repayment of interest on borrowed money continued because the principal was still outstanding. But the idea of interest payable under s 57 is to make good to some extent the consequences of non-payment on the 'reasonable day'. The plaintiffs, therefore, cannot, in my opinion, have both the amount assessed for extra interest (see above) and interest under s 57. The aggregate of those two amounts would, in my opinion, travel beyond compensation. I realise that I am driven to playing with words or to creating something of an artificial situation. Had I agreed with Rogers J's opinion I could no doubt have done it all in one hit by allowing interest on the 'indemnity sum' at a very high rate of interest, perhaps over 20 per cent. As it is I think that I must allow interest under s 57 on the 'indemnity sum' from 15 July 1987 until this day at 11 per cent (simple interest) and allow the balance between that sum and the 'extra interest' as damages. That is to say one sum awarded under s 57 and the other as damages. But the aggregate will be the 'extra interest'. It seems like playing with words but I think it obeys s 57 and provides compensation by way of damages. I expect the parties can agree on the arithmetic. That is the 'other agreement' mentioned above.

I should mention that I do not regard s 57 as providing a code for recovery of compensation for withheld payment under an insurance policy. It does not say that interest only and no damages may be recovered. Nor do I think that it implies that idea."

26 In my respectful conclusion Bollen J was correct, both in his approach and in his proposed method of calculating the plaintiff's entitlement.

27 Counsel for the appellant also submitted that s35 of the Supreme Court Civil Procedure Act (Tas) is not inconsistent with s57 of the Commonwealth Act because it deals with "damages in the nature of interest" and not "interest" simpliciter.

28 I have already dealt to some extent with this distinction but not in the context of the inconsistency argument. If counsel for the appellants is correct, it means of course that a claim under s35 can only succeed if damages in the nature of interest have been proved and there can be no automatic award of interest just because the plaintiff has been successful. Under s34, but significantly, not under s35, a prescribed rate of interest is provided for. This distinction adds some weight to the appellants' submission.

29 Perhaps the draughtsman of s35 was attempting to recognize the common law principles as expressed in Hadley v Baxendale when he drafted s35. For my part however, I find it unnecessary to pursue this interesting but speculative line of reasoning. It seems to me that the phrase "damages in the nature of interest" has been carefully chosen. In s34(1), we find a reference to allowing "interest" to the successful party at the prescribed rate and in s35(2) we see a clear recognition of the difference between interest and damages:

"(2) Nothing in this section or in section 34 shall preclude a jury or a judge or an officer of the Court, or a judge of an inferior court of civil jurisdiction, or a referee from giving interest, or damages in the nature of interest, in any case in which the same are now payable and can be awarded."

30 In my opinion, the distinction between interest and damages has been deliberately made and it seems to follow that the reasons which compelled the Court of Appeal of New South Wales and Bollen J to find an inconsistency between their State's legislation and s57 of the Insurance Contracts Act 1984 (Cw) do not exist in respect to s35(1) of the Tasmanian Act.

31 In the result therefore, in an appropriate case a successful claimant can recover any proved loss arising from loss of use of monies due under the policy either under s35(1) of the Supreme Court Civil Procedure Act, or at common law upon the principles enunciated in Hungerfords v Walker (supra). Whether there will be a difference in result in any given case depending upon which of these avenues is utilized will have to await further consideration.

32 In an appropriate case an award of damages will obviously include compound interest if the facts of the case so permit. In Hungerfords at p133, Mason CJ and Wilson J said:

"... The recovery of compensation for the loss may be ascribed to the operation of the second limb in Hadley v Baxendale. However, we would prefer to put it on the footing that it is a foreseeable loss, necessarily within the contemplation of the parties, which is directly related to the defendant's breach of contract or tort.

On this footing the Full Court was correct in awarding damages for the added cost of funding the business with borrowed money as a result of the loss of the use of money overpaid in tax. The award of interest was of necessity compound interest. Simple interest would not reflect accurately the extent of the respondents' loss. Simple interest almost always undercompensates the injured party's true loss."

33 Having reached these conclusions it means that prima facie, his Honour misdirected the jury in the present case and the matter must be sent back for retrial of this issue.

34 I say "prima facie" because counsel for the respondent submitted that there was no evidence upon which the jury could have reached a rational conclusion that the appellants had suffered any damage whatsoever as a consequence of non payment of monies by the respondent.

35 As already indicated to counsel, persistence with this submission will necessitate a postponement of this Court's final order so that the whole transcript of proceedings and copies of all relevant exhibits may be placed before us for our consideration.