Aspinall (by his next friend David Lee James Eastwood) v Government of PNG and Aspinall (No 2) [1980] PGLawRp 580; [1980] PNGLR 50 (18 April 1980)

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[1980] PNGLR 50 - Brendon John Aspinall by his next friend David Lee James Eastwood v The Government of PNG and Terence John Aspinall (No 2)

INTEREST - Award of interest as damages - Damages for personal injuries - Statutory discretion - Mode of exercise of discretion generally - Basis of awards of interest - Distinction between past and future components of award - Interest on past pain and suffering etc. at 4% - Interest on past economic loss at 8% - Interest on special damages at half current rate due to inflation - Law Reform (Miscellaneous Provisions) Act 1962, s. 42(1).

Section 42(1) of the Law Reform (Miscellaneous Provisions) Act 1962, provides that “in proceedings tried in a court for the recovery of damages ... the court ... may, if it thinks fit, order that there be included in the sum for which judgment is given, ... interest at such rate as it thinks proper on the whole or part of the damages ... for the whole or part of the period between the date on which the cause of action arose and the date of the judgment.”

In an action for damages for personal injuries arising out of a motor vehicle accident, in which the plaintiff was awarded general damages covering pain and suffering etc., loss of future earning capacity and special damages: (see Aspinall v. The Government of Papua New Guinea [1979] P.N.G.L.R. 642), the plaintiff applied for interest to be included in the award:

N1>(1) Section 42(1) of the Law Reform (Miscellaneous Provisions) Act 1962, confers upon the court a discretion to award interest which discretion should be exercised judicially.

N1>(2) Because the award of damages in cases of personal injury does not lend itself to assessment with any degree of arithmetic accuracy, the exercise of jurisdiction to award interest must be exercised on the basis of a broad practical approach.

N1>(3) When exercising the discretion under s. 42(1) of the Law Reform (Miscellaneous Provisions) Act 1962, regard must be had to the distinction between past or pre-judgment loss and future loss or loss suffered from the date of judgment onwards.

N1>(4) Interest should be awarded upon the basis that the plaintiff needs to be compensated for having been kept out of money which theoretically was due to him at the date of the accident.

Beaney v. Hastings Deering (Pacific) Ltd. [1979] P.N.G.L.R. 170 referred to.

N1>(5) Under s. 42(1) of the Law Reform (Miscellaneous Provisions) Act 1962,

N2>(a) there is a discretion to award interest upon the component parts of the total award of damages which constitute past losses, and for the period during which the plaintiff has been kept out of pocket;

N2>(b) there is no discretion to award interest upon those components of the award which relate to future elements.

N1>(6) The rate at which interest should be calculated on the pre-judgment loss for pain and suffering, loss of amenities etc. is 4%.

N1>(7) Semble: The rate at which interest should be calculated on the pre-judgment loss for loss of earnings is 8%.

N1>(8) The rate at which interest should be calculated on the sum awarded as special damages, should be 4% (that being half the 8% rate due to inflation), and calculated from the date of issue of the writ to the date of judgment.

This was the trial of an action for damages for personal injuries arising out of a motor vehicle accident in which Wilson J. awarded damages (see Aspinall v. The Government of Papua New Guinea [1979] P.N.G.L.R. 642) and in which the plaintiff then sought an award of interest under s. 42 of the Law Reform (Miscellaneous Provisions) Act 1962.

WILSON J: The plaintiff in this personal injury action arising out of a road accident, is entitled to damages, as per my reasons for decision published on 18th December, 1979 Aspinall v. Government of Papua New Guinea[lxv]¹ as follows:

As it was necessary to hear counsel as to the matter of interest on damages and as to the rate of interest to be offered, I adjourned this case for further argument, which I subsequently heard on 8th and 14th February, 1980.

Guidelines have recently been laid down in England and Australia for the assistance of judges on whom there falls the task of assessing damages in personal injury actions and awarding interest on damages. Those guidelines are to be found in what the Lords of the Judicial Committee of the Privy Council described as a “formidable array of authority” (see Thompson v. Faraonio[lxvi]²).

The relevant statutory provision empowering courts to award interest on damages is s. 42 of the Law Reform (Miscellaneous Provisions) Act 1962.

N2>“42(1) Subject to the next succeeding subsection, in proceedings tried in a court for the recovery of a debt or damages, and in an arbitration for the assessment of compensation for the acquisition or resumption of land, the court or the arbitrator, as the case may be, may, if it or he thinks fit, order that there be included in the sum for which judgment is given, or at which compensation is assessed, interest at such rate as it or he thinks proper on the whole or part of the, debt, damages or compensation for the whole or part of the period between the date on which the cause of action arose and the date of the judgment or assessment.

(b) applies in relation to a debt upon which interest is payable as of right, whether under an agreement or otherwise; or

This section gives to the judge several options as to the way in which he may assess the interest element to be included in the sum awarded by the judgment. He may include interest on the whole of the damages or on a part of the money, as he thinks appropriate. He may award it for the whole or any part of the period between the date when the cause of action arose and the date of judgment and he may award it at different rates for different parts of the period chosen.

The section gives no guidance as to the way in which the judge should exercise his choice between the various options open to him. This is all left to his discretion; but, like all discretions vested in judges by statute or at common law, it must be exercised judicially or, as Lord Emslie put it in Smith v. Middleton[lxvii]³:

“... in a selective and discriminating manner, not arbitrarily or idiosyncratically, for otherwise the rights of parties to litigation would become dependent on judicial whim.”

In the light of the recent English and Australian cases cited in Thompson v. Faraonio[lxviii]⁴, it may be useful for me to attempt to state the guidelines that I consider apply in Papua New Guinea at this time and to indicate what matters it is proper for the judge to take into account in deciding how to exercise the discretion conferred on him by a statute such as this. I am not to be understood to be asserting that those cases have expounded a rule of law from which a judge is precluded from departing where special circumstances exist in a particular case. I attempt to state the guidelines because the instant case is a typical personal injury action arising out of a road accident. There are no special features about it that distinguish it from the general run of such cases so far as concerns awarding interest on damages.

Because the award of damages in cases of personal injury does not lend itself to assessment with any degree of arithmetic accuracy, the exercise of jurisdiction to award interest must be exercised on the basis of a broad practical approach. (See British Transport Commission v. Gourley[lxix]⁵; Bennett v. Jones and Another[lxx]⁶; and Fire and All Risks Insurance Co. Ltd. v. Callinan[lxxi]⁷.)

However, the need remains, when exercising the discretion to award interest which the legislation gives to trial judges, to pay regard to the distinction which exists between items of detriment already suffered and those to be suffered in the future. (See Cookson v. Knowles [lxxii]⁸; and Fire and All Risks Insurance Co. Ltd. v. Callinan (supra).)

In Thompson v. Faraonio (supra), their Lordships approved the dictum of Jacobs J. in Ruby v. Marsh[lxxiii]⁹ to the effect that s. 79a(3)(b) of the Supreme Court Act 1958 (Vic.) (similar to the legislation under consideration here):

“refers not to the juristic concept of damages but to the practical concept that a plaintiff receives damages by way of compensation in respect of loss or damage incurred or suffered up to the date of trial and verdict and in respect of loss or damage (if any) which he will incur or suffer in the future. When the consequence of the compensable infringement of his legal rights is actually felt by him materially or physically he incurs or suffers the loss or damage to which the paragraph refers.”

In the normal personal injury case, therefore, the damages under the various heads both personal (e.g. general damages for pain and suffering, disability and loss of amenities of life) and economic (e.g. special or general damages for loss of earnings and general damages for loss of earning capacity) ought, as a general rule, to be split into two parts:

N2>(i) the pecuniary loss which it is estimated has already been sustained from the date on which the cause of action arose (or some later date—frequently the date of the issue of the writ) up to the date of judgment (“the pre-judgment loss”); and

N2>(ii) the pecuniary loss which it is estimated will be sustained from the date of judgment onwards (“the future loss”). (See Bennett v. Jones and Another[lxxiv]¹⁰; Fire and All Risks Insurance Co. Ltd. v. Callinan[lxxv]¹¹; and Thompson v. Faraonio[lxxvi]¹².)

In the context of damages for economic loss, their Lordships in Thompson v. Faraonio said:[lxxvii]¹³

“In personal injury claims for economic loss, with which alone this appeal is concerned, there is normally no difficulty in calculating the pre-trial damages and the damages for future economic loss separately, and there are good practical reasons for doing so.”

N2>(i) there is a discretion to award interest upon those component parts of the total award of damages which constitute past losses or detriments and to do so for the period during which the plaintiff has been kept out of money;

N2>(ii) there is no discretion to award interest upon those components of such an award which relate to future elements. (See Jefford and Another v. Gee[lxxviii]¹⁴; Cookson v. Knowles[lxxix]¹⁵; Bennett v. Jones and Another[lxxx]¹⁶; and Thompson v. Faraonio[lxxxi]¹⁷.)

Interest should be awarded simply upon the basis that the plaintiff needs to be compensated for having been kept out of money which theoreticially was due to him at the date of his accident. (See Thompson v. Faraonio[lxxxii]¹⁸; John Meaney v. Hastings Deering (Pacific) Ltd. and Bishop Shipping Services Pty. Ltd.[lxxxiii]¹⁹; cf. Bennett v. Jones and Another (supra).)

Because that part of the component for the personal side of the award which relates to the past is fixed by relation to the value of money at the date of the trial, there is already allowance for inflation upon to that date. Therefore, the ability and loss of amenities of life (i.e. the pre-judgment loss) is not the current high rate due to inflation (8%) but the lesser and more traditional rate of (4%). (See Bennett v. Jones and Another (supra).)

Because that part of the component for the economic side of the award which relates to the past is fixed by relation to the value of money at the time the lost earnings would have been received, there is no allowance for inflation built in. Therefore, the appropriate rate of interest for past loss of earnings (i.e. the pre-judgment loss) is the current high rate due to inflation in Papua New Guinea (8%). (See Rokan Bayava v. Minisang Wankier and Lufa Local Government Council [lxxxiv]²⁰; and Bennett v. Jones and Another (supra).)

(The instant case is not concerned with damages for past loss of earnings. Nevertheless, I have taken occasion to deal also, although obiter, with the interest rate on such damages for loss of earnings in order to make the guide-lines as complete as possible.)

In my judgment, in the present case, interest should be allowed from 23rd October, 1974 (the date of the issue of the writ) to the date of judgment (a period of approximately five and half years) in respect of the personal and economic losses as follows:

The special damages, agreed and allowed, total $3,447.03, which I round off to $3,500.00. Although the parties have put before me the details of all those claims, they have not placed before me the dates on which each of the various sums were paid. I find that some of them, including in particular the fees paid to the governess totalling $1,040.00, were paid at various times before trial and that the balance will be paid after judgment. It has not been suggested that the plaintiff or his family have been liable to pay any interest to others. In the circumstances, I will allow to the plaintiff interest at 4% on the amount of $3,500 as from 23rd October, 1974 (the date of the issue of the writ) to the date of judgment (a period of approximately five and a half years). The rate of 4% represents half the current high rate of the interest due to inflation in Papua New Guinea. I will allow, therefore, $770.

(Judgment was then entered in favour of the plaintiff against both defendants for the kina equivalent of $82,067.03.)

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[lxv] [1979] P.N.G.L.R. 642.

[lxvi] (1979) 54 A.L.J.R. 231; [1979] 1 W.L.R. 1159 (P.C.).

[lxvii] [1972] S.C. 30 at p. 37.

[lxviii] (1979) 54 A.L.J.R. 231; [1979] 1 W.L.R. 1159 (P.C.).

[lxix] [1956] A.C. 185.

[lxx] [1977] 2 N.S.W.L.R. 355.

[lxxi] (1978) 140 C.L.R. 427.

[lxxii] [1977] 3 W.L.R. 279.

[lxxiii] [1975] HCA 32; (1975) 132 C.L.R. 642 at pp. 667-8; [1975] HCA 32; 6 A.L.R. 385, at pp. 407-8.

[lxxiv] [1977] 2 N.S.W.L.R. 355.

[lxxv] (1978) 140 C.L.R. 427.

[lxxvi] (1979) 54 A.L.J.R. 231; [1979] 1 W.L.R. 1159 (P.C.).

[lxxvii] (1979) 54 A.L.J.R. at p. 233.

[lxxviii] [1970] 2 Q.B. 130.

[lxxix] [1977] 3 W.L.R. 279.

[lxxx] [1977] 2 N.S.W.L.R. 355.

[lxxxi] (1979) 54 A.L.J.R. 231; [1979] 1 W.L.R. 1159 (P.C.).

[lxxxii] (1979) 54 A.L.J.R. at p. 7.

[lxxxiii] [1979] P.N.G.L.R. 170.

[lxxxiv] [1978] P.N.G.L.R. 391.

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Special Damages	$3,447.03	$3,447.03
General Damages	<	&nbspan>
Pain and suffering, disability and loss of amenities of life (K9,000.00)	11,250.00	/td>
Loss or diminution of earning capacity /p>	64,000.00
Extra tuition fees and air-fares	1,500.00	<
	76,750.00
	<	$80,197.03

(a) For past pain and suffering, disability and loss of amenities of life upon a detriment of K4,000 ($5,000) — being that portion of the total sum of K9,000 ($11,250) as I estimate had accrued to the date of judgment—at 4%	K880	($1,100)
(b) For pat loss of earnings—(none claimed or awarded in the instant case)	nil
Total:	K880	($1,100)

Papua New Guinea Law Reports

Aspinall (by his next friend David Lee James Eastwood) v Government of PNG and Aspinall (No 2) [1980] PGLawRp 580; [1980] PNGLR 50 (18 April 1980)

Papua New Guinea Law Reports - 1980