Pinzger v Bougainville Copper Ltd [1985] PGLawRp 471; [1985] PNGLR 160 (24 June 1985)

Papua New Guinea Law Reports - 1985

[1985] PNGLR 160 - Anton Johan Pinzger v Bougainville Copper Ltd 

[1985] PNGLR 160

SC294

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

ANTON JOHAN PINZGER

V

BOUGAINVILLE COPPER LTD

Waigani

Pratt Amet Woods JJ

1-2 November 1984

24 June 1985

DAMAGES - Measure of - Personal injuries - Loss of earning capacity - Future loss - Notional tax - Inflation - To be taken into account - To be accounted for in discount rate - Proper discount rate 3 per cent.

DAMAGES - Measure of - Personal injuries - Interest on award - Purpose of interest award compensatory - Appropriate rates - Date from which to be calculated - Principles to be applied - Judicial Proceedings (Interest on Debts and Damages) Act (Ch No 52), s 1.

INTEREST - Award of interest as damages - Damages for personal injuries - Statutory discretion - Principles upon which to be exercised - Purpose of interest award - Appropriate rates - Date from which to be calculated - Judicial Proceedings (Interest on Debts and Damages) Act (Ch No 52), s 1.

DAMAGES - Measure of - Personal injuries - Loss of earning capacity - Basis of calculation - To be calculated on net (after tax) figures.

COSTS - Departing from general rule - Appeal - Each party successful in part - No order for costs appropriate.

Held

N1>(1)      In assessing damages in an action for personal injuries, account must be taken of notional tax on income received from investment of damages representing future loss, unless the amount involved is so small as to make the notional tax negligible.

Todorovic v Waller [1981] HCA 72; (1981) 150 CLR 402, applied.

Hassard v Bougainville Copper Ltd [1981] PNGLR 182 at 189, approved.

N1>(2)      The manner in which such notional tax should be accounted for is a downward adjustment of the figure agreed upon as the proper discount rate.

N1>(3)      The proper discount rate for calculating the present value of future economic loss in actions for damages for personal injuries, taking into account both notional tax and inflation, should be 3 per cent.

Todorovic v Waller [1981] HCA 72; (1981) 150 CLR 402, adopted and applied.

Pinzger v Bougainville Copper Ltd [1983] PNGLR 436, varied.

N1>(4)      The purpose for which interest on damages is awarded, in actions for damages for personal injuries, is compensatory.

British Transport Commission v Gourley [1955] UKHL 4; [1956] AC 185 at 208, adopted and applied.

Batchelor v Burke [1981] HCA 30; (1981) 148 CLR 448 at 455, considered.

N1>(5)      Until otherwise determined the appropriate rate of interest on past economic loss, in actions for damages for personal injuries, is 8 per cent.

Pinzger v Bougainville Copper Ltd [1983] PNGLR 436, affirmed.

N1>(6)      In actions for damages for personal injuries, the discretionary power deriving from the Judicial Proceedings (Interest on Debts and Damages) Act (Ch No 52), s 1, to award interest “for the whole or part of the period between the date on which the cause of action arose and the date of the judgment”, is, unless special circumstances indicate otherwise, to be exercised according to the following principles:

N2>(a)      Interest on special damages (including loss of wages) should be awarded from the date of the accident to the date of the trial at half the appropriate rate.

N2>(b)      Interest on damages for pain and suffering and loss of amenities should be awarded at the appropriate rate from the date of service of the writ to the date of trial; and

N2>(c)      no interest should be allowed on damages for loss of future earnings.

Jefford v Gee [1970] EWCA Civ 8; [1970] 2 QB 130 at 130; Dexter v Courtaulds Ltd [1984] 1 WLR 372 at 376-377, adopted and applied.

N1>(7)      (Obiter) There appear to be sound arguments in favour of dividing up damages for pain and suffering and loss of amenities into components for past and future, and confining interest awards to the component for past pain and suffering and loss of amenities.

Aspinall v Government of Papua New Guinea (No 2) [1980] PNGLR 50; Cybula v Nings Agencies Pty Ltd [1981] PNGLR 120, approved.

N1>(8)      In actions for damages for personal injuries, damages for loss of earnings actual and prospective, should be calculated on net (after tax) figures and not gross figures.

British Transport Commission v Gourley [1955] UKHL 4; [1956] AC 185 at 197, 200; Cullen v Trappell [1980] HCA 10; (1980) 146 CLR 1 at 23; Todorovic v Waller [1981] HCA 72; (1981) 150 CLR 402, adopted and applied.

Pinzger v Bougainville Copper Ltd [1983] PNGLR 436, affirmed.

N1>(9)      Where a plaintiff or appellant succeeds in part and a defendant or respondent succeeds in part the court may properly take the view that no order for costs should be made.

Child v Stenning [1879] UKLawRpCh 81; (1879) 11 Ch D 82; Williams v Stanley Jones & Co Ltd [1926] 2 KB 37, followed.

Cases Cited

Aspinall v Government of Papua New Guinea (No 2) [1980] PNGLR 50.

Atlas Tiles Ltd v Briers [1978] HCA 37; (1978) 144 CLR 202.

Batchelor v Burke [1981] HCA 30; (1981) 148 CLR 448.

Bennett v Jones [1977] 2 NSWLR 355.

British Transport Commission v Gourley (1956] AC 185.

Child v Stenning (l879) [1879] UKLawRpCh 81; 11 Ch D 82.

Cullen v Trappell [1980] HCA 10; (1980) 146 CLR 1.

Cybula v Nings Agencies Pty Ltd [1981] PNGLR 120.

Dexter v Courtaulds Ltd [1984] 1 WLR 372; 1 All ER 70.

Hassard v Bougainville Copper Ltd [1981] PNGLR 182.

Jefford v Gee [1970] EWCA Civ 8; [1970] 2 QB 130.

Koieba v Motor Vehicles Insurance (PNG) Trust [1984] PNGLR 365.

Lim Poh Choo v Camden Health Authority [1979] UKHL 1; [1980] AC 174.

London Chatham & Dover Railway Co v South Eastern Railway Co [1893] UKLawRpAC 41; [1893] AC 429.

Lubbering v Bougainville Copper Ltd [1977] PNGLR 183.

McDaid v Clyde Navigation Trustees [1946] SC 462.

Mallett v McMonagle [1970] AC 166.

O’Hello v Kayel Shipping Co Pty Ltd [1980] PNGLR 361.

Paul v Rendell (1981) 55 ALJR 371.

Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd [1981] HCA 3; (1981) 145 CLR 625.

Pickett v British Rail Engineering Ltd (1980) AC 136.

Pinzger v Bougainville Copper Ltd [1983] PNGLR 436.

Ruby v Marsh [1975] HCA 32; (1975) 132 CLR 642.

Tate & Lyle Food Distribution Ltd v Greater London Council [1982] 1 WLR 149; [1981] 3 All ER 716.

Taylor v O’Connor [1971] AC 115.

Thompson v Faraonio [1917] ArgusLawRp 74; (1974) 24 ALR 1.

Todorovic v Waller [1981] HCA 72; (1981) 150 CLR 402.

Williams v Stanley Jones & Co Ltd [1926] 2 KB 37.

Young v Percival [1975] 1 WLR 17; [1974] 3 All ER 677.

Appeal

This was an appeal from an award of damages in an action for damages for personal injuries: see Pinzger v Bougainville Copper Ltd [1983] PNGLR 436.

Counsel

I Molloy, for the appellant.

I V Gzell QC, and R Thompson, for the respondent.

Cur adv vult

24 June 1985

PRATT AMET WOODS JJ: On 17 May 1979, the appellant was employed by the respondent company as a senior tunnel foreman in charge of a shift working at the tunnel face when a worker threw a lever which collapsed the raised platform on which the appellant was standing. At the time he was holding a drill which weighed some fifty to sixty kilograms and the subsequent fall of about three feet whilst holding this weight caused severe jarring to his back. The action brought by the appellant against the defendant company came before the National Court in November 1982. Liability was admitted and the task of the learned trial judge was one of assessment of damages only: see Pinzger v Bougainville Copper Ltd [1983] PNGLR 436. His Honour found that the plaintiff/appellant was a “truthful witness”, that he was not “exaggerating his pain and suffering, his liabilities or his unsuccessful job searching”. Further, his Honour found that he was not capable of heavy work but was fit for light work and that he was physically capable of doing the jobs which he had attempted to obtain in Australia, namely, gatekeeper, weighbridge man, petrol attendant, salesman, kitchenhand, and night security man. His Honour did not accept the contention that he was capable of light work only from time to time or on a part-time basis. That submission has not been renewed in this Court. Further, his Honour found that he had been rejected for many jobs although the main cause for this was “the depressed economy rather than his back injury”.

It was quite possible, said the learned trial judge, that the plaintiff would invest the damages awarded in a small business and thus become self-employed rather than seek a light job. Examples given were a caravan park or a general store and certainly, his Honour felt, he was fit enough to run such businesses. Concerning the returns from such a business his Honour proceeded on the basis that “a self-employed man would not earn less than a gatekeeper or a weighbridge man”, so that on the balance of probabilities he considered that the plaintiff would get an unskilled job of the nature indicated or invest in a small business. The trial judge does accept the fact that if the plaintiff had returned to Australia in August 1983 as a fit man, he would have obtained a similar type of supervisory job as to that in which he had been employed at Bougainville. The final upshot of the learned trial judge’s findings was that the appellant’s future economic loss would be “the difference between what he could have earned as a mining supervisor in Australia and what he will earn as a gatekeeper, weighbridge man, petrol attendant, or the like”. Further, the finding of the trial judge was that the plaintiff “had tried” for many jobs since becoming unemployed in March 1982, without success, but a large part of this failure was because of the “economic recession in Australia”. Further, the trial judge was impressed by the argument that employers are wary of employing persons with back injuries in case employment at the new place of work will aggravate the injury or be said to aggravate the injury, and thus lead to compensation claims and time off work.

There were a number of grounds of appeal originally taken before this Court but on the day of argument those grounds were considerably reduced. However, the ones remaining are of considerable significance, not only between the parties but from the point of view of general principles to be followed in subsequent cases in this country should the arguments of the appellant succeed.

The first ground of appeal is:

Ground 1. “The learned trial judge misdirected himself in that he took no account of notional tax payable on income derived from damages for future loss.”

The aspect of notional tax on income received from investment of damages representing future loss seems to have been referred to for the first time in this country by Miles J during his judgment, Hassard v Bougainville Copper Ltd [1981] PNGLR 182 at 189:

“The final point needs to be considered as to whether the award for future economic loss needs to take into account the notional tax that a plaintiff will be liable to pay on the interest earned on the award when it is notionally invested. As a matter of strict principle, it should: Taylor v O’Connor [1971] AC l15, Cullen v Trappell [1980] HCA 10; (1980) 146 CLR 1. The difficulty lies in assessing the amount of notional tax. As it is to to be paid on the sum to be earned as interest, it is necessary first to ascertain or predict that rate of interest. Does one apply a market rate, or the discount rate itself, assuming a discount rate is applied?”

His Honour then goes on to underline further difficulties which have to be faced in this area, but with respect, we do not feel that the problems raised by him necessarily arise in a form which creates serious difficulty. On this aspect, as on several others, his Honour did not have the advantage of the judgments delivered by the High Court of Australia in the case of Todorovic v Waller [1981] HCA 72; (1981) 150 CLR 402.

The question of notional tax is undoubtedly bound up with an appropriate overall discount rate. The notional income is that income which would be derived from the award of the sum invested at a figure the same as the discount rate. In most instances it is unlikely that the award will be invested at that rate but what the successful plaintiff actually does with his money is his own business and not that of the court. We are not concerned with whether he be a shrewd investor or a profligate one.

The use of actuarial tables by the Australian courts has its counterpart in this jurisdiction. Lord Diplock in Paul v Rendell (1981) 55 ALJR 371, has said that the figure so obtained is a useful starting point but if the court pursues this avenue then it must be followed through to the end (at 375):

“... logic requires that if the pre-accident earnings used for the purpose of calculation are net earnings after deduction of tax, the notional income from the notional investment needed to produce the notional annuity should also be treated as subject to income tax on the interest element involved, and the notional income left after deduction of that tax should alone be treated as available to replace the pre-accident net earnings.”

Lord Diplock goes on to demonstrate that notional tax can only be ignored at the cost of the plaintiff. At 377 his Lordship says:

“So too it is desirable that he (trial judge) should bear in mind that the theoretical calculations on which the ordinary annuity tables are based do not take account of one of the facts of real life — the incidence of income tax upon the interest element in the annual payments of the annuity, and that some adjustment upwards may be needed for this.”

Prior to this statement the leading English authority in this area was Taylor v O’Connor [1971] AC 115 where it was held:

“When the court, for the purpose of assessing damages under the Fatal Accidents Act 1846 (Imp), calculates, by a process of discounting, the present value of the pecuniary benefits that the defendants would have received in future years, it must take account of the tax that will be notionally payable on income from the sum awarded” (per Gibbs J in Cullen v Trappell (supra) at 12).

What actual tax demand will eventually have to be paid by the plaintiff from the income received on investment damages is not a matter of concern to the court. The whole exercise revolves around the element of notionality, that is a speculative or imaginary figure as being the only practical solution to the very real problem of the plaintiff subsequently meeting the requirements of the income tax legislation. A part of this problem stems from the basic premise to date that income tax is not paid on capital but only on income. Thus whereas the plaintiff in his early years after judgment might be supported almost entirely from the income earned from the interest on the invested damages, the assumption underlying the determination of the original award requires that he will utilise more and more the capital for his support, thereby diminishing the amount of interest it can earn, until in the final year of the period calculated by the court as being compensable for the injury (normally a working life finishing at 60 or 65) the capital fund itself is completely exhausted. This is a feature which creates a major tax problem if one were to adopt a scheme other than the notional one. The plaintiff is increasingly in receipt of less income and more of his capital to support himself as the years roll on. Thus the scheme whereby:

“... the court is concerned with the tax notionally payable in the situation assumed to exist to enable the present value of the future loss to be determined because the method adopted to determine that present value will produce a somewhat misleading result unless notional tax is taken into account. Further, it must be remembered that notional tax will not be payable on the whole sum which it is assumed will be drawn each week from the invested fund ... for part of that sum will come from capital. As time goes on, the proportion of capital in the sum drawn each week by the plaintiff will increase, and the income component will decrease. Therefore, the notional tax on the income from the damages awarded for loss of earning capacity can never equal the actual tax which would have been paid out of the plaintiff’s pre-accident earnings.” (Gibbs J in Cullen v Trappell [1980] HCA 10; (1980) 146 CLR 1 at 15.

It is not surprising, therefore, that the majority of judges in Todorovic v Waller insist that in fairness to a plaintiff account must be taken of notional tax in assessing quantum, unless the amount is so small as to make the notional tax negligible: Gibbs CJ and Wilson J at 421, Mason J at 449, and Brennan J at 476. With respect we adopt such a view as both proper and suitable to the circumstances of this country, because basically it assists the court in achieving that ultimate aim in all personal injury cases, namely to put the plaintiff financially in a position as near as humanly possible to that which he would have been if he had not been injured.

As to the manner of applying the principle of taking notional tax into account we do not think one need go past the solution evolved by the High Court of Australia in Todorovic v Waller. The notional tax must be incorporated in the figure settled upon as the proper discount rate and we agree that in so doing “some further downward adjustment is necessary to take account of notional tax”: Todorovic v Waller at 424. The degree of downward adjustment can be left until later in this judgment. However, we believe that such adjustment is somewhere in the vicinity of 1 per cent.

The learned trial judge did not refer to this aspect of notional tax in his judgment, nor did he make any allowance in his calculations for such incidence. It may be that reference was not made to this specific issue during the trial and final submissions. It may be that his Honour did not feel inclined to branch out into a completely novel area in this jurisdiction. We have never been asked to take such an aspect into account. We doubt if many, or even any, other judges of our National Court have been previously asked to rule on the matter. In failing to take into account the incidence of notional tax on notional income his Honour has however failed to arrive at a figure which would fully compensate the applicant and we would accordingly uphold this ground of appeal.

Ground 2. “The learned trial judge was wrong in law in refusing to consider the appropriate discount rate for future economic loss and or alternatively the judgment is wrong insofar as the 5% discount rate is applied.”

In giving his judgment Bredmeyer J correctly pointed out that the discount rate used in Papua New Guinea has varied around the 6 per cent and 5 per cent mark for a considerable period of time. To the knowledge of one of us the use of the 6 per cent actuarial tables by the Public Solicitor in arriving at a figure upon which to settle a claim, or in proposing infant settlement, was employed well before 1974. Of course, the practice of the court is not restricted to those matters which have been the subject of a judgment published in the printed copies of the authorised law reports, or even in the roneoed copies which circulate about the country. Although Pratt J was not aware of a reduction from 6 per cent to 5 per cent which occurred in the late seventies when delivering the judgment in O’Hello v Kayel Shipping Co Pty Ltd [1980] PNGLR 361, he subsequently became aware in his role as a National Court judge that 5 per cent had come to be the norm for use by the Public Solicitor, the private profession and the Motor Vehicles Insurance Trust. That this should be so is not surprising. It may well be that to state an awareness of a substantial diminution in the purchasing power of the kina since 1974 is to take judicial notice of the fact that there has been considerable inflation in that eleven-year period, especially in the area covered by the many consumer items imported into the country and seen on the shop shelves together with the cost of fuel, and the increase in wages and conditions in order to attract persons away from such areas as Australia, New Zealand and the United Kingdom. We do have our own problems, of course, as published in the daily bulletins (both newspaper and radio) which disclose not only a great variation but long periods of depressed prices, in the area of the four great “Cs”, upon which the export economy of this country fairly and squarely rests: copper, cocoa, coffee and copra.

We do not lightly cast aside Mr Gzell’s strongly worded submissions that this Court should not interfere with the 5 per cent rate accepted by the learned trial judge unless there is very specific and detailed evidence laid before either a trial court or the Supreme Court, to establish factually the degree of inflation, if any, and hence the effect that such inflation should have on the fixing of the discount rate. However, we cannot agree with this submission for several reasons; first, this Court is the final Court of Appeal for Papua New Guinea, and as such should set the guidelines in relation to questions of general principle to be observed by National Court judges and others in the matters which come daily before them. In so doing this Court must, under the dictates of the Constitution, endeavour to develop the law and in so developing the law it must use is commonsense and everyday knowledge, even in the absence of statistical evidence on the point. Such absence of evidence will, of course, make things that much more difficult in determining what the final discount figure should be, but, nevertheless, that is a task which must be faced in the light of the circumstances which prevail within this country, and are likely to continue to prevail for many years to come.

Secondly, we agree with judges in other jurisdictions who have said that evidence as to the likely course of future inflation and future changes in rates of wages or prices should not be allowed, for “the quantification of future increases in net wages and costs, and of future rates of interest and inflation, is too complex an inquiry for the courts to undertake in personal injury litigation”. (Per Brennan J in Todorovic v Waller at 468.)

Thirdly, the opportunity for gathering and analysing statistics in this country must be far worse than it is in Australia without inferring any disrespect or discourtesy to our present Department of Statistics. If the judges in Todorovic v Waller can find fault and omission from the statistics placed before them with all the facilities which are at the disposal of such a department in Australia then there can be little hope arising in the breast of any plaintiff that the problem would be resolved more easily in this jurisdiction. That difficulty, however, should not be used as an excuse to stop the court formulating a general principle, at least on very broad lines.

Fourthly, Brennan J in Todorovic v Waller at 468, expresses a view with which we strongly concur, namely it would be wrong for the courts to continue to act on the assumption that there will not be an increased level in net earnings in the future, but instead adhere to a practice which has tended to give under-compensation. The result is to:

“dismantle the legal principle expressed by Lord Reid in British Transport Commission v Gourley [1955] UKHL 4; [1956] AC 185, and erect in its place a practice which ensures that a plaintiff will receive something less than ‘the financial loss which he will probably suffer’. That would be to permit an adjectival rule to prevail over a substantive principle.”

A little earlier on at 464, his Honour is clearly attracted to the description of the rate by Hutley JA in a New South Wales decision, as an “operational tool”. Brennan J goes on to emphasise the fact that the rate is determined:

“... as a matter of judgment, but the manner of its ascertainment is better considered after a reference with principle which guides its use and to the function which the discount rate performs in applying the principle.”

Indeed, at 478, after a very detailed examination of all the issues and the material, his Honour concludes that “in the result, there is no calculable figure which presents itself as the appropriate discount rate”. In the same vein Stephen J at 428 of Todorovic v Waller comes to the conclusion that:

“... since the sole function of the process of assessment is to attain what the law has fixed as the proper measurement of compensation, there can be no place in the process for fixed rules of law; instead the process must be capable of adjustment in the face of changes in the quality of the medium of compensation. The current acceptability at any time of a process of assessment will depend, and depend only, upon whether or not its outcome fairly corresponds to what the law has set as the proper measure of compensation.”

Lord Diplock in Paul v Rendell at 376 demonstrates how even in such an august body as the Privy Council their Lordships can still be called upon to engage in what is essentially a guessing game in order to arrive at a “rule of thumb”.

“To have one’s attention focussed on the detailed differences between the rival calculations, as that of counsel and their Lordships, has been in the instant appeal, makes it only too easy to forget how far removed from all reality are most of the assumptions on which the calculations are based. One is in danger of becoming unable to see the wood for the trees.”

Fifthly, we are greatly impressed by the reasoning of the two dissenting judges in the case of Todorovic v Waller (Stephen J and Murphy J), that the time has come to do away completely with the discount rate and indeed it may even be time for the adoption of what the two judges call a negative rate. We suspect strongly that there may be a great deal in what Murphy J says about the court’s function as having “transferred much of the cost of serious road or industrial accidents ... to the injured person. The principle of restitution has been theory, not practice”. In Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd [1981] HCA 3; (1981) 145 CLR 625, three of the judges were in favour of using no discount figure at all whilst the other three were in favour of a 2 per cent rate.

Of course, the underlying law to be applied by this Court is the common law of England and not of Australia. In Lim Poh Choo v Camden Health Authority [1979] UKHL 1; [1980] AC 174, the House of Lords felt that the situation had become so well established since Taylor v O’Connor [1971] AC 115 and Young v Percival [1975] 1 WLR 17, that a radical reappraisal of the law was necessary and that such reappraisal was beyond the power of the judges or modification by rules of court. Rather, their Lordships felt that the situation called for a full set of social, financial, economic and administrative decisions to be taken followed by the appropriate legislation. However, their Lordships were not faced, as are the judges of this Court, with a constitutional directive to develop the law — obviously in accordance with the evidence placed before the court. We are not for one instant suggesting that in all cases where there is paucity or absence of evidence the Supreme Court has any more right than the National Court to disregard that paucity, or absence. What we are saying in the present case is that the judges generally in other jurisdictions have come to the conclusion that whatever figure one chooses as the discount rate it is a figure which is arbitrary, has little or nothing to do with any evidence that is placed before the court, is essentially a policy matter, and in the absence of legislation must be one which can be used as a guide by all trial court judges. We conjoin the admonition of Brennan J as to the discount rate being a figure determined, inter alia, with reference to the function which it performs, in order to achieve Stephen J’s “proper measure of compensation”. There are some, of course, who may believe that any reduction, let alone a doing away with the discount rate is not a development, but rather a regression into anarchy. For good or ill we are not of those but on the other hand we are not of such fortitude and courage as to be able to do away with the discount rate altogether.

What we think must be the situation in Papua New Guinea is as follows: the figure of 5 per cent has been used, off and on, by judges of the National Court for a considerable number of years (at least seven or eight), though there are some aberrations going as high as one judge settling on 7 per cent (1980). Nevertheless that particular judge reduced the multiplier not long afterwards to 5 per cent: see Miles J in Hassard’s case. The 8 per cent used by O’Meally AJ in the matter of Lubbering v Bougainville Copper Ltd [1977] PNGLR 183, can only be regarded as something “one off” probably brought about by his Honour using a figure which was then in common use within the jurisdiction in which he normally practised. In view of the large number of issues covered in the judgment in that case we doubt very much whether the discount rate was even referred to by counsel or given any specific attention by his Honour. It is certainly well outside the rates normally used and well-known to any practitioner within this jurisdiction. Even as long ago as 1970, Lord Diplock in Mallett v McMonagle [1970] AC 166, was of the opinion that a rate of 4 per cent or 5 per cent should be adopted.

Of course, the appellant in this case did not argue for a complete doing-away with the discount rate. Counsel argued instead that the court should adopt 3 per cent following Todorovic v Waller in place of the 5 per cent which his Honour, the trial judge, used simply because, as his Honour says in his judgment, neither counsel objected to that figure. Of course, his Honour was faced with considerable difficulty in view of the variety of figures used by the judges in the reported cases although such matters of practice are not restricted to the cases which comprise the formal law reports. Consequently, the reply by the respondent was directed entirely to the aspect of whether or not this Court should rule in favour of a reduction from 5 to 3 per cent and was naturally enough not directed at all to the abolition of the discount factor. For that reason alone we would not be prepared, in this case, to rule in favour of the complete abolition of that rate, though we have no doubt the day is fast approaching when the Supreme Court shall indeed be asked so to rule. However, if such a task were to be undertaken it would be much more difficult to achieve if there were an absence of statistical material concerning past inflation and trends upon which some forecast could be made into the future. Certainly it would be more daunting than a mere reduction of the rate from what we regard as the normal 5 per cent to one of 4 per cent or 3 per cent.

It might be said that any assumed forecast favouring increased wages or increased wages in real terms in a third world country could be a very dangerous one to make indeed. However, we do not think that such argument has any bearing on the question of inflation. Irrespective of what direction wages go in this country, in real terms, over the remainder of this century and onwards, we have no hesitation in accepting the proposition that inflation will continue just as it has been since the beginning of the century. If there were a reduction in real terms of wages, that fact would obviously, be reflected in the sum to which the multiplying discount factor is applied, and consequently the end result would reflect the lower wage structure.

Returning then to the basic issue, we take it as an accepted rule of practice in this jurisdiction that 5 per cent has been applied, as the discount rate generally, for quite a number of years and that the rate of 6 per cent as a matter of practice finished somewhere about the late seventies. We have already expressed the opinion that the discount rate should reflect notional tax by some figure in the vicinity of one per cent. We would, therefore, reduce that figure of 5 per cent by one per cent and obtain a discount rate of 4 per cent as the one which should have been in general use in the courts of this jurisdiction, thereby taking into account the notional tax which heretofore, had been ignored. In short, we adopt the approach of Todorovic v Waller of incorporating in the final figure to be used as the multiplier a downward adjustment to account for notional tax.

We now come to the second aspect which must also necessitate a further downward adjustment. It is impossible to ignore the fact that inflation is still with us, and that there has been a very considerable increase in inflation since 1974 when the oil crisis first commenced to bite into the economy of various countries of the world. In the absence of evidence being placed before the court so that the court itself may examine the statistical basis underlying the multiplier, it is very difficult, if not impossible, to arrive at a satisfactory figure, but it would certainly be flying in the face of reality to fail to reduce the figure of 4 per cent by at least one further percentage point to take account of the general upsurge in the devaluation of the purchasing power of the kina in the last dozen years. On that basis alone we believe that the appellant has made out a sound submission for adopting, not only the principles enunciated in Todorovic v Waller but the amount as well. One cannot ignore in this country the considerable interrelationship, in monetary and trading terms, between Papua New Guinea and Australia. That relationship must certainly reflect itself in many economic avenues and reduce considerably any contention such as put forward by counsel for the appellant that there is no relationship at all between the economies of Australia and Papua New Guinea. Indeed we think whatever evidence there is, points very much the other way. We agree that it would be quite wrong to say that there is a great deal of similarity between the two economies, but we think that is a totally different thing from saying there is such a lack of relationship between the economies that what is said about one may well not be true in many respects about the other. This is not a matter of mere evidence but is an aspect of real day-to-day living to be ignored at one’s own economic peril as an ordinary member of society.

In the upshot, whilst one can understand the reasons why the learned trial judge felt compelled to use a discount rate of 5 per cent, the time has come for this Court, in our view, to set down clearly for the immediate future at any rate, a settled, fixed figure, which hopefully will bear some real relationship to a compensation sum which puts the plaintiff back in his former position, not only of course in this case, but in any subsequent cases where plaintiffs come before the courts. Such figure will acknowledge the reality of inflation. We therefore uphold the appeal on the basis that a proper discount rate to be adopted in this country is no longer 5 per cent, but 3 per cent to take into account both inflation and notional tax.

Ground 3. “The learned trial judge misdirected himself in the consideration of a possible income the plaintiff might earn from investing his damages in a business.”

The error, Mr Molloy says, is this: if the plaintiff works his loss will be K115 a week, that is the difference between a gateman (K177 per week) and a mine supervisor (K292 per week). If he does not work, however, his loss is not K115 per week, but K292 and he would have to have a sum which when invested, would give him a return of that amount over the next twenty-two and a half years, at least until capital is exhausted at the end of that period. We think it is important to bear in mind some of the findings of the learned trial judge in this area. First, in Australia, unemployment is running at quite a high rate. It is not surprising that his Honour found the plaintiff had been rejected from many jobs. Furthermore his Honour was not, as counsel phrases it, optimistic concerning the plaintiff’s job prospects, but he did consider him fit enough to run a small business and considered that, “on the balance of probabilities the plaintiff will get an unskilled job of the kind indicated, or commence a small business to give him an equivalent return from August 1983”. The chances were about equal so counsel says.

As learned counsel for the appellant points out, the court is often concerned with providing for contingencies. The respondent maintains, however, that because the trial judge concluded that the appellant could obtain either unskilled employment or invest his damages and become self-employed, it was unnecessary to consider which of these two alternatives might in fact come about. Why should the respondent be directed to pay more because the appellant may choose to remain unemployed. We would certainly agree it is not correct to argue that his Honour ruled the chances equal between an unskilled job and commencing self-employment. In our view, the trial judge was rather pessimistic about job chances, not only because of the economic recession but because of the reluctance of employers to accept someone onto the payroll with a back injury. The eventual problem which will have to be solved by this Court is what percentage can be placed on these two areas in relationship to each other.

It seems to us somewhat unfair for the appellant to be placed in a situation not of his own making, whereby he might well be, in the end result, worse off than he was. Now, of course, that is only a part possibility according to the trial judge and, therefore, if he is unable to obtain employment and decides to invest his funds in a business which he himself will run then, says the appellant, the amount necessary to achieve the loss will have to be greater than that awarded by the learned trial judge because the loss itself is in fact greater. If the appellant is employed then his loss is K115 per week. If, of course, he works on his own account, it is not simply K115 per week he has to make to put himself back in the position he was in before but, in fact, K292. The appellant concedes that he cannot claim the full amount in order to cover the investment because there is only a 50 per cent chance that he may be in this position. He does say, with considerable force, that there should be at least a 50 per cent element in the calculations which will give an investment amount of K116,500.

Of course, it may well be said why pick a 50 per cent figure rather than any other figure? The only answer is that in order to do justice to the plaintiffs position, he must be compensated for the distinct possibility that he will not get employment. If he does not then he will have to invest money into a business of his own which would hopefully give him a reasonable return. It might also be said that in a business of his own he may well be able to obtain that return, or even a greater amount, for a considerably smaller sum of money, depending on a number of factors including public demand, business sense and so forth. These are certainly contingencies of which the court is bound to take cognisance. And the court must do something in order to try to bring the plaintiff back to his former position.

From what we have said above, it is clear that this area is fraught with difficulties. It does not lend itself to a clear-cut solution. We cannot accept, however, the respondent’s contention that it is unnecessary to consider the possibility that the appellant might not obtain unskilled employment, or become self-employed, or that it is equally unnecessary to consider whether or not the appellant would then have to invest his damages to provide an equivalent return for the lost income. The plain facts of the matter are that there is a distinct, indeed a more than greater balance of probability, that the appellant will not obtain work bringing him a weekly return of K177. As we have said a little earlier, we cannot accept the appellant’s submission that the proportion is 50 per cent self-employment, 50 per cent unskilled job. We simply do not read that percentage into the learned trial judge’s comments. Nor do we think it an acceptable proposition to maintain that any particular suggested investment figure is such that it should, when invested in a business, give X returns per week profit. We believe it is impossible to make such a postulation with any degree of certainty. In the end result of course, it must be treated like any other contingency with which the court must deal. Yet some allowance must be made for the occurrence. The court must balance up the options whilst at the same time taking account of the injustice which would be occasioned to the respondent if the appellant did obtain employment at $177 per week. It is obvious that some figure must be chosen and that whatever the figure it will be purely arbitrary in the absence of very clear evidence. Fifty per cent favours the appellant too much but we do not feel in all justice that one could go below 25 per cent. It is that figure therefore which we have finally settled upon.

Consequently, whilst we would be prepared to uphold this ground of appeal we would not be prepared to find in favour of the appellant to the full amount claimed by him. The figures we would, therefore, suggest on this aspect, are as follows:

$115 per week times 22.5 years, discounted at 3 per cent	$102,000
$292 per week times 22.5 years, discounted at 3 per cent	245,000
Plus 25 per cent of the difference between the above two sums	35,750
$10
Discounted at the rate of 14 per cent (as per trial judge)	19,285
Total	$118,465
Converted to kina at exchange rate K1 = $1.35	K87,752

Ground 4: “The learned trial judge misdirected himself and was wrong in law on the purpose for which interest on damages is awarded.”

The words complained of in the judgment are, an award, “to compensate the plaintiff because the defendant has wrongfully withheld the plaintiff’s money from him”. In our view the difference between the words of the learned trial judge and those cited by counsel, (which we shall quote below) is little more than semantics. His Honour’s wording may be found used by a number of judges on many occasions involving personal injury claims, for example, Wilson J in Aspinall v Government of Papua New Guinea [1980] PNGLR 50 at 55; Moffitt P in Bennett v Jones [1977] 2 NSWLR 355 at 369 and Lord Denning in Jefford v Gee [1970] EWCA Civ 8; [1970] 2 QB 130 at 146. Lord Herschell LC in London Chatham & Dover Railway Co v South Eastern Railway Co [1893] UKLawRpAC 41; [1893] AC 429 at 437 was concerned with a commercial matter where the expression is certainly most apposite. According to counsel the true approach is that expressed in Batchelor v Burke [1981] HCA 30; (1981) 148 CLR 448 at 455:

“The interest is awarded to compensate the plaintiff for the detriment that he has suffered by being kept out of his money, and not to punish the defendant for having been dilatory in settling the plaintiff’s claim.”

As a matter of terminology in personal injury cases, we prefer the passage often quoted from Lord Goddard in British Transport Commission v Gourley [1955] UKHL 4; [1956] AC 185 at 208:

“Damages which have to be paid for personal injuries are not punitive, still less are they a reward. They are simply compensation, and this is as true with regard to special damage as it is with general damage.”

It has elsewhere been put quite succinctly that “the plaintiff receives compensation and not restitution”.

As a personal preference, we think it better to restrict the phraseology “kept out of his money” to commercial causes involving claims for moneys had and received, and other indebitatus assumpsit counts and perhaps also for those awards which represent damages for breach of contract, and to avoid the phrase in personal injury cases.

We do not find anything in the reasoning of the learned trial judge to indicate that his Honour has in any way seriously departed from the basic principles stipulated by Lord Goddard. It is true his Honour refers, on one occasion, to the defendant being kept out of his money but we do not take this to mean that some punitive action has been implemented against the plaintiff for which he must be compensated. There is nothing in the reasoning or the end results determined by his Honour which would indicate that such a result has occurred. It is also perhaps interesting to note a comment by Professor Luntz in Assessment of Damages in Personal Injury and Death (2nd ed, 1983), p 492, to the effect that the detriment complained of in the appropriate Victorian context (that is, Batchelor v Burke) was the issue which had to be resolved in the decision Ruby v Marsh [1975] HCA 32; (1975) 132 CLR 642 and is less appropriate for other jurisdictions which permit awards of interest from the time of cause of action. Thus, in Thompson v Faraonio [1917] ArgusLawRp 74; (1979) 24 ALR 1 at 7, the reason for awarding interest was said to be “to compensate the plaintiff for having been kept out of money which theoretically was due to him at the date of his accident”. Yet, even in New South Wales it has been said that interest is not designed to compensate the plaintiff for loss arising out of the cause of action, but to provide compensation when a sum of money has been outstanding for a period of time. A little later on in the same paragraph dealing with this area, Professor Luntz goes on to say:

“Forbes J put the matter more realistically when he said ‘I think the principle now recognised is that it is all part of the attempt to achieve ‘restitutio in integrum’.” (See Tate & Lyle Food and Distribution Ltd v Greater London Council [1981] 3 All ER 716 at 722.)

We do not believe this submission can be substantiated. We would dismiss this ground.

We propose to deal with the next two grounds together:

Ground 5(a) “The learned trial judge misdirected himself on the appropriate rate of interest for past economic loss”, and

(b) “The award of 8% per annum interest for economic loss was wrong and against the weight of evidence.”

In many judgments recognition is given to an appropriate rate of interest as one being “the normal commercial rate”. One suggestion of a realistic rate was the amount received on a fixed bank deposit on a short-term basis in the recent case of Koieba v Motor Vehicles Insurance (PNG) Trust [1984] PNGLR 365.

It is conceded by the respondent that one should not relate the interest rate to the effect of inflation (Pickett v British Rail Engineering Ltd [1980] AC 136), but in the final result we do not believe this has led his Honour into error. Certainly we do not agree that the bank rate referred to by the appellant as appearing at p 101 of the appeal book, being a rate charged out by the bank to its clients for the use of the bank’s money, has any particular relevance to the rate which should be used by a court in a personal injuries claim. We note also that even in the more stable economic times of Jefford v Gee [1970] EWCA Civ 8; [1970] 2 QB 130 at 148, the bank rate was rejected as an appropriate rate of interest because “it fluctuates too much”. As a general rate of interest awarded in damages cases in this jurisdiction 8 per cent has been accepted for some time and we do not believe that in excercising his discretion to settle on such a rate, the learned trial judge has failed as a matter of principle or exercised his discretion in a way which should be corrected on appeal. Nevertheless we think the time is ripe for the National Court judges to settle jointly on a suitable figure to be used as a guide in the majority of cases and publish same by way of a practice direction. Perhaps a guide can be obtained by averaging out the banks’ prime rates over the last five years.

We would dismiss both these grounds of appeal and uphold the rate of 8 per cent used by the learned trial judge.

Ground 6. “The learned trial judge misdirected himself as to the date from which the interest on damages should run.”

Counsel for the respondent maintains that the decision of the trial judge should not be interfered with because the Judicial Proceedings (Interest on Debts and Damages) Act (Ch No 52), s 1, gives a discretion to allow interest for the whole or part of the period from the cause of action. It is not without precedent. Counsel points out that such interest has been held in previous judgments to run from the date of the writ only and there is no evidence that any demand was made for payment before the writ. However, we do not think that such a contention really meets the main difficulty in this area. His Honour has followed the course earlier charted by such judges as Wilson J in the case of Aspinall v Government of Papua New Guinea (No 2) [1980] PNGLR 50 and Kearney Dep CJ in Cybula v Nings Agencies Pty Ltd [1981] PNGLR 120. In so far as there is no mention of the possibility of dating the loss for special damages to the time of injury there seems to us to have been slightly less than a complete adoption of the basic guiding principles which we believe we should follow in this jurisdiction as set out in Jefford v Gee [1970] EWCA Civ 8; [1970] 2 QB 130 at 151, thus:

“Special Damages (including loss of wages)

Interest should be awarded from the date of the accident to the date of the trial at half the appropriate rates.

Loss of Future Earnings

No interest should be allowed.

Pain and Suffering and Loss of Amenities

Interest should be awarded at the appropriate rate from the date of service of the writ to the date of trial.”

The most recent decision in the United Kingdom to follow these principles appears in the judgment delivered by Lawton LJ in Dexter v Courtaulds Ltd [1984] 1 WLR 372. At 376-377 his Lordship says:

“There may be special circumstances in which it would not be fair to apply the broad principles enunciated in Jefford v Gee. If there are special circumstances which make it unfair to apply those principles, they are circumstances which will be known to the plaintiff and his advisers ... [w]hen the plaintiff wishes to say that there are special circumstances which exclude the application of this Jefford v Gee principle, he should say so when claiming interest and set out the facts on which the court can adjudge whether they were special circumstances.”

Neither Wilson J nor Kearney J in the two cases earlier quoted have suggested in any way that the basic principle should be departed from. However, in Aspinall’s case Wilson J did introduce the more recent development of dividing past pain and suffering from future pain and suffering and such development has been followed by a number of National Court judges since. It would not be appropriate, however, for us to make any comment on such practice in the present appeal as the matter was not argued before us. We merely observe that there appear to be sound arguments in favour of such discrimination despite the reservations which were expressed earlier in the case of O’Hello v Kayel Shipping Co Pty Ltd [1980] PNGLR 361.

We cannot see any justification for denying an award of interest merely because there has been no demand for it prior to issue of the writ. The award of damages is compensation for the loss suffered. That loss was suffered at a particular date and was subsequently proved to have been the fault of the defendant. It is not a question of punishment. It is simply a matter of the plaintiff not being kept compensated at the proper time. If that is so, it seems to us perfectly just that he should not only receive that money but receive the monetary equivalent of the value which that money would have earned had he been given it at the proper time. We believe the principles enunciated in Jefford v Gee (supra) are consistent with both commonsense and justice.

The facts in this case however support the manner in which the learned trial judge has exercised his discretion. Quite obviously his Honour was greatly influenced by the employer’s payment of full wages (less PAYE tax we assume) to January 1981 and partial wages to March 1982. He assumed that his entitlement to wages accrued evenly over the whole period before judgment. The writ was issued on 12 December 1979 some seven months after the accident. We do not accept there is any error in the circumstances of this particular case or indeed any justification in back-dating the interest to the date of injury. We believe the discretion was properly exercised.

Ground 7. “The award was wrong in law in so far as the assessment of past and future loss of earning capacity was based on net (after tax) figures and not gross figures.”

It would seem that the appellant wants the best of both worlds. First of all he has argued that the learned trial Judge should take into account notional tax on future earnings, and by failing to do so had under-compensated the plaintiff. He now maintains, however, that in addition to the notional tax on notional income the figure which should have been used by the learned trial judge in order to establish loss of income was one based on his gross earnings and not as had been agreed by the parties at the trial, the net income on earnings. We appreciate that Mr Molloy is careful to distinguish past loss of earning capacity from future loss; but in contending that his Honour should have calculated past loss of earning capacity on gross (pre-tax) income it seems to us Mr Molloy is really asking this Court to revert to the situation which was approved by the High Court in Atlas Tiles Ltd v Briers [1978] HCA 37; (1978) 144 CLR 202, and completely ignore the subsequent High Court decisions which followed the dissenting judgment of Gibbs J (as he then was) in that earlier case.

There are two observations which we wish to make at this stage; first and foremost, we agree completely with the observations of the Chief Justice of the High Court of Australia, Gibbs CJ in the following extract of his dissenting judgment in the Atlas Tiles case (at 221), that British Transport Commission v Gourley rests on two foundations:

N2>1.       “The fundamental principle that damages awarded for personal injuries are compensatory. It would be unreal to measure the loss of a plaintiff, who has been deprived of the ability to earn moneys which, when earned, would have been subject to tax, by having regard to his gross earnings, without taking tax into consideration.”

N2>2.       The Lords in Gourley “rejected the argument that taxation was too remote to be taken into account in the assessment of damages”.

Secondly, Gibbs CJ (at 223) adheres to his earlier view that an award of damages for personal injuries is not taxable and that so far as he is aware this principle 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.”

We think it is important to bear in mind here that the Income Tax Act (Ch No 110), s 47(1)(j), in Papua New Guinea has an exact replica in the Australian legislation and was the subject of decision by the High Court in those terms both in the Atlas case and in Todbrovic v Waller. In our view, if the Commissioner of Taxation in this country does in fact tax such an award he does so without a legal basis. He is not, of course, a party to these proceedings and although he is not bound because of that to the decision this Court now publishes, we have no doubt he would consider himself beholden to follow the law as has been expounded to date by the judges of the final court in the land. If he believes the position still arguable no doubt he will arrange for the matter to be brought before the Court in due course.

At 23 of Cullen v Trappell Gibbs J, with whom Stephens J and Mason J agreed, pointed out that the trial judge had been quite correct, “in assessing damages for the future economic loss suffered by the respondent by reference to his net earnings after tax”. It is clear from the reasoning and from a specific reference to net income that his Honour has repeated this view in Todorovic v Waller in the joint judgment which he handed down with Wilson J (at 425) and that their Honours made no distinction between past and future economic loss.

Net earnings is certainly the starting point for Brennan J in Todorovic v Waller. At 465 he says:

“It is now accepted that a calculation of the present value of lost future net earnings is an appropriate measure of damages for diminution of earning capacity.”

Aickin J at 458 of the same report has this to say:

“Faced with what is in truth an impossible task, the courts have been able to solve it only by devising a mode of calculation based upon those assumptions. The courts, in effect have asked themselves ‘How can the plaintiff receive by way of a lump sum the equivalent of his salary or wages, after tax, from the date of the trial for each week until he reaches the age of sixty-five, subject however to adjustments for a variety of contingencies?’ In Australia the system has been to calculate the total of the wages over the relevant period to the age of sixty-five and arrive at a total figure.”

His Honour then goes on to discuss the actuarial tables, a system which has been followed in this country for many years.

We agree with learned counsel for the respondent in this matter that “what is struck down by the injury is the capacity to earn income”, and that an award of damages for loss of earning capacity is a matter of capital rather than income. We can see no basis upon which to assess tax on awards of damages for so much of the damages for personal injuries as represents a past loss of earning capacity. Whilst the loss of wages up to the time of trial can be obtained with precision, nevertheless the damages awarded are clearly for a loss of earning capacity and not a loss of income: see McGregor on Damages, par 406, at 296. Counsel for the respondent emphasises a basic assumption underlying British Transport Commission v Gourley, that the component of the award for past loss will not be taxed. It shall not be taxed because the award of damages is a matter of compensation and not restitution. That this is particularly so in cases of damages for personal injury is underlined by Earl Jowitt when he considers the distinction between an action for wrongful dismissal and one for personal injuries. In his Lordship’s view the basis of the distinction is that in wrongful dismissal cases, the action is to recover moneys which should have been rightly paid to the plaintiff, inter alia, for his wages at the time, whereas a personal injury claim of course is compensation for loss as a result of the injury. In the process of making his distinction, Earl Jowitt agrees that the principle governing assessment of damages in such a case is to “award the injured party such a sum of money as will put him in the same position as he would have been if he had not sustained the injuries”. His Lordship had earlier made it clear that the court had been called upon to rule whether or not the tax position should be considered in assessing “that part of the damages attributable to loss of earnings actual or prospective” (British Transport Commission v Gourley at 197). From the examples given by their Lordships, and particularly by Lord Jowitt at 200 of British Transport Commission v Gourley when referring to the facts in McDaid v Clyde Navigation Trustees [1946] SC 462 the real aspect concerning the court was whether:

“... in awarding damages for loss of earnings, the judge should have regard to the gross sum which the workman earned or to the net sum which was paid to him after payment of tax. Lord Sorn decided that the lowest sum should be the factor to be taken into account in assessing damages”.

With this approach Earl Jowitt agreed.

There are two further factors which cannot be overlooked under this ground of appeal. As counsel for the respondent points out, there is no evidence before us of gross figures. Secondly, and perhaps more importantly, both sides agreed to the use of net figures by the trial judge and, indeed, it was on their invitation that his Honour worked out the amount of past loss up to the date of trial. Even if the law were otherwise, we do not think it would be proper for us to turn round now and substitute gross figures.

In our view it would be much more preferable in this country to adopt an approach shared by both the Australian and the United Kingdom courts in treating net income, both past and future, as the appropriate basis for assessing damages. We have as part of our underlying law the English common law and the reasons for this Court following the decision in British Transport Commission v Gourley are even more pressing than they are for any of the Australian States. We think there would have to be quite compelling reasons also for us to adopt a course which would take us away from the main stream of authorities developed elsewhere, despite the very strong and persuasive arguments to the contrary by Sir Garfield Barwick in Atlas Tiles and in his dissenting judgment in Cullen v Trappell.

We agree, therefore, the rule must be that the award is based on net salary after tax, to give a figure of total loss of earning capacity, whether it be past or future. To arrive at such loss you must take it as a figure free of any pay out to others, for example the Commissioner of Taxation (unless they are added on, as one must do for hospital, medical, operation expenses etc). The loss to the plaintiff is the loss of money which he would have put in his bank. As regards the income he was making from the investment however, that is subject to tax and hence the notional income liable to notional tax. That, of course, is a different area altogether.

We would dismiss this ground of appeal also.

It is perhaps unfortunate that a decision which undoubtedly involves matters of policy was not argued before a court of five judges including the Chief Justice and the Deputy Chief Justice. The present constitution of the Court in some respects however leaves that avenue still open.

COSTS

The present appeal introduces some special circumstances concerning the matter of costs. The appellant has succeeded on a number of grounds and failed on some others. The success of the appellant before this Court has been brought about not because the learned trial judge by and large misdirected himself on a number of matters that were placed before him, but rather because having followed the precedents laid by earlier National Court judges, his Honour had not developed the law in the direction which we have indicated. Of course, there are definite limitations on the degree of development which the National Court judges are able to implement, and it is quite clear from what we have said in this case that the Supreme Court has now gone outside the ordinary parameters which would have been open to a National Court judge particularly in the light of the difficulties which the parties could have adducing evidence in some matters (for example statistical material on inflation, per capita income, interest rates, and so forth). We feel that the most appropriate course to take would be to make no order as to costs and treat the matter as somewhat similar to Child v Stenning [1879] UKLawRpCh 81; (1879) 11 Ch D 82 and Williams v Stanley Jones & Co Ltd [1926] 2 KB 37. Those cases indicate that where a plaintiff or appellant succeeds in part and a defendant or respondent succeeds as to part, or putting it in another way where both sides have succeeded and both sides have failed, then the Court may properly take the view that no costs of the appeal should be awarded. So far as the costs of the trial are concerned we do not see any reason for interfering with the original order of the trial judge made in that matter; awarding costs to the plaintiff. The nature of the issues raised, the complexity involved and the amount being sought and granted are all factors which in our view justify certification for southern counsel, though the nature of our ultimate ruling probably makes such a certification unnecessary.

ORDER

The appellant’s (plaintiff’s) appeal is allowed and the judgment for the plaintiff is varied by increasing the figure of future loss of earning capacity from K52,000 to K87,751

The judgment for the plaintiff is thereby increased to K165,613.86. Each party to pay own costs on this appeal.

Orders accordingly

Lawyer for the appellant: Warner Shand Wilson & Associates.

Lawyer for the respondent: Young & Williams.