The Gazette 1980

GAZETTE

APRIL 1980

sustain a very great loss unless they could obtain new premises in which to continue business. Although it appeared to McWilliam J. that no question of foreseeability arose with regard to the question of mitigation he was satisfied that: "Any reasonable man in business circles at the present time must appreciate that, if property and premises are destroyed and alternative property and premises have to be obtained the person obtaining such property or premises will not have money in a stocking or under a mattress or even in current account for that purpose, but will either have to apply money which is bearing interest and so lose such interest or will have to borrow money and pay interest on the money borrowed." In awarding damages to cover the interest paid he stressed that, whether there was any justification for it, there was a distinction between the principles governing an award of damages applicable to interest on money actually expended on mitigating loss and interest claimed in other connections as on the amount of a final decree. He said: "It has not been the practice in Ireland to award interest on the amount of a decree from the date when the cause of action arose until the date of the decree and it has not been argued that I have any jurisdiction to award such interest. Nevertheless, I have been referred to English cases in which interest upon the entire decree was allowed or refused under a discretion to do so given by the Law Reform (Miscellaneous Provisions) Act 1934. This Act gave the English Courts discretion to award interest for any period between the date when the cause of action arose and the date of judgement. In so far as these decisions depend on the express provisions of the English statute they are not relevant to a discussion of the principles upon which interest may be allowed on the amount of a decree in Ireland and do not deal at all with interest on money borrowed to mitigate loss." One case that would have proved of assistance, if needed, to McWilliam J. is the New Zealand Court of Appeal 21 decision in Taupo Borough Council v. Birnie 22 where the "Edison" was similarly distinguished if not actually discarded. Here, due to the negligence of the Borough Council largely flooding occurred in Mr. Birnie's hotel grounds. The hotel lost a lot of business and eventually had to be sold by public auction at a mortgagee's sale. The question before the Court was whether damages for loss of profits and loss of capital suffered as a result of the mortgagee's sale were recoverable. The Court held that the hotel's loss of accommodation profits was a foreseeable and immediate consequence of the flooding caused by the Borough Council's negligence, but as regards the loss of capital head it was contended that lack of funds was the real cause of the forced sale and that therefore the head of damage was too remote. Despite the high authority of the "Edison" the trial Judge, Haslam J., felt that reasonable foreseeability was the broad test for remoteness, took judicial notice of the likelihood that a hotel company operating a hotel in New Zealand could be expected to have mortgage liabilities and would depend on the uninterrupted maintenance of its operations to meet its covenants thereunder and held that loss on the forced resale (since a mortgagee's forced sale is likely to produce less than market value) was not too remote. The Court of Appeal unanimously refused to disturb this. Cooke J., in a judgement concurred in by the remainder of the Court said: "There can be no doubt that

impecuniosity is one of the matters to be considered in the question of reasonable foresight." 1933 AC 449. 1931 P 230 1932 P 52. Lords Wright, Tomlin, Buckmaster, Warrington of ClyfTe, and Russel of Killowen. Legal Essays, pp. 96-123. 1967 IR 277. With whom ó Dálaigh C.J. and Haugh J. agreed. 1961 AC 388 (The Wagon Mound I). On which see the decisions of Peter Pain J. in Ichard v. Frangoulis 1977 1 WLR 556. Lord Denning M.R. in H. Parsons (Livestock) Ltd. v. Uttley Ingham and Co. Ltd. 1977 3 WLR 990. The Court of Appeal in Esso Petroleum Ltd. v. Mardon 1976 2 AER 5, although cf. contra the decision of the House of Lords in The Heron 2 1969 1 AC 350. For an inter- esting Irish High Court decision on this area see Finlay P. in Hickey and Co. Ltd. v. Roches Stores (Dublin) Ltd. High Court unrep. 14-7-1976, and the case note by Clark 1978 29 NILO 128. High Court unrep. 14-11-1978 and 17-1-1979. 1971 1 WLR 1476. Ibid., p. 460. Ibid., p. 461. Re an arbitration between Polemis and Furness Withy and Co 1921 3 KB 560. Richmond P., Woodhouse and Cooke J.J. 1978 2 NZLR 397. l. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 12. 14. 15. 16. 17. 18. 19. 20. 21. 22. 1962 2 QB 405. 1901 2 KB 669. Tort: Cases and Materials (1974) p. 192. 1978 2 NZLR 97. 1947 AC 414. 1947 AC 196 at p. 224.

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