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On the Date for Assessing Damage

Published online by Cambridge University Press:  12 February 2016

G. Tedeschi
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Extract

In an epoch of inflation of the kind in which we are now living, the question of the correct date for assessing damage has come to be widely discussed. Should it be the date when the tort or breach of contract was committed, as the crystallisation doctrine urges? Or instead of the “date of the tort” or the “date when the damage occurs” should some other point of time be chosen, either the date of judgment or the date of payment? Or, more radically, should no particular date be adopted but subsequent events be taken into account in determining the existence and scope of the damage and assessing it, in so far as these events affect the damage, in the light of the proper interest of the injured party? (see infra, part 3).

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Israel Law Review , Volume 13 , Issue 1 , January 1978 , pp. 10 - 40
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Copyright © Cambridge University Press and The Faculty of Law, The Hebrew University of Jerusalem 1978

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References

1 A judgment may also decide that if at the date of payment the rate of exchange or the price index is different, the amount of compensation awarded should vary accordingly (see infra, part 5). In this case as well the assessment is made in the judgment even if it contains a reference to an external future element.

2 25 L.S.I. 11. Hereafter referred to as the Remedies Law.

3 The present damage is generally therefore also future damage. On the other hand where it is already apparent now that certain damage will affect property in the future, the future damage affects the present property itself (see also infra, part 3 n. 8); hence there is no good reason for the distinction largely adopted between present and future damage.

4 Yardenia v. Ofer Bros, and Israel Ports Authority (1976) (I) 30 P.D. 29 (hereafter referred to as Yardenia) ; Israel Ports Authority v. Ararat, Yardenia, Zim (1977) (I) 31. P.D. 533 (hereafter referred to as Ararat). For details of these cases, see Yadin, infra p. 111.

5 Cohn J. laid down two propositions: (1) “When and where the Supreme Court regards a rule decided in the past […] to be erroneous […] it not only may depart from it but […] must do so”; (2) but with regards to “precedents defining the jurisdiction of the courts or prescribing procedure” since “in such and like matters decisive importance is attributed to stability and certainty… and the possible miscarriage of justice of an erroneous interpretation of a statute is not on a par with injustice” and because “a departure from precedent […] will only yield […] academic utility, it is better to go along with the precedent”. With respect, whilst agreeing with the first proposition, we must disagree with the second. If on the judge's assumption an erroneous statutory interpretation features in a precedent, that is, the precedent is inconsistent with the law, one cannot reconcile with subjection to the law the fact that the subject should distinguish between laws obedience to which is required absolutely and those it is not, in respect of which therefore, even if the court is satisfied that an earlier interpretation was mistaken, it may persist in its error. Apart from “academic utility”, obedience by the Supreme Court to a law because it is law would set a good example to citizens and to the judges themselves who might stumble not only over laws the provisions of which in one way or another do not appear to them significant but also over laws which they do not find to be to their taste. For further considerations, see Tedeschi, , “Prospective Revision of Precedent” (1973) 8 Is.L.R. 173, 182–87.Google Scholar 6 At 39.

7 In the modern use (common especially among English and Israel lawyers) of this expression, as distinguished from its original meaning in Roman Law, the setting aside of a limitative status of the person.

8 To arrive at the difference which constitutes the damage, the patrimony as it is now must be compared with what it would be but for the injurious event (and not as it was on the eve of that event). In any case we must assess the patrimony according to everything it bears within itself actually or potentially. In the light of these considerations we cannot agree with the view that sees a difference between torts and contracts because in the former the injured party must be placed in the same position he was but for the tort and in the latter he must be placed in the position he would have been had the guilty party performed the contract (Zeltner, , The Law of Contracts in Israel (1974, in Hebrew) vol. 1, p. 469)Google Scholar.

9 Secs. 10 and 11 read as follows:

“10. The injured party is entitled to compensation for the damage caused to him by the breach and its consequences, which the person in breach foresaw or should have foreseen, at the time the contract was made, as a probable consequence of the breach.

“11. (a) Where an obligation to supply or receive any property or service has been broken and the contract is rescinded by reason of the breach, the injured party shall, without proof of damage, be entitled to compensation in the amount of the difference between the consideration for the property or service under the contract and its value on the date of rescission of the contract. “(b) Where an obligation to pay a sum of money has been broken, the injured party shall, without proof of damage, be entitled to compensation in the amount of the interest on the sum in arrears from the date of the breach to the date of payment, at the full rate under the Adjudication of Interest Law, 1961, unless the Court has prescribed a different rate”.

10 In Birmingham City Corp. v. W. Midland Baptists (Trust) Assoc., [1969] 3 All E.R. 172, 189.

11 Tedeschi, G., ed., The Law of Torts (in Hebrew) 594.Google Scholar

12 At 39.

13 Pothier, , Traité des Obligations (Paris, 1828) no. 161.Google Scholar

14 Incidentally, this is not peculiar to movements in money values only but is common to all instances of movements in the price of the injured person's property.

15 See also infra, part 10.

16 (1958) 12 P.D. 85, 93.

17 At 38.

18 Ibid.

19 Goldschmidt v. Contins (1976) (I) P.M. 441.

20 Following this suggestion, an amendment of the Enforcement of Foreign Judgments Law was placed before the Knesset.

21 See Hevrat Nofesh Arad v. Jewish Agency (1977) (I) 31 P.D. 449, 453 where the Court said (Etzioni J.) obiter that “even if the Court were to hold that as a result of special economic conditions the sum expressed in the contract does not truly reflect the real value of the obligation or the property given in consideration therefor, even then it is not the practice of the Court to give relief to the plaintiff”. It could, however, be imagined that if the situation were to deteriorate very much more the courts could apply sec. 39 of the Contracts (General Part) Law, 1973 (“An obligation or right arising out of a contract shall be fulfilled or exercised in customary manner and in good faith”) in the manner of German courts after the First World War. Cf. Zeltner, op. cit., at 469. For the moment this approach has been rightly rejected: see Landau, J. in Mechoniot Hadar v. Siman Tov (1975) (I) 29 P.D. 561Google Scholar, 569: “As regards the idea of revaluation […] I think we must not […] create a revolution in the case law, such as the courts in Weimar Germany created during the period of ruinous inflation”.

22 Including indemnities: see infra, part 13 et seq.

23 Nussbaum, , Money in the Law, National and International (2nd ed., 1950) 159Google Scholar; Mann, , Legal Aspects of Money (3rd ed., 1971) 95Google Scholar; Ascarelli, , Obbligazioni pecunarie (in Commentario al cod. civ. a cura di Scialoja e Branca, Bologna-Roma, 1959 Lib. IV) 168 ff., 514 ff.Google Scholar But a certain criticism was levelled against this distinction: v. Maydell, , Geldschuld und Geldwert (1974) 99 ff.Google Scholar; Horn, , Geldwertveränderungen, Privatrecht und Wittschaftsordnung (1975) 12Google Scholar; Kötz, , Facilides, Reichert, eds., Inflationsbewältigung im Zivil–und Arbeitsrecht (1976) 87 ff.Google Scholar The main contention of these writers is that Geldwertschulden and Geldsummenschulden constitute only the two outer limits and that a more graduated scale of possibilities should be recognised.

24 But see Zeltner, op. cit., at 468, who adheres to the crystallisation doctrine which he believes is required by the nominalist principle.

25 Not all agree to this point. Mann, op. cit., at 106 and 108, cites authority in two directions from France and Belgium.

26 See Yadin, , The Contracts (Remedies for Breach of Contract) Law, 5731–1970Google Scholar (Commentary on the Law of Contracts) 87. For another view, see Zeltner, op. cit., at 468.

27 (1869) 19 L. Ed. 501.

28 Hevra L'Pituah Yerushalayim v. A.G. (1959) 13 P.D. 819; Mizrahi v. Bagdadi (1973) (II) 29 P.D. 645, 651; Mechoniot Hadar v. Srnian Tou, ubi supra, 561. See Eitan, S., “Inflation as a Reason for not Enforcing Contracts in Land” (1976) 30 HaPraklit 359.Google Scholar

29 Hirschberg, E., “Equitable Remedies and Changes in Value of Currency” (1970) 26 HaPraklit 543.Google Scholar

30 At 36.

31 At 35.

31a In favour of the judgment day “or perhaps even of the payment day” in the case of personal injuries, see now J., Witkon in Sheravi-Ben Hur v. Harari (1977) (II) 31 P.D. 707, 715.Google Scholar

32 At 41.

33 For this reason the present writer supported it at a time of monetary stability: “Il danno e il momento della sua determinazione”, 1933, no. 4 Riv. dir. priv.; “Danno per inadempimento e tempo della condanna”, 1934, no. 4 ibid.; “Il momento della determinazione del danno”, 1934, no. 4–5 Riv. dir. comm.

34 See as regards torts Barak, op. cit., para. 372, and as regards contracts Yadin, op. cit., para. 44, and the case law cited by both.

35 At 37.

36 It may be noted that even within the frame of the crystallisation doctrine recourse to certain hypotheses cannot be avoided. For instance, if a person is disabled and prevented from working, the determination of the compensation will be based on the assumption that, had he not been injured, he would live a given number of years throughout which he would earn a given amount of wages, all based on the probabilities.

37 See Shafir v. Shafir (1970) (II) 24 P.D. 453, 457; Barak, op. cit., para. 353 (at end).

38 But see Witkon, J. in Hahsharah v. Kofikah (1950–1951) 5 P.E. 378Google Scholar, 382:

“Counsel for the respondent contests that the Court should take cognisance of the matter [affidavits] as additional evidence, since according to him we must decide the law solely on the state of affairs before the lower court. Two questions arise here […] the first is procedural, whether […] the Court of Appeal may receive further evidence, the second is substantive, whether specific performance can be ordered on the basis of facts which in part came into being after commencement of proceedings”.

39 [1947] 2 All E.R. 7, 11.

40 Odeh v. Al Shami (1947) S.D.C. 604, 607.

41 The Adjudication of Interest Law, 1961, sec. 5 (15 L.S.I. 214).

42 Reis v. Povitzer (1956) 10 P.D. 272, 276.

43 Danker v. Fast and Matrani (1976) (II) 30 P.D. 796, 807.

44 Mahsane HaHamzan v. The Estate of P. Bernstein (1968) (II) 22 P.D. 914.

45 Diamanten v. Objections Committee (1965) (IV) 19 P.D. 161, 166. See also the observations of Judge Wittkowski (Witkon) in Monkatsh v. Cohen (1950–2) 3 P.M. 296.

46 [1912] A.C. 778, 801.

47 Reinharz v. Foss (1953) 7 P.D. 982.

48 3rd ed., para. 658 (in Hebrew).

49 Including the sum which the court may impose in favour of the injured person on a person convicted of an offence, under sec. 77 of the Penal Law, 1977.

50 The question of the date of assessment may also arise outside the field of damage. For instance in criminal law, with regard to the fixing of a fine, sec. 63 (b) of the previously mentioned Law provides that “where a person convicted of an offence has received something as remuneration for committing it or as a means for committing it, the Court may impose a fine of an amount treble the amount [value] of the remuneration.” Where the “something” was not an amount in Israel currency, the question is whether its “value” must be understood as the value at the time when the offender received it or its value at the date of the trial. The latter seems to be preferable, so that the offender is not remunerated in spite of the fine, and in any event so as to maintain the relationship sought by the Law between the “something” and the amount of the maximum fine. This problem was brought to the writer's attention by Mr. Yigal Tamir of the Sacher Institute of Legislative Research and Comparative Law.

51 Sec. 48B of the Civil Wrongs Ordinance, according to sec. 165 of the Land Law, 1969 (23 L.S.I. 312).

52 See the Invalids (Nazi Persecutions) Law, 1957 (11 L.S.I. 111).

53 Beinun v. Singer (1970) (II) 24 P.D. 125.

54 The Bill of the Insurance Law (1975) H.H. no. 1209, p. 22.

55 See Hercules Ins. Co. v. Hunter (1835), 14 Sh. (Ct. of Sess.) ; Chapman v. Pole (1870) 22, L.T. 306; In re Wilson and Scottish Ins. Corp., [1920] 2 Ch. 28; Vance v. Forster (1841), Ir. Circ. Rep. 47.

56 Warhaftig, Sh., The Law Relating to Devaluation in Israel (Studies in Jewish Law, Ministry of Justice, 1976, in Hebrew) 19–20, 27.Google Scholar

57 That could be so when the events by themselves do not fall within the insured risks; for instance, in the example given supra part 1, the subsequent effects of fire, where insurance is taken out against fire but not other risks.

58 Apart from cases regulated by other enactments, among them the Planning and Building Law, 1965, sec. 188 et seq. (19 L.S.I. 365). See also the Acquisition for Public Purposes (Amendment) Law, 1964 (18 L.S.I. 116).

59 Land (Acquisition for Public Purposes) Ordinance, article 12, as amended in 1946.

60 [1969] 3 All E.R. 172.

61 At 180 and 184.

62 Mann, F. A., “The Relevant Date of the Assessment of Compensation” (1969) 85 L.Q.R. 516.Google Scholar And in Israel see Kammar, , “Compulsory Acquisition of Immovable Property — Assessment” (1974) 29 HaPraklit 264, 272.Google Scholar

63 A similar observation may be made with regard to sec. 21 (b) of the Land Law because it refers to the value of the fixtures at the time of the exercise of the option. In contrast to this provision, where revocation of a licence is involved-and the revocation is made dependent by the court on restitution of the licensee's investment-the Supreme Court held that the indemnity should be according to the present value of the investment (and did not refer to the date of revocation, the date when the proceedings were commenced or the date of judgment at first instance). See Ha'yar v. Ha'yar (1969) (II) 23 P.D. 197; Levi v. Weiman (1977) (II) 31 P.D. 127.

64 See Katzenshtein v. Municipality of Ramat Gan (1961) 15 P.D. 2107.

65 Yalkut HaPirsumim 2158 of 20 October 1975. (On this decision see Mizrahi v. Municipality of Tel Aviv (1977) (II) 31 P.D. 253). The decision does not, however, apply to acquisitions by a Local Commission under sec. 180 et seq. of the Planning and Building Law, 1965.

66 Bill for amending the Land (Acquisition for Public Purposes) Ordinance (1975) H.H. no. 1210, p. 49.