Adelaide (SA) Pools & Spa Manufacturing and Installation Pty Ltd v Westcourt General Insurance Brokers Pty Ltd (No 3)

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
ADELAIDE (SA) POOLS & SPA MANUFACTURING AND INSTALLATION PTY LTD & ORS v WESTCOURT GENERAL INSURANCE BROKERS PTY LTD (No 3)
[2022] SASC 58
Judgment of the Honourable Justice Doyle
INSURANCE - INSURANCE AGENTS AND BROKERS - GENERAL DUTY OF CARE
EVIDENCE - ADDUCING EVIDENCE - COURSE OF EVIDENCE - RE-OPENING CASE - BY PARTY
INTEREST - RECOVERABILITY OF INTEREST - AWARD OF INTEREST AS DAMAGES - IN SOUTH AUSTRALIA - GENERALLY
INTEREST - RECOVERABILITY OF INTEREST - AWARD OF INTEREST AS DAMAGES - IN SOUTH AUSTRALIA - EFFECT OF DELAY
The first to fifth applicants are corporate entities (collectively, the ASA Group) variously involved in the business of manufacturing, selling and installing fiberglass pools and spas. The sixth applicant, Mr Elliott, was the director and a shareholder of each entity.
In January 2010, a fire at the factory used to manufacture the fiberglass pools and spas caused extensive damage to the property and its contents. It became apparent that the ASA Group’s insurance policy, brokered by authorised representatives of the respondent insurance company, was inadequate and did not cover the damage and business interruptions suffered by reason of the fire. In September 2012, the first, second and third applicants were placed into voluntary administration, the fourth and fifth applicants having previously ceased trading.
In November 2021, the first, second, fourth and fifth applicants (collectively, the named insured) were awarded damages in the sum of $3.2 million for the respondent’s breach of a general duty of care to them to exercise the skill and care of a reasonably competent insurance broker. A tortious duty of care owed to each of the applicants was also held to have been breached.
In March 2022, the parties were heard on the issues of further damages and interest. The applicants claim damages for personal contributions made by Mr Elliott to the ASA Group as a result of the financial difficulties caused by its under-insurance, comprised of the proceeds of sale of personal assets together with a payment made to BankSA from monies paid out of his income protection insurance. In doing so, the applicants seek to reopen their case to adduce additional affidavit evidence in support of these personal contributions. The applicants also seek an award of pre-judgment interest on the awarded damages and any further damages awarded in respect of the personal contributions.
Held, per Doyle J:
1.      The applicants are granted leave to reopen their case to adduce the further evidence identified.
2.      It was reasonably foreseeable and not too remote that, if the named insured were under-insured, Mr Elliott might make (potentially irrecoverable) personal contributions to those entities in order to assist them to continue to operate.
3.      Mr Elliott’s indebtedness to BankSA under the guarantee, but not his personal indebtedness, was a direct and reasonably foreseeable consequence of the ASA Group’s under-insurance and resulting financial difficulties.
4.      Mr Elliott is entitled to recover the sum of $239,267 in damages for his personal contributions, in the amounts of $120,372, $41,000 and $17,000 realised from his assets, and $60,895 in respect of his payment to BankSA.
5.      It is not appropriate to make a deduction from the damages awarded in favour of Mr Elliott on account of any expected dividend he might receive from the voluntary administrations as an unsecured creditor, as the likelihood of any such dividend being paid is low and the level which might be paid very modest.
6.      There is no basis to reduce the period of interest on account of delay by the applicants in prosecuting their claims, or the interest rate on account of the timing of accrual of losses.
7.      The named insured are awarded $5,411,388, constituted of $3,200,000 in damages and $2,211,388 in interest.
8.      Mr Elliott is awarded $374,533, constituted of $239,267 in damages and $135,226 in interest.
Supreme Court Act 1935 (SA) s 30C; Uniform Civil Rules 2020 (SA) r 182.3; Supreme Court Civil Supplementary Rules 2014 (SA) r 208, referred to.
Adelaide (SA) Pools & Spa Manufacturing and Installation Pty Ltd & Ors v Westcourt General Insurance Brokers Pty Ltd (No 2) [2021] SASC 123; Batchelor v Burke (1981) 148 CLR 448; Curnow Consulting Pty Ltd v JPD Media and Design Pty Ltd (No 3) [2018] NSWSC 827; Dairy Vale Foods v Manfield (1999) 203 LSJS 126; De Girolamo v State of South Australia (1991) 56 SASR 40; Duke Group Ltd v Pilmer (1999) 73 SASR 64; Kalls Enterprises Pty Ltd v Baloglow (No 3) [2007] NSWCA 298; MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657; Metro Meat Ltd v Werlick (1992) 167 LSJS 455; Osborne v Kelly (1993) 61 SASR 308; Poniatowska v Channel Seven Sydney Pty Ltd (No 3) [2020] SASCFC 37; Stewart v Jacobsen (2000) 31 MVR 450, considered.

ADELAIDE (SA) POOLS & SPA MANUFACTURING AND INSTALLATION PTY LTD & ORS v WESTCOURT GENERAL INSURANCE BROKERS PTY LTD (No 3)
[2022] SASC 58
Civil

DOYLE J: On 2 November 2021, I delivered reasons for judgment in this matter.[1] I held that the respondent insurance broker, through its authorised representatives (OBI and Mr Olbrich), and pursuant to its contract with the named insured (the first applicant (ASA Manufacturing), second applicant (ASA Sales), fourth applicant (ATPF) and fifth applicant (H20)), owed each of those named insured a contractual duty of care. It also owed each of these named insured, and the third applicant (TEE) and sixth applicant (Mr Elliott), a tortious duty of care. I held that the respondent breached each of those duties of care.
[1] Adelaide (SA) Pools & Spa Manufacturing and Installation Pty Ltd & Ors v Westcourt General Insurance Brokers Pty Ltd (No 2) [2021] SASC 123 (trial reasons). The full names of the parties and the relationships between them are set out in those reasons.
I held that the named insured were entitled to recover damages in the sum of $3.2 million, being the additional insurance proceeds they would have received had OBI (through Mr Olbrich) not breached the duties it owed to those entities.
At the conclusion of my reasons, I indicated that I would hear the parties further in relation to the applicants’ claims to recover the fees paid by them in connection with the voluntary administrations of ASA Sales, ASA Manufacturing and TEE, and in relation to Mr Elliott’s claims in respect of the payments or contributions he made to those entities as a result of their financial difficulties consequent upon their under-insurance. I also indicated that I would hear the parties further as to the issues of interest and costs.
The parties have since put on further evidence and submissions addressing these issues. I heard argument on 4 March 2022.
In the lead up to the hearing on 4 March 2022, I was informed that the parties had resolved the applicants’ claim for the fees paid in connection with the voluntary administrations of ASA Sales, ASA Manufacturing and TEE. It is thus no longer necessary for me to address the factual and legal issues associated with those claims. The parties also agreed that I should defer consideration of the issue of costs until the quantum of the applicants’ claim (including interest) had been determined.
These reasons will thus be confined to consideration of the applicants’ claim for damages for the contributions made by Mr Elliott, and for pre-judgment interest.
Mr Elliott’s claim for damages
In my trial reasons, I held that, when advising Mr Elliott in relation to the 2009 policy, OBI (through Mr Olbrich) owed a tortious duty of care to not only the named insured and TEE, but also Mr Elliott.[2] I also held that OBI (through Mr Olbrich) breached that duty of care.[3]
[2] Trial reasons at [1088].
[3] Trial reasons at [1090].
In addressing Mr Elliott’s claim for damages, I commenced by observing that, having accepted that OBI (through Mr Olbrich) owed and breached a duty of care in favour of Mr Elliott, he was entitled to recover any personal (non-reflective) loss that was within the scope of the duty owed by OBI, was caused by a breach of that duty, and was not too remote.[4] I observed that the applicants’ statement of claim included claims for two heads of loss on behalf of Mr Elliott: (i) the losses suffered from the sale of properties that he owned or had an interest in (the property claims); and (ii) the losses suffered through his sale or use of other assets to realise proceeds which Mr Elliott then paid or contributed to the named insured in an attempt to assist those entities to continue to trade (the contribution claims).
[4] Trial reasons at [1125].
Having rejected Mr Elliott’s property claims,[5] I noted that the quantification of Mr Elliott’s contribution claims had been deferred for further consideration following delivery of my reasons:[6]
The applicants also pleaded a claim for loss on behalf of Mr Elliott based upon the funds he advanced to the ASA business prior to it failing. The claim as pleaded was that Mr Elliott sold various personal assets (including shares and a boat that he owned) and advanced the proceeds from the sale of these assets to the named insureds in order to assist them to continue to trade, which advances he lost as a result of the failure of those businesses. To the extent these claims are pressed, they were not quantified at trial. Indeed, the applicants sought to defer the quantification of these losses for subsequent consideration on the basis that the extent of the losses suffered would depend upon what, if anything, Mr Elliott recovers as an unsecured creditor from the administrations of the named insureds. I propose to hear the parties further in relation to this aspect of Mr Elliott’s claim.
[5] Trial reasons at [1127]-[1133].
[6] Trial reasons at [1134].
The agreement between the parties to defer quantification of the applicants’ claim for losses suffered by reason of Mr Elliott’s contributions to the named insured contemplated, and was confined to, the applicants having an opportunity to adduce evidence as to what, if anything, Mr Elliott stood to recover as an unsecured creditor in the administrations of the named insured. Any such recovery would need to be offset against any losses otherwise suffered by reason of the contributions that Mr Elliott made to the named insured. While this aspect of the quantification of the contribution claims was deferred for subsequent consideration, it would seem that the expectation of the parties was that I would, on the basis of the evidence led at trial, make findings as to the contributions that were made, and as to their conceptual recoverability.
As it happens, I made some findings as to the contributions that were made and their conceptual recoverability, but I did not go as far as I might have. As explained later in these reasons, I did not address a couple of the heads of contribution losses claimed at all, and did not express final views in relation to the balance of those claims.
Following delivery of my trial reasons, the applicants sought leave to reopen to adduce some additional evidence in relation to Mr Elliott’s contribution claims. In particular, they sought leave to reopen to adduce evidence:
·from Mr Lopresti as to Mr Elliott’s beneficiary loan account in the TEE general ledger, certain bank statements from a BankSA account in the name of ASA Sales, and a journal entry from TEE’s MYOB file; and
·from Mr James as to a settlement reached between Mr Elliott and BankSA, pursuant to which Mr Elliott agreed to pay BankSA $95,000 from the proceeds he received from AMP under his income protection insurance.[7]
[7] Together with another document, tendered during the course of the hearing of the application to reopen, which had been obtained from Mr Elliott’s phone during the course of that hearing, and which also related to the $95,000 in insurance proceeds.
The relevance of these documents is addressed in more detail below. It is sufficient at this point to note that the documents sought to be adduced through Mr Lopresti were probative of the contributions Mr Elliott claimed to have made following the sale of some shares, and a boat and trailer; and the documents sought to be adduced through Mr James were probative of the circumstances in which Mr Elliott agreed to pay $95,000 from the income protection insurance proceeds received by him to BankSA.
The Court has a broad discretion to reopen. It may do so when satisfied that it is in the interests of justice. In deciding to exercise that discretion in favour of the applicants, I have taken into account several matters.
The first is the circumstances in which the documents sought to be relied upon came to light. The applicants accept that all of the documents now sought to be relied upon were available to them during the course of the trial.
In relation to the documents sought to be adduced through Mr Lopresti, counsel for the applicants explained that the documents had not come to their attention until December 2021; that is, until after my trial reasons had been published. It was only at that point that counsel became aware of the entries in Mr Elliott’s beneficiary loan account in TEE’s general ledger that related to the contributions Mr Elliott claimed to have made to the named insured. And once aware of these entries (which indicated that the payments had been made, at least in the first instance, to TEE rather than ASA Sales), this led to them making further inquiries that then turned up the entries in ASA Sales’ bank statements and TEE’s general journal that also related to these contributions.
There was no real explanation at all for the late timing of the attempt to adduce the documents relating to the $95,000, other than perhaps the implicit explanation that it was thought that the issue had been sufficiently addressed through the evidence adduced at trial (including the agreed fact in relation to the payment of the $95,000 (see below)).
To some extent the applicants’ explanation for seeking to reopen in respect of both categories of documents also lay in their concern to ensure that the Court have available to it the documents of which counsel were now aware that, in a general way, supported the evidence of Mr Elliott at trial, but which also qualified or corrected his evidence as to some matters of detail.
Ordinarily explanations of the above nature would be insufficient, and weigh against an exercise of the Court’s discretion to reopen at this late stage of the proceedings. But I accept that these explanations need to be seen in the context of what was, on any view, a lengthy and complicated trial. It is perhaps not surprising, given the number of issues potentially in play during the trial, that some matters of detail did not receive the attention that, in an ideal world, they would have.
It is also relevant that the documents now sought to be relied upon relate to the heads of damages that were not addressed in any detailed, let alone final, way in my trial reasons.
This consideration is particularly relevant when considering the stage at which the application to reopen has been made in the present case. Ordinarily it would weigh heavily against an application to reopen that it is made after the trial judge’s reasons have been delivered. But the fact of those reasons having been delivered is of limited significance where the application to reopen relates to an issue that those reasons do not determine, and indeed in respect of which the reasons contemplate that there will be some further evidence and submissions.
As events have transpired in the present case, while in one sense the application to reopen has come at a very late stage, for the reasons explained, it does not risk contradicting any findings or conclusions in my trial reasons, or otherwise interfering with the orderly and timely resolution of the issues that remain to be resolved in these proceedings.
Finally, I do not consider that granting the application to reopen will cause the respondent any significant hardship. The new documents largely speak for themselves, and are of a confined relevance and significance. The respondent was given an opportunity to cross-examine Mr Lopresti and Mr James, and chose to take that opportunity in respect of the former. It is not surprising that the respondent chose not to cross-examine Mr James at all, or to cross-examine Mr Lopresti at any length, given their limited ability to comment upon the new documents. The respondent was given the opportunity to adduce any responding evidence, but again chose not to do so. There was no application to recall Mr Elliott or Mr Highet (from BankSA). While I accept that the respondent might have cross-examined these witnesses in a slightly different way had the new documents been adduced at trial, I do not think this is a matter of much significance in the context of the present case.
I accept that the public interest in the finality of litigation is a relevant consideration in any application to reopen. However, balancing all of the above considerations, including the relevance of the documents (explained below) to the heads of damages still to be addressed, I am satisfied that it is in the interests of justice that the applicants have leave to reopen to rely upon the additional evidence summarised above. I so rule.
Sale of Mr Elliott’s shares, boat and trailer and motorbike
The applicants seek to recover damages for the contributions made by Mr Elliott to the ASA Group from the proceeds of the sale or use by him of several assets that he owned; namely some shares, a boat and trailer, and a Harley-Davidson motorbike.
I mentioned these contributions in the course of my narrative of the events that occurred after the January 2010 fire. In a section of that narrative addressing the steps Mr Elliott took to enable the ASA Group to continue trading, despite the financial difficulties (and, in particular, cash flow difficulties) it was experiencing, I said the following in relation to Mr Elliott’s sale of his shares, and his boat and trailer:[8]
As foreshadowed in his discussions with Mr Beale in September and October 2011, Mr Elliott sold several parcels of shares he held in listed companies, from which he realised slightly in excess of $110,000. His evidence was that were it not for ASA’s difficulties, he would not have sold those shares.
In late October 2011, Mr Elliott also sold a boat which he owned (but which was held in the name of his father). The sale realised $20,000, which he used to assist in funding ASA’s businesses. Again, his evidence was that were it not for ASA’s difficulties, he would not have sold the boat.
[8] Trial reasons at [267]-[268].
In the context of discussing the ASA Group’s continuing financial difficulties, I later said the following in relation Mr Elliott’s use of his motorbike:[9]
By the end of January 2012, Mr Elliott was still waiting to hear from BankSA as to its preparedness to continue to finance ASA. He sold a Harley Davidson bike that he owned, and contributed the $17,000 in proceeds from this sale, and $5,000 from a Commonwealth Bank account that he owned, to the funding of ASA’s business activities. It was apparent to Mr Elliott from his communications with Mr Beale that ALT and Atradius were concerned about continuing to fund ASA. Cash flow was continuing to become increasingly tight. ASA was having consequential difficulty in maintaining a supply of pools to install for its customers.
[9] Trial reasons at [281].
These paragraphs of my trial reasons were based upon the unchallenged evidence of Mr Elliott to the effect that he was forced to undertake these transactions in order to realise funds to assist with the ASA Group’s cash flow difficulties and to enable it to continue trading.

I note in passing that I referred to Mr Elliott realising slightly in excess of $110,000 from his sale of shares in listed companies. In summarising Mr Elliott’s evidence in this way, I overlooked two additional parcels of shares that he said were sold in September 2011 for amounts of $11,603.47 and $608.50. The precise figure for the proceeds from share sales made by Mr Elliott in September and October 2011 was $120,372.25.
While Mr Elliott did not state in unequivocal terms that he paid these share sale proceeds to the ASA Group, that was the clear implication of his evidence. Indeed, he made reference in his affidavit evidence to not having access to ASA’s BankSA bank account statements for the relevant months at the time of preparing his affidavit, the implication being that he expected that they would show receipt of the payments he made.
I also note that I referred to Mr Elliott having sold his boat, when his evidence was that he sold his boat and trailer. He said that it was a forced sale in that he would not have sold them were it not for the under-insurance, and that he sold them for $20,000. He said that he received a bank cheque, that he used $10,000 “to pay Mark Brown so that he would keep digging holes for pool installations”, and that “I think I deposited the remaining $10,000 in ASA’s bank account for use in the business”.
The documents adduced through Mr Lopresti support Mr Elliott’s evidence to the effect that he contributed the proceeds from these asset sales, however they suggest that he did so via TEE, and that the proceeds from the sale of the boat and trailer were in fact $41,000 rather than the $20,000 initially claimed.
In particular, the extract from TEE’s general ledger relating to Mr Elliott’s beneficiary loan account shows credits for the proceeds from the sale of both the shares, and the boat and trailer. As to the former, there are credits of $65,726.80 on 9 September 2011 (with a journal narration ‘funds from the sale of share’) and $54,645.45 on 13 October 2011 (with a journal narration ‘disposal of personal shares deposited into Sales bank acc’), totalling $120,372.25. As to the latter, there is a credit of $41,000 on 30 September 2011 (with a journal narration ‘proceeds of boat sale provided to ASA Sales’).
Mr Lopresti also exhibited some bank statements for the relevant period from a BankSA account held in the name of ASA Sales. The bank statements showed credits of $65,726.80 on 9 September 2011, of $21,000 on 30 September 2011, and of $54,645.45 on 13 October 2011. The first and third of these credits correspond with the amounts appearing for the share sale proceeds in TEE’s general ledger. The second credit of $21,000 is less than the $41,000 for the boat and trailer proceeds in TEE’s general ledger. However, the discrepancy of $20,000 between these amounts appears to be explained by a copy of the relevant journal entry in TEE’s MYOB records. That journal entry, dated 30 September 2011, shows a credit to Mr Elliott’s beneficiary loan account with TEE of $41,000, and two corresponding debits, each to the ASA Sales loan account and in the amounts of $21,000 (with a memo ‘banked in ASA cheque account’) and $20,000 (with a memo ‘provided direct to LMB Earthwork’). It is noteworthy that this reference to a payment directly to LMB Earthwork corresponds with Mr Elliott’s evidence that he paid a portion of the proceeds to Mark Brown so that he could keep digging holes for pool installations. The total of $41,000 for the proceeds from the sale of the boat and trailer is greater than the $20,000 Mr Elliott had recalled, but his recollection that about half was paid straight to Mr Brown corresponds with the documents referred to by Mr Lopresti.
Turning to the use made of Mr Elliott’s motorbike, his evidence at trial was that, in the context of his concerns about BankSA extending the finance it was providing to the ASA Group, he “ended up pawning it on 30/5/12 to raise $17,000 as a result of pressure from a debt collector sent by a crane company who threatened to sell my belongings at Largs Bay.” Although there is no further evidence as to this payment, and in particular as to the circumstances of the payment to the crane company,[10] I consider it appropriate to infer that it was a payment made to meet an obligation incurred by the ASA Group in the course of its business.
[10] Other than several references in the documents to the ASA Group having used the services of at least two crane hire companies (Fleurieu Cranes and Hall’s Cranes) during 2012.
In the context of the $17,000 raised by pawning his motorbike, Mr Elliott said that he “also paid $5,000 from the proceeds to a Commonwealth Bank account”. The evidence does not reveal the account holder of that Commonwealth Bank account, or any other detail about this payment. It would seem that this $5,000 was included within the $17,000 which I have accepted was raised and paid in order to meet the ASA Group’s financial obligations. I do not understand the applicants to have pursued any separate or additional claim in respect of the $5,000. If they did, it has not been made out.
In the case of each of his shares, his boat and trailer, and his motorbike, I made findings that Mr Elliott sold each of these assets.[11] While perhaps implicit in my reasoning, I stopped short of express findings to the effect that the reason he did so was in direct response to the financial difficulties, and in particular cash flow difficulties, experienced by the ASA Group, and that he then paid the proceeds to (or on behalf of) the ASA Group in an attempt to address those difficulties. But that was the effect of Mr Elliott’s evidence, and I now make findings accordingly.
[11] In the case of the motorbike he pawned it; but the effect of the transaction was the same for relevant purposes, the focus being upon what he did with the proceeds that were realised.
I accept that earlier in my trial reasons I expressed reservations as to the reliability of certain aspects of Mr Elliott’s evidence.[12] However, as explained in the relevant passage from my trial reasons, those reservations related primarily to Mr Elliott’s evidence about his dealings and conversations with Mr Olbrich. I was, and am, satisfied as to the general reliability of his evidence to the effect that he sold the assets mentioned, and that he used the proceeds in the circumstances and for the purposes he described. The fact of the asset sales, and payment over of the proceeds, is corroborated by the documentary evidence adduced both at trial, and on the application to reopen. That said, as is apparent from my above consideration of those documents, Mr Elliott was mistaken as to some of the detail of these payments. But I do not find these mistakes of detail surprising, and they have not caused me to doubt the reliability of Mr Elliott’s evidence as to the circumstances in which those payments were made.
[12] Trial reasons at [21]-[23].
In my view, the findings I have made at trial and above are sufficient to establish the quantum of the claimed losses (being $120,372.25 for the shares, $41,000 for the boat and trailer, and $17,000 for the motorbike), subject only to any reduction on account of any dividend received, or to be received, by Mr Elliott from the administrations of ASA Sales, ASA Manufacturing or TEE.
I do not think it matters whether the proceeds from the share sales were paid to TEE (at least in the first instance). The point remains the same; the proceeds were paid over to one of the companies in administration in order to address the financial difficulties being experienced by the ASA Group as a result of the under-insurance that resulted from the respondent’s breaches of duty.
In resisting this conclusion, the respondent’s pointed to some of the debit entries in the extract from Mr Elliott’s beneficiary loan account from TEE’s general ledger. The respondent contended that these entries during the period from July 2011 to September 2011 suggested that while three payments had been made by Mr Elliott to TEE, there were also several entries indicating payments made by TEE to Mr Elliott. These entries totalled slightly more than $12,000. However, there is no reason to think that these payments were in any way connected to the proceeds from the sale of the shares, and the boat and trailer, paid by Mr Elliott to TEE. And in the absence of any other evidence to indicate what those payments related to, there is no basis for deducting them from, or setting them off against, the contributions made by Mr Elliott.
I do not think that the claim for the contributions made by Mr Elliott raises any separate issues of causation or contributory negligence not already addressed and rejected in my trial reasons. I said as much in the concluding section of my trial reasons in relation to Mr Elliott’s personal claims:[13]
I have addressed the issues of causation and contributory negligence earlier in these reasons. The conclusions and reasoning in relation to those matters apply equally in respect of the claims brought by TEE and Mr Elliott, and hence do not represent any independent obstacle to those claims.
[13] Trial reasons at [1135].
As for the issue of whether the losses claimed by Mr Elliott were too remote, I did not directly address this in my trial reasons. However, in the context of my reasons for finding that OBI (through Mr Olbrich) owed Mr Elliott a duty of care,[14] I made several observations of significance to the issue.
[14] Trial reasons at [1084]-[1088].
I commenced that section of my reasons by explaining that Mr Elliott did not tend to pay attention to the legal structures or entities through which he conducted the various limbs of his business. This ignorance and intermingling of entities and interests extended beyond Mr Elliott’s business interests to include his personal interests (through, for example, TEE as the trustee of his family trust). Importantly, I found that, through his longstanding relationship with Mr Elliott, Mr Olbrich must have had some appreciation of Mr Elliott’s approach in this respect.[15] I went on to say:[16]
I bear in mind that the evidence does not enable me to make a finding that Mr Olbrich had any detailed knowledge or understanding of Mr Elliott’s personal finances. However, given the nature and extent of his dealings with Mr Elliott over the years, Mr Olbrich must have had at least some general appreciation, as was inherently likely, that Mr Elliott’s personal fortunes were bound up in those of the business; and, indeed, in more than a reflective way. In other words, I am satisfied that Mr Olbrich must have understood that in the event of a financial catastrophe for the business (for example, through inadequate insurance), there was a real likelihood that Mr Elliott might suffer financial loss over and above any loss in the value of his shareholdings in the various companies (and the consequential loss of the benefit flowing from the salary, dividends or distributions he would receive from those entities); that he might suffer loss by reason of him having provided a personal guarantee or other forms of security to BankSA, or by reason of him having to make contributions to assist the business to survive. While Mr Olbrich may not have had any knowledge of the precise arrangements with BankSA, he was aware of the fact that Mr Elliott and his entities were being financed by BankSA, and indeed that they were in the process of obtaining refinancing at around the time of the renewal of the ISR policy in 2009. It was inherently likely that these arrangements would have involved Mr Elliott, as the effective owner and controller of the ASA Group, providing security that would link his personal fortunes to those of the business.
[15] Trial reasons at [1084].
[16] Trial reasons at [1087].
In light of these findings, I am satisfied that the losses suffered by reason of Mr Elliott’s personal contributions to the ASA Group in 2011 and 2012 were entirely foreseeable, and not too remote. It may be that, as the respondent submitted, the precise circumstances of Mr Elliott’s contributions could not reasonably have been foreseen. However, a loss is only too remote if the type or category of loss is not reasonably foreseeable. In my view, it was reasonably foreseeable that if the named insured were under-insured, then this might result in Mr Elliott making (potentially irrecoverable) contributions to those entities in order to assist them to continue to operate. I thus reject the respondent’s submission that the losses claimed by Mr Elliott were too remote.
Proceeds of Mr Elliott’s income protection insurance claim
The next limb of the applicants’ claim for personal losses sustained by Mr Elliott relates to the $95,000 that he paid to BankSA from the proceeds of his income protection insurance claim.
In my trial reasons, I mentioned the fact of Mr Elliott’s income protection policy, and the claim he made as a result of his being unable to work for a period during 2010.[17] As I explained, the insurer (AMP) made various payments under the policy, but then ceased making payments. Mr Elliott disputed AMP’s decision to cease payments, and some time later AMP paid Mr Elliott a lump sum of $145,000 in settlement of his claim under the policy. The evidence revealed that this payment by AMP to Mr Elliott was made in May 2015.
[17] Trial reasons at [307]-[310].
However, my trial reasons did not address Mr Elliott’s claimed loss by reason of his having paid over $95,000 of these settlement proceeds to BankSA. The applicants contend that this sum is recoverable because the payment was referable to Mr Elliott’s liability under the guarantee he gave BankSA in respect of the ASA Group’s indebtedness with the bank. The respondent, on the other hand, opposes recovery of this sum on the basis that the payment was at least in part referable to Mr Elliott’s personal indebtedness to the bank. The respondent points to statements in my trial reasons to the effect that repayments by Mr Elliott of his own indebtedness do not sound in damages vis-à-vis the respondent.[18]
[18] Trial reasons at [1133].
As explained in my trial reasons, Mr Elliott owed BankSA money under a mortgage relating to the Largs Bay and North Haven properties. However, he had also guaranteed the ASA Group’s indebtedness to BankSA. Pursuant to the BankSA facilities and associated guarantee, the bank took possession of the Largs Bay and North Haven properties, as well as the properties owned by TEE. Those properties were then realised in the circumstances described in the trial reasons. However, Mr Elliott remained indebted to BankSA, under both the mortgage and the guarantee.
In his trial evidence, Mr Elliott made reference to AMP having in May 2015 paid him $145,000 in full and final settlement of his claim under his income protection policy. His affidavit also included reference to a settlement with BankSA in which Mr Elliott agreed to pay $95,000 of the $145,000 received from AMP to BankSA in return for it agreeing to forebear any further claim against him under the guarantee. However, following objection by the respondent, that passage of Mr Elliott’s affidavit was not pressed, and it was not received by me. It would seem that it was not pressed because the parties had agreed the following fact: on 18 June 2015, the amount of $95,000 from the settlement with AMP was paid to BankSA by Mr Elliott pursuant to his personal guarantee with BankSA.
On the evidence as it stood at the conclusion of the trial, it appeared that the $95,000 had been paid by Mr Elliott pursuant to the guarantee he had granted in favour of BankSA. As such, this sum would have been recoverable as an amount paid by Mr Elliott in order to meet the indebtedness of other entities within the ASA Group rather than his personal indebtedness.[19]
[19] Trial reasons at [1133].
However, by the time of the hearing of the application to reopen, the applicants produced the settlement agreement with BankSA, and indeed amended its statement of claim to bring it into line with that agreement. Importantly, the settlement agreement, and the amendment to the statement of claim, made it plain that the $95,000 payment was not solely referable to Mr Elliott’s liability under the guarantee. It was also referable, at least in part, to Mr Elliott’s liability under his personal mortgage.
The evidence suggests that as at August 2013, once the properties over which the bank had security had been sold, the amount owing by Mr Elliott was $394,581.62, split between his indebtedness under the guarantee of $253,064.78 and his indebtedness under his personal mortgage of $141,516.84. Under the settlement deed with BankSA, the parties agreed that Mr Elliott’s indebtedness (the Debt) would be capped at the sum of $500,741.81, being the amount owing by Mr Elliott to the bank pursuant to the guarantee and mortgage as at September 2014. The terms of the settlement required that Mr Elliott then make an offer to the bank in full and final satisfaction of the Debt, and that this include details of how the proceeds of Mr Elliott’s claim against AMP under his income protection policy were to be dealt with. It was in this context that Mr Elliott ultimately agreed to pay $95,000 of the $145,000 he received from AMP to the bank, and that the bank agreed to forbear from taking any further action against Mr Elliott under the guarantee or the mortgage.
It is thus apparent, and I find, that Mr Elliott’s payment of $95,000 to BankSA in June 2015 was referable to his obligations under both the guarantee and the mortgage.
The difficulty so far as Mr Elliott is concerned is in determining what portion, if any, of the $95,000 payment was referable to the guarantee. The settlement deed, and related correspondence with the bank, do not provide any assistance in this regard. Mr Elliott sought to rely upon correspondence from his solicitors that suggested that the $95,000 was paid into a BankSA account in the name of ASA Sales. However, I do not think this is determinative of the objective character of the payment, nor indeed how it was allocated or treated by the bank.
Counsel for the applicants sought to argue that even though at least some of the $95,000 was referable to Mr Elliott’s personal indebtedness under the mortgage, the entirety of the $95,000 was recoverable on the basis that, had the ASA Group not been under-insured, there would have been no occasion for the bank to have foreclosed on the mortgage. I accept that the factual premise of this argument may be sound. However, I do not think it leads to the consequence that the entirety of the $95,000 is recoverable. Insofar as that payment went in reduction of Mr Elliott’s personal indebtedness, for the reasons given in the trial reasons, I do not think it is recoverable from the respondent.[20] In my view, only the portion of the $95,000 paid under the guarantee of the ASA Group’s indebtedness is recoverable.
[20] Trial reasons at [1133].
Despite the absence of any clear basis in the evidence for determining the precise proportion of the $95,000 that was paid under the guarantee, as opposed to the mortgage, I do not think it is appropriate for me to proceed on the basis that Mr Elliott has not made out that head of his claim for damages. Rather, I consider that this is a situation where it is apparent that some loss has been suffered, and that it is appropriate that I do the best I can to quantify that loss on the evidence available to me.
In summary, the $95,000 was paid in settlement of the Debt. The Debt comprised the aggregate of Mr Elliott’s indebtedness under the guarantee and his indebtedness under the mortgage. In the absence of any evidence as to how the bank allocated the $95,000 as between Mr Elliott’s indebtedness under the guarantee and under the mortgage, it seems to me that the most relevant consideration in characterising the payment of $95,000 is the respective proportions of the Debt represented by Mr Elliott’s indebtedness under the guarantee and under the mortgage.

As at September 2014, and indeed subsequently, given that the parties agreed to cap Mr Elliott’s indebtedness as at that date, the total Debt was $500,741.81. I am not aware of any direct evidence as to the breakdown of this figure between Mr Elliott’s indebtedness under the guarantee and mortgage. However, as mentioned earlier, that breakdown is available in respect of Mr Elliott’s aggregate indebtedness of $394,581.62 as at August 2013. As at that date, $253,064.78 (or 64.1 per cent) related to Mr Elliott’s indebtedness under the guarantee, and $141,516.84 (or 35.9 per cent) related to Mr Elliott’s indebtedness under the mortgage.
In my view, in the absence of any other useful evidence or information, it is appropriate to determine the proportion of the $95,000 that was referable to Mr Elliott’s indebtedness under the guarantee by applying these proportions to this sum. As 64.1 per cent of $95,000 is $60,895, I consider it appropriate to quantify Mr Elliott’s damages referable to his $95,000 payment to BankSA in this amount.
In my view, there is no causation or remoteness obstacle to recovery of this head of damages. Mr Elliott’s indebtedness under the guarantee was a direct and reasonably foreseeable consequence of the ASA Group’s under-insurance and resulting financial difficulties.
The only issue that remains to be considered in respect of this head of damages, and indeed the heads of damages referable to Mr Elliott’s contributions from the proceeds of the sale of his shares, boat and trailer, and motorbike, is whether any deduction from the sums claimed must be made on account of any dividend that Mr Elliot might receive as an unsecured creditor of the administrations of ASA Manufacturing, ASA Sales and TEE. It is to that issue that I now turn.
Likelihood of offsetting dividend
The applicants accept that the amount Mr Elliott is entitled to recover on account of the heads of damages referred to above must be reduced by any dividend that he ultimately receives from the administrations of ASA Manufacturing, ASA Sales or TEE. However, the applicants contend that there is no realistic prospect of any such dividend and hence that no reduction needs to be made.
In support of this contention, the applicants rely upon the evidence of Mr Lopresti. Mr Lopresti is a chartered accountant, who has been involved in the administrations of ASA Manufacturing, ASA Sales and TEE, which he referred to collectively in his evidence as the ASA Group. While Mr Hall and Mr Clifton[21] were the voluntary administrators, and then deed administrators under the deeds of company arrangement (DOCAs), Mr Lopresti had the primary role in managing the administrations. By reason of the substantial work he had undertaken in this context, he had a detailed understanding of the work already undertaken, and the work still to be undertaken in completing the administrations. In his affidavit evidence,[22] after referring to the Reports to Creditors for the ASA Group prepared in early 2022, Mr Lopresti explained that due to the range of issues that remained to be resolved in the litigation, the final recovery pool available for distribution under the DOCAs was unknown, and it was not possible to provide an accurate assessment of the likely dividend to be made to the various classes of creditors. However, he said that, based upon the best information available to him, it had been possible to estimate the range of possible dividends to creditors.
[21] Initially jointly, and then following Mr Hall’s resignation as deed administrator on 30 June 2020, Mr Clifton alone.
[22] Which was updated to take account of the resolution of the applicants’ claim for the fees charged in respect of the voluntary administrations.
The calculations underpinning that estimate assumed the pooling of funds between the three entities in administration, and then included worst case, mid-point and best case figures for the sums recovered from the litigation, and for the costs associated with that litigation (broken into various sub-categories of legal, funding and administration expenses), as well as figures for the claims by higher ranking creditors.
Based upon his calculations, Mr Lopresti estimated that a recovery pool in excess of $7.31 million would be required for there to be any dividend to unsecured creditors of the ASA Group. Mr Lopresti added that if the gross recovery were in excess of this sum, then for every additional $100,000 there would be an approximately four cents in the dollar dividend to unsecured creditors. The best case scenario included in the calculations resulted in an estimated dividend of 16 cents in the dollar for unsecured creditors.
Mr Lopresti said that he had been asked to estimate what dividend might be available to Mr Elliott personally. After noting that Mr Elliott had not lodged a proof of debt in the deed administrations, Mr Lopresti explained that the deed administrator had yet to call for proofs of debt in the deed administrations and was unlikely to do so unless a dividend was likely to be declared to unsecured creditors. As a result, the deed administrator was yet to make a final adjudication on any debt owed to Mr Elliott. Any potential dividend to him was thus qualified by a broad range of variables. It was in that context that Mr Lopresti opined:
Ultimately, I have formed the view that on a best case scenario in terms of the range of recoveries which might be made, it is possible that Mr Elliott would receive a dividend as an ordinary unsecured creditor. However, on balance, I consider that it is most likely that Mr Elliott will not receive any dividend in respect of his ordinary unsecured claims against the ASA Group.
I accept this evidence from Mr Lopresti. While it remains possible that there will be some very modest dividend to unsecured creditors including Mr Elliott, I do not consider it appropriate to make any deduction from the damages otherwise payable to Mr Elliott to reflect this contingency. In my view, the combination of the low likelihood of this occurring and the very modest level of any dividend that might be paid, means that no deduction is required.
Conclusion
In summary, I have concluded that Mr Elliott is entitled to recover the following by way of damages from the respondent:
·$120,372 for the contributions made in September and October 2011 from the sale of his shares;
·$41,000 for the contributions made in late September 2011 from the sale of his boat and trailer;
·$17,000 for the contribution made in June 2012 from the funds realised by pawning his motorbike; and
·$60,895 for the payment made in June 2015 to BankSA in respect of his indebtedness under his guarantee of the ASA Group’s indebtedness.
The total of these sums recoverable by Mr Elliott is $239,267. It remains for me to address the interest payable on this sum.
The applicants’ claim for interest
The applicants seek pre-judgment interest on both the $3.2 million payable to the named insured, and the $239,267 payable to Mr Elliott. There is no contest to the applicants’ entitlement to an award of interest. There is also no dispute as to several aspects of the methodology for determining the amount of interest payable. Rather, the respondent’s challenge is to the period over which interest should be awarded, and to the applicable rate at which it should be awarded. As to the former, the respondent’s contention is that there should be a significant reduction in the period over which interest is awarded to take account of what it contends have been unreasonable and unjustified delays by the applicants in their pursuit of these proceedings. As to the latter, the respondent’s contention is that there should be some reduction in the usual rates by analogy with defamation and personal injury cases where such reductions have been made.
Section 30C of the Supreme Court Act 1935 (SA) provides for the recovery of pre-judgment interest. It relevantly provides:
30C—Power to award interest
(1)Unless good cause is shown to the contrary, the court shall, upon the application    of a party in favour of whom a judgment for the payment of damages, compensation or any other pecuniary amount has been, or is to be, pronounced, include in the judgment an award of interest in favour of the judgment creditor in accordance with the provisions of this section.
(2)     The interest—
(a)     will be calculated at a rate fixed by the court; and
(b)     will be calculated in respect of a period fixed by the court (which must, however, in the case of a judgment given on a liquidated claim, be the period running from when the liability to pay the amount of the claim fell due to the date of judgment unless the court otherwise determines); and
(c)     is payable, in accordance with the court's determination, in respect of the whole or part of the amount for which judgment is given.
It follows that interest is payable unless good cause is shown to the contrary, and it is payable at a rate, and for a period, determined by the Court.
As to the rate at which interest is payable, r 182.3 of the Uniform Civil Rules 2020 (SA) (which commenced on 18 May 2020), while recognising that it is a matter for the Court in each case, provides that, as a guide, the Court may calculate the interest payable at the rate of 5 per cent per annum. Prior to this rule coming into effect, r 208 of the Supreme Court Civil Supplementary Rules 2014 (SA) had provided that, as a guide, the Court may calculate the interest payable at the Reserve Bank of Australia cash rate plus 4 per cent.[23]
[23] With the rate to be determined for each six month period beginning on 1 January or 1 July by reference to the last cash rate set prior to that date plus 4 percent.
Subject to the respondent’s argument as to the relevance of the applicants’ delay, the parties agree that it is appropriate to make an award of interest for the period from the date the relevant loss was incurred through to the date of judgment. And subject to the respondent’s argument in favour of a reduced rate by analogy with cases in which reductions have been made to take account of the continuing or accumulating nature of the loss incurred, the parties agree that it is appropriate to calculate the interest payable using the RBA cash rate plus 4 per cent up to 18 May 2020, and using 5 per cent thereafter. The applicants have helpfully provided me with tables setting out the applicable cash rates in the period up to 18 May 2020, and calculations of interest through to 31 December 2021.
It is appropriate to commence by addressing the two arguments of the respondent to which I have referred, before then turning to quantify the applicants’ entitlement to interest.
No basis for reducing period of interest on account of delay
The respondent seeks a reduction in the period over which interest is awarded to reflect what it contends were unreasonable and unjustifiable delays by the applicants in pursuing their claim. The respondent points to several matters in support of this contention of delay, including: that the claim was not issued until close to the expiration of the relevant time limit; that the proceedings were stayed for a considerable period as a result of the applicants’ failure to provide the security for costs that the Court ordered; that the applicants took a considerable time to formulate their claim; and that the applicants’ pursuit of their claim was unnecessarily slow in several other respects.
The rationale for an award of pre-judgment interest under s 30C of the Supreme Court Act1935 (SA) is to compensate the successful plaintiff for being kept out of its money; to restore the successful plaintiff to the situation, so far as money can, in which it would have been but for the defendant’s breach of duty. It is not intended to punish the unsuccessful party, whether for its failure to pay the successful party’s claim sooner or otherwise.[24]
[24] Batchelor v Burke (1981) 148 CLR 448 at 455 (Gibb CJ); MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657 at 663 (the Court); Osborne v Kelly (1993) 61 SASR 308 at 311 (Mohr J, Bollen and Millhouse JJ agreeing); Dairy Vale Foods v Manfield (1999) 203 LSJS 126; [1999] SASC 245 at [89] (Lander J); Duke Group Ltd v Pilmer (1999) 73 SASR 64 at [532] (Doyle CJ, Duggan and Bleby JJ).
Bearing in mind this rationale for an award of interest, courts have generally been reluctant to use delay as a basis for reducing a successful party’s entitlement to pre-judgment interest.[25] Even where there has been delay, it remains the case that the successful party has been kept out of its money through to the date of judgment.
[25] De Girolamo v State of South Australia (1991) 56 SASR 40 at 44-45 (Cox J); Dairy Vale Foods v Manfield (1999) 203 LSJS 126; [1999] SASC 245 at [91], [101], [111], [115] (Lander J); Kalls Enterprises Pty Ltd v Baloglow (No 3) [2007] NSWCA 298 at [10] (Giles, Ipp and Basten JJA).
However, the authorities have also recognised that the courts retain a broad discretion in determining the appropriate period and rate for the award of interest, and that, in some cases, delay will be a relevant consideration in the exercise of this discretion.[26] In particular, it may operate to reduce the period over which interest is awarded.
[26] Stewart v Jacobsen (2000) 31 MVR 450 at [68] (Nyland J, Doyle CJ and Debelle J agreeing); Kalls Enterprises Pty Ltd v Baloglow (No 3) [2007] NSWCA 298 at [11] (Giles, Ipp and Basten JJA).
For example, in Metro Meat Ltd v Werlick,[27] Olsson J accepted that there was authority to the effect that the court might disallow interest for a period of time where there has been “inexplicable tardiness” on the part of the successful plaintiff in pursuing his claim. His Honour said that, in such circumstances, the plaintiff could not be heard to say that, during the period of the delay, he has been kept out of his money by virtue of any action on the part of the defendant.[28] Rather, the plaintiff has been kept out of his money by his own default.
[27] Metro Meat Ltd v Werlick (1992) 167 LSJS 455.
[28] Metro Meat Ltd v Werlick (1992) 167 LSJS 455 at 460 (Olsson J).
King CJ and Mullighan J agreed with Olsson J, although both expressed some reservations about courts placing too much emphasis on delay in assessing the interest payable. King CJ said:[29]
I agree that delay on the part of a plaintiff is a factor to be considered by the judge in exercising his discretion as to interest, for the reasons given by Olsson J. I consider, however, that it should not be given undue importance for two reasons. The first is that a defendant has remedies at his disposal for unwarranted delay on the part of a plaintiff. If he neglects to pursue his remedies, the plaintiff’s delay becomes a less important consideration. That does not apply in the present case because the delay occurred in serving the proceedings and the defendant had no remedy for that. The second is purely practical. From the time of the introduction of the statutory interest provisions, the Courts have inclined strongly against allowing interest to become a new issue in litigation and a source of costly disputation. The statute gave to the judges a broad discretion to be exercised along common sense lines. It would be totally contrary to the spirit of the legislation to allow the justification for delay to become an issue in the proceedings. I consider that delay should therefore be used as a discretionary basis for reducing the interest otherwise allowance only where the delay is considerable and plainly unjustifiable.
[29] Metro Meat Ltd v Werlick (1992) 167 LSJS 455 at 455 (King CJ).
Mullighan J said:[30]
However, I do not subscribe to the view that delay, even unjustified, should be the dominant factor in the exercise of discretion with respect to an award of interest. It is but one matter to be brought to account along with all other matters which bear upon how that discretion is to be exercised. In many cases unjustified delay may be a matter of considerable importance. In others, it may be of less significance. Whilst it is often helpful to draw attention to factors which should be considered in the exercise of a judicial discretion, it is, in my view, contrary to principle, to determine that one factor must ordinarily be of greater importance than others. How the discretion is to be exercised in each case depends upon all of the relevant circumstances.
[30] Metro Meat Ltd v Werlick (1992) 167 LSJS 455 at 463-464 (Mullighan J).
After referring to these passages, the Full Court in Duke Group Ltd v Pilmer[31] explained:
These passages indicate that delay on the part of a plaintiff is a relevant matter, because it may cause the Court to conclude that the plaintiff cannot complain of being kept out of its money during the relevant period. However, undue emphasis is not to be placed upon delay.
[31] Duke Group Ltd v Pilmer (1999) 73 SASR 64 at [544] (Doyle CJ, Duggan and Bleby JJ).
In summary, a successful plaintiff’s delay in progressing its claim may be a relevant consideration in the Court’s exercise of its discretion in relation to pre-judgment interest under s 30C of the Supreme Court Act. In circumstances where that delay is considerable, and is unreasonable or unjustifiable, it may result in a reduction in the period over which interest is awarded. Insofar as the rationale for that reduction is recognition of the fact that the plaintiff has been kept out of its money by reason of its own unreasonable conduct, there is some analogy with the principles of causation and mitigation.
However, delay should not be unduly emphasised. The Court should discourage an approach that would result in the explanation for delay becoming a costly and time-consuming issue in the litigation. The issue of whether any reduction in the interest otherwise payable should be made on account of delay should, in the ordinary course, be approached in a manner that reflects the broad, if not impressionistic, nature of the Court’s discretion.
In considering the respondent’s allegations of delay in the present case, the parties accepted that I could and should do so having regard to the information discernible from the Court record, as well as my general knowledge of the interlocutory progress of the proceedings through my role as the judge who managed the interlocutory stages of the proceedings. I also received, to be treated as a submission, a schedule prepared by the respondent’s legal advisors which provided some assistance in terms of the dates and time periods relevant to the contended delay.
I readily accept that these proceedings took an unfortunately long time to get to trial. However, it does not necessarily follow that there has been any unreasonable or unjustifiable delay on the part of the applicants. Indeed, given the scale and complexity of the current proceedings, as reflected in my trial reasons, and the unfortunate reality of modern litigation, it is hardly surprising that the current proceedings took a number of years to get to trial.
The first of the more specific aspects of the delay relied upon by the respondent is that the proceedings were not issued until close to the expiration of the relevant time limit for bringing the proceedings. While this is a relevant consideration, it is not of itself a basis for not awarding interest throughout the relevant period.
Next, the respondent relies upon the fact that the proceedings were stayed for approximately a year following the applicants’ failure to provide the security for costs ordered by this Court at an early stage of the proceedings. In my view, it is not appropriate to attach much weight to this consideration. In part this is because in order to obtain the required funds, the applicants needed to obtain litigation funding. It was understandable that this took some time to organise. And some of the delay in then having the proceedings reinstated, and the stay lifted, was attributable to matters outside of the applicants’ control. Further, and more fundamentally, in light of the conclusions reached in my trial reasons, it can now be seen that the respondent’s breaches of duty were a cause of the applicants’ impecuniosity. In those circumstances, I do not think it can be said that the delay in the proceedings attributable to the need to obtain funding to provide security for the respondent’s costs, insofar as it can be sheeted home to the applicants, was unreasonable or unjustifiable in the relevant sense.[32]
[32] A similar conclusion was reached in Curnow Consulting Pty Ltd v JPD Media and Design Pty Ltd (No 3) [2018] NSWSC 827 at [68] (Slattery J).

The third aspect of the applicants’ delay relied upon by the respondent is the time it took the applicants to formulate their claim. It is true that the applicants’ claim was subject to several reformulations. The most significant of these was reflected in the applicants’ third statement of claim, and took a number of months to be finalised. While this task ought to have been undertaken more expeditiously than it was, I do not consider it appropriate to be too critical of the applicants (or, more particularly, the applicants’ advisors) in this respect. As I have already mentioned, these proceedings were complex. The task of formulating the applicants’ losses, which was a significant aspect of the relevant reformulation of the applicants’ claim, was particularly complex. These complexities are apparent from my trial reasons and need not be described here.
There is also something of an irony in the criticisms now made by the respondent. It can be inferred that some of the complexity and time associated with the applicants’ reformulations of its claim was a product of the respondent’s insistence that the applicants separate out the claims and losses for each entity. While at one level this request was a reasonable one, it required significant work by the applicants. Further, the significance of this delay needs to be assessed in light of the fact that, by the time the matter got to trial, the respondent’s expert opined that certain aspects of the claimed losses could only be considered on a joint or combined basis (as between ASA Pools and ASA Manufacturing), and indeed criticised the applicants’ expert for attempting an entity by entity valuation exercise.
The respondent also criticises various other aspects of what it contends involved unreasonable delay on the part of the applicants. These included the time taken for the applicants to prepare their reply, and to obtain and serve aspects of their expert evidence. The respondent also emphasised the approximately eight month delay occasioned by the postponement of the original start date for trial of these proceedings.
As the judge who managed the interlocutory stage of these proceedings, I am in a position to form a conclusion about the timeliness of the prosecution of these proceedings. It is my view that while both parties can be criticised at a general level for the time these proceedings took to get to trial, it is fair to say that the applicants were responsible for a greater proportion of the delay during the interlocutory stages of these proceedings.
However, bearing in mind the nature and complexity of the proceedings, including the vast amounts of documentary material that was discovered and tendered, and the multiple and intersecting topics addressed through expert evidence, I am not satisfied that it is appropriate to reduce the period of time over which interest should be payable. In so concluding, I bear in mind the reluctance in the authorities to make such reductions. The Court’s discretion with respect to interest should not be exercised in a manner that involves embarking upon any detailed relitigating of the parties’ conduct of the interlocutory stages of the litigation.
It is to be borne in mind in this respect that, to some extent, the respondent had means available to it to address any unreasonable delay. That said, I have not attached much weight to this consideration in the circumstances of the present case for fear of penalising the respondent for its commendably pragmatic approach to several of the delays that occurred along the way.
It is also to be borne in mind that, throughout the entirety of the period from when the relevant insurance proceeds would have been paid (had the applicants not been under-insured) through to the date of judgment, the respondent had the use of the money it is now required to pay the applicants.
For all of these reasons, I decline to make any reduction in the period over which pre-judgment interest is payable on account of the applicants’ delay in prosecuting their claim.
No basis for reducing the rate on account of the timing of accrual of losses
The respondent contends that the Court should, in the exercise of its discretion as to the applicable rate of interest, make a reduction to reflect the timing of the accrual of the applicants’ losses. The respondent referred in this respect to the 40 per cent reduction applied to the usually applicable rates in Poniatowska v Channel Seven Sydney Pty Ltd (No 3).[33]
[33] Poniatowska v Channel Seven Sydney Pty Ltd (No 3) [2020] SASCFC 37 at [13] (Kourakis CJ, Blue and Nicholson JJ).
As the Court pointed out in that case, a practice is often adopted whereby the interest calculated for the relevant period is halved to accommodate an assumed even rate of accrual of losses over the entire period for which the damages are awarded. In Poniatowska v Channel Seven Sydney Pty Ltd (No 3), a slightly lesser discount was applied to reflect the fact that the relevant losses accrued more in the earlier part of the period relative to the later part of the period.
In my view, the respondent’s reliance upon this practice in the context of the present case is misplaced. The practice is applied, and makes sense, in cases where the relevant loss was suffered in an accumulating or continuing manner; that is, where it accrued throughout the period over which interest is said to be running. That is often the case in respect of some of the heads of damages recoverable in defamation and personal injury claims.
However, there is no need or basis for any such reduction or adjustment in the present case. The losses sustained by the named insured accrued at the time the additional insurance proceeds that should have been paid would have been paid. The losses were thus sustained in the period from 2010 to 2012, and not throughout the entire period through to the delivery of judgment in 2022. Insofar as it was to be expected that those payments of insurance proceeds would have been received over a period of time (namely, the balance of the 24 month indemnity period that ought to have been in place), this aspect of the timing of the accrual of the relevant losses is adequately addressed by commencing the relevant period for interest at the midpoint of the period over which those payments would have been made.
There is likewise no basis for applying any discount applicable to the interest payable in respect of Mr Elliott’s losses. Those losses were suffered on the date the relevant amounts were paid; they were not losses that accumulated, or continued to accrue, over the period through to judgment.
Interest on the $3.2 million payable to the named insured
In order to the determine the interest on the $3.2 million payable to the named insured, it is appropriate to separate that sum into its two component parts: (i) the additional insurance that would have been paid in respect of the six month indemnity period following the fire; and (ii) the additional insurance that would have been paid in respect of the balance of the 24 month indemnity period that should have been in place.
The applicants contend that the amount payable in respect of (i) is $671,558, and that the balance payable in respect of (ii) is thus $2,528,442. The basis for these figures is set out in the applicants’ submissions and is not challenged. I consider it appropriate to use these figures.
In relation to the $671,558 in respect of the six month indemnity period following the fire, the applicants contend that it could reasonably have been expected that this figure would have been paid by the end of July 2010. The applicants contend that interest should thus be payable on this sum from 1 August 2010 through to the date of judgment. I accept the applicants’ contentions. Using their figures through to 31 December 2021, and then adding a further amount to take the interest through to 10 June 2022, the interest payable on this sum is $498,257.
In relation to the $2,528,442 for the balance of the 24 month indemnity period that should have been in place, the applicants contend that this sum could reasonably have been expected to be paid to the named insured over the 18 month period from August 2010 through to July 2012. The applicants contend that interest should therefore run from the mid-point of this period. Again, I accept the applicants’ contentions. Using the applicants’ figures for the period from 1 May 2012 through to 31 December 2021, and then adding a further amount to take the interest through to 10 June 2022, the interest payable on this sum is $1,713,131.
The total interest on the $3.2 million payable to the named insured is thus $2,211,388, giving a total judgment sum in favour of the named insured against the respondent of $5,411,388.
Interest on the $239,267 payable to Mr Elliott
In order to calculate the interest payable, it is again appropriate to separate the total sum payable to Mr Elliott into its component parts.
In relation to the contributions made by Mr Elliott from the proceeds of the sale of his shares ($120,372) and his boat and trailer ($41,000), these were made in September and October 2011. The applicants seek interest from 1 November 2011. I accept that this is an appropriate date from which to commence the calculation of interest. Using this date, and the rates provided by the applicants, the figure for interest through to 10 June 2022 is $102,258.[34]
[34] Whilst I have used the applicants’ calculations, I have adjusted them to reflect an additional $21,000 by reason of the claim for the boat and trailer being $41,000 rather than $20,000.
In relation to the $17,000 contribution by Mr Elliott from the proceeds raised by pawning his motorbike, this was paid in June 2012. The applicants seek interest on this sum from 1 June 2012. I accept that this is an appropriate date from which to commence the calculation of interest. Using this date, and the rates provided by the applicants, the figure for interest through to 10 June 2022 is $9,927.
Finally, in relation to the $60,895 out of the $95,000 payment by Mr Elliott from the AMP income protection insurance proceeds that I found was referable to Mr Elliott’s obligations under the guarantee he gave in respect of the ASA Group’s indebtedness, this sum was paid in June 2015. The applicants seek interest on this sum from 1 June 2015. I accept that this is an appropriate date from which to commence the calculation of interest. Using this date, and the rates provided by the applicants, the figure for interest through to 10 June 2022 is $23,081.
The total interest on the $239,267 payable to Mr Elliott is thus $135,266, giving a total judgment sum in favour of Mr Elliott against the respondent of $374,533.
Orders
For the reasons set out above, judgment should be entered in favour of the named insured for $3,200,000 in damages and $2,211,388 in interest, giving a total of $5,411,388. And judgment should be entered in favour of Mr Elliott for $239,267 in damages and $135,266 in interest, giving a total of $374,533.

[2022] SASC 58

10 June 2022