Catalano v Zollo

[2006] SADC 125

DISTRICT COURT OF SOUTH AUSTRALIA

(Criminal)

CATALANO v ZOLLO

[2006] SADC 125

Judgment of His Honour Judge Tilmouth

11 October 2006

INTEREST

Damages awarded in favour of the plaintiff.  Awards of interest thereon.

COSTS

Plaintiff to recover the costs of the action fixed at 90% of the applicable scale.

CATALANO v ZOLLO
[2006] SADC 125

1. The court previously delivered reasons in this matter proposing various orders, reserving to the parties liberty to speak to those orders and as to consequential matters, such as costs and interest[1]. This judgment deals with those residual matters.

   [1] Catalano v Zollo [2006] SADC 111 (22 September 2006).

2. The first plaintiff seeks costs of the action.  Costs against Mrs Catalano were conceded.  Mr Catalano also sought interest in relation to the three separate sums for which damages are to be awarded, $85,800, $58,372.80 and $10,000 respectively.

3. The defence resisted orders for costs on the basis that the original claim, as then formed, was in effect an ambit claim.  Furthermore the precise basis for calculating the level of damages sought, was only formulated or became evident during the hearing. Awards of interest were inappropriate, given that fact and because the corporate defendant was joined relatively late. This following an application to strike out the proceedings as they then were, on the basis that the principal action should always have been against Zollo Nominees Pty Ltd.  That application led to an order being made by a Master of this court on 8 March 2005, joining that corporation as a defendant.

4. In the result the male plaintiff has established liability, the major issue in the trial, under both statutory causes of action.  So far as damages is concerned, although awards are to be made in amounts significantly less than the original claim, it was clear from the commencement of the trial that the plaintiff’s claim was limited to losses recorded in the taxation returns of the family trust and/or of Mr Catalano.  Ultimately judgment will be entered in not insignificant sums.  The defendants also point out that the plaintiff was unsuccessful on one issue of liability, namely the oral misrepresentations alleged against the agent of the vendors.

5. These proceedings were transferred into this court in November 2002.  The transaction in question occurred in February 2000, approximately six and a half years ago. The loss attributable to the difference in the price paid and the value of the business (assessed at $85,800) fell immediately upon settlement of the subject transaction, whereas the damages attributable to loss of profits (assessed at $58,372.80) were sustained progressively over the course of the contract, and then not evenly.  They became heavier as time went on.[2]  Accordingly, it would be inappropriate to award full interest on that sum over the entire period.

   [2] Refer footnote 50 in judgment [2006] SADC 111.

6. Mr Cole for the plaintiffs proposed a simple calculation, suggesting a rate of 5%  (which Mr Strawbridge conceded was reasonable) over four years on all three awards.  He contended the shorter period would broadly offset any proper reduction to reflect the incremental nature of the loss of profits.  Mr Strawbridge countered by arguing that no interest was applicable as to the loss of profits because it was impossible to identify when they fell or to make any sensible calculation, whereas the interest on the damages proposed for the loss in value produced a sum of $25,500.  The proposed method of calculating interest suggested by Mr Cole would have produced a total of $30,800.

7. Since the loss relating to the value of the business fell instantly and was carried throughout, it is appropriate to make an award of interest on the basis of the calculation suggested by Mr Strawbridge of $25,500.  As to the award for loss of profits, since they fell more heavily in the latter years and since the action against Zollo Nominees was not properly constituted until March 2005, a fair solution would be one allowing interest at 5% over eighteen months, so an award of $4,377.96 is appropriate. 

8. Finally some allowance for interest is required on the award of $10,000, albeit  difficult to calculate precisely, because that loss accrued at the early stages of the Catalanos involvement in Bright ‘N’ Clean.

9. Turning to the question of costs, the first plaintiff succeeded on each of the two major statutory causes of action and as to the breach of contract. No relevant filed offer or Calderbank letter was referred to by the parties.  It would have been inevitable for the defendants to call Mr Grant, but then again more time was taken up because of the issue of the failed allegation of oral misrepresentation.  As to damages, as already pointed out, Mr Catalano succeeded in obtaining substantial awards.  In these circumstances he should ordinarily have an order for costs to follow the event[3].

   [3] (R101.02 1987 Rules)

10. In all the circumstances, rather than making several orders as to costs in relation to particular issues, justice would be best served by one all-encompassing order that Tony Catalano is entitled to 90% of his costs of the action including damages, to be agreed or taxed.    He should not however have his costs for the last day of the hearing, as that was made necessary to allow the defendants to properly respond to late submissions put forward by the plaintiffs. There will be an order that Mrs Catalano pay the costs of the action, insofar as it relates to her, to be agreed or taxed.

11. Consistent with the reasons of the court delivered on 22 September 2006, there will be orders accordingly:-

    1.That damages be awarded in favour of Carl Antonio Catalano against Zollo Nominees Pty Ltd, in the sum of $85,800 plus interest of $25,500.

    2.That further damages be awarded in favour of Carl Antonio Catalano against Zollo Nominees Pty Ltd, in the sum of $58,372.80 plus interest of $4,377.96.

    3.That damages be awarded in favour of Carl Antonio Catalano in the sum of $10,000 against Gerry Zollo, Julie Zollo and Zollo Nominees Pty Ltd jointly and severally, plus interest of $2,000.

    5.The action brought by Angela Margaret Catalano is dismissed with costs insofar as they relate to her, to be agreed or taxed.

    6.There will be an order that Carl Antonio Catalano recover the costs of the action fixed at 90% of the applicable scale as against Zollo Nominees Pty Ltd, to be agreed or taxed, save and except that there will be no order as to costs in favour or as against any party for the adjourned hearing of 20 July 2006.