Corani & Corani v Wright, Wright and Basheer & De Conno Pty Ltd (No 2)

[2004] SADC 180

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

CORANI & CORANI v WRIGHT, WRIGHT AND BASHEER & DE CONNO PTY LTD (No 2)

Judgment of His Honour Judge Smith

13 December 2004

TRADE PRACTICES

Contribution indemnity proceedings between defendants who are principal and agent – plaintiffs succeeded in recovering loss of damage from defendants in a mix of statutory and general law causes of action – discussion of basis upon which contribution and indemnity and interest thereon should be ordered as between the defendants – principles of equitable contribution apply to predominate over principals common law right of indemnity.

Corani & Corani v Wright, Wright and Basheer & De Conno Pty Ltd [2004] SADC 154; Burke v LFOT Pty Ltd (2002) 209 CLR 282; Wheeler v Page (1982) 31 SASR 1; Faulkner v Bourke (1990) 19 NSWLR 574, considered.

CORANI & CORANI v WRIGHT, WRIGHT AND BASHEER & DE CONNO PTY LTD (No 2)
[2004] SADC 180

1. In this action on the 5^th November 2004 I entered judgment in the main action (see Corani & Corani v Wright, Wright and Basheer & De Conno Pty Ltd [2004] SADC 154) (the first judgment). As no argument was proffered to me at trial as to the contribution proceedings I heard argument by the defendants as to that on the 23^rd November 2004.

2. I now make orders in respect of the contribution proceedings as between the first and second defendants on the one hand and the third defendant on the other.

3. I refer to my comments in the first judgment as to the considerations relevant to the contribution proceedings which I considered required resolution. 

4. I consider that the principles enunciated in Burke v LFOT Pty Ltd (2002) 209 CLR 282 are applicable. The right to contribution based on a “common obligation” is given by both the common law and equity (see Burke per McHugh J at [38]). So the principles set out by the High Court Justices are not necessarily a product only of the law of equity. They effectively cover the field of the law relating to contribution. In particular, the principal’s right to an indemnity from his defaulting agent is subject to the parameters set out in Burke.

5. As indicated in the first judgment the loss or damage is the amount of the overpayment which I have found was caused, in the legal sense, by the agent’s misleading or deceptive conduct, misstatement or misrepresentation.  Therefore the first and second defendants have received the benefit of that overpayment.  If I order that the third defendant agent indemnify the first and second defendants to the extent that the judgment is recovered from them, it will effectively leave them unjustly enriched.  The dictates of justice, fairness and common obligation would require that the first and second defendants disgorge that excess payment, namely $27,885 in satisfaction of the plaintiffs’ judgment. 

6. Of course that same reasoning does not hold for the excess fees. 

7. As far as interest is concerned I accept the argument of counsel, Mr Lunn, that the predominant guiding principle underlying an award of interest should be “who has the use of the money” (see Wheeler v Page (1982) 31 SASR 1 per King CJ at 3). In particular, I accept that “judicial sympathy” is not a proper basis upon which to exercise the discretion as to an award of interest (see Faulkner v Bourke (1990) 19 NSWLR 574). I note at one time the courts penalised a dilatory plaintiff by not awarding interest. In my view, that was a questionable exercise of the discretion to grant interest.

8. Therefore the first and second defendants ought also to indemnify the third defendant for that portion of the interest I have awarded on the amount of the excess payment but not including the fees.  That sum is $7,848 (ie $27,885 x 6.5% x 4.33 years = $7,848).

9. The third defendant agent should not be indemnified in respect of the excess fees nor that portion of the interest allowed by me in respect of the quantum of those fees.  That amount is approximately $372 (ie $1,319 x 6.5% x 4.33 years = $371).

10. As to the refund of commission, despite what I said in the first judgment I decline to allow the first and second defendants to amend the contribution notice to embrace such a claim.  The agent should refund that amount.  The first and second defendants right to recover it is not lost. 

11. Therefore I make the following orders on the contribution proceedings in respect of the judgment and interest ordered by me in favour of the plaintiffs in the first judgment:

    ·That the third defendant indemnify the first and second defendants in respect of $1,319 being the quantum of the excess fees and $372 being the interest thereon;

    ·That the first and second defendants indemnify the third defendant in respect of $27,885 being the excess payment for the land and $7,848 being the interest awarded thereon.

12. I will hear the parties as to costs.