David Terence Osborne v John James Kelly and Alexander Klimenko

[1992] SASC 3564

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA PERRY J

CWDS
Practice - interest on damages - Supreme Court Acts.30c - Lengthy and inexcusable delay by plaintiff in prosecuting civil damages claim - 12 years between writ and trial - question whether allowance of interest under s.30c of the Supreme Court Act should be reduced on account of the delay - cases discussed - held that when the plaintiff is kept out of the judgment monies for a period due to his own default, he should not be allowed interest during that period - interest allowed in a lump sum calculated by reference to a reduced period of 5 years. Supreme Court Act (SA) s.30c. Batchelor v Burke
(1981) 148 CLR 448; Mbp (SA) Pty Ltd v Gogic (1991) 98 ALR 193; Coleman V Williams (Unreported) 28/11/1990 Perry J (Judgment No 2598); De Girolamo v State Of South Australia (1991) 56 SASR 40; Catanzariti v Steadfast Insurance Co Ltd (1976) 14 SASR 15; Ruby V Marsh (1975) 132 CLR 642; Wheeler v Page
(1982) 31 SASR 1; Atlas Tiles Ltd v Briers (1978) 21 ALR 129; Fire And All Risks Insurance Co Ltd V Callinan (1978) 21 ALR 375; Thompson V Faraonio
(1979) 24 ALR 1; Diggins v Brunotte (Unreported) 22/11/88 King CJ (Judgment No 1112) and Golubovs V Mcauliffe (1991) 161 LSJS 235, discussed.
Practice - costs - Application by defendant to deprive plaintiff of costs on issues upon which defendant said to have been successful and for order that the costs as to those issues should be awarded to the defendant against the plaintiff - held not a proper case to deprive the plaintiff of any part of the costs of action generally. Forster v Farquhar and ors (1893) 1 QB 564; Cretazzo V Lombardi (1975) 13 SASR 4 and Residues Treatment And Trading Co Ltd And Others v Southern Resources and ors (Unreported) Perry J 10/11/89 (Judgment No 1934), discussed.

HRNG ADELAIDE, 28 July 1992 #DATE 7:8:1992
Counsel for plaintiff:     Mr R Cameron
Solicitors for plaintiff:    Andersons Barker Gosling
Counsel for defendants:     Mr D A Trim with Mr D H Greenwell
Solicitors for defendants: Ross and Mccarthy

ORDER
Interest on damages and costs determined.

JUDGE1 PERRY J This matter came to trial before me for assessment of damages. On 24 July 1992 I published Reasons for Judgment (Judgment No. 3541) and intimated that I would assess the damages in the sum of $1,015,746, which was reduced after apportionment of 30 per cent against the plaintiff, to $711,022, exclusive of interest. 2. At that stage I refrained from pronouncing final judgment, so as to enable counsel to be heard on the question of interest, and also as to costs. Subsequently, I heard counsel on both of those topics. 3. As to the award of interest, the argument focussed on the question whether the period over which interest fell to be calculated should be reduced on account of delay by the plaintiff in prosecuting the action. I deal first with that question. 4. The plaintiff sustained his injuries the subject of the action in a road accident which occurred on 13 July 1978. The writ was issued on 23 September 1980. On 23 May 1984 Public Trustee was appointed pursuant to the Aged and Infirm Persons' Property Act manager of the whole of the estate of the plaintiff. Thereafter, Public Trustee has prosecuted the proceedings as the plaintiff's next friend. The matter came to trial before me in July 1992. 5. Mr Trim for the defendants contends that the plaintiff has been guilty of inordinate delay, and that it would be wrong to make an award of interest encompassing the twelve year period between the issue of the writ and trial. 6. Mr Cameron for the plaintiff suggested that the plaintiff was not responsible for all of the various delays which had occurred, and that there had been some difficulty in obtaining instructions from him from time to time due to his condition, and that his whereabouts in New Zealand were not always known. Mr Cameron submitted further that in any event, upon a proper application of principle, as laid down by the High Court in Batchelor v Burke
(1981) 148 CLR 448 and confirmed in MBP (SA) Pty Ltd v Gogic (1991) 98 ALR
193, delay in proceeding with a claim, for whatever cause, should not be held against a plaintiff, the defendant having had the use of the money in the meantime. 7. Over the years, approaches by judges within this Court to the question whether or not delay in proceeding with a claim may be held against a plaintiff in assessing the allowance to be made for interest under s.30c of the Supreme Court Act, have varied. 8. In Coleman v Williams (Unreported) 28/11/1990 Perry J (Judgment No. 2598) I said:
    "It is now clear that the underlying basis for the award
    of interest under s.30c is to compensate the plaintiff for being
kept out of his money (see Wheeler v. Page (1982) 31 SASR 1).
    It must follow that if the plaintiff has been responsible for
    unreasonable delay in prosecuting the action, the period over
    which interest is to be calculated may be reduced. Cases in
    which the Court has declined to adopt such an approach, on the
    footing that the defendant has had the use of the money in the
meantime, can no longer be regarded as good law." 9. Coleman v. Williams went on appeal to the Full Court (Unreported, Matheson J, Olsson and Debelle JJ concurring, 5/5/92 Judgment No. 3340). The appeal included a challenge to the award of interest. That aspect of the appeal was compromised by an agreement that a reduced allowance be substituted (see per Matheson J at pp.1-2). The decision of the Full Court in thatcase cannot therefore be regarded as authority one way or the other in favour of the view which I took at first instance. 10. In De Girolamo v State of South Australia (1991) 56 SASR 40, Cox J said:
    "The prima facie case of substantial and unjustified delay
    therefore remained unanswered. However, the effect of this on
    the calculation of interest is another matter. It seems to me
    that the principle that delay will not ordinarily affect a
    plaintiff's entitlement to interest, laid down by this Court in
    such cases as Catanzariti v Steadfast Insurance Co Ltd (1976) 14
    SASR 15, has not been abrogated by later decisions about the
    entitlement to or calculation of interest under s 30c. Interest
    is awarded to compensate a plaintiff for the detriment he has
    suffered by being kept out of his money: see Batchelor v Burke
(1981) 148 CLR 448. It is true that the time between accident or
    writ and judgment has been greatly lengthened in this case by the
    plaintiff's neglect - his own 'fault', if you like - so that
    there is a sense in which, with respect to some of that period,
    he has not been kept out of his money by the defendant but by his
    own inaction. However, it is still the case that the plaintiff
    has not had the use of the money in question for the whole of the
    relevant period, and the necessary practical consequence of this
    is that the defendant has had the use of that money, presumably
    to its advantage, for the same time. That, in my opinion, is an
    important consideration in deciding whether the plaintiff's delay
    should affect the amount of interest to be awarded. This is not
    one of those cases, of which some compensation neurosis claims
    are an example, in which delay can itself lead to an increase in
    the overall damages awarded to a plaintiff, and it was not
    suggested that variations in either commercial or real interest
    rates over the lengthened interest period, or any other factor,
    could have resulted in any prejudice to the defendant in this
    case. There is no punitive or inducing or moral component in the
    awarding of interest now, certainly not of the kind discussed in
Ruby v Marsh (1975) 132 CLR 642 at 652-653. Section 30c may not
    be used to discourage defendants from delaying settlements. See
Bennett v Jones (1977) 2 NSWLR 355; Wheeler v Page (1982) 31 SASR
    1. It was not put to me that the court nevertheless could, or
    should, as a matter of policy use s 30c to discourage plaintiffs
    from sleeping on their rights. The submission was based on mere
    unjustified delay on the part of the plaintiff as, it would seem,
    a virtually self-evident ground for awarding interest for a
    reduced period only. I amnot persuaded of the general soundness
    of that submission. However, the principle of the matter was not
    really argued by either party and I hesitate to express a final
    view on the subject. It is enough for present purposes to say
    that I am not satisfied that any interest that would otherwise be
    awarded to the plaintiff in this case under s 30c should be
    diminished by reason of his failure to prosecute the action
    diligently." 11. With respect, I agree that "mere unjustified delay on the part of the plaintiff" would not necessarily lead to a reduction in the interest to be awarded. The award of interest under s.30c of the Supreme Court Act is the result of the exercise of a discretion, and it would be wrong to attribute to one matter which is to be taken into account so much emphasis that it displaces entirely other matters to which regard should also be had. Commonly, however, there will not be any other relevant factors, and unjustified delay will usually lead to a deprivation of interest during the period of the delay. 12. Early cases such as Catanzariti v Steadfast Insurance Co. Ltd. (supra) were decided at a time when the exposition of principle by Barwick CJ in Ruby v Marsh (supra) was still regarded as good law. In that case Barwick CJ had said (132 CLR 652):
    "The purpose of giving courts the power to award interest
    on damages is to my mind twofold, and neither aspect of the
    purpose should be lost sight of. In the first place, the
    successful plaintiff, who by the verdict has been turned into an
    investor by the award of a capital sum, and whose claim in the
    writ has been justified to the extent of the verdict returned,
    ought in justice to be placed in the position in which he would
    have been had the amount of the verdict been paid to him at the
    date of the commencement of the action. In the second place, the
    power to award interest on the verdict from the date of the writ
    is to provide a discouragement to defendants, who in the greater
    number of actions for damages for personal injuries are insured,
    from delaying settlement of the claim or an early conclusion of
    proceedings so as to haveover a longer period of time the
    profitable use of the money which ultimately the defendant agrees
    or is called upon by judgment to pay." 13. As was pointed out in Wheeler v Page (supra) (per King CJ, pp.3-4), the first of the purposes identified by Barwick CJ in that dictum, at least insofar as it applies to post-trial detriments, and the second of those purposes, were subsequently held to embody an incorrect view of the rationale of sections such as s.30c, (see Atlas Tiles Ltd v Briers (1978) 21 ALR 129, Fire and All Risks Insurance Co Ltd v Callinan (1978) 21 ALR 375, and Thompson v Faraonio (1979) 24 ALR 1). 14. As King CJ went on to observe in Wheeler v Page (31 SASR 4):
    "If interest is confined to detriments already suffered,
    it must be because the purpose of the section is to compensate
    plaintiffs for being kept out of compensation for losses already
    suffered and not to discourage defendants from delaying
    settlement of claims. This view of the purpose of the section
was made explicit in Batchelor v. Burke (11981) 35 ALR15. In
    that case the High Court held that the plaintiff should not be
    allowed interest on that part of the damages which represented
    past loss of wages which were made up by payments of workers'
    compensation by a third party, notwithstanding that the defendant
    had had the use of the money until judgment. Gibbs CJ (with
    whose judgment Aickin J, Wilson J and Brennan J agreed) said:
    'In accordance with the principle which has been accepted in this
    Court and in the Privy Council it would therefore not be right to
    award interest in respect of that portion of the award which
    represents damages for earnings lost before trial but replaced by
    payment of workers' compensation. It would not be consistent
    with that principle to award interest simply to discourage
    defendants from delaying the settlement of claims. The interest
    is awarded to compensate the plaintiff for the detriment that he
    has suffered by being kept out of his money, and not to punish
    the defendant for having been dilatory in settling the
    plaintiff's claim.'" 15. In Diggins v Brunotte (Unreported) 22/11/88 (Judgment No 1112), King CJ said (17):
    "Counsel for the plaintiff submitted that the defendant
    should pay interest for the period of the adjournment because he
    had had the use of the money during that period. The authorities
    are now clear, however, that interest is included in judgments
    not because the defendant has had the use of the money but
    because the plaintiff is kept out of it. It follows that if the
    plaintiff is kept out of the money for a period due to his own
default, he should not be allowed interest during that period." 16. In Golubovs v McAuliffe (1991) 161 LSJS 235 Lunn J, sitting in the District Court of Adelaide, dealt with a personal injuries award made in an action where there was what he found to be undue delay by the plaintiff in prosecuting the action. He referred to the judgments in Coleman v Williams, De Girolamo v State of South Australia, and Diggins v Brunotte (supra). He went on to observe (238):
    "I intend to follow the approach of Perry J in Coleman v
    Williams (above). What is in issue is a policy decision about
    whether a plaintiff should be penalised in interest for
    unjustified delays in the prosecution of the action even though
    the defendant has not suffered any actual loss because of that
    delay through having had in that period the notional benefit of
    investing the moneys which should have been paid to the plaintiff
    as soon as the cause of action was complete. In view of the
    current policy of this Court in requiring plaintiffs to pursue
    their claims expeditiously there is good reason why penalties in
    interest should be visited upon tardy plaintiffs where delays are
    their fault. I do not understand Cox J in De Girolamo v State of
    South Australia (above) to say that he was necessarily against
    this as a matter of principle." 17. Lunn J concludes:
    "The mere fact of delay is not sufficient: it must be shown
    to be the fault of the plaintiff. There is no doubt that it
    should not take seven and a half years from a road accident, and
    four and a half years from the institution of proceedings, for an
    action such as this to come to trial. The plaintiff had the
    responsibility of prosecuting his action expeditiously: Kenny v
State of South Australia (1987) 46 SASR 268. He clearly has not
    done so." 18. The actual decision in Batchelor v Burke (supra) is, for present purposes, instructive. In that case the High Court heldthat the receipt by the plaintiff of payments from a third party which went to ameliorate his losses, will generally preclude the award of interest against a defendant, to the extent of the payments. That in such cases, the fact that the defendant has had the use of the money in the meantime counts for nothing, tends to emphasize that the predominant consideration is recognition of the underlying principle that the award of interest is to compensate the plaintiff for being kept out of his money. 19. In my opinion, if proper effect is to be given to that principle in cases where, in determining the award of interest, there is nothing to balance out other than on the one hand inordinate delay on the part of the plaintiff, and on the other hand the fact that the defendant has had the use of the money in the meantime, the latter factor is of no weight. Putting it another way, I do not see how it can consistently be said that on the one hand, the purpose of the award of interest is to compensate the plaintiff for being kept out of his money, yet on the other that that purpose is served by taking into account the fact that the defendant has had the use of the money in the meantime. 20. In the circumstances I reject the argument of Mr Cameron that the statements of principle in Batchelor v Burke would suggest otherwise. I adopt, with respect, and follow the approach of King CJ in Diggins v Brunotte (supra). 21. I was invited by both counsel to peruse the file of the action. I did so with the assistance of the chronology of pleadings and the chronology of various orders made on a numberof chamber attendances, which had been extracted from the file by those instructing Mr Trim. 22. My perusal of the file enables me to make certain observations as to the reasons for the slow progress of the action.
    1. I could see no support for the proposition that
    difficulty in obtaining instructions from the plaintiff had
    anything to do with the pace of the action, except in very minor
    respects. In any event, during most of the time between
    September, 1980, when the writ was issued, and the date of trial,
    as I pointed out in the earlier Reasons for Judgment, the
    plaintiff has been at the establishments known as Tokenui
    Psychiatric Hospital, the New Empire Hotel, or Pat's Place, all
    places at which, presumably, he could readily be contacted.
    2.The plaintiff's solicitors were consistently slow in taking
    the steps necessary for the action to proceed. In by far the
    majority of those chamber attendances at which there was
    criticism in one way or another for the slow progress of the
    action, that criticism was directed to the plaintiff's advisors
    rather than to those of the defendants.
    3. There is a note of resignation in the report of Master Kelly
    dated 14 June 1990 (Document No. 32):
    "Despite attempts to do so I have been unable to get assurances
    from the plaintiff's solicitors that this matter is ready for
    trial.
    It has been suggested at times that evidence will have to be
    taken in New Zealand but the solicitors for the defendant assure
    me that that would appear quite unnecessary. I do not have the
    plaintiff's contribution on that topic.
    On a perusal of the file it would appear that
    all interlocutory steps have been taken and it would further
    appear, upon the assurances of the defendant's solicitors, that
    the matter is now ready for trial. Again, I have no contribution
    from the plaintiff's solicitors.
    I direct that a copy of this report be included with the copy
    documents for the use of the trial Judge."
    (Despite the last sentence of that report, it was not included
    with the copy documents for the use of the trial judge - another
    default by the plaintiff's solicitors).
    4.An application to dismiss the claim for want of prosecution
    made on 6 September 1989 (Document No. 28), although
    unsuccessful, does not seem to have had the slightest effect in
    prompting the plaintiff's solicitors to get on with the action.
    5.On 28 June 1991 (Document 66) there was a further application
    to dismiss the action, again unsuccessful, this time for failure
    by the plaintiff's solicitors to comply with discovery orders.
    6.In an affidavit sworn by Mr Mark Leaker on 17 July 1991
    (Document No. 70) appears the following statement (paragraph 5):
    "The Plaintiff's solicitors must take responsibility for the
    failure of the plaintiff to comply with the orders of this
    Honourable Court on 14th May 1991 and on 13th June 1991. I have
    therefore taken over conduct of this file to ensure that there
    will be no further delays in this matter". 23. Mr Trim submitted that if the action had progressed with an appropriate degree of expedition it would have come on for hearing by early 1985. In substance I consider that view to be amply borne out by my perusal of the file. Furthermore, the fact that it did not come on for hearing within that time and insteadtook a period of 12 years from the date of issue of the proceedings until trial, is substantially the result of inordinate and inexcusable delay on the part of the plaintiff in prosecuting the action. 24. In all the circumstances I consider that a reasonable period over which to allow interest is five years. 25. Mr Trim went on to suggest that the period over which interest was awarded, should, for the purpose of the calculation, be halved. As to that suggestion, the remarks of King CJ in Wheeler v Page (supra) at p.5 are apposite:

    "If the writ is issued soon after the injury is sustained or
    if for some other reason only a minor part of the pre-trial loss
    is sustained before the issue of the writ, it may be necessary to
    fix a sum by way of or in lieu of interest on the basis of a
    reduced period. In these circumstances judges sometimes
    calculate interest on the pre-writ loss for the whole period and
    interest on the post-writ loss for a reduced period. If,
    however, a substantial part of the pre-trial loss is sustained
    before the issue of the writ, fairness may require that interest
    be awarded on the whole of the pre-trial loss for the whole
    period between the commencement of the proceedings and judgment,
    the under-compensation in respect of the pre-writ loss cancelling
out the over-compensation in respect of the post-writ loss." 26. Here the pre-writ period was 2 years and 2 months. While that is not equal to 5 years, a substantial part of the pre-trial loss was suffered in that time. Bearing that in mind, I consider that justice would be done in this case by awarding interest over an unreduced period of five years. 27. Mr Cameron has conceded that, given that I have assessed the pre-trial economic loss in the money values prevailing at the day of the judgment, it would be inappropriate to adopt other than a 4 per cent interest rate for that as well as for the pre-trial non-economic loss. In my opinion, interest should be awarded on the component in the award which compensates for voluntary assistance given by relatives (see Coleman v Williams (supra)) at pp.16-17, and to the contrary the authorities mentioned by Lunn J in Golubovs v McAuliffe (supra) at p.239). 28. It follows that the components in the assessment upon which interest falls to be awarded are: General damages for past non-economic loss $ 75,000 Voluntary assistance of relatives $ 5,000 Past loss of earning capacity $278,625 $358,625 70 per cent thereof $251,038 $250,000 at 4 per cent for five years gives a figure of $50,000. I award interest in a lump sum of that amount. 29. It will be seen from the Reasons for Judgment which I published on 27 July 1992, that I then assessed the allowance for the costs of management, provisionally, reserving the right to review it in the light of the award of interest. 30. Given the quantum of the award of interest, there is no reason to vary that provisional assessment. 31. Mr Trim separately argued that the plaintiff's entitlement to costs, which in general terms he did not dispute, should be reduced by reason of the success of the defendant on certain issues. Indeed, he sought an allowance of costs in favour of the defendants with respect to so much of the trial as was taken up with the receipt of evidence as to the plaintiff's entitlements under the New Zealand health and welfare system and as to the ascertainment of the cost of the plaintiff's need for ongoingcare in New Zealand, including the manner in which that need could fairly be met. 32. Mr Trim referred to Forster v Farquhar and Ors (1893) 1 QB 564, in which the Court of Appeal upheld the decision of the trial judge to order the plaintiff, although otherwise successful in the action, to pay to the defendant the costs of proof of items of special damage upon which the plaintiff had failed. 33. While the power to follow such a course undoubtedly exists, it must be used sparingly. See Cretazzo v Lombardi (1975) 13 SASR 4, per Jacobs J at p.16:
    "Having said that, I would wish to sound a note of cautious
    disapproval of applications, which are being made with
    increasing frequency, to apportion costs according only to the
    success or failure of one party or the other on the various
    issues of fact or law, which arise in the course of a trial ...
    trials occur daily in which the party, who in the end is wholly
    or substantially successful, nevertheless fails along the way on
    particular issues of fact or law. The ultimate ends of justice
    may not be served if a party is dissuaded by the risk of costs
    from canvassing all issues, however doubtful, which might be
    material to the decision of the case. There are, of course, many
    factors affecting the exercise of the discretion as to costs in
    each case, including in particular, the severability of the
    issues and no two case are alike. I wish merely to lend no
    encouragement to any suggestion that a party against whom the
    judgment goes ought nevertheless to anticipate a favourable
    exercise of the judicial discretion as to costs in respect of
    issues upon which he may have succeeded, based merely on his
    success in those particular issues." See also Residues Treatment and Trading Co. Ltd. and Others v Southern Resources and Ors (Unreported) Perry J 10/11/89 Judgment No. 1934. 34. I have carefully considered Mr Trim's submissions in this respect, but it does not appear to me that a proper basis hasbeen made out upon which to vary the incidence of the costs of the trial in the manner which he suggests. 35. The plaintiff will have his costs of action against the defendants, that is as to all of the issues brought to trial. 36. I will hear counsel as to the form of the final judgment, including an order for payment into Court.