Golden West Refining Corporation Ltd v Daly Laboratories Pty Ltd

[1995] FCA 525

CATCHWORDS

PRACTICE & PROCEDURE  - Judgment for damages - interest on damages - costs - no matter of general principle.

Federal Court of Australia Act s.51A

Haines v. Bendall (1991) 172 CLR 60
Clarke v. Foodland Stores Pty Ltd [1993] 2 VR 382
Keithara Pty Ltd v. J.G.L. Holdings Pty Ltd [unreported, 6 December 1994, Supreme Court of Victoria, Smith J. No. 4308 of 1990]
Newcrest Mining (W.A.) Ltd v. The Commonwealth of Australia (unreported, French J. 17 December 1993, No. 954 of 1993);
Commissioner of Australian Federal Police v. Razzi (1991) 101 ALR 425 at 430
Permanent Building Society v. Wheeler (No. 2) (1993) 10 WAR 569.
Dodds Family Investments Pty Ltd v. Lane Industries Pty Ltd (1993) 26 IPR 261

GOLDEN WEST REFINING CORPORATION LIMITED v. DALY LABORATORIES PTY LTD & CLYDE INDUSTRIES LIMITED
WAG 63 of 1992

CARR J.
SYDNEY (HEARD IN PERTH)
16 FEBRUARY 1995

IN THE FEDERAL COURT     )
OF AUSTRALIA  )
WESTERN AUSTRALIA         )
DISTRICT REGISTRY            )
GENERAL DIVISION             )       No. WAG 63 of 1992

B E T W E E N:  GOLDEN WEST REFINING CORPORATION LIMITED

Applicant
  and

DALY LABORATORIES PTY LTD

First Respondent
  and

CLYDE INDUSTRIES PTY LTD

Second Respondent

CORAM:     CARR J.  
PLACE:      PERTH
DATE:         16 FEBRUARY 1995

MINUTE OF ORDERS

THE COURT ORDERS THAT:

1. (a)    The first respondent and the second respondent pay to the applicant interest on the sum of $146,601.33 calculated in respect of the period 22 May 1990 to 31 December 1990 (both dates inclusive) and 5 June 1992 to 5 January 1995 (both dates inclusive);

(b)Such interest is to be calculated at the rates which were fixed from time to time during the above periods under Order 35 rule 8 of the Federal Court Rules in respect of judgment debts; and

(c)The interest so calculated shall be added to the amount payable to the applicant by the first respondent and the second respondent pursuant to paragraph A1 of the orders made on 5 January 1995.

1. The respondents pay the applicant's costs of the application to be taxed.

1. The second respondent indemnify the first respondent in respect of such costs as the first respondent is obliged to pay to the applicant.

1. The second respondent pay to the first respondent the first respondent's costs of the first respondent's cross-claim and of the second respondent's cross-claim to be taxed as one set of costs.

NOTE:Settlement and entry of Orders are dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT   )
OF AUSTRALIA                 )
WESTERN AUSTRALIA     )           No. WAG 63 of 1992
DISTRICT REGISTRY         )
GENERAL DIVISION         )           

B E T W E E N:  GOLDEN WEST REFINING CORPORATION LIMITED

Applicant
  and

DALY LABORATORIES PTY LTD

First Respondent
  and

CLYDE INDUSTRIES PTY LTD

Second Respondent
CORAM:     CARR J.
PLACE:      SYDNEY (HEARD IN PERTH)
DATE:        16 FEBRUARY 1995

REASONS FOR JUDGMENT

On 5 January 1995 I handed down reasons for judgment in this matter.  I ordered that the first respondent and the second respondent pay to the applicant the sum of $146,601.33 together with such interest thereon as may be fixed in due course.  I declared that the first respondent was entitled to contribution to the full extent of any amount or amounts which pursuant to the above order, the first respondent was obliged to pay to the applicant and further ordered that the second respondent's claim against the first respondent be dismissed.  I directed the parties to submit a minute of agreed orders as to interest and costs or, in the absence of such agreement, to file and serve written submissions on those issues.  They have done so and these are my reasons for the orders which I propose to make in respect of interest and costs.
Interest
        The damages referred to above were awarded to compensate the applicant for loss of gold and for damage to its gold refining equipment caused by hydrofluoric acid contained in batches of hydrochloric acid supplied to the applicant for use in its gold refining business.  Those losses occurred on two separate occasions.  The first was on 11 January 1990 and the second on 24 January 1990.  It is not possible completely to allocate the various items of loss between the two incidents.

The applicant claims interest on the full amount of its judgment from the date of the second loss which it describes as having occurred on 11 January 1990.  It relies on the principle that the purpose of an award of interest is to ensure that the successful applicant is placed in the position it would have been in but for the breach of duty by the respondents, for which proposition it cites Haines v. Bendall (1991) 172 CLR 60 at p.66. The applicant says, in its written submissions, that all of the equipment which had been damaged was replaced and paid for by July 1990 and of that amount the sum of $63,220.46 had been expended by June 1990. The applicant further says that by 11 January 1990 gold to a total value of $58,220.46 had been lost. There seems to be some confusion on the applicant's part about the dates, since the statement of claim refers to gold losses on 24 January 1990 of some $35,976.67, but the applicant, in its computation of interest, calculates that interest on the whole of the judgment from 11 January 1990. An affidavit has been filed on behalf of the applicant which indicates that notice of the applicant's losses was given to the respondents on 8 May 1990 and again on 16 May 1990. That affidavit also sets out the history of the replacement of the equipment and the pressing of claims by its
insurers against the respondents.  There then follows a history of matters which eventually led to the commencement of these proceedings.  The application was not filed until 5 June 1992 but was set down relatively quickly for a conference to list it for hearing.  That was in November 1992. 

The first respondent has not made any submissions in relation to the matter of interest. 

The second respondent submits that the Court should exercise its discretion against allowing interest for all or some of the period between the date upon which the causes of action arose and the commencement of the proceedings.  This is because, so it is said, the matters referred to in the applicant's affidavit are no answer to the fact that the management of the action in commencing proceedings and advancing them to trial is primarily in the hands of the applicant.  The second respondent submits that it would be appropriate for interest to be computed from, say, six months from the accrual of the causes of action and for a reasonable period between commencement of the proceedings and the trial. 

I have already held, in my earlier reasons for judgment that in terms of s.51A of the Federal Court of Australia Act, no good cause had, to that point, been "shown to the contrary" why there should not be an award of interest.  Nothing has been advanced to suggest that there should not be any award of interest.  The question is for what period should interest be allowed?

I have read the cases cited by the applicant and the second respondent in their respective written submissions and I have also considered the cases on this point collected in Australian Torts Reporter pp.59823-59853.  These decisions do appear to reflect a degree of reluctance on the part of Courts to deny a plaintiff interest on damages by reason of delay (either in instituting proceedings or prosecuting them) unless some detriment is shown to the defending party.

However, I have derived considerable assistance from two decisions of the Supreme Court of Victoria.  In the first case, Clarke v. Foodland Stores Pty Ltd [1993] 2 VR 382, the Full Court held that in the circumstances of that particular case the trial judge had not been in error in taking into account delay on the part of the plaintiff in bringing proceedings to recover a preference. I accept that there were some circumstances peculiar to that case which were relevant to the time from which interest might be calculated.

The other case appears to be unreported and is a decision of Smith J. given on 6 December 1994 in Keithara Pty Ltd v. J.G.L. Holdings Pty Ltd [unreported, Supreme Court of Victoria No. 4308 of 1990]. In that matter his Honour allowed interest from the time when the plaintiff attempted to recover the moneys prior to instituting proceedings until the date upon which those proceedings were instituted. Pre-judgment interest was also allowed, but the period was reduced in respect of a delay on the plaintiff's part in bringing the matter to trial. While referring to the purpose of the statutory power (which was in comparable terms to s.51A of the Federal Court of Australia Act) as being to compensate the plaintiff for being kept out of its money,
Smith J. referred to Clarke v. Foodland Stores Pty Ltd. His Honour decided, as an exercise of discretion, that the plaintiff should bear the apparently self-inflicted burden of being kept out of its funds for the period (between 20 December 1989 and 6 March 1992) when it was apparently having problems with its pleadings.

Weighing up the various factors in this matter, I consider that it would be reasonable for interest on the amount of the judgment to be calculated from 22 May  1990 (being 14 days after the first demand for payment) to 31 December 1990 by which time I consider that it was reasonable to expect proceedings to have been instituted.  In my opinion, the applicant's affidavit does not satisfactorily explain the delay between, say, the latter part of 1990 and the commencement of proceedings in June 1992.  I am, however, satisfied that there was no undue delay after that date in bringing the application on for hearing.  In my view, the applicant is also entitled to interest on the amount of the judgment from the date upon which these proceedings were instituted, 5 June 1992 to the date of judgment.  I do not see any fault on the applicant's part in bringing this matter to hearing.  Insofar as it was within the power of the parties to have this matter brought on for an early hearing, in my opinion, each party shared that power equally.

Costs
        There is an argument about costs.  The applicant seeks an order that the respondents pay the applicant's costs.  The first respondent agrees with that but seeks an order against the second respondent for indemnity in respect of those costs.  The second respondent argues that although the applicant was successful against the
second respondent in its claim in negligence and in its claim under s.52 of the Trade Practices Act, it was unsuccessful in its alternative claims based on breach of conditions said to have been implied under ss.13 and 14(1) of the Sale of Goods Act 1895 (W.A.).

Part of the second respondent's submissions on this issue is based on the proposition that the applicant's conduct unreasonably prolonged the proceedings.  That conduct was referred to as being the multiple amendments made at various stages throughout the trial.  However, orders were made or agreement was reached between the parties for costs thrown away by such amendments to be paid by the applicant.  Accordingly I reject that basis for denying the applicant part of its costs.  The respondent acknowledges that the matter is one of a discretion to be exercised as a matter of impression and evaluation rather than by an attempt at a mathematically precise division of time: Newcrest Mining (W.A.) Ltd v. The Commonwealth of Australia (unreported, French J. 17 December 1993, No. 954 of 1993); Commissioner of Australian Federal Police v. Razzi (1991) 101 ALR 425 at 430; Permanent Building Society v. Wheeler (No. 2) (1993) 10 WAR 569.

In a fairly recent unreported decision of the Full Court of this Court, Dodds Family Investments Pty Ltd v. Lane Industries Pty Ltd (1993) 26 IPR 261 the Court observed (at pp.271-272):

"The propositions enunciated in that case [Toohey J's decision in Hughes v. Western Australian Cricket Association (Inc) (1986) 8 ATPR 40-748 at p.48,136] are subject to the further consideration that justice may not be served if parties are dissuaded by the risk of costs from canvassing all issues which might be material to the decision in the case - Cretazzo v. Lombardi (1975) 13 SASR 4 at 12.
In Trade Practices Commission v. Nicholas Enterprises Pty Ltd (1979) 42 FLR 213, Fisher J. regarded the discretion to apportion costs as one to be exercised only in the most exceptional circumstances. Nevertheless he accepted that where a considerable part of the trial is taken up in determining issues upon which a party fails, it is a proper exercise of the discretion to reduce the costs allowed to that party. Generally speaking, and notwithstanding the considerations referred to by Toohey J. and the other authorities mentioned above, the demands of the community for greater economy and efficiency in the conduct of litigation may properly be reflected in a qualification of the presumption that a successful party is entitled to all its costs."

In my view, this was not a case where a considerable part of the trial was taken up in determining the issues raised by the applicant under the Sale of Goods Act.  I accept the second respondent's submissions that it was necessary for it to prepare and present its case in answer to the Sale of Goods Act claims.  However, there was a considerable overlap in the evidence and it is extremely difficult to identify any significant body of evidence which related solely to the Sale of Goods Act issues.

In my opinion the fact that the applicant was not successful in its claims under the Sale of Goods Act should not deprive it of its costs.

For similar reasons the first respondent should have its costs against the second respondent in respect of the cross-claim and be indemnified fully for the applicant's costs.  There will be orders accordingly.

On 5 January 1995 I made an order in respect of the date fixed for the filing and service of any notice of appeal.  For the purposes of that order the date of delivery of this judgment will be deemed to be 20 February 1995.

I certify that this and the preceding seven (7) pages are a true copy of the Reasons for Judgment of Justice Carr.

Associate:

Date:     16 February 1995

Counsel for the Applicant:   Mr G R Hancy
Solicitors for the Applicant:   Messrs Phillips Fox

Counsel for the Respondent:                    Mr M L Barker
Solicitors for the Respondent:                  Messrs Fiocco Hopkins Rattigan

Counsel for the Second Respondent:        Mr R J L McCormack
Solicitors for the Second Respondent:      Messrs Srdarov Richards

Date of Judgment:       20 February 1995