Gould v Vaggelas

[1985] HCA 75

HIGH COURT OF AUSTRALIA

Gibbs C.J., Murphy, Wilson, Brennan and Dawson JJ. Gibbs C.J., Wilson, Brennan and Dawson JJ.

GOULD v. VAGGELAS

(1985) 157 CLR 215

3 December 1985

Fraud—Practice

Fraud—Deceit—Inducement to purchase property—Onus of proving inducement—Measure of damages—Real value of property—Ascertainment—Foreseeability of loss—Respective rights of purchaser company and its principals. Practice—Costs—Alternative claims against two defendants—Plaintiff succeeding against one, failing against other—Bullock order—Discretion—Interest—Discretion to vary statutory rate—Common Law Practice Act 1867(Q.), ss. 72, 73(1).

Decision

GIBBS C.J., WILSON, BRENNAN, DAWSON JJ.: This matter came to the High Court in 1983 by way of appeal and cross-appeal from a decision of the Full Court of the Supreme Court of Queensland allowing in part an appeal by the respondents from a decision at first instance of Connolly J. On 6 November 1984 the Court handed down its decision. The appeal was allowed and the cross-appeal dismissed and the Court ordered that the judgment of the Full Court be set aside and that in lieu thereof the appeal to that Court be dismissed with costs: (1984) 58 A.L.J.R. 560; 56 A.L.R. 31. The effect of that order was to restore the judgment of Connolly J.

2. The successful appellants now proceed by way of notice of motion seeking two further orders. The first is purely a matter of form. Connolly J. gave judgment in favour of the appellants in the sum of $1,427,500. However, that figure was wrongly stated in the formal order of this Court as $1,427,000. The appellants apply under the slip rule (O. 29 r. 11 of the High Court Rules) to have the error corrected. The respondents do not oppose the application and clearly it should be granted.

3. The second application is attended with more difficulty. The notice of motion asks that there be included in the orders of this Court made on 6 November 1984 an order

"that the Respondents pay interest on the amount of ONE MILLION FOUR HUNDRED AND TWENTY SEVEN THOUSAND FIVE HUNDRED DOLLARS ($1,427,500.00) in respect of the period from 18th September 1981 to 6th November 1984 in the sum of FIVE HUNDRED AND FORTY TWO THOUSAND FOUR HUNDRED AND FIFTY DOLLARS ($542,450.00)".

It is necessary to record some of the facts touching the history of the litigation. In his judgment given on 18 September 1981 Connolly J. included in his award of $1,427,500 a sum representing damages by way of interest in accordance with s.72 of the Common Law Practice Act 1867 (Q.) ("the Act"). His Honour chose a rate of 12% per annum to be applied to some only of the sums awarded and then discounted the sum awarded by way of interest to a round figure of $200,000. That sum represented his Honour's view of the entitlement of the appellants in respect of the period between the date when the cause of action arose and the date of the judgment. He was not asked to make any order under s.73 of the Act and did not do so.

4. The matter then went to the Full Court. On 29 October 1982 the Court published its reasons for judgment whereby the appeal by the respondents was allowed and the judgment of Connolly J. reduced from $1,427,500 to $700,000. That latter sum included a global figure of $50,000 as damages by way of interest. The appellants then sought an award of interest at the rate of 12% per annum from the date of judgment on the judgment sum or on such amount as remained unpaid. Written submissions on the question were tendered and the Court made an order in those terms on 9 February 1983. The order was sought and made under s.73 of the Act. An appeal was then brought to this Court but unfortunately neither in the notice of appeal nor in the course of argument was any reference made to the question of interest on the judgment debt. The solicitor handling the matter for the appellants deposes by affidavit in support of the motion that the failure to advert to the matter of interest was an accidental omission on the part of the appellants' legal representatives due in part to the complexity of the facts and legal issues raised in the appeal. The practical effect of the events as they have occurred is that the appellants have lost the benefit of the award of interest on the judgment debt at the special rate of 12% as ordered by the Full Court. They remain entitled to interest on the judgment debt but only at the prescribed rate operating from time to time pursuant to s.73 of the Act.

5. Counsel for the respondents make two submissions in opposition to the motion. The first submission relates to the proper construction of s.73 of the Act. The material part of the section reads as follows:

"73. Interest on debt under judgment or order.

(1) Where judgment is given or an order is made by a court of record for the payment of money in a cause of action that arose after the commencement of the Common Law Practice Act Amendment Act 1972, interest shall, unless the court otherwise orders, be payable at the rate prescribed from time to time by Order in Council and until so prescribed at the rate of eight per centum per annum from the date of the judgment or order on so much of the money as is from time to time unpaid".

It is argued that the section does not confer on the court a power to vary the rate but only a power to order that interest shall not be payable. No authorities were referred to by either counsel and it would appear that the point has not been taken before in Queensland. The Court was informed that the courts in Queensland have consistently assumed that the power to vary the rate of interest does exist and that when the present matter was before the Full Court counsel for the respondents conceded that to be the case. In our opinion the view taken in Queensland is correct. The power conferred on a court to make an order inconsistent with the provision for interest made by the section is expressed in broad terms and we can see no reason for confining it to the threshold question of whether interest on the judgment debt is or is not to be payable. The discretion confided to the court introduces flexibility which enables such lower or higher rate of interest to be determined as the interests of justice in a particular case may require. Section 95(1) of the Supreme Court Act 1970 (N.S.W.) is substantially similar to s.73 of the Act and a similar approach to its construction has been taken by the Supreme Court of New South Wales: Mercantile Credits Ltd. v. McDowell (1980) 2 NSWLR 101, at pp 103-104; General Credits (Finance) Pty. Ltd. v. Brushford Pty. Ltd. (1975) 2 NSWLR 786, at p 788.

6. The second submission advanced for the respondents is that in the exercise of its discretion the Court should decline to make any order, thereby allowing the statutory rate as prescribed from time to time to apply. Two points are sought to be made in support of the submission. First, it is argued that the learned trial judge did not in fact adopt a rate of 12% per annum in assessing the interest component of the damages award. The sum of $200,000 representing that component is clearly indicative, so the submission goes, of the adoption of a rate considerably lower than 12% per annum. Secondly, it is said that the order of the Full Court fixing a rate of 12% per annum was intended only to apply prospectively from the date on which the order was made, leaving the statute to supply the rate during the period between 18 September 1981, when Connolly J. made his order, and the later date. In our opinion, neither of these points can be sustained. The first is answered by referring to the reasons for judgment of Connolly J. His Honour said:

" There remains the question of interest. It is in my opinion appropriate in this case to choose a rate of the order of that agreed by the parties in the contract of sale from South Molle to Gould Holdings. I therefore adopt twelve percent".

He then itemised those parts of the award which in his opinion attracted an award of interest and recognized that a substantial deduction had to be made to take account of the income tax which would have been incurred but for the wrong done to the appellants. His Honour concluded:

"The exercise is necessarily arbitrary but I allow interest, bearing these factors in mind, in the sum of $200,000".

The second is answered by reference to the formal order of the Full Court. So far as material, that order reads:

"IT IS THIS DAY ORDERED that the appeal be allowed with costs and that the said judgment be varied by:-

(a) Substituting in the judgment for the Plaintiffs by Counterclaim against the First to Seventh Defendants to the Counterclaim the sum of SEVEN HUNDRED THOUSAND DOLLARS ($700,000.00) for the sum of ONE MILLION FOUR HUNDRED AND TWENTY SEVEN THOUSAND DOLLARS ($1,427,000.00) (sic).

...

AND IT IS FURTHER ORDERED that there be interest at the rate of twelve (12) per cent on the judgment sum from date of judgment or on that amount which remains unpaid.

... ".

The order plainly varies the judgment given by Connolly J. by substituting a different sum for the figure set out therein. The "date of judgment" remains 18 September 1981 and it is from this date that the award of interest at the rate of 12% per annum is to be calculated. That this must be so is demonstrated by the problem that would arise if the order of the Full Court was taken to set a new date of judgment, arguably leaving the original judgment of Connolly J. to attract the statutory interest in accordance with s.73 of the Act until varied at the later date.

7. The jurisdiction of the Court to entertain the motion is not challenged by the respondents. Recent decisions of this Court provide illustrations of the injustice that may be caused to litigants by the inadvertence of counsel and the willingness of the Court in appropriate circumstances to grant a remedy: L. Shaddock &Associates Pty. Ltd. v. Parramatta City Council (No. 2) (1982) 151 CLR 590, The Commonwealth v. McCormack (1984) 58 ALJR 513; 55 ALR 185 (cf. also Tak Ming Co. Ltd. v. Yee Sang Metal Supplies Co. (1973) 1 WLR 300; (1973) 1 All ER 569). Nevertheless, the jurisdiction is one to be exercised sparingly, lest it encourage carelessness by a party's legal representatives and expose to risk the public interest in finality of litigation.

8. The circumstances of the present case are by no means as compelling as were those in Shaddock. There the failure to seek an award of interest under s.94 of the Supreme Court Act 1970 (N.S.W.), a section corresponding to s.72 of the Queensland Act, between the date when the cause of action arose and the date when the judgment took effect left the successful party without any interest at all on a substantial award for several years. Here the failure to ask the Court to fix a special rate of interest for the purposes of s.73 of the Act has resulted in the appellants becoming entitled to interest but only at the statutory rate. Although, as has been noted, the notice of motion seeks the award of the sum of $542,450, the appellants now ask the Court merely to fix the rate of interest and to refrain from attempting any computation of a money sum. It suffices to say that the difference between an award of interest based upon the statutory rate and one based upon the rate of 12% per annum is roughly $100,000.

9. There are a number of considerations in favour of the application. It does not come as an afterthought. The evidence is that the failure to advert to the question of interest in this Court was an accidental omission on the part of the appellants' legal representatives and reference is made to the complexity of the legal issues and the facts, in order to explain how the omission came about. It is a matter of importance that an application was made to the Full Court for a similar order relating to the substituted judgment and that in the exercise of its discretion the Full Court made such an order. The appellants have been held entitled to an award of damages in a very substantial sum, the possession of which was denied to them between 18 September 1981 and 6 November 1984. Clearly, an award of interest is necessary to preserve to the appellants the full benefit of their judgment. Where interest is allowed, it should be allowed at ordinary commercial rates: Cullen v. Trappell (1980) 146 CLR 1, per Gibbs J. at p 21. In the circumstances of this case, the rate of 12% per annum accords more with ordinary commercial rates and with the rate of interest contemplated in the contract of sale than does the prescribed rate or rates. Counsel for the respondents did not contend otherwise. Furthermore, it appears to be fair and just. We see no reason to doubt that had the matter been canvassed at the time of the hearing in this Court the order now sought would have been made. Finally, there has been no undue delay on the part of the appellants in seeking rectification. What delay there has been is explained by an approach by the solicitors for the appellants to the solicitors for the respondents seeking a resolution of the matter without the necessity of recourse to this Court.

10. In our opinion, therefore, the circumstances are such as to require the Court in the interests of justice to make an order under the slip rule awarding interest at the rate of 12% per annum on the judgment debt for the period from 18 September 1981 to 6 November 1984. With respect to the question of costs, the application was made necessary by the failure on the part of the appellants to seek an order at the hearing. The appellants should be ordered to pay the respondents' costs of the present application.

Orders

Order that the order of this Court dated 6th November

1984 be amended pursuant to O.29 r.11 of the High Court Rules as follows:

(1) in par.(a) of that order, for the words and figures "One Million Four Hundred and Twenty-Seven Thousand Dollars ($1,427,000.00)", substitute the words and figures "One Million Four Hundred and Twenty-Seven Thousand Five Hundred Dollars ($1,427,500.00)", and

(2) by adding the following paragraph: "THIS COURT DOTH FURTHER ORDER that there be interest at the rate of 12% per annum on the judgment debt for the period from 18th September 1981 to 6th November 1984".

Order that the appellants pay the costs of this
application.