Hamilton v Simeon Wines Ltd (No 2) - [2012] SADC 26

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
HAMILTON & ANOR v SIMEON WINES LTD & ORS (No 2)
[2012] SADC 26
Judgment of His Honour Judge Lovell
9 March 2012
PROCEDURE - JUDGMENTS AND ORDERS - INTEREST ON JUDGMENTS
Form of order where plaintiffs sue for partnership loss. Calculation of interest.
Held: Interest of $60,000 awarded on whole of partnership loss.
Wine Grapes Industry Act 1991 (SA) s 6; District Court Act 1991 (SA) s 39, referred to.

HAMILTON & ANOR v SIMEON WINES LTD & ORS (No 2)
[2012] SADC 26

The procedural aspects of this matter are set out in my judgment and earlier ruling during the course of the trial so I do not intend to repeat them.
In my view, as this claim was prosecuted as a loss of partnership income, it is appropriate for me to enter judgment for the plaintiffs for the full amount of the partnership loss plus interest. I accept the submissions of Mr Dal Cin with regard to this point. Lindley & Banks on Partnership, 18^th ed, at page 448 supports the position.
I reject the first defendant’s submissions. In my view, clause 2.3 of the Deed of Sale does not support the first defendant’s submission that all that remained after the sale of the interest was a personal claim.
I turn to the question of interest. The plaintiffs submitted that I should award interest on the damages pursuant to the Wine Grapes Industry Act 1991.
Section 6 of that Act states:
6—Terms and conditions of payment
(1)     The Minister may, by order, fix terms and conditions relating to—
(a)     the time within which payment for wine grapes must be made by processors;
and
(b)payments (which are to be regarded as payments in the nature of liquidated damages) to be made by processors in default of payment within that time.
(2)     In determining terms and conditions, the Minister must not differentiate between processors.
(3)     Any terms and conditions fixed under this section are implied in every contract for the sale of wine grapes to a processor and any provision of a contract or other instrument is void to the extent of any inconsistency with those terms and conditions.
Pursuant to sub-s (3) the terms and conditions are implied into this contract.
The Minister made an order under the Act as follows:
WINE GRAPES INDUSTRY ACT 1991
Order by Minister
PURSUANT to section 6 of the Wine Grapes Industry Act 1991, I, Rory McEwen, Minister for Agriculture, Food and Fisheries make the following order applying to wine grapes grown in the production area and sold to a processor.
Terms and Conditions of Payment
(1) The following terms and conditions are fixed in respect of wine grapes harvested in 2004 or any subsequent year and are implied in every contract for the sale of such grapes to a processor:
(a)If the grapes are delivered to the processor prior to 1 April in a year, the processor must pay to the producer 33¹/₃ per cent of the total amount payable for the grapes by the end of the month following the month during which the grapes are delivered, 50 per cent of the remaining balance by 30 June in that year and the balance by 30 September in that year.
(b)If the grapes are delivered to the processor on or after 1 April but prior to 1 May in a year, the processor must pay to the producer 33¹/3 of the total amount payable for the grapes by 31 May in that year, 50 per cent of the remaining balance by 30 June in that year and the balance by 30 September in that year.
(c)If the grapes are delivered to the processor on or after 1 May in a year, the processor must pay to the producer 66²/₃ per cent of the total amount payable for the grapes by 30 June in that year and the balance by 30 September in that year.
(d)If a processor defaults in making a payment within the time fixed above, the processor must pay to the producer an amount equal to interest on any amount remaining in default calculated at the Commonwealth Bank standard overdraft interest rate (as at the beginning of the month during which the default occurred) plus 1 per cent per annum until the following 31 December and thereafter at the Commonwealth Bank standard overdraft interest rate (as at 1 September in the year during which the default occurred) plus 5 per cent per annum.
This came into effect from 18 March 2004.
The plaintiffs conceded that the payments made by the first defendant to date did not attract the operation of the Order made pursuant to s 6.
The plaintiffs argued that (1)(d) of the Order applied to the damages award as the processor (first defendant) defaulted “in making a payment within the time fixed”. By finding that the first defendant had breached the contract and therefore “underpaid” the plaintiffs within the “time fixed” the Court had in effect found that the assessed damages attracted the interest provisions.
Mr Dal Cin argued that the interest provisions became part of the contract pursuant to s 6 of the Act. Properly construed, he argued the interest provisions are aimed at providing a “liquidated damages remedy” for growers who have been “held out of their money”.
I reject that submission. For paragraph (d) to operate there must have been a default in a “payment within the time fixed”. The plaintiffs’ claim was for unliquidated damages. In my view, the contract mechanism only operates on default of the amounts payable at the time not what a court may later assess as unliquidated damages. While I accept that the purpose of the damages award is to place the plaintiffs, as best the Court can, in the position they would have been if the contract had not been breached, that does not make the damages award one that is “payable” under those provisions.
Arguably, if the plaintiffs’ claim for interest under this provision was to succeed, it should have been part of the damages claim, that is, part of the loss to be assessed. What I am being asked to calculate now is “interest” on damages assessed. In my view, the Act has no role to play at this stage of the proceedings. Of course it may be that the result would not be different.
Mr Dal Cin further argued that the calculation of interest under these provisions should be on a “compound” basis. As I have found the provisions do not apply in this instance, it is strictly unnecessary for me to decide the point. However, in my view, even if the provisions applied, interest would not be calculated on a “compound” basis. There is nothing in the provisions themselves that would mandate such an approach. Indeed, the structure of the provisions suggest otherwise.
As submitted by the defendant, the existence of a significant uplift on the rates suggests the prescribed rates are to be “simple” ones.
I find that the plaintiffs are entitled to interest at a commercial rate pursuant to s 39 of the District Court Act 1991 (SA). They are entitled to interest on the partnership loss of $103,850.
The appropriate rate for the calculation of interest is a matter to be determined by the Court. I have had regard to practice direction 13.3 of the Supreme Court Practice Directions 2006 and to a limited extent the provisions under the Wine Grapes Industry Act. Interest rates have fluctuated. I intend to use a rate of 10 per cent. It is not possible to be precise as to the starting date for the interest calculation. I allow 10 per cent for the period of approximately five years and nine months. I allow interest in the sum of $60,000.
There will be judgment for the plaintiffs in the sum of $163,850.
I will hear the parties on the form of the final orders and costs.