Jaron Holdings Pty Limited v Amaca Pty Limited

[2017] NSWDDT 4

Dust Diseases Tribunal

New South Wales

Medium Neutral Citation:

Jaron Holdings Pty Limited v Amaca Pty Limited [2017] NSWDDT 4

Hearing dates:

1 June 2017

Date of orders:

09 June 2017

Decision date:

09 June 2017

Before:

Judge D. Russell

Decision:

1  Order the plaintiff to pay the defendant $214,804.48.

2  Direct the parties to file written submissions on the question of costs of the motion as follows:

   (a)  the defendant’s submissions to be filed and served within 14 days of the date of delivery of this judgment;

   (b)  the plaintiff’s submissions in reply to be filed and served within a further 14 days;

   (c)  the defendant’s submissions in reply to be filed within a further 7 days.

3  Reserve the question of costs of the motion to be dealt with by a further judgment after receipt of the written submissions as set out above.

Catchwords:

DUST DISEASES - contribution - monies paid under compulsion after a Contributions Assessment determination – whether payee should pay interest upon principal amount when payer obtains a better result – restitution

Legislation Cited:

Dust Diseases Tribunal Regulation 2013; Law Reform (Miscellaneous Provisions) Act 1946; Dust Diseases Tribunal Regulation 2007; Civil Procedure Act 2005

Cases Cited:

Commonwealth of Australia v McCormack [1984] HCA 57; (1984) 155 CLR 273
James Hardie & Coy Pty Ltd v Seltsam Pty Ltd [1998] HCA 78; (1998) 196 CLR 53
MPB (SA) Pty Limited v Gogic [1991] HCA 3; (1991) 171 CLR 657
Pavey & Matthews Pty Limited v Paul [1987] HCA 5; (1987) 162 CLR 221
Power Technologies Pty Limited v Energy Australia [2010] NSWCA 107
Production Spray Painting v Newnham (No. 2) (1992) 27 NSWLR 659

Texts Cited:

Mason & Carter’s Restitution Law in Australia, 3rd edition, LexisNexis, 2016

Category:

Consequential orders (other than Costs)

Parties:

Jaron Holdings Pty Limited (plaintiff);
Amaca Pty Limited (defendant)

Representation:

Counsel:
Mr J Sheller appeared for the applicant/defendant;
Mr D Toomey SC appeared for the respondent/plaintiff

  Solicitors:
Mills Oakley for the applicant/defendant
Hicksons for the respondent/plaintiff

File Number(s):

DDT149/2011

Judgment

Introduction

1. This motion raises an issue not decided before in the Tribunal. Where a party has been obliged to pay a sum of money to represent the percentage found attributable to that party by a Contributions Assessment Determination under the Dust Diseases Tribunal regulations, and that party is later found (either after a hearing or by settlement of the contribution claim) to be not liable, or to be liable for a lesser amount than that found by the Contributions Assessor, can the payer recover from the payee not only the principal amount paid, but also interest?

2. For the reasons set out below I have decided that interest can be recovered under normal restitutionary principles.

Background

3. In 2008 Mr Robert John Hall sued Jaron Holdings Pty Limited (“Jaron”) in the Tribunal for damages for the disease of mesothelioma. Those original claim proceedings were settled for the sum of $1,385,000 inclusive of costs on 15 June 2009. That amount was paid by Jaron to Mr Hall.

4. Jaron then brought the present proceedings seeking contribution towards that settlement sum. By a statement of claim filed on 14 June 2011 Jaron sued Amaca Pty Limited (“Amaca”) as defendant seeking contribution pursuant to s 5 of the Law Reform (Miscellaneous Provisions) Act 1946.

5. The claim for contribution was subject to the claims resolution process (CRP) under the Dust Diseases Tribunal Regulation 2007. A Contributions Assessor found that the damages and costs payable to Mr Hall should be apportioned 47.1% to Jaron and 52.9% to Amaca.

6. Pursuant to Consent Orders filed on 4 June 2012 Amaca paid Jaron the sum of $732,655 being 52.9% of the judgment entered in favour of Mr Hall. Those Orders noted that Amaca intended to dispute the Contributions Assessment Determination.

7. Since it disputed the percentage decided by the Contributions Assessor, Amaca, as was its right, insisted that Jaron run its contribution claim before a judge of the Tribunal.

8. On 30 November 2016 Amaca served an offer of compromise on Jaron.

9. The offer of compromise served by Amaca simply stated:

“1.   Verdict and judgment for Amaca.

2.   Each party to bear its own costs.”

10. These were the only orders necessary to dispose entirely of Jaron’s claim for contribution.

11. Amaca sent its offer of compromise to Jaron with a covering letter. That letter stated:

“For the avoidance of doubt, if Amaca’s offer is accepted then your client will reimburse to Amaca the following:

1.   Principal contribution                                   $732,655.00

2.   Interest calculated (27/6/12 – 30/11/16)      $211,516.54

3.    Total                                                            $944,171.54

Please note interest continues to accrue at the daily rate of $115.10.”

12. The offer of compromise was accepted by the solicitor for Jaron on 8 December 2016. When the solicitor for Jaron accepted, he said that there would be an issue about Amaca’s entitlement to interest.

13. That led to a letter from the solicitors for Amaca to the solicitors for Jaron dated 13 December 2016. Inter alia, that letter made reference to both s 90 and s 100 of the Civil Procedure Act 2005. It also reiterated the claim for interest.

14. By letter dated 30 December 2016 the solicitors for Jaron sent their client’s cheque in favour of Amaca in the sum of $732,655 “in full reimbursement of the monies paid by your client pursuant to the CAD”. Of course this amount is the principal sum without any interest.

15. By a second letter dated 30 December 2016 the solicitors for Jaron made it plain that they denied that Amaca had any entitlement to interest.

16. That led to a response dated 13 January 2017 from the solicitors for Amaca which referred to the decision in Production Spray Painting v Newnham (No.2) (1992) 27 NSWLR 659 at 663C.

17. By letter dated 22 February 2017 the solicitors for Amaca indicated that any terms agreed upon, to dispose of the pleaded contribution claim, were without prejudice to Amaca’s right to claim interest. The sum of $214,804.48 was claimed for interest. Amaca informed Jaron that if interest was disputed, Amaca would go ahead and file a notice of motion. It also said that should that be necessary, Amaca would seek costs of and incidental to the motion on an indemnity basis.

Amaca’s Notice of Motion

18. Amaca filed a notice of motion in the Tribunal on 11 April 2017. The motion sought the following orders:

“1. The Plaintiff pay the Defendant $214,804.48 pursuant to Section 100 of the Civil Procedure Act 2005 (NSW).

2.   The Plaintiff pay the Defendant’s costs of this Motion.”

19. In support of that motion Amaca tendered and read the affidavit of Ms Nicola Murphy dated and filed on 11 April 2017. This affidavit set out a chronology of the matter and annexed the relevant historical documents. There was no cross-examination of Ms Murphy.

20. On 13 April 2017 the contribution claim brought by Jaron against Amaca was settled by a Consent Judgment filed in court in the following terms (which are identical to those in the offer of compromise):

“1.   Judgment for the Defendant.

2.    Each party to bear its own costs.”

21. Amaca filed its written submissions on this motion on 11 May 2017 and Jaron filed its written submissions on 18 May 2017. The motion was heard on 1 June 2017. Both Mr Sheller, counsel for Amaca, and Mr D. Toomey, senior counsel for Jaron, made detailed and helpful oral submissions.

22. Judgment was reserved.

Submissions for Amaca

23. Amaca based its claim for interest upon the general law of restitution. However, the mechanism for achieving that was in dispute.

24. As previously recited, the original form of the notice of motion sought an order for interest pursuant to Section 100 of the Civil Procedure Act. However, as Mr Toomey pointed out in his submissions, s 100 has no application in the present circumstances because it provides for an order for interest up to judgment. It commences with the words “In proceedings for the recovery of money” and then gives the power to include interest “in the amount for which judgment is given”.

25. In the present case there are no proceedings for recovery of money (apart from the present motion seeking interest) and there is no money judgment within which there can be included an amount for interest.  

26. Mr Sheller resiled from reliance upon s 100 in his written submissions, and only faintly pressed the argument for s 100 in oral submissions.

27. I accept the submission of Mr Toomey that s 100 cannot be of utility to Amaca in its present claim.

28. Amaca sought, and was granted, an amendment of its notice of motion at the commencement of the hearing. It sought an additional order in the alternative, which was simply for payment of money. In this regard s 90 of the Civil Procedure Act provides:

“The court is, at or after trial or otherwise as the nature of the case requires, to give such judgment or make such order as the nature of the case requires.”

29. In the Tribunal, s 90 is commonly relied upon to make an order to enforce a party’s obligation under the CRP, to make payment in accordance with the determination of a Contributions Assessor.

30. In the present case s 90 is available to enable Amaca to obtain an order for payment of money, representing interest, providing that there is some appropriate legal basis for the making of such order. In my view the law of restitution provides such a basis.

31. In Power Technologies Pty Limited v Energy Australia [2010] NSWCA 107 at [100] the Court of Appeal said that s 90 of the Civil Procedure Act permits the Tribunal to make an order in the circumstances of the present case. The Court of Appeal found at [101] that where a claimant for contribution does not wish to pursue its cross-claim to a hearing on the merits, “the Tribunal has the power to ensure that the defendant/cross-claimant does not retain the monies previously paid to it by the cross-defendant”.

Restitution

32. The leading authority is the decision of the High Court of Australia in Commonwealth of Australia v McCormack [1984] HCA 57; (1984) 155 CLR 273. In earlier High Court proceedings, it had been found that the Commonwealth was, in effect, entitled to set off $75,000 against an amount owed to a land owner in respect of the acquisition of land by the Commonwealth. In making its order in the original proceedings, the High Court was not aware that the Commonwealth had in fact already paid the plaintiff $75,000 and interest. The High Court then held that the Commonwealth was entitled to have the order varied to require the plaintiff to repay the amount paid in satisfaction of the earlier judgment.

33. At page 276.5, all five judges of the High Court said:

“ ‘Restitutio in integrum is the right of every successful appellant’: per Lord Field in Cox v Hakes. An appellant who has satisfied a judgment for the payment of monies is entitled, on the reversal of the judgment, to repayment of the money paid by him with interest: Rodger v The Comptoir D’Escompte de Paris; Merchant Banking Co v Maud. In the former case, Lord Cairns said:

‘…One of the first and highest duties of all Courts is to take care that the act of the Court does no injury to any of the suitors, and when the expression ‘the act of the Court’ is used, it does not mean merely the act of the Primary Court, or of any intermediate Court of appeal, but the act of the Court as a whole, from the lowest Court which entertains jurisdiction over the matter to the highest Court which finally disposes of the case.’

[Underlining added]

34. That decision was applied by the NSW Court of Appeal in Production Spray Painting & Panel Beating Pty Limited v Newnham (No.2) . There it was held, following Commonwealth Bank of Australia v McCormack, that when the Supreme Court, as a superior court exercising its supervisory jurisdiction, quashes orders of the Industrial Commission, the claimant is entitled to an unconditional order for the repayment by way of restitution of any sum paid pursuant to those orders. The final order of the court was for the repayment of the money sum paid together with interest thereon at court rates from the date of payment to the date of the order for repayment.

35. Mr Sheller took the Tribunal to the third edition of Mason & Carter’s Restitution Law in Australia. Chapter 7 deals with “Judgments Reversed or Set Aside”. The learned authors state at [706] that a party who has satisfied a judgment for the payment of money is entitled, on the reversal of the judgment, to repayment of the money paid, with interest. They also say: “The reason for reversal is irrelevant to the right to restitution, just as the law of restitution has itself nothing to do with such questions as validity of judgments, rules relating to appeals or actions to set aside judgments”.

36. Paragraph [707] of Mason & Carter says that the principle extends to all types of appeal and review:

“It does not matter that the order pursuant to which the benefit was conferred was set aside on appeal; quashed in proceedings for judicial review, or any other way in which an erroneous or interim judgment is overturned; varied; or (in the case of an irregular or default judgment) set aside by the court which first entered it.”

Footnotes 27-33 set out the authorities for those propositions.

37. Subject to the submissions made by Mr Toomey, it seems to me that it does not matter that in the present case the obligation upon Amaca to pay money was effectively set aside by the consent of the parties, rather than by a judgment on the merits which overturned the finding of the Contributions Assessor. A consent judgment for a defendant is just as effective to absolve it from liability as a judgment on the merits – James Hardie & Coy Pty Ltd v Seltsam Pty Ltd [1998] HCA 78; (1998) 196 CLR 53.

38. The function of an award of interest is to compensate a party for loss or detriment suffered by being kept out of his or her money during the relevant period – MPB (SA) Pty Limited v Gogic [1991] HCA 3;(1991) 171 CLR 657. In the present case Amaca paid $732,655 five years ago. It has not only lost that principal amount until it was recently repaid, but it has lost the use of that money in the meantime. Traditionally the measure of that loss, in the absence of other evidence, is the award of interest at court rates – Production Spray Painting and Panel Beating Pty Limited v Newnham (No. 2) at 665C-E.

Submissions for Jaron

39. Mr Toomey firstly submitted that the principle underlying the modern law of restitution is unjust enrichment, the purpose being to prevent a man from retaining the money of, or some benefit derived from, another which it is against conscience that he should keep. He submitted that Jaron had not “kept” Amaca’s money “against conscience” for any period. Upon settlement of the claim for contribution it had promptly repaid the principal amount.

40. The written submissions of Mr Toomey cited the High Court decision in Pavey & Matthews Pty Limited v Paul [1987] HCA 5; (1987) 162 CLR 221. In that case Justice Deane said at [263]:

“What the concept of monetary restitution involves is the payment of an amount which constitutes, in all the relevant circumstances, fair and just compensation for the benefit or ‘enrichment’ actually or constructively accepted. Ordinarily, that will correspond to the fair value of the benefit provided.…………. It would be contrary to the general notions of restitution or unjust enrichment if what constituted fair and just compensation for the benefit accepted by the other party were to be ascertained without regard to any identifiable real detriment sustained by that other party… .”

41. The focus of the phrase “against conscience” is therefore not upon what was in the mind of the person who had the money for a period of time, but rather upon what should, in conscience, be paid to the party who has suffered a detriment by being out of its money for some time.

42. In this case the detriment suffered by Amaca is twofold. Firstly, it lost the principal amount for five years. Secondly, it lost the use to which that money could have been put over those five years, which is traditionally compensated by an award of interest.

43. Mr Toomey also submitted that Amaca should not be awarded interest upon the principal amount for the entire five years. The submission was that interest should only be awarded for the period when the benefit of the money had been “unjustly” enjoyed at the expense of the payer. Once again, this submission is rejected because it ignores the fundamental principle of restitution, which is that the restitution ordered should focus upon the benefit gained by the recipient of the money and the detriment actually suffered by the payer of the money.

44. Mr Toomey also submitted that interest should not be allowed for the entire five years for which Jaron had held the money paid by Amaca. It was submitted that this was a claim for interest made very late, in that it was only made at the time of the offer of compromise. It is hard to see how the claim could have been made any earlier. For five years the claim for contribution was not dealt with one way or the other. In my view there was no obligation upon Amaca to set out in any pleading a claim for restitution, in the event that Jaron abandoned its contribution claim, or obtained a result less favourable than that given by the Contributions Assessor after a hearing on the merits. Amaca made its claim for interest at the first available opportunity.

45. Mr Toomey submitted that by agreeing to the terms contained in the offer of compromise Amaca had lost its right to seek interest on restitutionary grounds, because of an accord and satisfaction reached between Jaron and Amaca.

46. The submission was that looking at the terms of the offer of compromise alone, the objective intention of the parties, when Jaron accepted that offer, was to deal with all matters in dispute between them, including any notion that Amaca could recover interest.

47. The correspondence between the parties recited above makes it plain that Amaca was at all times maintaining its claim for interest, while Jaron was at all times disputing that Amaca was entitled to interest. What the parties did was to settle the primary proceedings, by making orders no wider than needed to dispose of those proceedings, but leaving the issue of an entitlement to interest in dispute, to be the subject of further litigation in the Tribunal.

48. Indeed, Amaca filed its motion seeking payment of interest before orders were entered in accordance with the offer of compromise to dispose of the contribution claim.

49. For the reasons set out above, I find that Amaca is entitled to interest on the principal amount paid five years ago. Further such interest should run from the date Amaca paid the money until the present time. There being no evidence or argument regarding the appropriate amount or rate of interest, I will award interest in the amount claimed by Amaca, which has been calculated at court rates, although only up to 22 February 2017.

Costs Reserved

50. At the conclusion of submissions both parties agreed that the Tribunal should deliver judgment on the primary issue, being interest, and give the parties the opportunity to be heard on costs, regardless of the outcome. Both parties indicated that they were willing to make further submissions on costs in writing and have the Tribunal deal with it on the papers.

Orders

51. The orders of the Tribunal are:

1. Order the plaintiff to pay the defendant $214,804.48.

2. Direct the parties to file written submissions on the question of costs of the motion as follows:

1. the defendant’s submissions to be filed and served within 14 days of the date of delivery of this judgment;

2. the plaintiff’s submissions in reply to be filed and served within a further 14 days;

3. the defendant’s submissions in reply to be filed within a further 7 days.

3. Reserve the question of costs of the motion to be dealt with by a further judgment after receipt of the written submissions as set out above.

Decision last updated: 07 July 2017