Kewside Pty Ltd v Warman International Ltd

[1990] FCA 48

'9DDQMErn No. . 4 4 . . ! b - " . S

CATCHWORDS

JUDGMENTS AND ORDERS - Amendment - interest - failure to claim pre-judgment interest on cross-claim - no clalm in pleadings or at hearlng - error by solicitors and counsel - motion to vary judgment - judgment not entered - principle governing discretion to amend - factors affecting grant of interest.

INTEREST - pre-judgment interest - discretion to award - punitive considerations irrelevant.

Federal Court Rules 0.35 r.7

Federal Court of Australia Act 1976 s.51A

Tak Ming C0.Ltd V.	[l97311 ALL ER 569
Shaddock (L) & AS	tta City Councll

(1982) 43 ALR 773
Cappucio v. Chrysler Australia (Sales) Pty Ltd (1980)30 ALR 176

Cropper v. Smlth (1884) 26 Ch.D 700.

KEWSIDE PTY LTD V C WARMAN INTERNATIONAL LTD	-
14 FEBRUARY

' ' ':.WAG 86- OF 1987

FRENCH	J .
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA	)

.. ,

)

WESTERN AUSTRALIA DISTRICT REGISTRY ) No. WAG 86 of 1987

1

GENERAL DIVISION 1

BETWEEN:  KEWSIDE PTY LTD

Applicant

AND :  WARMAN INTERNATIONAL
LIMITED

Respondent

Judge Making Order: FRENCH J.

Date of Order	: 14 February 1990
Where made	: Sydney

HINUTE OF ORDER

THE COURT ORDERS THAT:-

1.       The judgment delivered on 18 January 1990 be varled by adding to paragraph 2 thereof the words "and interest of $14,201.01".

Each party to bear its own costs of the motion to amend

.judgment. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

. :IN THE FEDERAL COURT OF,AUSTRALIA	) 1
WESTERN AUSTRALIA DISTRICT REGISTRY )	No. WAG 86 of 1987

1

GENERAL DIVISION )

BETWEEN:  KEWSIDE PTY LTD

Applicant

AND :  WARMAN INTERNATIONAL
LIMITED

Respondent

FRENCH J.

REASONS FOR JUDGMENT ON MOTION TO VARY JUDGMENT

To vary a ludgment was at one time to court disaster. Artlcle 5 of the Code of Hammurabl prescribed that a judge who altered his judgment after it had been handed down would be publicly expelled from office and required to pay twelve times the penalty laid down in that judgment. Today the need for

. :  finality .in .litigat.ion ,IS .balanced -with a recognl.tion that

,.mist.ake.s are .made -f r.om, time to Lime ;by;judges, and the rpart.ies or

their advisers which can and should be corrected without resort
to appeal so that justice may be done.

A judgment .was delivered- in- these proceedings on 18

January 1990. The applicant was awarded $51,545 damages inclusive of interest. The respondent was awarded $49,365.42 on its cross-claim under a contract for the provision of goods and services in relation to the updating of a drilling rig leased by the applicant. No application for interest was made on the cross-claim at or prior to the trial of the action and none was awarded. Liberty was allowed to the parties to apply on the question of costs.

On 7 February I ordered that the respondent pay three quarters of the applicant's costs on the cross-claim and that there be no order for the costs of the cross-claim. At that hearing the respondent moved for an order varying the judgment on the cross-claim to allow interest on the judgment sum calculated at 14% per annum from 31 December 1987 to 18 January 1990. The additional sum sought amounted to $14,201.01. Counsel for the respondent explained in movlng for the variation that the failure to claim interest at or before trial was the result of an oversight .on .the part.of the .respondentrs.advisers

The motion having been brought on at short notice it was adjourned to 9 February after argument from counsel for the respondent. The appllcantls counsel then indicated that he would not oppose but would not consent to the application for interest being entertained. He did however address on discretionary considerations which he submitted should lead the Court to refuse the award of any interest to the respondents.

The power . 0.f the Court to - vary a judgment is an

emanation of its implied incidental powers and is expressed in

Order 35 rule 7 as follows:

"7(1) The Court may vary or set aside a judgment
or order before it has been entered.

7(3) A clerical mistake in a judgment or order, or an error arising in a judgment or order from an accidental slip or omission, may at any time be corrected by the Court."

Judgment not having been entered the Court may still vary it under sub-rule (l). In the alternative counsel invokes sub-rule 3, the so called "slip-rule". It is well established that an accidental omission by counsel can attract its operation - Tak Ming CO Ltd v. Yee Sang Metal Supplies CO [l9731 1 ALL ER 569 at p.573 (P.C. ) ; Shaddock (L) and Associates Pty Ltd v. Parramatta City Council (1982) 43 ALR 4731 at page 475; Cappucio v. Chrysler Australia (Sales) Pty ltd (1980) 30 ALR 176 at pp. 179-180.

Pre-.judgment .interest .may be. awarded .under .S. 51A of .the Federal

.,: Court .-of Australia -Act -1976 ,in,:respect of .causes -of. a ~ t l ~ n

arising after-the commencement of that section on 22 November 1984. In sub section (1) which is the only part of the section relevant for present purposes it is provided :-

"51A(1) In any proceedings for recovery of any money (including any debt or damages or the

value of any goods) in respect of a cause of action that arises after the commencement of this section,',the Court or a Judge shal1;upon

application, unless.good cause is shown to the

contrary, either -

(a)	order that there be included in the sum for which judgment is given interest at such rate as the Court or the Judge, as the case may be, thinks fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of actlon arose and the date as of which judgment is entered; or
(b)	without proceeding to calculate interest in accordance with paragraph (a), order that there be included in the sum for which judgment is glven a lump sum in lleu of any such interest."

The power of the Court to award interest under the section is conditional upon an application being made for that purpose. In Whitlock v. Brew (1968) 118 CLR p.445 the unsuccessful plaintiff in an action in the Victorian Supreme Court succeeded upon appeal to the Full Court and there obtained judgment for the sum of $31,200. Although he had claimed pre-judgment lnterest in his statement of claim no application was made when the Full Court gave its judgment in his favour. On a subsequent motion seeking a variation of that judgment to include under s.78(1) of

, the,Supreme Court Act 1958 (Vlc) the .omission was-held to be ,> .

..fatal. , And the .decision. of ,the> Full Court, in .that- regard was

affirmed by the High Court. Section 78(1) provided inter alia

"Upon all debts or sums certain hereafter recovered in any action the Judge at the hearing shall upon application unless good cause is shown to the contrary allow interest to the

creditor . . ."

In the joint judgment -of Taylor Menzies and Owen JJ it was

"when the terms of s.78(1) are scrutinised it is seen that the power to give interest under that section is to be exercised, if it be exercised at all, at the hearing and it is to be exercised upon application in respect of debts or sums certain recovered. The language of the sectlon naturally supposes an application being made after "the recovery" of the debt or sum certain and that the power to give interest will, if it is exercisable at all, be exercised at the hearing. This being so, it cannot be said that the claim in the statement of claim or in the notice of appeal to the Full Court constituted an application with~n the meaning of the section."

In my opinion however the notable omission of the words "at the hearing" from s.51A(1) indicates that the power of this Court is not as tightly constrained as that of the Victorian Supreme Court at the time that Whitlock v. Brew was decided. The power would, in my opinion, arise upon the inclusion of a claim for interest in the pleadings whether on application or cross-claim. It may also arlse upon application after judgment has been delivered although, according to the circumstances of the case,

the ;delay may.,constitute ,'!good cause . . .-	to the contrary"
The power of the Court to amend the judgment before it has been entered is broad. Where amendment is sought, whether under sub-rule 1 or 3, because of some error or inadvertence by the solicitors or counsel for the parties the Court's response is not to be influenced by punitive considerations. And

although the ,need to es,tablish finality ,that is essential to certainty in litigation is relevant, the dominating principle must, I think, be that whlch was expressed over one hundred years ago in Cropper v. Smith (1884) 26 ch.~, 700, namely that there is no klnd of error or mlstake which is not fraudulent or intended to over-reach which the Court ought not to correct if it can be done without injustice to the other party.

In this case the failure to make application for interest on the cross-claim as filed or otherwise at the hearing has not glven rise to any prejudice to the applicant and it was not suggested by counsel that it had. In my opinion the motion to amend the judgment can be entertained on its merits.

As to the merits, counsel for the applicant contended that the Court should decline to award interest having regard t0:-

1. The supply to the applicant by the respondent

of: .the ,defective ,.compressor .which was a

significant.icause, ofr.the. applicant's-ability

to earn profits and thereby repay the amount
of the debt the subject of the judgment.

2.  The scheme devised and implemented by the respondent to regain possession of the compressor.

In my opinion neither,of these,matters constitutes good cause for refusing or reducing the claim for interest. The loss flowing from the supply of the defective compressor has already been compensated by the award of damages and interest. To refuse, because of the defects, to award interest on the debt for work done on the installation of the compressor and the upgrading of the rig would in my opinion be a punitive rather than compensatory response. And so far as the repossession of the compressor is concerned the fact that the scheme by which it was repossessed may be described as devious does not detract from the legal entitlement of the respondent to repossess it at that time. In my opinion there is nothing in the second matter advanced by counsel for the applicant that has any bearing on the question of the award of interest. I am prepared therefore to accede to the respondent's motion to amend the judgment by including an award of interest in the sum of $14,204.01.

pages are a true copy of the Reasons for Judgment

I certify that thls and the preceding slx (6)

of his Honour Justlce French.

Associate: c HA,d&dJ Date:

Counsel for the.Applicant: Mr P.P, McCann

Solicitors f o r t h e 'App1icant:Ma)teles & Salmon

Counsel for the Respondent: Mr P.G. McGowan
Solicitors for the Resp0ndent:Phillips Fox

Date of Hearing:	9 February 1990
Date of Judgment:	14 February 1990