Ledgerwood, R.J. and C.A. v Monyash Pty Ltd

[1990] FCA 223

JUDGMENT NO. 2 3 3 l..?* ........ . .

C A T C H W O R D S

INTEREST - The fact that money was lent free of interest does not prevent the applicant from seeking and obtaining an award of interest when the loan was made as a result of misleading and deceptive conduct.

COSTS - Even though an applicant is substantially successful, the Court should show its disapproval of grossly exaggerated claims in evidence by reducing the amount of costs otherwise recoverable.

ROBERT JAMES LEDGERWOOD and CAROLE ANN LEDGERWOOD

First Applicant

- and -

MONYASH PTY. LTD	Second Applicant
- and -
RONALD GEOFFREY RESIDE	First Respondent
- and -

REGISTRY

DIGNUM PTY. LTD.	Second Respondent
OrLoughlin J. Perth
22 May 1990

3 1 MAY 1990

FEDERAL COURT OF

AUSTRALIA PRINCIPAL

IN THE FEDERAL COURT OF AUSTRALIA	)
)
WESTERN AUSTRALIA DISTRICT REGISTRY)	NO. WAG 168 of 1988

)

GENERAL DIVISION	1
B E T W E E N :
ROBERT JAMES LEDGERWOOD and CAROLE ANN LEDGERWOOD

First Applicant

- and -

MONYASH PTY. LTD.

Second Applicant

- and -

RONALD GEOFFREY RESIDE

First Respondent

- and -

DIGNUM PTY. LTD.

Second Respondent

MINUTES OF ORDER

JUDGE MAKING ORDER O'LOUGHLIN J.

PERTH

WHERE MADE
DATE OF ORDER	22 MAY 1990
THE COURT ORDERS THAT:

1.        There be judgment for the second applicant Monyash Pty. Ltd. on the claim against both respondents in the sum of

$99,000 together with interest at the rate of 13.75%

from 1 October 1987 to the date hereof.

L.

2.        There be judgment for the second applicant Monyash Pty. Ltd. against the first respondent Ronald Geoffrey Reside in the additional sum of $1,000 together with interest at the rate of 13.75% from 1 October 1987 to the date hereof.

3.        The respondents pay to the second applicant Monyash Pty. Ltd. 75% of its costs which are to be taxed in default of agreement.

Note: Settlement and entry of orders is dealt with in Order 36 of

the~ederal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA	)
)

WESTERN AUSTRALIA DISTRICT REGISTRY ) No.WAG 168 of 1988

)

GENERAL DIVISION	)
B E T W E E N :
ROBERT JAMES LEDGERWOOD and CAROLE ANN LEDGERWOOD

First Applicant

- and -

MONYASH PTY. LTD

Second Applicant

- and -

RONALD GEOFFREY RESIDE

First Respondent

- and -

DIGNUM PTY. LTD.

Second Respondent

The applicants in these proceedings were Mr. & Mrs. R.J. Ledgerwood and Monyash Pty. Ltd. the corporate trustee of their	family trust. The respondents were Dignum Pty. Ltd. and one of
its directors, Mr. R.G. Reside. My reasons for judgment in the matter were handed down on 16 February 1990.
The applicants had claimed against the respondents damages under s.82 of the Trade Practices Act ("the Act") as a result of Dignum's misleading and deceptive conduct in breach of s.52 and Mr. Reside's involvement in contravention of s.75B of
the A C ~ .
At the joint request of counsel I published my reasons on the issues of liability and damages but refrained from entering judgment until the parties had the opportunity to make written submissions on the issues of interest and costs. Those written submissions have now been submitted.

I will not stay to present a full summary of the facts

of the case. It is sufficient to say that Mr. Reside induced the applicants to hand over various sums of money totalling $125,000. $25,000 was ear-marked to purchase shares in the capital of Dignum from a man named York but I was not satisfied on the evidence that this sum was irrecoverable. I therefore declined to quantify it as part of the loss suffered by Monyash (whom I identified as the appropriate applicant). Of the other sums, totalling $100,000, that were paid over by the applicant, some went direct to Mr. Reside. He in turn passed on what he received to or for the beneflt of Dignum with the exception of $1,000 which he retained. The rest was paid direct by Monyash to Dignum

by way of cheques given to fir. Reside. Within a few months	Dignum collapsed financially; it is unable to repay to the
applicant the $99,000 that it received by way of loans.
In addition to the claim for damages, the statement of claim sought interest in these terms:-

"In relation to the amount awarded under each sald claim, interest at the rate of 13.75% per annum from 1

October 1987. "

The payments made by or on behalf of Monyash and their approximate dates are as follows:-

7 August 1987	$ 1,000.00
27 August	$10,000.00
4 September	$70,000.00
30 September	$44,000.00 $125,000.00

If the applicant is entitled to interest then its claim that interest should accrue from 1 October 1987 seems more than fair. However, the respondent Mr. Reside argues that no interest should be advanced (Dignum did not appear in the proceedings). He argues that an award of damages is to put the applicant in the position in which it would have been had the misleading and deceptive conduct not occurred, as the terms of the unsecured loan of $100,000 did not include (as is the fact) a term that Dignum would pay interest, the consequence, so it is said, is that the applicant had no legitimate expectation that it would receive any interest from Dignum to compensate for (or offset) any interest that it had incurred as a result of borrowing money

from its banker to make the loan of $100,000. The flaw in this	reasoning is that if the applicant had not been induced by the
misleading and deceptive conduct to make the investment it would never have borrowed the $100,000 from its banker.
Section 51A of the Federal Court Act allows for an award of interest in a case such as this "unless good cause is shown to the contrary...". No such cause has been made out. In hls written submissions in support of a claim for interest counsel
for the appllcant sought leave to file an affidavit showing the actual amount of Interest paid by the appllcant on the funds that it had borrowed from its banker. I decline to receive that affidavit. That evidence should have been led as part of the applicant's case. The manner in which the trial proceeded did not inhibit the appllcant from presenting such evidence.

- -

The rate of interest that 1s referred to s.51A is "such rate as the Court or Judge, as the case may be, thinks fit...". I am of the opinion that the rate of 13.75% that was clalmed in the prayer for relief is an appropriate rate and judgment will be based on that rate as from 1 October 1987.

costs

The question of costs has posed some difficulties. The

applicant seeks its costs by virtue of the fact that it was substantially successful. Mr. Reside has clalmed that the appropriate order should be that each party pay its and his own costs. The basis upon which the respondent rests his case is

that I made some very adverse comments about the integrity of Mr.	Ledgerwood. I concluded that he had engaged in an exaggerated
fault-finding exercise against Mr. Reside. He made some claims that were patently inaccurate and sought, at every opportunity to distance himself from any question of fault or blame. A measureable part of the trlal was taken up dealing with these unjustified claims.
The award of costs is a matter of discretion and in most, if not all cases, the particular facts and circumstances of the case will govern the manner in which the discretion is exercised. However, I have gained some assistance from the observations of Toohey J. in Hughes v Western Australia Cricket Association Inc. (1986) A.T.P.R. 40-748 where he said:-

"Subsection 43(2) of the Federal Court of Australia Act 1976 vests the award of costs 'in the discretion of the Court or Judger . The Federal Court Rules do not purport to quallfv that discretion. The onlv rule to - -

which reference is necessary is 0.62 r.15 whe;eby, when costs are reserved, those costs follow the event 'unless the Court or a Judge otherwise orders'.

The discretion must of course be exercised judicially. There are decisions, both of Australian and English courts, that throw light on the way in which the discretion is to be exercised. I shall not refer to those decisions in any detail; I shall simply set out in a summary way what I understand to be their effect.

1. Ordinarily, costs follow the event and a successful litigant recelves his costs in the absence of special circumstances justifying some other order. Ritter v. Godfrey (1920) 2 K.B. 47.

2. Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed. FoCSter v Farquhar (1893) 1

Q.B. 564.

3. A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party's

costs of them. In this sense, 'issue' does not mean a

disputed question of fact or of law. Cretazzo v.	precise issue in the technical pleading sense but any
Lombardi (1975) 13 S.A.S.R. 4 at p.12."

Having regard to these remarks and reminding myself of the criticisms that I made of Mr. Ledgerwood's evidence I believe that this is a case where the Court should show its disapproval for the manner in which he presented hls case and gave his evidence. However, as agalnst that, it must not be overlooked that the case for the applicant was basically that the respondent

had engaged in misleading and deceptive conduct - an allegation that was totally denied but ultimately, in my conclusions, substantlated. After weighing up the competing factors, I have concluded that the appropriate order is that the applicant recover against the respondents 75% of its costs which are to be taxed in default of agreement.

$25,000 and Mr. York

The applicant sought in its wrltten submissions, as part of its relief, that the Court require -

"Mr. Reside to execute and deliver to the applicants solicitors an assignment in writing of any rights to repayment of the sum of $25,000.00 and interest Mr. Reside may have against Mr. York. Monyash would then be able to make alternative claims covering both possibilities as to the party in whom the chose in action inheres."

It was said that by this means Mr. York would thereby be precluded, in any proceedings that were instituted against him for the recovery of $25,000 from disputing the identity of the proper applicant. Much as I sympathise with the applicant's

potential predicament, I decline to involve the Court for several	reasons.
First I made findlngs of fact in respect of the payment of money to Mr. York that were based only on the evidence of Mr. Ledgerwood and Mr. Reside: Mr. York was not called by either side and it might be that a fact finding tribunal who assesses Mr. York's evidence may justifiably come to a conclusion that is different from the one that I reached. Secondly, the fault is entirely that of the applicant in not earlier taking action against Mr. York. This issue is tied up wlth my earlier criticism of mr. Ledgerwood to the effect that he engaged in an exercise of total fault against 1 . Reside. Finally, and assuming without deciding, that I have jurisdiction to make the order (or impose the condition) that is sought, the proposal has surfaced for the first time in the written submissions of counsel; the respondent has not addressed the polnt and it was not part of the relief sought in the statement of claim.
Conclusion
There will be judgment for the applicant Monyash Pty. Ltd. against both respondents in the sum of $99,000 together with interest at the rate of 13.75% from 1 October 1987 to the date hereof. Additionally there will be ludgment for the same applicant against the respondent Mr. R.G. Reside in the additional sum of $1,000 together with interest at the same rate and for the same period. The respondents are to pay to Monyash
~ t y . ~ t d . 75% of its costs whlch costs are to be taxed in default
of agreement. I certify that this and the 6 preceding pages are a true copy of the Reasons for Judgment of mr Justice OtLoughlin.

Associate 1% <[*U-

Dated:  / & h- ( Y q O