Matland Holdings Pty Limited v NTZ Pty Limited
[2004] FCA 795
•23 JUNE 2004
FEDERAL COURT OF AUSTRALIA
Matland Holdings Pty Limited v NTZ Pty Limited [2004] FCA 795
PRACTICE AND PROCEDURE – whether appropriate at this stage of the proceeding to determine the question of interest – trial on liability and quantum split - quantum still to be determined
Federal Court of Australia Act 1976 (Cth), s 51A
Penalty Interest Rates Act 1983 (Vic)McCormick v Riverwood International (Australia) Pty Ltd [2000] FCA 32 referred to
EMCL Pty Ltd v Esanda Finance Corporation Ltd [1999] FCA 978 referred toMATLAND HOLDINGS PTY LIMITED ACN 005 558 912 AND CALTEX AUSTRALIA PETROLEUM PTY LIMITED ACN 000 032 128 v NTZ PTY LIMITED ACN 005 154 165, GEORGE NTZOUNAS AND HELCO PETROLEUM PTY LIMITED ACN 080 758 738
VG 581 of 1999KENNY J
23 JUNE 2004
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VG 581 OF 1999
BETWEEN:
MATLAND HOLDINGS PTY LIMITED (ACN 005 558 912)
FIRST APPLICANTCALTEX AUSTRALIA PETROLEUM PTY LIMITED (ACN 000 032 128)
SECOND APPLICANTAND:
NTZ PTY LIMITED (ACN 005 154 165)
FIRST RESPONDENTGEORGE NTZOUNAS
SECOND RESPONDENTHELCO PETROLEUM PTY LIMITED (ACN 080 758 738)
THIRD RESPONDENTJUDGE:
KENNY J
DATE OF ORDER:
23 JUNE 2004
WHERE MADE:
MELBOURNE
THE COURT ORDERS AND DECLARES THAT:
1.The applicants be granted leave to amend their second further amended statement of claim by substituting references to the Fair Trading Act 1985 (Vic) for references to the Fair Trading Act 1999 (Vic), in conformity with the draft third further amended statement of claim, which the applicants filed with their written submissions on 11 June 2004.
2.The third respondent pay the second applicant the sum of $29,087.54 together with interest thereon as may be fixed in due course.
3. The cross-claim be dismissed.
4.Judgment be entered for the applicants against the first and second respondents for damages to be assessed.
5.There be a case management conference, at a date to be fixed, before a Registrar of this Court to prepare the matter for trial on the question of quantum.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VG 581 OF 1999
BETWEEN:
MATLAND HOLDINGS PTY LIMITED (ACN 005 558 912)
FIRST APPLICANTCALTEX AUSTRALIA PETROLEUM PTY LIMITED (ACN 000 032 128)
SECOND APPLICANTAND:
NTZ PTY LIMITED (ACN 005 154 165)
FIRST RESPONDENTGEORGE NTZOUNAS
SECOND RESPONDENTHELCO PETROLEUM PTY LIMITED (ACN 080 758 738)
THIRD RESPONDENT
JUDGE:
KENNY J
DATE:
23 JUNE 2004
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
On 4 June 2004, I gave reasons for judgment in this proceeding against the respondents. On that day, I proposed certain orders but allowed the parties to file submissions concerning my proposal and, in particular, concerning the question of interest.
The applicants filed submissions on 11 June 2004 and the respondent filed submissions on 15 June 2004. The applicants filed submissions in reply on 17 June 2004. As the parties are in dispute about the calculation of interest, it is appropriate that I give short reasons for the manner in which I would dispose of this part of the matter at this stage of the proceeding.
On 4 June 2004, I gave judgment for the applicants in respect of their claims for breach of contract, misleading or deceptive conduct, and debt. Their further claim for negligent misrepresentation failed. Specifically, I found that:
·the first and second respondents, NTZ Pty Limited (“NTZ”) and Mr Ntzounas, had breached an agreement made on 28 November 1997 that Mr Ntzounas would cause the prompt execution of, and NTZ would promptly execute, a supply agreement in the form given to them by the applicants earlier in the week, save for the substitution of the name Australian Petroleum Pty Ltd for Matland Holdings Pty Limited (“Matland”);
·the applicants were entitled to recover damages against NTZ pursuant to s 82(1) of the Trade Practices Act 1974 (Cth) (“TPA”) for breach of s 52 of the TPA, and were also entitled to recover damages against Mr Ntzounas pursuant to s 159 of the Fair Trading Act 1985 (Vic) (“FTA”) for breach of s 9 of the FTA; and that
·the third respondent, Helco Petroleum Pty Limited (“Helco”), was indebted to the second applicant, Caltex Australia Petroleum Pty Limited (“Caltex”) in the sum of $29,087.54 for petroleum products supplied to it in January and February 1998.
I also gave judgment against the respondents in respect of their cross-claims for various breaches of the TPA, unjust enrichment, and alleged breaches of contract by Caltex. Specifically, I found that:
·the respondents’ cross-claims in respect of ss 51AA, 53A, 45(2)(a)(ii), 45(2)(b)(ii), 45B(2) and 45C(2) of the TPA failed; and
·the respondents’ cross-claims for unjust enrichment, reimbursement of part of the fee paid under the franchise agreement, and for damages in respect of Caltex’s alleged breach of contract in relation to the EFPEC console also failed.
Judgment was given only in respect of liability. Pursuant to an order made by a Registrar on 1 March 2000, the issues of liability and quantum were split. The question that arises is whether I should now make orders in relation to interest, or whether it is appropriate that the matter of interest be considered when the quantum of damages is considered.
The applicants seek, by their submissions filed on 11 June 2004, interest both on the debt and on any damages that may be assessed from the date of each cause of action, pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth). Such interest, the applicants say, should be at the rate prescribed from time to time by the Penalty Interest Rates Act 1983 (Vic). They particularly referred to McCormick v Riverwood International (Aust) Pty Ltd [2000] FCA 32 at [11] and EMCL Pty Ltd v Esanda Finance Corporation Ltd [1999] FCA 978 (“EMCL”) at [59]-[62].
In respect of the debt, the applicants submitted that the cause of action arose when the debt became due and payable, which was “no later than 24 February 1998”. This was the date upon which the last payment request was rejected on the direct debit authority provided by Helco. On that basis, the applicants calculate the interest on the debt from 24 February 1998 to 11 June 2004 as $21,816.16.
In respect of the three heads of damage the applicants are claiming, the applicants propose a number of dates on which each cause of action arose as the appropriate starting date for the calculation of interest.
The respondents contend that it is inappropriate to determine the question of interest at this stage, and that submissions on the issue should await the outcome of the hearing on quantum. While the respondents reserved their position until the hearing on quantum, at which time they desired to call evidence on the issue, the respondents did make “an initial reply”.
In particular, the respondents submitted that (1) interest should not be calculated on the whole of the period between the date at which the relevant cause of action arose and the date of judgment; (2) that the rate of interest should not be calculated according to the Penalty Interest Rates Act 1983 (Vic), but rather according to a commercial rate of interest; and (3) that interest on the debt cannot be awarded under s 51A(1) of the Federal Court Act 1976 (Cth) because, pursuant to s 51A(2)(b), s 51A(1) does not apply in relation to debts upon which interest is payable “as of right whether by virtue of an agreement or otherwise”. A further point is raised as to whether interest is payable on a claim for the loss of the value of the site, a claim which the respondents say was not pleaded. The applicants reply that such a claim was filed on the first day of trial.
With regard to their first point, the respondents suggest that interest should not be calculated for the whole period for a number of reasons. In relation to the claim for loss of profits, they argue both that profit would have been lost incrementally over the period covered by any award of damages, and that there was a three-month period where no profits were lost because the site was closed. The applicants reply that the applicants’ right to interest does not accrue incrementally but from the date of the right to commence legal proceedings; that, pending discovery, they have not accepted the assertion that the site was not generating income for three months; and that the right to interest arises from the breach of contract or the misleading or deceptive conduct, and there is no evidence that Mr Ntzounas would have purchased fuels from Caltex but for the remediation works.
The respondents also argue that significant periods of delay resulted from the dilatory conduct of the applicants in taking various interlocutory steps. These steps included the transfer of the proceeding to this Court from the Supreme Court of Victoria; the joinder of Helco to the proceedings; the filing of supplementary affidavits; and the amendment of the applicants’ statement of claim on 20 November 2002. The applicants join issue on the subject of delay, citing various delays on the respondents’ part and the obligatory character of the transfer of proceedings. They submit that no good cause has been shown to refuse the applicants their right to interest.
With regard to their second point, the respondents argue that the prescribed interest rates under the Victorian Act are not commercial, and that the practice of adopting the rates of interest applied by the Supreme Court of the State or Territory in which the Court deals with the matter is inappropriate where there is evidence that such rates are non-commercial. They too relied on EMCL. The applicants submit that there was no evidence that the prescribed Victorian rate was inappropriate or uncommercial. The respondents say that such evidence will be led at the hearing on quantum.
With regard to their final point, the respondents argue that clause 13.2 of the unexecuted supply agreement prescribes a rate of interest payable on any late payments, and thus that interest is payable “under terms similar to those found in clause 13” and therefore, is payable “as of right … by virtue of an agreement”. They say further that, at the hearing on the second stage of this proceeding, they will adduce “evidence in relation to the trading terms concerning interest for late payment as between Caltex and Helco”. The applicants contend that this clause cannot govern the terms under which petroleum products were supplied to NTZ, as the agreement was never executed, and thus s 51A(2)(b) is not enlivened by this clause. This clause, they say, could only be of relevance as an alternative measure of a commercial rate. They note that the only other agreement that might attract s 51A(2)(b) is the franchise agreement with Chrisanna Holdings Pty Ltd (which was not a party to this proceeding), but that this agreement is silent on the issue of interest.
As is evident from the foregoing, there are a number of issues in relation to the question of interest upon which the parties disagree. The respondents have stated that they intend to adduce evidence on a numbers of issues that may be pertinent to the calculation of interest, both on the debt and on any damages as may be assessed. Doubtless, the parties will wish to make further submissions in light of this evidence. In this circumstance, it is proper for me to defer the determination of the question of interest, both on the debt and on any damages, until after the hearing of the second stage of the proceeding.
As the applicants observed in the written submissions, I have not sought submissions as to costs. This too is a matter best considered in the second stage of the proceeding.
The applicants have now formally sought leave to amend their second further amended statement of claim by substituting the Fair Trading Act 1985 (Vic) for the Fair Trading Act 1999 (Vic) wherever appearing. As I indicated in my reasons for judgment, I would grant such leave.
Accordingly, I would order and declare that:
1.The applicants be granted leave to amend their second further amended statement of claim by substituting references to the Fair Trading Act 1985 (Vic) for references to the Fair Trading Act 1999 (Vic), in conformity with the draft third further amended statement of claim, which the applicants filed with their written submissions on 11 June 2004.
2.The third respondent pay the second applicant the sum of $29,087.54 together with interest thereon as may be fixed in due course.
3. The cross-claim be dismissed.
4.Judgment be entered for the applicants against the first and second respondents for damages to be assessed.
5.There be a case management conference, at a date to be fixed, before a Registrar of this Court to prepare the matter for trial on the question of quantum.
I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. Associate:
Dated: 23 June 2004
Counsel for the Applicant: Mr M J Crennan SC with Mr P D Corbett Solicitor for the Applicant: Hall & Wilcox Counsel for the Respondent: Mr C A Connor Solicitor for the Respondent: Bernstein & Associates Date of Hearing: 4 June 2004 Date of Judgment: 23 June 2004
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