National Formalwear v George
[2001] FMCA 88
•18 September 2001
FEDERAL MAGISTRATES COURT OF AUSTRALIA
NATIONAL FORMALWEAR v GEORGE [2001] FMCA 88
TRADE PRACTICES – Damages – judgment in default of agreement – jurisdiction limit s.86AA Trade Practices Act 1974 – whether interest may be awarded in addition to damages of $200,000 – power to award interest.
Nalla v Kingyear Pty Ltd (1989) ATPR 40-952
Kewside Pty Ltd v Warman International Ltd (1990) ATPR 41-012)
Trade Practices Act 1974 s 52, s 82 and s 86AA
Federal Magistrates Act 1999 s 76
Federal Court of Australia Act 1976 s 51A
| Applicant: | NATIONAL FORMALWEAR GROUP PTY LTD |
| Respondent: | ALLAN GEORGE |
| File No: | MZ 4 of 2001 |
| Delivered on: | 18 September 2001 |
| Delivered at: | Melbourne |
| Hearing Date: | 18 September 2001 |
| Judgment of: | McInnis FM |
REPRESENTATION
| Solicitor for the Applicant: | Mr F Summons |
| Solicitors for the Applicant: | Holding Redlich |
ORDERS
That the respondent pay to the applicant damages of $200,000 plus interest of $16,578.63.
That the respondent pay the applicant's costs of the application, including costs of and incidental to the entering of judgment, to be taxed in default of agreement pursuant to order 62 of the Federal Court Rules.
FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE
MZ 4 of 2001
NATIONAL FORMALWEAR GROUP PTY LTD
Applicant
And
ALLAN GEORGE
Respondent
REASONS FOR JUDGMENT
In this application the applicant had obtained a judgment on 4 September 2001 against the respondent Allan George by order of the court on 4 September 2001. On that occasion there was sufficient affidavit material before the court to persuade the court that it was appropriate to enter a judgment in circumstances where there had been a settlement agreement between the parties. The agreement which had been entered into between the parties provided for payment by the respondent to the applicant of a sum of $40,000 as the settlement sum, by way of four instalments of $10,000, the first being due on 10 August 2001.
In affidavit material before the court I was satisfied that there had been default in payment of that first instalment. Accordingly the other clauses of the agreement applied, which enabled the applicant, upon default of the respondent, to provide to this court a copy of the agreement as evidence of the respondent's consent to judgment being entered against him in the proceedings for the claim as any amount paid, plus interest on the claim calculated from the date of issue of the proceeding to the date upon which the applicant enters judgment at the rate fixed pursuant to schedule 2(1) of the Penalty Interest Rates Act 1983, plus the applicant's costs of and incidental to entry of judgment.
The issue of damages has been the subject of further affidavit material provided to the court and in particular an affidavit of Allan Bruce Sutton sworn 18 September 2001. When the matter had been before the court on 4 September 2001 I indicated that the amount of the judgment would be the subject of further hearing this day and that in support of the issue of damages that the applicant should file and serve affidavit material upon which it intends to rely.
I understand that the affidavit material upon which the applicant intends to rely has been served upon the respondent. I further understand from the affidavit of Fleur Elizabeth Summons sworn
18 September 2001 that the respondent is aware of these proceedings but is not wishing to play any further part in them.
The issue of damages which is now before the court and supported by the affidavit of Mr Sutton to which I referred raises two scenarios concerning the stock which had been sold to the respondent and which had then been on-sold in Australia, allegedly by the respondent, which formed essentially the basis of the claim where these proceedings commenced.
The two scenarios are that if that $90,000 worth of stock had been sent for sale, or at least made available for sale by the applicant, then the applicant estimates that that sale would have resulted in a total revenue of $800,948.70, and after deducting costs of wages and advertising totalling $62,000, and $90,000 received by the applicant from the respondent for the sale of the stock in the first place, the net amount on that first scenario would be $648,948.70.
The second scenario that was referred to in the affidavit of Mr Sutton involved the applicant selling the stock to a third party, with the applicant consenting to the purchaser reselling the stock in Australia. On that basis the applicant estimates that the total proceeds of sale would be $400,474.35 and, after taking into account the total amount of $90,000 which had already been paid, left a balance of $310,474.35.
I had indicated earlier today that in my view the second scenario is more appropriate in circumstances where to suggest that the applicant may be able to sell stock which it had already indicated had been sold to the respondent for $90,000 could be sold by it for just over $800,000 did not seem particularly realistic.
Doing the best I can on the material before me, it is appropriate to make some assessment of the damages. In my view the preferred option is the second scenario which has been set out, though I also deduct from that estimate what I would regard as being appropriate expenses involved with at least the removal of the items and potentially other expenses which may be involved in dealing with a third party. It is difficult to place a figure on that, but in any event it does not matter for the present purposes because the applicant does not seek damages in excess of $200,000 and is content to obtain an order for that amount from this court. Hence, after making due allowance for the vague nature of the claim, I am satisfied it is appropriate to make an order for damages for $200,000.
The next issue before the court which has caused some concern is the issue of the extent to which the court may, in these circumstances, award interest which would then take the total amount of the order above the sum of $200,000. It should be remembered that section 86AA of the Trade Practices Act provides a limit on the jurisdiction of the Federal Magistrates Court in proceedings under section 82 of the Trade Practices Act and that limit is provided in the section which reads that:
“If proceedings under section 82 are instituted in, or transferred to, the Federal Magistrates Court under section 82, the Federal Magistrates Court does not have jurisdiction to award an amount for loss or damage that exceeds:
(a)$200,000; or
(b)(b) if another amount is specified in the regulations, that other amount.”
In the present case Ms Summons who appears for the applicant has submitted that it is appropriate that I should award interest, even if the award of interest would then take the amount of the judgment above the sum of $200,000. She has referred me to the clause in the agreement to which I have already referred, which allows interest to be fixed, in default of the settlement sum, at the rate fixed pursuant to section 2(1) of the Penalty Interest Rates Act 1983, plus of course costs of and incidental to the entry of the judgment.
In my view the limit of the amount of damages to be awarded by the court under section 82 does not detract from the court's power to award interest which is given to the court pursuant to statute. It is clear that section 82 of the Trade Practices Act does not provide a power to award interest. But it has been held that section 51A of the Federal Court of Australia Act empowers that court to award interest (see Nalla v Kingyear Pty Ltd (1989) ATPR 40-952 and Kewside Pty Ltd v Warman International Ltd (1990) ATPR 41-012).
Likewise, in my view, it would appear that section 76 of the Federal Magistrates Act 1999 provides this court with power to award interest upon the judgment which has been entered and that interest can be from the date when the cause of action arose up to the date when judgment is entered. The section does not, on the face of it, appear to restrict the power of the court to award that interest.
It seemed to me in the circumstances that in the normal course of events, in the absence of a settlement agreement, the appropriate rate of interest would be the interest rate set out in order 35 rule 8 of the Federal Court Rules, in the absence of any rate specified by the Federal Magistrates Act. In any event, as Ms Summons points out, the agreement which the respondent has breached and which allows the applicant to enter judgment is one which itself provides for interest at the rate fixed pursuant to the Penalty Interest Rates Act.
On balance, it is my view that in the circumstances it is appropriate that I accede to the request to impose interest at that rate, and the rate and the amount of the damage will be calculated accordingly. I will then enter the judgment for that appropriate amount, together with costs.
I will make the following orders:
(1)That the respondent pay to the applicant damages of $200,000 plus interest of $16,578.63.
(2)That the respondent pay the applicant's costs of the application, including costs of and incidental to the entering of judgment, to be taxed in default of agreement pursuant to order 62 of the Federal Court Rules.
I have made that order about costs because the Federal Magistrates Court Rules only came into operation recently and this matter started well before that and I think it is appropriate in the circumstances that the costs be under the Federal Court Rules.
I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of McInnis FM
Associate:
Date: 18 September 2001
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