Newman v Financial Wisdom Limited (No 2); Newman v Hold Pty Ltd (No. 2)

[2004] VSC 282

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

LONG CASES LIST

No. 2066 of 2000

DALE NEWMAN & ORS	Plaintiffs
v
FINANCIAL WISDOM LIMITED	First Defendant
and
TWENTY FIRST AUSTRALIA INC	Second Defendant

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IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

LONG CASES LIST

No. 7702 of 2001

DALE NEWMAN & ORS	Plaintiffs
v
HOLD PTY LTD	First Defendant
and
PAMACORP SECURITIES LIMITED	Second Defendant

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JUDGE:	Mandie J
WHERE HELD:	Melbourne
DATE OF HEARING:	5 August  2004
DATE OF JUDGMENT:	5 August  2004           Revised 12 August 2004
CASE MAY BE CITED AS:	Newman v Financial Wisdom Limited (No 2); Newman v Hold Pty Ltd (No. 2)
MEDIUM NEUTRAL CITATION:	[2004] VSC 282

PRACTICE AND PROCEDURE – interest on damages pursuant to statute - costs

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Dr C Pannam QC with Mr B Quinn of Counsel	Corrs Chambers Westgarth
For Financial Wisdom Limited	Mr M Sifris SC with Ms C Mavroudis of Counsel	Ryrie Bridges

HIS HONOUR:

1. I will deal with these matters. The first question relates to interest on the damages awarded. Under s.60, sub-s.1 of the Supreme Court Act 1986 the Court is obliged, unless good cause is shown to the contrary, to give damages in the nature of interest at such rate not exceeding the penalty interest rate as applies from time to time, from the commencement of the proceeding to the date of the judgment in addition to the damages awarded. I am satisfied that interest should be awarded and that no good cause has been shown to the contrary.

1. The case is not really different from any other damages case in that respect.  I do think however that the question of the commencement date for the running of interest needs to be varied to some extent, having regard to the nature of the damages awarded.

1. The damages awarded for loss of opportunity are in fact in the nature of interest and are calculated on the net cash loss.  So that I think the interest should be calculated in the case of those plaintiffs who were awarded damages for loss of opportunity from the date when that calculation terminated which was 1 January 2003 - so those plaintiffs should have interest on damages from 1 January 2003 but otherwise interest should be calculated from the commencement of the proceeding.  I am not persuaded that any other date is appropriate in relation to those plaintiffs who simply recovered damages for net cash losses, and also interest should be calculated from the commencement of the proceeding on damages for stress and anxiety and the like.

1. So the interest component on damages will have to be recalculated.  It seems to me that the penalty interest rate from time to time is the appropriate rate to apply and I am not persuaded that there is any other interest rate which there is a good reason to apply or that there is any reason to reduce the rate or any reason to select any other rate.

1. And although I do not propose to deal specifically with each point made concerning interest, I have considered all the submissions made both orally and in writing and that is my conclusion.  The interest will therefore have to be recalculated.  I note that there is no dispute otherwise about the arithmetic applied by the plaintiffs so I will ask the plaintiffs to supply revised minutes to take account of what I have just said about interest but otherwise I will make the orders which are proposed in the draft which has been submitted in each proceeding in relation to damages (but the interest will have to be adjusted in the way that I have indicated).

1. So far as costs are concerned, I am satisfied on the evidence that the plaintiffs are all liable for costs to their solicitors.  At any rate, I am certainly not satisfied to the contrary.  I have heard some interesting arguments about what would be the position if they were not liable.  I do not find it necessary to deal with those arguments although my inclination would be - without having heard Mr Sifris - to accept Dr Pannam's submissions about those matters but, as I say, I do not think I reach that point because I am satisfied on the evidence that the plaintiffs are liable for their legal costs. Mr Marquet's affidavit supports that finding and Exhibit 'A' which contains the agreement of the plaintiffs with Insolvency Litigation Fund Pty Ltd, the funder of the litigation, supports the same conclusion: that what the funder is agreeing to do is to pay the costs for which the plaintiffs are liable to their solicitors.  And I do not find that the letter of the solicitors to the plaintiffs contradicts that conclusion at all.  The reference in paragraph 2 to "No exposure to costs" might reflect the practical reality but the reference in 2.2 of the letter reflects the legal position which is referred to in Mr Marquet's affidavit, namely that the legal fees are incurred by the plaintiffs but will be paid by the funder and that of course also follows from the agreement that the plaintiffs executed with the funder.

1. As I indicated in the course of argument, I am not prepared to grant indemnity costs against Financial Wisdom although I will grant indemnity costs against the other defendants for the reasons indicated in the course of argument.

1. So the orders in relation to costs will be that the defendants pay the costs of the proceeding and the trial (including reserved costs) of the selected plaintiffs, for the benefit of the plaintiffs as a whole, and also pay the costs of all of the plaintiffs to date (in so far as these costs were related to or necessary for the trial of the selected plaintiffs’ cases).

1. In the case of the defendants other than Financial Wisdom, that will be on an indemnity basis (for what it is worth) and in the case of Financial Wisdom on a party/party basis.