Orchard Holdings Pty Ltd v Paxhill Pty Ltd as trustee for Paxhill Trust trading as Property People

[2012] WASC 271 (S2)

ORCHARD HOLDINGS PTY LTD -v- PAXHILL PTY LTD AS TRUSTEE FOR PAXHILL TRUST TRADING AS PROPERTY PEOPLE [2012] WASC 271 (S2)

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2012] WASC 271 (S2)
Case No:	CIV:1762/2010	Heard:	15 MARCH 2013
Coram:	ALLANSON J	Delivered:	9/05/13
No of pages:	11	Judgment Part:	1 of 1
Result:	Application to correct judgment to include an interest component allowed
Category:	B
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Parties:	ORCHARD HOLDINGS PTY LTD KEITH ROBERT ANDERSON SUE-ANN ELIZABETH ANDERSON PAXHILL PTY LTD AS TRUSTEE FOR PAXHILL TRUST TRADING AS PROPERTY PEOPLE PRO PROPERTY PTY LTD AS TRUSTEE FOR ACEHIGH ADELAIDE TRUST TRADING AS COLDWELL BANKER PRO PROPERTY RICHARD MASSON MOODY
Catchwords:	Practice and procedure Costs Application to correct judgment Slip rule To include interest component Turn on own facts
Legislation:	Rules of the Supreme Court 1971 (WA), O 21 r 10 Supreme Court Act 1935 (WA), s 32 Trade Practices Act 1974 (Cth), s 52
Case References:	Areva NC (Australia) Pty Ltd v Summit Resources (Australia) Pty Ltd [No 2] [2008] WASC 10 (S) Gould v Vaggelas (1985) 157 CLR 215 Haines v Bendall [1991] HCA 15; (1991) 172 CLR 60 Hanave Pty Ltd v LFOT Pty Ltd [2004] FCAFC 180; (2004) 136 FCR 566 L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) [1982] HCA 59; (1982) 151 CLR 590 Milson v Carter (1893) AC 638 Orchard Holdings Pty Ltd v Paxhill Pty Ltd [2012] WASC 271 Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION : ORCHARD HOLDINGS PTY LTD -v- PAXHILL PTY LTD AS TRUSTEE FOR PAXHILL TRUST TRADING AS PROPERTY PEOPLE [2012] WASC 271 (S2) CORAM : ALLANSON J HEARD : 15 MARCH 2013 DELIVERED : 9 MAY 2013 FILE NO/S : CIV 1762 of 2010 BETWEEN : ORCHARD HOLDINGS PTY LTD

First Plaintiff

KEITH ROBERT ANDERSON
Second Plaintiff

SUE-ANN ELIZABETH ANDERSON
Third Plaintiff

AND

PAXHILL PTY LTD AS TRUSTEE FOR PAXHILL TRUST TRADING AS PROPERTY PEOPLE
First Defendant

PRO PROPERTY PTY LTD AS TRUSTEE FOR ACEHIGH ADELAIDE TRUST TRADING AS COLDWELL BANKER PRO PROPERTY
Second Defendant

RICHARD MASSON MOODY
Third Defendant

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Catchwords:

Practice and procedure - Costs - Application to correct judgment - Slip rule - To include interest component - Turn on own facts

Legislation:

Rules of the Supreme Court 1971 (WA), O 21 r 10

Supreme Court Act 1935 (WA), s 32
Trade Practices Act 1974 (Cth), s 52

Result:

Application to correct judgment to include an interest component allowed

Category: B

Representation:

Counsel:

First Plaintiff : Mr S C England
Second Plaintiff : Mr S C England
Third Plaintiff : Mr S C England
First Defendant : Mr T M Clavey
Second Defendant : Mr J R Ludlow
Third Defendant : No appearance

Solicitors:

First Plaintiff : Lawton Gillon
Second Plaintiff : Lawton Gillon
Third Plaintiff : Lawton Gillon
First Defendant : Clyde & Co Australia
Second Defendant : Downings Legal
Third Defendant : No appearance

(Page 3)

Case(s) referred to in judgment(s):

Areva NC (Australia) Pty Ltd v Summit Resources (Australia) Pty Ltd [No 2] [2008] WASC 10 (S)
Gould v Vaggelas (1985) 157 CLR 215
Haines v Bendall [1991] HCA 15; (1991) 172 CLR 60
Hanave Pty Ltd v LFOT Pty Ltd [2004] FCAFC 180; (2004) 136 FCR 566
L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) [1982] HCA 59; (1982) 151 CLR 590
Milson v Carter (1893) AC 638
Orchard Holdings Pty Ltd v Paxhill Pty Ltd [2012] WASC 271
Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446


(Page 4)

1 ALLANSON J: On 27 July 2012, I gave reasons for decision on the claim by Orchard Holdings against three defendants. While there were several causes of action pleaded, the claim allowed was for conduct in breach of s 52 of the Trade Practices Act 1974 (Cth).

2 The findings with regard to damages were relatively complicated. In summary, I found that the plaintiffs were entitled to:

(1) Interest which they would not otherwise have paid on a Westpac finance facility from 5 March 2009 to the date of settlement of each eventual sale of each of the relevant apartments.

(2) Holding costs on each of those apartments from 5 March 2009 to the date of settlement of each eventual sale. This was subject to the allowance for one apartment where a notional date of sale was used.

(3) The loss of value in the apartments.

3 This part of the damages was to be reduced by 50%, for reasons explained in the judgment. The relevant settlement dates were between April 2009 and October 2010.

4 The second limb on which damages were awarded to Orchard Holdings was for specific outgoings: a 'valuation fee' or 'inspection/valuation fee' of $16,041.36 charged by Westpac, and certain legal fees payable to Orchard Holdings' solicitors.

5 The plaintiffs brought in a minute of proposed orders, supported by calculations made necessary by the basis on which I had allowed the first part of the damages. On 20 August 2012, the court made orders awarding damages in the total amount of $450,000. The award of damages did not include interest from the date the losses were incurred to the date of trial. Pre-trial interest had, however, been claimed in the statement of claim.

6 Orchard Holdings now applies for a correction of the judgment to include an interest component. The application was brought on 5 December 2012, although only served in January 2013.

Pre-judgment interest

7 Under s 32(1) of the Supreme Court Act 1935 (WA) the court may order that there shall be included, in the sum for which judgment is given, interest at such rate as it 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

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action arose and the date when the judgment takes effect. Section 32(1) confers a wide discretion on the court awardinginterest. That discretion must be exercised in accordance with legal principle. There is no statutory presumption in favour of interest: compare Federal Court of Australia Act 1976 (Cth) s 51A.

8 The purpose of an award of interest under s 32 is to ensure an innocent party is properly or completely compensated for its loss or damage. It has been described as 'an integral element in the attainment of the object of damages' and 'an essential element in the achievement of true compensation for that damage': see Haines v Bendall [1991] HCA 15; (1991) 172 CLR 60, 66 - 67.

9 In the circumstances of the present case, Orchard Holdings was indebted to Westpac, which had provided finance to it for the purposes of carrying out the apartment development. It was paying interest on that debt. So much is clear from the components of the award of damages. To not include an award of interest on the damages from the time the cause of action accrued in 2009 to the time of trial would significantly detract from the effect of the judgment in providing compensation.

The slip rule

10 The orders have been formally recorded. The general rule is that a superior court of record, in the absence of a statutory provision, and subject to certain narrow exceptions, may not reopen an extracted order. The slip rule in O 21 r 10 of the Rules of the Supreme Court 1971 (WA) is one of the exceptions. The rule reflects the inherent jurisdiction of a court 'at any time to correct an error in a decree or order arising from a slip or accidental omission', regardless of whether the order has been drawn up, passed and entered: see Milson v Carter (1893) AC 638, 640.

11 The purpose of theslip rule is to avoid injustice to litigants. While it is a jurisdiction to be exercised sparingly, the application of the rule should not be constrained by a narrow or restrictive approach to the circumstances in which it might be applied: Gould v Vaggelas (1985) 157 CLR 215, 274 - 275; Areva NC (Australia) Pty Ltd v Summit Resources (Australia) Pty Ltd [No 2] [2008] WASC 10 (S) [7].

12 The slip rule applies also where the mistake or error is the result of inadvertence by a party's legal representative: L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) [1982] HCA 59; (1982) 151 CLR 590, 594. But it is a power to correct a mistake. The correction should be such that had the matter been drawn to the court's attention at

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the time, the correction would have been made at once: Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446. Where the proposed correction would alter the substance of an order in a matter on which there might be a real difference of opinion, the rule does not apply. I also take into account the consideration that courts 'should not encourage carelessness and thereby put at risk the public interest in the finality of litigation': Hanave Pty Ltd v LFOT Pty Ltd [2004] FCAFC 180; (2004) 136 FCR 566 [42]; Gould v Vaggelas (274 - 275).

13 The failure to include interest in an award is capable of coming within the slip rule: see, for example, L Shaddock & Associates Pty Ltd.

The evidence

14 The following matters are not in dispute.

15 First, while the prayer for relief claimed interest under s 32 against each defendant, the particulars filed did not refer to the interest claim or identify any date from which interest should be calculated. The particulars did, however, attempt to identify the date on which loss accrued for each of the apartments. I see no reason to read them as a limitation on the claim for interest in the prayer for relief.

16 Second, in conferral between the parties after the court delivered reasons, Orchard Holdings did not include pre-judgment interest in its calculations.

17 Third, the claim for pre-judgment interest was only raised by Orchard Holdings, after judgment had been entered on 20 August 2012. On 14 September 2012, the court made orders regarding the costs of the action. At the hearing on 14 September, I mentioned in court that I had, in preparing reasons, noticed the omission of interest. No application was made immediately. The solicitors for Orchard Holdings, however, wrote to the defendants on 18 September regarding the claim for interest. The application for amendment of the judgment was made on 5 December 2012.

18 Fourth, the application was not served until 14 January 2013.

19 Orchard Holdings relies on the evidence of their solicitor, Simon Christopher England, who had the day-to-day conduct of the action. In an affidavit sworn 4 December 2012, Mr England deposes that the calculation of pre-judgment interest 'was inadvertently omitted' in the calculation of damages, and 'inadvertently overlooked' at the hearing at

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which orders were made. The defendants object to this evidence as a conclusion, with no evidentiary basis for the assertion made. I accept that the evidence is scant, but that is consistent with the subject matter. Were Mr England purporting to give evidence about the conduct of someone else, there may be substance in the objection. But Mr England was deposing to his own conduct and state of mind. In my opinion, the passages referred to, reasonably read, say that he did not include the claim for interest because of his own inadvertence (that is, it was unintentional, or he did not turn his mind to it). So understood, the statements are admissible. I accept that the failure to include interest in the orders sought was an error due to the solicitor's oversight.

20 No explanation is given for the oversight. There are cases where it may be possible to explain why something was missed. But it is also relevant, in my opinion, that the reasons for decision on which the orders were based did not include pre-judgment interest. Orchard Holdings' entitlement to interest was not considered and rejected. To move from the passive voice to the active, I overlooked that pre-judgment interest had been claimed and did not deal with the interest entitlement in the reasons for decision. The plaintiff's orders and calculations reflected the heads of damages in those reasons.

The application of the slip rule

21 The defendants submit that this application does not come within the slip rule.

22 The defendants argue that the decision to award interest requires the exercise of an independent discretion. It is not a matter of correction of an error and does not fall within the intent of the rule. The defendants point, in part, to the wide discretion of the court under s 32, including as to the rate at which interest should be allowed.

23 The slip rule should not be used to vary a judgment in a matter of discretion on which real differences of opinion may exist. But the rule has been applied where interest has been omitted. There are three matters which, in my opinion, resolve this issue in favour of the application of the rule. First, the claim for interest is not an afterthought, but was claimed in the prayer for relief. Second, as noted above, the orders sought reflected the reasons for judgment. Third, while there is no doubt an exercise of discretion in the award of interest, including in choosing the proper rate to be applied, the cases show that the award of pre-judgment interest may be essential to achieving proper compensation for the loss suffered. In this case, where Orchard Holdings was heavily indebted to Westpac, which

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had provided the finance for the apartment development, I cannot see how the damages can be a proper measure of compensation if no allowance is made for the detriment that flows from it being deprived of the use of the money between the date of accrual of the loss and the date of judgment. That is, the discretion to award interest would, if exercised judicially, have resulted in a decision to award interest. Orchard Holdings has put forward a conservative rate (6%) as the basis for its present calculations.

24 The second defendant also refers to comments made in the principal judgment (Orchard Holdings Pty Ltd v Paxhill Pty Ltd [2012] WASC 271) about the limited basis on which Orchard Holdings pursued its claim, where I said:

Despite the width of the plea regarding reliance on the representations (that is, that in reliance,Orchard Holdings presented contracts to Westpac, obtained finance, and proceeded with the development), Orchard Holdings pleaded its loss and damage in this limited way:

'Had the plaintiffs not been misled into believing that the apartments ... had been sold, the plaintiffs would have achieved an equivalent number of such sales of similarly priced apartments from genuine purchasers prior to June 2007.' [22]

25 The contrast there referred to, between what Orchard Holdings said it did in reliance on the misleading representations and the facts on which it based its loss, are irrelevant to the present question. Orchard Holdings did not limit its claim at trial in a manner which excluded its pleaded claim for interest.

26 The defendants refer also to the detailed calculations used by Orchard Holdings to establish its claim for the interest it paid to Westpac up to the date of settlement of each apartment. The fact that the plaintiff went to such detail in calculating its actual loss (a level of detail which I did not follow in making the assessment) does not indicate any conscious decision not to pursue interest for the period to judgment.

27 Finally, the defendants rely on the delay between the judgment and this application. The evidence shows that it was first raised in correspondence between the parties within a few days of the judgment on costs. In the period between then and the making of the formal application, there was communication between the parties directed, initially, to whether the claim fell within the slip rule, and later to whether the issues could be limited by agreement on the calculations. The application to amend the judgment was filed on 5 December 2012.

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28 There could have been more urgency in bringing the application before the court. But neither defendant has put forward any evidence of prejudice arising from the delay. I am not satisfied that the delay is a sufficient basis to deny the application.

Conclusion

29 In summary, I am satisfied that this is a proper case for the application of the slip rule to avoid what would, in my opinion, be an injustice.

30 The orders made on 20 August 2012 should be amended by the inclusion of interest in the sum of $67,573.14 for the period between when each loss was incurred and the date of judgment. The rate of 6% is, in my view, appropriate. I include below, the tables prepared by the solicitors for Orchard Holdings which set out, in detail, the amount awarded and the calculations of interest.

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TABLE A - Pre-judgment interest on holding costs and loss in value of apartments

Apartment	Settlement Date	50% of Amount Awarded	Days from Settlement Date to Judgment Date (27.07.2012)	Interest to Judgment Date (calculated at 6% per annum)
4	27.02.2009	$0.00	-
5	22.10.2009	$46,747.26	1,009 days	$7,753.64
7	02.11.2009	$46,910.72	998 days	$7,695.93
8	15.04.2009	$18,180.69	1,199 days	$3,583.34
9	19.04.2010	$35,611.11	830 days	$4,858.72
12	19.04.2010	$35,246.81	830 days	$4,809.02
18	31.03.2010	$29,128.80	849 days	$4,065.26
21	01.05.2009	$17,857.29	1,183 days	$3,472.63
23	16.12.2009	$52,508.15	954 days	$8,234.43
24	03.09.2009	$31,885.02	1,058 days	$5,545.37
25*	31.03.2010	$29,245.16	849 days	$4,081.50
26	25.10.2010	$28,276.21	641 days	$2,979.46
28	25.01.2010	$49,067.36	914 days	$7,372.20
TOTAL	$64,451.50

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TABLE B - Pre-judgment interest on legal fees and valuation fees

Amount	Relevant Date	Days from Relevant Date to Judgment Date (27.07.2012)	Interest to Judgment Date (calculated at 6% per annum)
Legal fees
(a)	$6,781.90	07/01/09	1321	$1,472.69
(b)	$4,685.85	09/02/09	1288	$992.12
Valuation	fees
(a)	$3,500.00	08/12/08	1351	$777.29
(b)	$3,500.00	19/12/09	1340	$770.96
(c)	$186.36	31/03/09	1266	$38.78
(d)	$2,255.00	01/06/09	1176	$435.93
(e)	$4,400.00	20/07/09	1127	$815.15
(f)	$2,200.00	28/06/10	784	$283.53
TOTAL	$3,121.64