Screenco Pty Ltd v R.l. Dew Pty Ltd & Anor

[2004] HCATrans 549

[2004] HCATrans 549

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S599 of 2003

B e t w e e n -

SCREENCO PTY LIMITED

Applicant

and

R.L. DEW PTY LIMITED

First Respondent

RONALD STEELE TRADING AS DRAGON SCAFFOLDING

Second Respondent

Application for special leave to appeal

McHUGH J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 10 DECEMBER 2004, AT 2.54 PM

Copyright in the High Court of Australia

MR C.R.C. NEWLINDS, SC:   If the Court pleases, I appear with my learned friend, MS J.A. STEELE, for the applicant.  (instructed by Piper Alderman)

MR J.B. TURNBULL:   If the Court pleases, I appear for the first respondent.  (instructed by McCabe Terrill)

MR P.W. TAYLOR, SC:   If the Court pleases, I appear for the second respondent.  (instructed by Deacons) 

McHUGH J:   Yes, Mr Newlinds.

MR NEWLINDS:   If your Honour pleases, I should start, I suppose, by acknowledging immediately that this would be an appeal from a discretionary decision of a trial judge.  However, can I go straight to what we say are two special leave points.  Perhaps they are related, but together or taken separately we would suggest that these matters both need to be determined with clarity.  The first is, as a matter of principle, is what a judgment creditor intends to do with his or her judgment money once they get it relevant to the exercise of discretion for the purpose of section 94.

The second question is what level of evidence is required of a judgment creditor to satisfy the court that the discretion should be exercised in favour of the creditor.  On the first point, and your Honours understand that the finding of fact that was made by the trial judge was really a finding of no fact because what his Honour Justice McClellan identified was that the applicant – this is at page 31 of the book in paragraph 11:

was in the process of purchasing the screen from its English “parent” company but had not made any payment for it and has still not done so.  This is apparently because of arrangements which it has been able to make with the “parent” company.  However, those arrangements have not been explained by the evidence and there is nothing before me to confirm that Screenco will either have to make payment –

Now, just pausing there, if that is the case it would be a gift of the screen to Screenco –

or more importantly, pay any amount of interest.

So what his Honour said is, “Well, I know that the accident happened on 3 March 1998; I know that four years down the track; I know that the plaintiffs won; so I know that prima facie the cases tell me that the plaintiff should receive an award of interest unless there is some good reason ‑ ‑ ‑

CALLINAN J:   If you had had to pay interest, would that not have to be proved as part of the damages?

MR NEWLINDS:   No, because this head of damages was simply the value ‑ ‑ ‑

CALLINAN J:   No, but I was thinking of the damages that were given in that case against the accountants. 

MR NEWLINDS:   Walker v Hungerfords?

CALLINAN J:   Yes.

MR NEWLINDS:   That is authority for ‑ ‑ ‑

CALLINAN J:   Would not interest be those sorts of damages here?

MR NEWLINDS:   One could prove interest on that basis.

CALLINAN J:   Well, exactly.

MR NEWLINDS:   One could.  One does not, as your Honour knows.

CALLINAN J:   Well, sometimes you do.

MR NEWLINDS:   If you want to get more than the statutory rate which is what Walker v Hungerfords was about.  The plaintiffs in that case proved ‑ ‑ ‑

CALLINAN J:   Well, in case of doubt as to your entitlement at all you would prove them, not merely in cases in which you were seeking more than the statutory rate.

MR NEWLINDS:   Can we test it this way?  What would one be proving, that one has an obligation to pay someone else some money?

CALLINAN J:   Was it a parent company?

MR NEWLINDS:   It is a parent company.

CALLINAN J:   That there was an obligation which would be certainly possible but not expected that the subsidiary would pay the parent interest in these circumstances.

MR NEWLINDS:   No, that was not proved and his Honour says because it was not proved the plaintiff had failed to make out a case.  Now, your Honour knows though from thousands of trials that plaintiffs do not prove those sort of things.

CALLINAN J:   Well, they do.  They usually prove the contract and if interest was part of the contract that would have been proved.

MR NEWLINDS:   But that is when you sue for interest under a contract.  In this case what was being sued for was a destroyed or damaged chattel, the cause of action being negligence.  The defendant destroyed the screen.

CALLINAN J:   There must have been a lot of evidence before the judge though about how the screen would be replaced and ‑ ‑ ‑

MR NEWLINDS:   Yes, there was and ‑ ‑ ‑

CALLINAN J:   And the source of it and there was some evidence about the arrangements with respect to its acquisition by the subsidiary.

MR NEWLINDS:   Very little because it was an agreed fact that the plaintiff was the owner of the screen.

CALLINAN J:   You could have asked for agreement upon other facts. 

MR NEWLINDS:   Well, I could have if I had understood that interest was in play but, of course, one does not plead material facts that demonstrate your right to interest or your claim for interest.  The defence does not flag that there is an issue before the court.  In the usual way, as this did, it only comes up on the bringing in of short minutes and the defendants go, well look at this, there is an unexplained arrangement.  Now, can we test it this way, your Honour?  Assume the facts against me.  Assume that my client has an arrangement with its parent to pay whatever damages it receives in relation to the screen to the parent and assume that there is no requirement for interest.  We say, so what.  We say that of itself is an irrelevant fact.

CALLINAN J:   What about if you get loss of profits as part of your damages?

MR NEWLINDS:   That is wholly and utterly irrelevant.  We did get loss of profits as part of our damages.

McHUGH J:   Well, you got $79,000 for loss of profit plus interest on it. 

MR NEWLINDS:   That is right.

McHUGH J:   The view that was taken against you is that if you got interest you would be in a better position than if your screen had not been destroyed in the first place. 

MR NEWLINDS:   And that is wrong.

McHUGH J:   Why?

MR NEWLINDS:   Because the value of my money – the screen was worth what it was worth in 1998.

McHUGH J:   Yes.

MR NEWLINDS:   I get my judgment in 2004.

McHUGH J:   Yes.

MR NEWLINDS:   Well, common experience tells us that with inflation running I am getting less than I was entitled to at the date of my cause of action.  Now, what I choose to do with my money thereafter is my business.

McHUGH J:   Yes, I know, but it is a discretionary matter.  Interest is discretionary and questions of justice and interest and reality are taken into account and here the courts below took the view that you really had not suffered any loss.

MR NEWLINDS:   No, with respect, your Honour, they took the view that I had not proved that I had suffered any loss.  I have taken your Honour to the finding.  The finding is there is no evidence that loss has been suffered.  The Court of Appeal acknowledges, all three of the Court of Appeal acknowledge that if it was a gift, interest would run.  So the first matter that Justice McClellan postulates is a possibility that there was no obligation to make payment.

CALLINAN J:   The assumption seems to be that if anybody was out of its money ‑ ‑ ‑

MR NEWLINDS:   The parent, that is the assumption.

CALLINAN J:   Well, what is wrong with that assumption when you do not prove that there was any different arrangement between the parent and the subsidiary because normally you would expect that unless there is some sort of transfer pricing or something going on that there would not be any interest?

MR NEWLINDS:   I would suggest that the natural inference would be that there would be interest.

CALLINAN J:   Well, it just shows how minds can differ on this, really.  I mean I could easily foresee of a situation in which there would be interest, but it could be affected by all sorts of dealings – well transfer pricing; income tax regimes; all sorts of things.

MR NEWLINDS:   Can I put forward some other just examples?  What if the evidence was that the plaintiff always intended to put the money in a cardboard box under his bed?  It is still worth less between the day he gets it and that is what the interest compensates him for.

CALLINAN J:   Yes, but if you have not paid the money you have not been out of the money and you therefore have not had an opportunity cost.  We are talking about opportunity cost really, are we not?

MR NEWLINDS:   Well, two things.  Interest is meant to compensate for the fact that money is worth less at a later date and also for the fact the person has not been able to use the money to make money.

CALLINAN J:   Well, it is really the same thing in a way and if you have never been out of that money and you get your loss of profits as if you had got money’s worth, then it seems to me that there has not been any opportunity lost.

MR NEWLINDS:   I have been out of my money.  I had a screen and then there were four years went by during which I had no screen ‑ ‑ ‑

CALLINAN J:   You were out of your money ‑ ‑ ‑

McHUGH J:   Mr Newlinds, there is no special leave in this point.  It is a question of an application of principle to the facts of the case and there is an adverse decision to you.  Whether it is right or wrong it does not warrant special leave in this Court.

MR NEWLINDS:   Can I take your Honour up on that.  This case, this judgment does stand for the proposition that either a moving party has to prove an entitlement to interest with evidence or alternatively that it is open for a defendant to try and disprove a claim for interest.  That opens up issues of discovery, interrogatories and the like ‑ ‑ ‑

CALLINAN J:   But look factually I am not satisfied you are right because by getting loss of profits you have the equivalent of what you would have got had you had the screen and you would only have had the screen if you had expended money. 

MR NEWLINDS:   But test that this way.  The loss of profits we got was only $79,000.  The screen is worth $1.2 million.  How can it be ‑ ‑ ‑

CALLINAN J:   You only prove that having it earlier would have ‑ ‑ ‑

MR NEWLINDS:   But that is because we got a replacement screen.  We mitigated our loss.

CALLINAN J:   Well, exactly.  Courts do not ignore the facts.

McHUGH J:   I mean the case stands only for the proposition of facts stated at page 88 of Justice Tobias’ judgment:

the primary Judge was therefore correct in holding . . . the appellant had not suffered any “real” or “practical” loss by the delay –

Now, that may be right or it may be wrong, but it is not a special leave point.

MR NEWLINDS:   But, your Honour, you need to read that in light of what the primary judge did find because all he found was there was no evidence as to what the arrangement was and that is why I say that is ‑ ‑ ‑

McHUGH J:   Well, he may have, but the fact is that the Court of Appeal referred to the case on the basis I just put to you.

MR NEWLINDS:   Well, your Honour, if that is what the Court of Appeal has done then they have completely gone wrong because there is just no basis for such a finding.  The only finding that was made was that the trial judge was left in a state of not knowing.

McHUGH J:   Well, that may be but it is not a special leave point.  I mean this Court can only take 40 or 50 cases a year and in the run of things it may be important to the parties, it is a trivial case. 

MR NEWLINDS:   But your Honour it is not because it comes up, as your Honour knows, in every case; at the end of every civil case the plaintiff goes “And by the way, can I have my interest” and your Honour knows ‑ ‑ ‑

CALLINAN J:   It does not come up in every single case.  This is a special case because you have loss of profits and that does not come up in every case. 

MR NEWLINDS:   With respect, your Honour, none of the judges who have looked at it took into account the proposition that was contended that there was some sort of double counting.

CALLINAN J:   I do not care whether the other judges did.  I would take it into account because I am just telling you what is exercising my mind.

MR NEWLINDS:   I understand that, your Honour, but that is not the basis of the decision. 

CALLINAN J:   It may well be the basis of a decision if the case did go anywhere.

McHUGH J:   I mean the trial judge summarised the principles for an award of interest in paragraphs 5 to 9 of his judgment and he may or may not have applied them wrongly.

MR NEWLINDS:   And then said, because I am not satisfied as to what ‑ ‑ ‑

McHUGH J:   That only means he got the facts wrong, that is all.  It is not a special leave point.  The New South Wales Bar, in particular, has to learn to identify cases where there is a real special leave point.  This Court cannot - out of the hundreds of thousands of cases that are decided in this country there are only a tiny percentage that warrant the grant of special leave.

MR NEWLINDS:   We understand that, your Honour, and I would be repeating myself but I might have one last go seeing the light is not on.  It comes up in every case and clever defendant’s lawyers will be able to wreak havoc in places like the District Court of New South Wales with a decision such as this because they will put it before trial judges and they will say look at this, this trial judge was not satisfied as to what the plaintiff was going to do with his money and the result was the plaintiff did not get interest and that is what it does stand for.  If you apply the facts as found to the result that is what it is authority for and that has to be wrong and it is also a special leave point because it will do nothing more than delay; add to costs and expenses, make it difficult to settle cases and so on.

So, if it be arguable that it is wrong, in my respectful submission, it is a case that warrants the attention of this Court.  It is a short point; could be dealt with shortly.  With the greatest of respect to the Court of Appeal, even if they have it right, one would have thought that a principle such as this needed to be stated with real clarity and it is not.  It is all very well saying you have to show a real and practical loss.  My answer to that is, well we did.  We showed damage at day X, judgment at day Y.  There is a

real and practical loss, we were kept out of our money.  Those are my submissions.

McHUGH J:   Yes, we need not hear you, Mr Turnbull and Mr Taylor.

The Court is of the view that this case raises no question of general principle that would warrant a grant of special leave.  The case turned on its own facts.  The Court is of the view special leave must be refused with costs.

AT 3.08 PM THE MATTER WAS CONCLUDED