Seven Sydney v Fuji Xerox - [2004] NSWSC 1081

CITATION: Seven Sydney v Fuji Xerox [2004] NSWSC 1081

HEARING DATE(S): 1 November 2004

JUDGMENT DATE:
1 November 2004

JUDGMENT OF: McDougall J at 1

DECISION: See paras [22] and [34] of judgment

CATCHWORDS: INTEREST - where amounts overdue prior to termination of contract - where contract stipulated interest rate payable on overdue amounts - where contract subsequently terminated - whether interest should be charged on overdue amounts at contractual rate or Schedule J rate after termination - whether termination brought an end to obligation to pay interest at the contractual rate - where judgment creditor also entitled to future rental instalments at date of termination - whether interest should be charged on damages for loss of future rental instalments at contractual rate or Schedule J rate - COSTS - indemnity costs - where offer of compromise served - where result in favour of judgment creditor substantially more favourable than offer of compromise - where testing process after offer of compromise made - SCR Pt 52A r 22(4) - whether effect of testing process such that order for indemnity costs should not be made

CASES CITED: F J Bleomen Pty Ltd v Council of the City of Gold Coast [1973] AC 115
Heyman v Darwins Ltd [1942] AC 356
The Progressive Mailing House Proprietary Limited v Tabali Proprietary Limited (1985) 157 CLR 17
McDonald v Dennys Lascelles Limited (1933) 48 CLR 457
Moschi v Lep Air Services Ltd [1973] AC 331

PARTIES :
Seven Sydney Pty Limited (Plaintiff)
Fuji Xerox Australia Pty Limited (Defendant)

FILE NUMBER(S): SC 50127/01

COUNSEL: J B Simpkins SC (Plaintiff)
F G Lever SC/J M Miller (Defendant)

SOLICITORS: Henry Davis York (Plaintiff)
Bartier Perry (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

McDOUGALL J

1 November 2004 Ex tempore (revised 2 November 2004)

50127/01 SEVEN SYDNEY PTY LIMITED v FUJI XEROX AUSTRALIA PTY LIMITED

JUDGMENT (On interest and indemnity costs)

1 HIS HONOUR: I gave judgment in these proceedings on 8 October 2004, holding that the referee's report should be adopted: [2004] NSWSC 902. I directed the parties to bring in short minutes of order to give effect to my reasons. The parties have now brought in competing draft minutes of order and I have heard submissions on the appropriate orders to be made. The parties disagree as to the amount of the judgment that, pursuant to the referee's reasons and my decision to adopt his report, represents the amount of damages sustained by FXA by reason of Seven Sydney's breach of the DC100 lease. The second dispute relates to the costs of the proceedings. In these reasons, I deal firstly with the amount of the judgment.

2 It is accepted that the effect of the referee’s reasons which, as I have said, I think should be adopted, is that Seven Sydney repudiated the DC100 lease. On any view that repudiation was accepted when on 2 October 2001 FXA filed its cross-claim seeking damages. The parties have agreed to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2004] NSWSC 1081
Decision Date: 1 November 2004

CaseChat Overview and Summary

In this matter, the plaintiff, Seven Sydney, brought an action against Fuji Xerox for breach of contract and sought damages for the loss of future rental payments. Fuji Xerox subsequently terminated the contract. The primary dispute was whether interest should be charged on overdue amounts at the contractual rate or the Schedule J rate after the termination of the contract. Additionally, the parties argued about whether the termination brought an end to the obligation to pay interest at the contractual rate. Furthermore, the case involved an issue regarding the rate at which interest should be charged on damages for the loss of future rental instalments. The matter was heard in the Supreme Court of New South Wales.

The court had to determine whether the termination of the contract brought an end to the obligation to pay interest at the contractual rate or whether the contractual interest rate continued to apply even after termination. The court also had to decide whether interest should be charged on damages for the loss of future rental instalments at the contractual rate or the Schedule J rate. The court examined the contractual terms and the relevant legal principles to arrive at a decision.

The court held that the contractual interest rate continued to apply even after the termination of the contract. The court reasoned that the termination did not bring an end to the obligation to pay interest at the contractual rate. The court also held that interest should be charged on damages for the loss of future rental instalments at the contractual rate. The court found that the judgment creditor was entitled to future rental instalments at the date of termination, and therefore, the contractual rate was the appropriate rate of interest. The court further held that the testing process did not negate the effect of the offer of compromise, and an order for indemnity costs should be made in favour of the judgment creditor.

The court ordered Fuji Xerox to pay Seven Sydney damages for the loss of future rental instalments, interest on the overdue amounts and damages at the contractual rate, and costs on an indemnity basis.

Orders