Svitzer Salvage Australasia Pty Ltd v Trident Australasia Pty Ltd (No. 2)

[2012] NSWDC 147

District Court

New South Wales

Medium Neutral Citation:

Svitzer Salvage Australasia Pty Ltd v Trident Australasia Pty Ltd (No. 2) [2012] NSWDC 147

Hearing dates:

10 September 2012 (written submissions)

Decision date:

10 September 2012

Jurisdiction:

Civil

Before:

Gibson DCJ

Decision:

(1) By way of variation of Order 1 of the orders of 29 June 2012, judgment for the plaintiff for USD $523,372.46, being USD $416,307.07 plus interest in the sum of USD $107,065.39.

(2) By way of variation of Order 1 of the orders of 29 June 2012, the defendant is to pay the plaintiff's costs on a party/party basis to 30 December 2011 and thereafter on an indemnity basis.

(3) The indemnity costs order in Order 2 above is to include the costs of this application for indemnity costs.

Catchwords:

COSTS - offer of compromise - application for indemnity costs - interest

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 101

Cases Cited:

Calderbank v Calderbank [1975] 3 All ER 333
Commonwealth of Australia v Gretton [2008] NSWCA 117
Leichhardt Municipal Council v Green [2004] NSWCA 341
Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721
Michos v Council of the City of Botany Bay (No. 3) (Supreme Court of NSW, Slattery J, 9 July 2012)
Miwa Pty Ltd v Siantan Properties PTE Ltd (No. 2) [2011] NSWCA 344
Morgan v Johnson (1998) 44 NSWLR 578
MPB (SA) Pty Ltd v Gogic (1991) 171 CLR 657
SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323
Trkulja v Yahoo! Inc LLC & Anor (No 3) [2012] VSC 228
Trustee for the Salvation Army (NSW) Property Trust t/as Salvation Army v Becker (No 2) [2007] NSWCA 194

Texts Cited:

-

Category:

Costs

Parties:

Plaintiff: Svitzer Salvage Australasia Pty Ltd
Defendant: Trident Australasia Pty Ltd

Representation:

Plaintiff: Mr E Cox
Defendant: Mr T Ross (in person)
Plaintiff: Norton White
Defendant: Mr T Ross (in person)

File Number(s):

2010/392856

Publication restriction:

None

Judgment

Introduction

1. This is an application by the plaintiff for interest and for costs to be paid on an indemnity basis. The defendant's principal director, Mr Ross, resides in Western Australia and the defendant has dispensed with the services of its legal representatives. To suit the convenience of the defendant, this application was dealt with on the basis of written submissions, and the defendant has been given an extended time to file submissions to fit in with travel and holiday arrangements of its principal director.

1. The written submissions I have received are:

(a)   The plaintiff's submissions dated 8 August 2012 and supporting affidavit by Nathan Paul Cecil;

(b)   The defendant's submissions dated 7 September 2012 and supporting affidavit sworn by Anthony Richard Ross.

1. Mr Ross raised issues of fact to which the plaintiff's legal representatives have not had an opportunity to reply. I have, however, advised the parties this morning that I propose to give judgment in any event, as it is not necessary, by reason of my findings, to hear from the plaintiffs in reply. The plaintiff's legal representatives have been pressing for this application to be heard since 29 June, the date of judgment, and further delay is undesirable.

The plaintiff's applications

1. These were proceedings to recover the costs of salvage services rendered by the plaintiff in relation to the APC AUSSIE 1 barge (090263) in May 2009. Proceedings were commenced on 25 November 2010 and the hearing took place on 27 - 29 February and 4 April 2012, following which further submissions were made.

1. On 29 June 2012, I gave judgment for the plaintiff and made orders as follows:

(1)   Judgment for the plaintiff for USD $416,307.07.

(2)   Defendant pay plaintiff's costs.

(3)   Liberty to restore in relation to interest and costs.

(4)   Exhibits retained for 28 days.

1. Pursuant to the liberty to apply, the plaintiff now seeks orders for:

(a)   Interest from the date the cause of action accrued (2 August 2009, being the due date for payment of the plaintiff's invoice) at the Court rate based on the Reserve Bank rate;

(b)   An order for costs to be paid on an indemnity basis from 30 December 2011, being the date of an Calderbank offer (Calderbank v Calderbank [1975] 3 All ER 333).

The claim for interest

1. The power to order interest is for the compensation of a successful plaintiff where a defendant has not paid the debt owed: MPB (SA) Pty Ltd v Gogic (1991) 171 CLR 657.

1. Section 101 Civil Procedure Act 2005 (NSW) provides:

"101 Interest after judgment

(1) Unless the court orders otherwise, interest is payable on so much of the amount of a judgment (exclusive of any order for costs) as is from time to time unpaid.

(2) Interest under subsection (1) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from:

(a) the date on which the judgment takes effect, or

(b) such later date as the court may order.

(3) Despite subsection (1), interest is not payable on the amount of a judgment if the amount is paid in full within 28 days after the date on which the judgment takes effect, unless the court orders to the contrary.

(4) The court may order that interest is to be paid on any amount payable under an order for the payment of costs.

(5) Interest under subsection (4) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from:

(a) the date or dates on which the costs concerned were paid, or

(b) such later date as the court may order.

(6) This section does not authorise the giving of interest on any interest payable under this section.

(7) In this section, a reference to the "prescribed rate" of interest is a reference to the rate of interest prescribed by the uniform rules for the purposes of this section."

1. The claim for interest was included in the statement of claim but, as is noted in my judgment, was not argued by the parties during the hearing, on the assumption that it will be dealt with when reasons were published if the plaintiff succeeded.

1. This is the usual procedure in unliquidated claims, such as claims for defamation, and is commonly a course adopted in liquidated claims such as the present.

1. The calculation of the interest is as follows:

Interest Calculation - Australian Court Rate
Principal $US	From	To	Days	Interest	Daily Interest p.a.	Amount
$416,307.07	2/8/2009	31/12/2009	152	7.00%	$79.84	$12,135.64
$416,307.07	1/1/2010	30/6/2010	181	7.75%	$85.54	$15,483.20
$416,307.07	1/7/2010	31/12/2010	184	8.50%	$96.95	$17,838.47
$416,307.07	1/1/2011	30/6/2011	181	8.75%	$99.80	$18,063.73
$416,307.07	1/7/2011	31/12/2011	184	8.75%	$99.80	$18,363.13
$416,307.07	1/1/2012	29/6/2012	181	8.25%	$94.10	$17,031.52
Total	$98,915.70

Post-Judgment Interest
Principal $US	From	To	Interest	Daily Interest p.a.
$416,307.07	30/6/2012	30/6/2012	10.25%	$142.57
$416,307.07	1/7/2012	31/12/2012	9.75%	$111.21

1. The amount of post-judgment interest from the date of judgment to the date of this application resulting in judgment is USD $8,149.69, which was calculated as follows:

$142.57 (interest on 30 June 2012) + (72 days (1 July 2012 to 10 September 2012) x $111.21) = $8,149.69

1. A calculation of interest was sent by the solicitors for the plaintiff to the solicitors formerly acting for the defendant on 29 June 2012 (affidavit of Nathan Cecil, annexure NPC-3) and no reply or objection was made until the written submissions served on Friday 7 September 2012.

1. The challenges made to the interest claim are as follows:

(a)   The plaintiff's actual invoice to the defendant (as opposed to the T-D Joint Venture address the defendant's servant or agent Mr Barooni gave to Mr Timofei) is 11 November 2009.

I do not accept this submission. I have found that the defendant was the contracting party, and it would be inconsistent with that finding to date interest from the later date.

(b)   The plaintiff did not commence legal proceedings until 25 November 2010, and no interest should run until that date, because of the plaintiff's delay in commencing the proceedings.

I do not accept this submission. As the extensive documentation set out in my judgment demonstrates, the factual background to these proceedings required analysis not only of many documents, but also the taking of a careful history of events. The plaintiff and its legal advisers were obliged to investigate the defendant's claims before commencing litigation.

(c)   Interest should be awarded in accordance with the Federal Court Rules.

I do not accept this submission. Section 100 Civil Procedure Act 2005 (NSW) is the appropriate legislation for actions in the District Court.

(d)   The ABN number cited by the plaintiff is incorrect. The defendant is therefore obliged to withhold 46.5% of the judgment debt excluding GST which is to be paid direct to the Australian Tax Office.

In addition, I am requested to reduce the judgment sum for allegedly incorrect GST and to reduce the judgment debt by 46.5% which, when calculated in accordance with the defendant's estimate of when interest should run, results in a judgment debt of $33,710.98.

I do not accept these submissions, which effectively challenge the quantum of damages, rather than interest, and seek to rely upon material not adduced at the trial. Challenges to the GST calculation or the plaintiff's ABN were issues that should have been raised at the trial, in relation to quantum. It is too late to do that now. I note the search upon which the defendant relies was carried out on 30 January 2012, a month before the hearing commenced. Leave should not be granted to the defendant to rely upon fresh evidence, in relation to an application for interest and costs, where that evidence is material it had at the trial, but elected not to use.

1. The defendant has not raised any challenge to the mathematics or to the formula employed.

1. Accordingly, I propose to award interest in the sum of USD $107,065.39 (being the $98,915.70 plus $8,149.69).

Application for indemnity costs

1. The plaintiff made three offers, each expressly stated to have been made in accordance with the principles in Calderbank v Calderbank [1975] 2 All ER 333:

(a)   an offer dated 30 December 2011 for AUD $200,000, opened for acceptance for 14 days;

(b)   a second offer dated 30 December 2011 for AUD $235,000 which was opened for six weeks;

(c)   an offer dated 14 February 2012 for AUD $115,000 which remained open for three days, namely to 17 February 2012.

1. In Trustee for the Salvation Army (NSW) Property Trust t/as Salvation Army v Becker (No 2) [2007] NSWCA 194 Ipp JA explained the nature of a Calderbank offer as follows:

"[27] Calderbank offers are simply offers that do not comply with the relevant rules of court relating to the making of offers of compromise: Jones v Bradley (No 2) (at [5]). Whether an offer, intended to be an offer under the Uniform Civil Procedure Rules but which is ineffective because it does not comply with those Rules, operates as a Calderbank offer, depends upon the intention of the offeror as revealed by the terms of the offer. The offer may disclose an intention that it should take effect only if it complies with the Uniform Civil Procedure Rules. On the other hand, it may disclose a general intent to make an offer, irrespective of whether it takes effect under the Uniform Civil Procedure Rules or not."

1. However, the onus lies upon the offeror (the plaintiff in the present circumstances) to satisfy the court that the defendant's failure to accept the offer was unreasonable in all the circumstances: Miwa Pty Ltd v Siantan Properties PTE Ltd (No. 2) [2011] NSWCA 344 at [16]; Commonwealth of Australia v Gretton [2008] NSWCA 117 at [44].

1. In Commonwealth of Australia v Gretton at [41], Beazley JA noted the public policy considerations underpinning the making of favourable costs orders where a Calderbank offer has been made, those being the encouragement of the settlement of disputes and the discouragement of wasteful behaviour (in the sense of the incurring of unnecessary legal costs) by litigants. However, the making of a Calderbank offer does not automatically result in a favourable costs order notwithstanding the fact that the judgment may be more favourable: SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37] per Giles JA.

1. In Michos v Council of the City of Botany Bay (No. 3) (Supreme Court of NSW, Slattery J, 9 July 2012), Slattery J set out the relevant factors for consideration in relation to Calderbank offers as follows:

"The Court must consider the factors relevant to determining whether the rejection of the offer was unreasonable on a wide basis including those matters set out in Hazeldene's Chicken Farm Pty Limited v Victorian WorkCover Authority (No. 2) [2005] VSCA 298 and MIWA Pty Ltd v Siantan Properties Pty Ltd (No. 2) [2001] NSWCA 344. Those relevant factors include:

(a)   The stage of the proceedings at which the offer was received;

(b)   The time allowed to the offeree to consider the offer;

(c)   The extent of the compromise offered;

(d)   The offeree's prospects of success, assessed as at the date of the offer;

(e)   The clarity with which the terms of the offer were expressed;

(f)   Whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it."

1. The plaintiff in written submissions (at [4] - [5]) notes that the rationale for a compensatory costs order in this context is well known, citing Morgan v Johnson (1998) 44 NSWLR 578 at 581 - 2 and Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 - 5. While there is no presumption with a Calderbank letter, as opposed to an offer of compromise, the plaintiff submits that the exercise of discretion is similar, citing Leichhardt Municipal Council v Green [2004] NSWCA 341 at [42] - [47].

1. I shall first set out a short chronology of the relevant events, drawn from the affidavit of Mr Cecil (to which no factual objection is taken by the defendant), in order to deal with the issues identified as relevant by Slattery J in Michos.

The chronology of events

1. The relevant chronology is as follows:

Date	Event
25 November 2010	Proceedings commenced.
1 July 2011	Discovery lists to be completed.
12 August 2011	Plaintiff's evidence in chief was served.
26 September 2011	Matter fixed for hearing on 27 February 2012 for three days with priority by reason of interstate and overseas witnesses.
30 September 2011	Defendant's evidence in response was served.

1. Although the plaintiff served further evidence after the matter was set down for hearing (namely reply evidence on 21, 23 and 24 February 2012) the parties were ready to take a hearing date some three months before the first of these offers was made.

1. It can be seen from the above chronology that the offers were made at an advanced stage, offering (in the case of the second offer) a considerable period of time to consider the offer, at a time when the defendant was sufficiently aware of the nature of the plaintiff's case for the proceedings to be set down for hearing.

1. There is a problem with the clarity of the first and second offers, which were sent on the same day but which are inconsistent in terms of time and amount, and with the very short period of time for the first offer of AUD $200,000, which allowed for 14 days at a time covering the court vacation and post-Christmas holiday period.

1. The explanation given by the plaintiff for the making of two offers on 30 December 2011 was that the second offer was made "in the event that the first offer was not accepted" (affidavit of Mr Cecil dated 8 August 2012). However, as I am satisfied that the second offer replaced the first, and that this would have been clear to the solicitors for the defendant, the fact that two inconsistent offers were made on the same day is irrelevant. I note that the defendant has not in fact raised any complaint about being unable to understand which of these offers was in fact capable of acceptance.

1. It was always open to the defendant to accept the second 30 December 2011 offer to accept AUD $235,000 after the very short expiry period of the first offer. In addition, the 14 February 2012 offer of AUD $115,000 was for a sum significantly less than both these offers, as well as the amount finally awarded.

1. Applications for indemnity costs have been refused on occasion by courts where a party argues that the issue of credibility is essentially a fact-finding issue by the court: Trkulja v Yahoo! Inc LLC & Anor (No 3) [2012] VSC 228. However, with respect to the trial judge in those proceedings, it would defeat the purpose of the procedure for pre-trial offers if Calderbank offers could be disregarded in proceedings where credit is an issue. In addition, this was not simply a case turning on the credit of one witness versus the credit of another. All of the contemporaneous documentation supported the position taken by the plaintiff in these proceedings.

1. The defendant does not refer to any of these principles in the submissions in reply. Mr Ross states only that "for various reasons the defendant was incapable of taking up [these offers] at each of these particular points in time" (written submissions, paragraph 1).

1. Mr Ross also relies, in relation to indemnity costs, to the quantum issues referred to at [14(d)] above. These have even less relevance to the issue of costs than to the issue of interest.

1. Accordingly, I propose to order the defendant to pay the plaintiff's costs on a party/party basis to 30 December 2011 and thereafter on an indemnity basis.

The costs of this application

1. There is substantial delay and failure to answer correspondence by the defendant between the date of judgment and the date of this application coming before the court. The solicitors for the defendant filed a Notice of Ceasing to Act. While I am sympathetic to the difficulties of a party without legal representation, especially where there has been legal representation during a hearing of some complexity, the issues in this application were straightforward and did not require any detailed knowledge of the history of the litigation, this being readily available from the material contained in the court file and in the judgment.

1. Accordingly, it is appropriate that the indemnity costs order should also include the costs of this application.

Orders

(1)   By way of variation of Order 1 of the orders of 29 June 2012, judgment for the plaintiff for USD $523,372.46, being USD $416,307.07 plus interest in the sum of USD $107,065.39.

(2)   By way of variation of Order 1 of the orders of 29 June 2012, the defendant is to pay the plaintiff's costs on a party/party basis to 30 December 2011 and thereafter on an indemnity basis.

(3)   The indemnity costs order in Order 2 above is to include the costs of this application for indemnity costs.

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Decision last updated: 14 September 2012