Sykes v Reserve Bank of Australia

[1999] FCA 975

FEDERAL COURT OF AUSTRALIA

Sykes v Reserve Bank of Australia [1999] FCA 975

PETER SYKES, BEVERLEY MAY SYKES AND POLYBANK PTY LIMITED v

RESERVE BANK OF AUSTRALIA

NG 941 OF 1994

TAMBERLIN J
SYDNEY
16 JULY 1999

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 941 OF 1994

BETWEEN:

PETER SYKES
First Applicant

BEVERLEY MAY SYKES
Second Applicant

POLYBANK PTY LIMITED
(ACN 051 634 158)
Third Applicant

AND:

RESERVE BANK OF AUSTRALIA
Respondent

JUDGE:

TAMBERLIN J

DATE OF ORDER:

16 JULY 1999

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.There be judgment for the applicants in the sum of $82,648.00, together with interest thereon pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth), from 7 July 1992 to date, to be calculated in accordance with Schedule J to the Supreme Court Rules 1970.

2.        The respondent is to pay the applicants’ costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 941 OF 1994

BETWEEN:

PETER SYKES
First Applicant

BEVERLEY MAY SYKES
Second Applicant

POLYBANK PTY LIMITED
(ACN 051 634 158)
Third Applicant

AND:

RESERVE BANK OF AUSTRALIA
Respondent

JUDGE:	TAMBERLIN J
DATE:	16 JULY 1999
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. This judgment concerns the appropriate orders in respect of claims for interest and costs by the successful applicants. 

2. The applicants instituted proceedings in December 1994 and originally claimed judgment for an amount over $6 million; this was subsequently reduced before trial to a claim in the order of $3.9 million.  At trial the claim was reduced to an amount of $550,989, and in the alternative $213,500.  The amount actually awarded was $82,648, together with interest.  It is common ground that the loss was suffered by July 1992. The applicants claim that prejudgment interest should be calculated by reference to that date.

3. The respondent Bank, the Reserve Bank of Australia, says that the proceedings were not instituted until December 1994 and therefore interest should not begin to run until that date.  In some cases where there has been lengthy delay which would lead to considerable hardship, the Court has awarded interest from the date of institution of the proceedings and not from the date of loss.  See, for example, the judgment of Davies J in Namol Pty Ltd v A W Baulderstone Pty Limited (1993) 47 FCR 388 (“Namol”) at 389-400, (1993) 119 ALR 187 at 188-189. However, in the circumstances of the present case, I think it is appropriate to award interest from the date of loss, namely July 1992, because the purpose of the award of interest is to compensate an applicant for not having the benefit of money which should have been in the applicant’s pocket as at a particular date.  See Smallacombev Lockyer Investsments Co Pty Ltd (1993) 42 FCR 97 (“Smallacombe”) at 103, (1993) 114 ALR 568 at 575, per Spender J; Netaf Pty Ltd v Bikane Pty Ltd (1990) 26 FCR 305 at 312, (1990) 92 ALR 490 at 507, per Wilcox J; and Bennett v Jones [1977] 2 NSWLR 355 at 367 per Moffitt JA.

4. As to the rate of interest to be applied, I consider that it is appropriate to use the statutory rates in Schedule J to the Rules of the Supreme Court of New South Wales, taking into account the factors discussed by Davies J in Namol (supra) at 389. This is because, as his Honour there points out, the Supreme Court rates more accurately reflect the relevant commercial rates. In addition, such an approach ensures that compensation is awarded on the same basis whether the proceedings are commenced in the Federal Court or the Supreme Court of New South Wales. The present matter is of course a commercial proceeding. It was commenced in New South Wales. Therefore, in my view, the Supreme Court rates should apply.

   Costs

5. The Court has a wide discretion although, normally, costs will follow the outcome of a proceeding.  In the present case, although the damages awarded are considerably less than the amounts originally claimed, I am not persuaded that the applicant should be deprived of part of his costs.  The Bank raised numerous issues in defence, most of which were concerned with liability and on these the Bank lost.  I have also taken into account that the Bank did not take any steps to make an open offer of payment or to pay moneys into Court with a view to improving its position as to costs.

6. The Bank has referred to the provisions of O 62 r 36A of the Federal Court Rules which provides that:

   “(1) Where a party is awarded judgment for less than $100,000 on a claim (not including a cross-claim) for a money sum or damages any costs ordered to be paid, including disbursements, will be reduced by one-third of the amount otherwise allowable under this Order unless the Court or a Judge otherwise orders.

   (2) If the Court or a Judge is of the opinion that a proceeding
   (including a cross-claim for a money sum or damages) brought in this
   Court could more suitably have been brought in another court or in a
   tribunal and so declares, then any costs to be paid, including
   disbursements, will be reduced by one-third of the amount otherwise
   allowable under this Order.
   …”

7. It has been held that the judgment sum includes interest awarded under s 51A of the Federal Court of Australia Act 1976 (Cth): see O’Kelly Holdings Pty Limited v Dalrymple Holdings Pty Limited (1993) 45 FCR 145; and Smallacombe (supra) at 103. In the present case, it is common ground that the amount awarded together with interest over the relevant period will exceed $100,000. Accordingly, r 36A(1) is not applicable. Notwithstanding this, however, the Bank refers to the policy underlying the rule and submits that the present case is within that policy, and submits that the present case is within r 36A(2), so that a reduction should be made. In my view, the present case is not within either of the rules or the policy. It is therefore open and appropriate for the Court to apply the normal rule. The issues raised by the Bank in its defence were complex and important and it was appropriate that these matters should be determined in this Court rather than the District Court. Further, this is not a case, in my view, in which the issues should be fragmented and analysed for the degree of success or failure on each issue. The matter should be looked at as a whole, and in substance the applicant has substantially won the litigation and should be awarded costs of the first instance proceedings on a party party basis.

8. The appropriate orders are as set out in the Minutes of Order attached to this judgment.

I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.

Associate:

Dated:             16 July 1999

Counsel for the Applicant:	M Ashhurst
Solicitor for the Applicant:	Packer & Austen
Counsel for the Respondent:	V R Gray
Solicitor for the Respondent:	Reserve Bank of Australia
Date of Hearing:	24 May 1999, final submissions on costs filed 9 July 1999
Date of Judgment:	16 July 1999