Walker v Citigroup Global Markets Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Walker v Citigroup Global Markets Pty Ltd [2005] FCA 1866

INTEREST – section 51A of the Federal Court of Australia Act 1976 (Cth) – requirement of application for award of interest – delay in making application – whether O 35 r 7 of the Federal Court Rules applied – rate of interest – the Court’s usual practice – whether State interest rates were commercial

COSTS – indemnity costs – whether the respondents should have known that they had no chance of success on the question of liability – failure to make proper discovery

Trade Practices Act 1974 (Cth), s 52
Federal Court of Australia Act 1976 (Cth), s 4, 24, 51A
Penalty Interest Rates Act 1983 (Vic)

Federal Court Rules 1979 (Cth), O 35 r 7

Walker v Citigroup Global Markets Pty Ltd [2005] FCA 1678 discussed
Walker v Salomon Smith Barney Australia Securities Pty Ltd [2003] FCA 1099 discussed
Kewside Pty Ltd v Warman International Ltd (1990) ATPR 41-012 referred to
Pheeney v Doolan (No. 2) [1977] 1 NSWLR 601 discussed
Hanave Pty Ltd v LFOT Pty Ltd (2004) 136 FCR 566 discussed
Driclad Pty Ltd v Commissioner of Taxation (1968) 121 CLR 45 referred to
Ah Toy v Registrar of Companies (1985) 10 FCR 280 cited
Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc(No 2) (1998) 155 ALR 328 cited
Hannpost Pty Ltd v Mita Copiers Australia Pty Ltd (1996) 137 ALR 701 cited
Hanave Pty Ltd v LFOT Pty Ltd [2003] FCA 1154 referred to
GEC Marconi Systems Pty Limited v BHP Information Technology Pty Limited (2003) 201 ALR 55 discussed
Namol Pty Ltd v AW Baulderstone Pty Ltd (No 2) (1993) 47 FCR 388 referred to
EMCL Pty Ltd v ESANDA Finance Corp Ltd [1999] FCA 978 applied
Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 applied
Abbott v Random House Australia Pty Ltd [1999] FCA 1540 referred to
Colgate-Palmolive Company v CussonsPty Ltd (1993) 46 FCR 225 followed
Yates v Boland [2000] FCA 1895 applied

DAVID WALKER v CITIGROUP GLOBAL MARKETS PTY LTD (FORMERLY SALOMON SMITH BARNEY AUSTRALIA SECURITIES PTY LIMITED) AND CITIGROUP GLOBAL MARKETS AUSTRALIA HOLDINGS PTY LTD (FORMERLY SALOMON SMITH BARNEY AUSTRALIA PTY LIMITED)

VID 531 OF 1998

KENNY J
19 DECEMBER 2005
MELBOURNE


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 531 OF 1998

BETWEEN:

DAVID WALKER
APPLICANT

AND:

CITIGROUP GLOBAL MARKETS PTY LTD (FORMERLY SALOMON SMITH BARNEY AUSTRALIA SECURITIES PTY LIMITED)
FIRST RESPONDENT

CITIGROUP GLOBAL MARKETS AUSTRALIA HOLDINGS PTY LTD (FORMERLY SALOMON SMITH BARNEY AUSTRALIA PTY LIMITED)
SECOND RESPONDENT

JUDGE:

KENNY J

DATE OF ORDER:

19 DECEMBER 2005

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.There be judgment for the applicant against the first respondent in the sum of $41,566, being the principal sum of $22,917 together with interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) in the sum of $18,649.

2.There be judgment for the applicant against the second…

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Details
Case
[2005] FCA 1866
Decision Date

CaseChat Overview and Summary

In the matter of Walker v Citigroup Global Markets Pty Ltd, the plaintiff, Mr Walker, sought damages and interest against the defendants, Citigroup Global Markets Pty Ltd and Citigroup Global Markets Australia Holdings Pty Limited, following alleged misleading and deceptive conduct under the Trade Practices Act 1974 (Cth). The plaintiff claimed damages for the breach of contract and misrepresentations made by the defendants regarding his employment terms and conditions. The defendants opposed the plaintiff's claim for interest on the awarded damages, arguing that Mr Walker's delay in applying for interest and procedural defects in his application warranted denying the award. The primary issue before the court was whether the plaintiff was entitled to interest on the awarded damages under Section 51A of the Federal Court of Australia Act 1976 (Cth).

The court held that the plaintiff was entitled to interest on the awarded damages, rejecting the defendants' arguments. The court found that the defendants' contention of delay in applying for interest was not supported by the law, as there was no requirement for the plaintiff to apply for interest within a specific timeframe. The court also dismissed the argument that procedural defects in the application for interest warranted denying the award, finding that the application was made in a timely manner and was valid. The court emphasised that the reasons for judgment did not constitute a 'judgment' for the purposes of Section 4 or 24 of the Act or Order 35 Rule 7 of the Federal Court Rules 1979 (Cth), and that the orders made on 23 November 2005 did not dispose of the proceedings before the court.

The court awarded the plaintiff damages and interest under Section 51A of the Federal Court of Australia Act 1976 (Cth). The court also declared that the second respondent engaged in misleading and deceptive conduct under Section 52 of the Trade Practices Act 1974 (Cth). The court ordered the defendants to pay the plaintiff's costs incurred in relation to the respondents' failure to make timely discovery of the due diligence report and the employee lists, on a full indemnity basis. The court also ordered the defendants to pay the plaintiff's costs of and incidental to this proceeding on a party and party basis.

Orders

Orders of the court

1. There be judgment for the applicant against the first respondent in the sum of $41,566, being the principal sum of $22,917 together with interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) in the sum of $18,649.

2. There be judgment for the applicant against the second respondent in the sum of $1,307,919.35, being the principal sum of $721,113.35 together with interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) in the sum of $586,806.00.

3. The respondents pay the applicant’s costs incurred in relation to the respondent’s failure to make timely discovery of the due diligence report and the employee lists (“the indemnity costs”), on a full indemnity basis, the indemnity costs to include all costs, including reserved costs, incurred by the applicant except in so far as they are of an unreasonable amount or have been unreasonably incurred, so that subject to these exceptions, the applicant is completely indemnified by the respondent.

4. Save for costs referred to in paragraph 3 above, the respondents pay the costs of the applicant of and incidental to this proceeding on a party and party basis.

AND THE COURT DECLARES:

1. The second respondent Citigroup Global Markets Australia Holdings Pty Limited (formerly known as Salomon Smith Barney Australia Pty Limited) (ACN 081 472 684), in representing to the applicant on 13 February 1998 that after the purchase by it of County NatWest Securities Australia Ltd he would be employed by the second respondent on the same terms and conditions as had been agreed in a Contract of Employment entered into by the applicant and County NatWest Securities Australia Ltd on 16 January 1998, engaged in misleading and deceptive conduct contrary to s 52 of the Trade Practices Act 1974.

2. The second respondent Citigroup Global Markets Australia Holdings Pty Limited (formerly known as Salomon Smith Barney Australia Pty Limited) (ACN 081 472 684), in representing to the applicant on 20 February 1998 that there were positions available to him in its Corporate Finance Department and that it would be likely that a position would be offered to him, engaged in misleading and deceptive conduct contrary to s 52 of the Trade Practices Act 1974.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

KENNY J
Section 51A of the Act empowers the Court to award interest on damages ordered pursuant to the TPA or for breach of contract: see, e.g., Kewside Pty Ltd v Warman International Ltd (1990) ATPR 41-012 (“Kewside”) per French J. Section 51A provides, in part, as follows:“51A INTEREST UP TO JUDGMENT(1)In any proceedings for the recovery of any money (including any debt or damages or the value of any goods) in respect of a cause of action that arises after the commencement of this section, the Court or a Judge shall, upon application, unless good cause is shown to the contrary, either:(a)order that there be included in the sum for which judgment is given interest at such rate as the Court or the Judge, as the case may be, 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 action arose and the date as of which judgment is entered; or(b)without proceeding to calculate interest in accordance with paragraph (a), order that there be included in the sum for which judgment is given a lump sum in lieu of any such interest.”(Emphasis added) Under s 51A, there is a presumption that interest will be awarded unless good cause is shown to the contrary. Thus, ordinarily, it would be straightforward that Mr Walker is entitled to damages upon the principal sums awarded. However, the Court’s power to award interest under s 51A is conditional upon an application being made for that purpose: Kewside at 51,237 per French J. Mr Walker sought interest in his proposed minute of orders filed on 28 November 2005. He applied for interest in his written submissions filed on 5 December 2005 in support of his proposed minutes of order. He also applied orally at the hearing of 12 December 2005. The respondents raised two arguments in opposition to any award of interest. First, they contended that Mr Walker is not entitled to interest because of his delay in applying for interest. They cited Pheeney v Doolan (No. 2) [1977] 1 NSWLR 601 (“Pheeney”) and Hanave Pty Ltd v LFOT Pty Ltd (2004) 136 FCR 566 (“Hanave”) in support of this argument. Secondly, they argued that there are procedural defects with Mr Walker’s application for interest. The respondents’ reliance on Hanave was misplaced, because they mistakenly assumed that O 35 r 7 of the Federal Court Rules 1979 (Cth) (“the Rules”) applied in the present instance. In effect, the respondents submitted that, by an application for interest, the applicant was seeking to vary a judgment and this could only be done under O 35 r 7 of the Rules. The reasons for judgment that were delivered on 23 November 2005 do not, however, constitute a ‘judgment’ for the purposes of s 4 or s 24 of the Act or O 35 r 7 of the Rules: see Driclad Pty Ltd v Commissioner of Taxation (1968) 121 CLR 45 (“Driclad”) at 64 per Barwick CJ and Kitto J; Ah Toy v Registrar of Companies (1985) 10 FCR 280 at 285 per Toohey, Morling and Wilcox JJ (and the cases there cited); Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc(No 2) (1998) 155 ALR 328 at 329 per Beaumont J, at 337 per Branson J and 339 per Emmett J (noting that, although reasons for a judgment are often referred to as a ‘judgment’ the term means the actual orders made by the Court); and Hannpost Pty Ltd v Mita Copiers Australia Pty Ltd (1996) 137 ALR 701 at 710-711 per Branson J. In Driclad at 64, Barwick CJ and Kitto J said:“The taxpayers lodged notices of appeal to the Full Court which were expressed as if the appeals were against the reasons of Taylor J, relating to the “B” part of the fund rather than against the orders that he made. Needless to say, this was erroneous because it is of the nature of appeals, as s 73 of the Constitution recognizes, that they lie only against “judgments, decrees, orders and sentences”, not against reasons. The word “judgments” in this connexion refers only to operative judicial acts, and is not used, as it often is in other contexts, as a convenient abbreviation for reasons for judgment.”The word ‘judgment’ as it appears in ss 4 and 24 of the Act and O 35 r 7 of the Rules has the same meaning. For the purposes of O 35 r 7 of the Rules, a ‘judgment’ is pronounced when a formal order is made that deals with or disposes of proceedings before the court. The reasons for judgment are not the ‘judgment’ in this sense. The orders that were made on 23 November 2005 did not dispose of the proceedings before the Court. This step has yet to be taken.

Ratio Decidendi

Legal Principle Established

Established by: KENNY J

Full text does not contain this section.