Zaramede Pty Ltd v Pengala Pty Ltd

[2010] VCC 1328

IN THE COUNTY COURT OF VICTORIA Revised

(Not) Restricted

AT MELBOURNE
COMMERCIAL LIST

GENERAL DIVISION

Case No. CI-08-02495

ZARAMEDE PTY LTD	Plaintiff
v.
PENGALA PTY LTD	Defendant

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	24 September 2010
DATE OF JUDGMENT:	24 September 2010 (Revised 28 September 2010)
CASE MAY BE CITED AS:	Zaramede Pty Ltd v. Pengala Pty Ltd
MEDIUM NEUTRAL CITATION:	[2010] VCC 1328

REASONS FOR JUDGMENT

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Catchwords:  Practice and Procedure – Judgment amount in foreign currency –
Interest – “unless good cause is shown to the contrary” – ss. 58 & 60
Supreme Court Act 1958 – Costs – Associated parties to counterclaim
– No orders made – Principal parties’ successes on claim and
counterclaim set off – Net judgment with interest for $9,474.89 – No
order as to costs.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D. Cole	Law 554
For the Defendant	Mr P. Barton	Prosperity Legal

HIS HONOUR:

1           I delivered judgment in this matter on 6 July 2010. There were outstanding issues to be decided in respect of which I have heard further submissions today.

2           The plaintiff is now in liquidation and it is appropriate that the name of the plaintiff and first defendant to counterclaim be amended by the addition of the words “(In liquidation)”.

3           The defendant has raised the issue as to whether two matters, not expressly referred to in the reasons for judgment, had been overlooked. They were claims for:

a.	$37,000 for the cost of the return visit by TMG technicians in early 2007;
b.	$12,690, being the costs of an extra ten metres of conveyor.

4           In respect of the TMG technicians’ return visit, I consider that the defendant’s counter claim must fail because of the findings I have already made in respect of the difficulties experienced commissioning the lines during 2006 as a result of late delivery of samples to Italy and the general approach I took in the Reasons for Judgment of requiring the defendant to accept responsibility for losses arising before the end of 2006. In those circumstances, it would be inappropriate to allow the defendant to recover the cost of the return visit by the TMG technicians.

5           The defendant paid an additional sum for a length of conveyor. This was apparently necessary because of a reconfiguration of the line resulting from difficulties encountered when the depalletizer was placed in position. I was not required to make a decision as to responsibility for that matter. If I had been, on the evidence I heard, it would be difficult to attribute the sole blame to the plaintiff, as the problem appeared to arise as a result of the existing configuration of the premises, of which the defendant was well aware. It seems to me that the additional conveyor was an extra item provided, and in those circumstances, the additional cost should be borne by the defendant.

6           In my reasons for judgment, I converted the plaintiff’s claim in Euros to Australian Dollars, using the conversion rate available at the time I delivered my judgment on 6 July 2010 being the RBA rate for 2 July 2010. The plaintiff’s claim, apparently, was originally in Australian Dollars and was, during the course of the proceeding, amended to Euros. It seemed to me that it was appropriate that judgment in this case be entered in Australian Dollars. That was the request of the plaintiff and, essentially, the conversion to Australian Dollars was not contested by the defendant. What the defendant did contest is the date at which the conversion should be made. After 2 July 2010 (which is the date I used in my Reasons for Judgment as the date when conversion information was available), the Australian Dollar has moved strongly as against the Euro. If I were to make the conversion today, the amount the plaintiff would recover would be substantially less.

7           I consider that the appropriate course is to recalculate the amount I indicated the plaintiff should recover, converted to Australian Dollars at 6 July 2010, as the appropriate conversion rate for that date is now available. If a particular date must be chosen, it seems to me that of the options available, this is the most appropriate in the circumstances.

8           A related issue concerned the question of the calculation of interest, as part of the plaintiff’s recovery was originally in a foreign currency. Defendant’s counsel, Mr Barton, in his written submissions suggested that evidence should be required of the appropriate foreign interest rate in respect of Euro loans, rather than applying the penalty interest rates. In my view, that would not be an appropriate course, because the judgment is to be converted into Australian Dollars, the Euro currency is not specific to any particular country and the sort of evidence contemplated by Mr Barton in his submission would be difficult to obtain, even if one were to select Italy as the most appropriate country.

9           The principal issues to be determined arising from the judgment relate to interest, costs and the setting-off of amounts recovered by the parties. The litigation was very complex. It arose, however, out of a relatively simple transaction for the supply of equipment. As I referred to in my Reasons for Judgment, unfortunately the contractual arrangement between the parties was not clearly documented, and therefore the responsibilities and obligations of the parties were unclear.

10         The litigation has brought into the dispute claims by two companies associated with the defendant and, as defendants to counterclaim, directors of the plaintiff who were alleged to have made actionable representations. In respect of the claims made by or

against those additional parties, I have determined that the counterclaims by the
defendant’s associated companies should fail and the counterclaim against the
directors of the plaintiff should also fail. The counterclaims by the defendant’s
associated companies were claims additional to the defendant’s counterclaims,
whereas the counterclaims made against the directors of the plaintiff were essentially
an alternative to counterclaims made against the plaintiff which had some success in
the proceeding.

11         I consider, however, that these particular counterclaims were matters which were relatively minor in the context of the disputes between the parties, and certainly at the trial, did not occupy much time in evidence or during submissions. I consider that, because of the relationship of the parties, and the fact that there was not separate representation, I should be reluctant to make any order in respect of the costs of those separate proceedings.

12         There has been success in the proceeding by both the plaintiff and the defendant. Plaintiff’s counsel, Mr Cole, has suggested that I should calculate interest separately on the amounts which I have found the plaintiff and defendant should recover. Mr Cole has submitted that in respect of the amounts the plaintiff recovers, interest should be calculated pursuant to the Supreme Court Act from the date that invoices were submitted for the relevant items of equipment, or alternatively when formal demand was made by the plaintiff’s solicitors or alternatively as from the date of the issue of the writ.

13         I consider that such an approach would be inappropriate in the present case. It seems to me that, effectively, until the determination of the disputes between the parties by my judgment, there was only a notional entitlement by each party, and that the amounts recovered by each party should be set-off against the other before a calculation of interest is made on the net amount.

14         I consider that, in any event, this is a case where “good cause” has been shown, which would justify not allowing interest under the Supreme Court Act on the amounts I have found the plaintiff and the defendant should separately recover, but only upon the net amount after one is set-off against the other.

15         Similarly, in relation to the question of costs, although each party has had some success, ultimately, the amount of recovery by each is within a few thousand dollars of the other’s recovery. Using the conversion rate as at 2 July 2010, my findings were that the plaintiff was entitled to recover $284,620.04 and the defendant should recover sums totalling $278,298. Mr Cole submitted that I should make orders for costs on both the successful claim and the successful counterclaim, although he submitted there were specific reasons why the sum of the defendant’s costs should be reduced.

16         Following the delivery of a report by the defendant’s expert, Ms Murone, in March 2009, the defendant amended its counterclaim to claim sums totalling in excess of $8 million. Substantial parts of the amended claim were abandoned two weeks before the trial commenced, and the counterclaim by one of the plaintiffs by counterclaim was abandoned on day 11 of the trial. It is not clear, however, whether this had any significant effect on the costs expended by the parties in this matter. Mr Cole submitted that the plaintiff had engaged an expert, Mr Fettner, to answer Ms Murone’s report. Mr Fettner was not, however, called to give evidence as part of the plaintiff’s case, and his report has not been produced upon the hearing of the costs argument so that I might determine the breadth of that report and whether the failure to call Mr Fettner to give evidence was made for other forensic purposes.

17         On the other side, defendant’s counsel, Mr Barton, has submitted that the defendant unnecessarily incurred additional costs because of the delivery of what he described as a prolix request for further and better particulars, because of excessive directions hearings, including an application for discovery shortly before the trial, which was

adjourned to the trial but issues raised in the application were not later pursued, and
a notice to admit which received a blanket denial, whereas as part of its successful
counterclaim, the defendant needed at the trial to adduce evidence in respect of
some of those matters.

18         I consider, however, that these issues are all relatively minor matters and that in respect of the notice to admit, it would be appropriate for me to “otherwise order” that the costs of the defendant proving matters not admitted by the plaintiff should not be recovered.

19         In Mr Barton’s written submissions, received prior to the hearing today, reference was made to a Calderbank offer served by his solicitors on 30 March 2009. The offer was described as “a complete walk-away by all parties”. I was informed of this offer before I heard argument about the issues relating to claims which it was said were not

decided in the judgment and matters of interest, both of which may have significantly
affected the question of which party was “successful” in the litigation. In Mr Barton’s
written document, the submissions proceeded “on the assumption that the
Calderbank offer is ineffective”.

20         Although, with the benefit of hindsight, the terms of the offer sound eminently sensible, I consider that it is not a matter which I should take into account in determining matters of costs. I consider, that the appropriate order as to costs in the present case is that each party to the proceeding, including the additional plaintiffs to counterclaim and additional defendants to counterclaim should bear their own costs.

21         There has been a measure of success and a measure of failure by the principal parties, the plaintiff and the defendant, and the net result after setting-off each of those parties’ entitlements is, as Mr Barton describes in his written submissions, that

proceeding and, at one time, involved a counterclaim in excess of $8 million. The

the parties “have substantially fought a draw”.

22         I am conscious that the cost of each party having to prepare separate bills of costs and for allowances to be made in respect of minor successes or minor failures in the counterclaim against other parties would be a significant additional expense. This is particularly so in circumstances where the plaintiff is now in liquidation and it is likely that additional costs would be needed for an application for leave to proceed against the plaintiff if a costs order were made and pursued.

23         I will allow the parties time to recalculate the plaintiff’s entitlement using as the date for conversion, of the judgment in Euros to a judgment in Australian Dollars, the date of 6 July 2010, and that amount must then be set-off against the sum of $278,298 which I found the defendant was entitled to recover. It would then be appropriate to calculate interest on that net sum from the date of commencement of the claim or counterclaim, depending on which party is entitled to payment of the net balance.

24 that any costs of the defendant in respect of the notice to admit, dated 13 March

I will make no order as to the costs of the proceedings save that I will otherwise order stand and will remain unaffected. If it is appropriate, any existing costs orders might be set-off against any payment that a party is required to make to the other. If costs have been reserved during the course of the interlocutory proceeding, those costs will also be borne by the party incurring those costs.

25         After hearing further argument about the issue of interest payable on the amounts recovered by each party and set-off against each other, I am persuaded that it is appropriate for the plaintiff, who is apparently the party who will recover the net amount, to have interest payable pursuant to the Penalty Interest Rates Act from the date of its solicitor’s demand on 4 May 2007.

26         Mr Cole submitted that, if the plaintiff were entitled to an order for costs, that I should certify for two counsel at the rate of $4,400 for leading counsel, and $1,980 for junior counsel as daily fees. Although it is not necessary for me to decide this matter, I

indicated during the course of argument, that this case was a very complex four scales of costs, however the highest scale Scale D, has a threshold of $50,000. I consider that, if costs were to be awarded to a party, it would be appropriate for me to certify for two counsel.

27         The daily rate sought for leading counsel is slightly more than would usually be allowed for an experienced junior counsel, but somewhat less than is commonly allowed for senior counsel. I consider that, if it had been necessary to determine the matter, I would have certified counsel’s fees as sought, and would also have given consideration to the certification of at least one day preparation, prior to the commencement of the trial. The matter of preparation fees was not argued before me. The common practice in the Commercial List is, however, to allow one day preparation as part of counsel’s fees for a complex commercial trial, and to consider an application for further preparation time in an appropriate case. I will reserve liberty to apply in case the issue of certification of counsel’s fees ever becomes appropriate.

28         The relevant calculation involves, firstly, ascertaining the difference between the amount of Euros, $115,687 at 2 July 2010 ($171,109.30) and the figure as at 6 July 2010, of $172,332.78, a difference of $1,223.48. That sum is then added to the $284,620.04 which was the amount I calculated in my reasons for judgment to which the plaintiff was entitled, giving a total of $285,843.52. From this sum must be subtracted the defendant’s entitlement of $278,298 and a further $650 for the outstanding costs order referred to by Mr Barton in his submissions, making a net balance of $6,895.52. Interest is to be calculated on that sum from 4 May 2007, the date of the solicitor’s demand, to today, being $2,579.37, making a total judgment of $9,474.89.

29         In the circumstances, the appropriate orders would be:

a.	The name of the plaintiff and first defendant to counterclaim is amended in the title to the proceeding by the addition of the words “(in liquidation)”.
b.	Judgment for the plaintiff against the defendant for $9,474.89.
c.	The counterclaim of the plaintiffs to counterclaim against all defendants to counterclaim is otherwise dismissed.
d.	No order as to the costs of the proceeding, including any existing order for costs as they have been taken into account in determining the judgment sum.
e.	In respect of the defendant’s costs of its notice to admit, dated 13 March 2009, I otherwise order that the defendant should bear its own costs in relation to the notice and the consequences of the plaintiff’s response to the notice.
f.	Reserve any issues which may arise in relation to the certification of counsels’ fees for further determination if that becomes necessary.
g.	Stay of 30 days on the payment of the judgment.

30         A copy these reasons for decision will be immediately given to the parties in draft form and revised reasons will be issued in due course.

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Certificate

I certify that these 7 pages are a true copy of the reasons for decision of His Honour Judge

Anderson delivered on 24 September 2010 and revised on 28 September 2010.

Dated: 28 September 2010

Caroline Dawes

Associate to His Honour Judge Anderson