Benge v Attorney-General HC Wellington CP216/97

[2001] NZHC 1303

IN THE HIGH COURT OF NEW ZEALAND
WELLINGTON REGISTRY CP216/97

BETWEEN GEOFFREY BENGE
First Plaintiff

AND REX HALLINAN
Second Plaintiff

AND THE ATTORNEY-GENERAL for and on behalf of the Commissioner of Police Defendant

Hearing: 18 December 2001

Counsel: H A Cull QC Plaintiffs
P J Gunn and C C Inglis for Defendant

Judgment: 19 December 2001

JUDGMENT OF DURIE J

Solicitors:
K M Drysdale, Solicitor - N Z Police Association, Wellington for Plaintiffs
Crown Law Office, Wellington for Defendant

[1] Judgment in these proceedings was delivered on 6 October 2000. I found for the plaintiffs and ordered that the defendant pay:

For the plaintiff Hallinan

Loss of earnings $337,350.00

For the plaintiff Benge

Loss of earnings $52,250.00

[2] The plaintiffs now apply for an order pursuant to Rule 12 of the High Court Rules “correcting” the judgment to include the words “net of tax” in respect of each of those award. The defendant opposes on the basis that the judgment contains no accidental slip or error in this regard.

[3] No express order was made as to interest so that the rate of 11% as provided for in s 87 of the Judicature Act 1908 applied. The defendant seeks orders fixing the interest at 6% and has filed in support an affidavit of a banking expert that this represents the average market from the date of judgment to the present. The total damages awarded to Mr Hallinan amounted to $415,872.72 and Mr Benge $65,260.91.

[4] Since the judgment of October 2000, final settlement has been delayed. On 3 November 2000 the defendant appealed but abandoned that appeal on 2 August 2001. From 14 August to the present the parties have been unable to agree on whether the awards were gross awards or whether they were net of tax, that is to say, whether they represent the sum that the plaintiffs would each have received after tax was deducted. It appears now to be accepted that if “net of tax” is not stated in a Court award, then the award is for a gross sum. The defendant would be obliged to pay the tax on the sum to the Inland Revenue Department and the amount payable to the plaintiffs would be reduced. Inland Revenue Department Public Ruling BR Pub 01/6 “Employment Court Awards for Lost Wages or other Remuneration - Employers’ Liability to make Tax Deductions” supports that and so also North Island Wholesale Groceries Ltd v Hewin [1982] 2 NZLR 176 (CA).

The plaintiffs’ application

[5] The judgment cannot now be recalled, the order having been sealed by the defendant, following consultation, on 10 July 2001. Accordingly the plaintiffs rely on Rule 12. This provides:

“12 Correction of accidental slip or omission -

(1) If any judgment or order contains a clerical mistake or an error arising from any accidental slip or omission, whether the mistake, error, slip, or omission was made by an officer of the Court or not, or if any judgment or order is so drawn up as not to express what was actually decided and intended, the judgment or order may be corrected by the Court, or, where the judgment or order was made by a registrar, then by the registrar.

(2) The correction may be made by the Court or the registrar, as the case may be, of its own motion or on an interlocutory application made for that purpose.”

[6] Ms Cull submitted that the judgment does not express what was actually decided and intended. She submits, and a supporting affidavit affirms, that the Court’s attention was not drawn to the relevance of making the awards gross or net amounts pursuant to the Taxation Rulings by the Inland Revenue Department. She relies upon the face of the judgment in paragraph [95] which refers to “. . . the assumed gap between net investment earnings and future salary increases . . .”. I accept Mr Gunn’s submission that in interpreting those words I should sit as a Judge who had not heard the case and not ask as to what I had in mind. On that basis I think Ms Cull is on stronger ground in submitting that the decision on loss of earnings “derives from actuarial calculations” as the decision states, and that those calculations were based on net income. I think that is plainly so as stated in the brief of evidence of the plaintiffs’ actuary, whose evidence was preferred and which is now exhibited in an affidavit on this appeal.

[7] The only question is whether the Court is able to give effect to that intent.

[8] Mr Gunn argued that the Court was not able to amend the judgment. The fact that a Judge does not specify that the award is net cannot constitute an accidental slip or omission. He compared this case with Crewther v Welch (No. 2) (1992) 6 PRNZ 350 (where the Court had misstated the section of the Arbitration Act under which a referee was to have been appointed) and submitted, in reliance upon Broadview Investments Co Pty Ltd v Corporate Interiors (NZ) Ltd (High Court, Wellington, CP 123/92, 12 August 1998, Neazor J) at p 11 that Rule 12 could not be used to allow the plaintiffs to substantially improve the judgment that has been obtained. Mr Gunn cautioned that the Rule must be sparingly exercised so that the general rule as to the finality of judgment is not likely to be weakened: Bank of New Zealand v Mulholland (1991) 4 PRNZ 299, R v Cripps, ex parte Muldoon & Ors [1984] 2 All ER 705, at 712.

[9] In Broadview, as Ms Cull pointed out, the Court in fact proceeded to effect substantial additions to the judgment and to make specific findings in respect of the copyright in drawings that had not been considered in the decision. However, in this instance, the substantive question of whether a litigant is improving the judgment leads to a circular argument. The addition is an improvement if one starts from the fact that “net of tax” is not in the judgment but it is not an improvement if one starts with the proposition that it ought to have been in the judgment in the first instance and was wrongly omitted.

[10] The authorities to which counsel have referred rely upon accidental slips or omissions. The question in this case is quite different, namely, whether the judgment is so drawn as not to express what was actually decided and intended. I do not read the words in the Rule as limited to whether an order properly reflects a judgment, but as including the situation where the orders recorded within the judgment itself do not reflect the Court’s true intent. That is the situation here where the intent was to give effect to actuarial calculations.

[11] On the equities concerning delay I think that the delay results from the defendant’s appeal, now abandoned, and that the period thereafter is a natural consequence of the conflicting positions that the parties took over the taxation issue.

[12] In Hanmore v Gangly (1995) 9 PRNZ 25 Tompkins J considered the application of Rule 12 having regard to the justice of the case. I respectfully follow that lead and consider the justice of the case to be clear, in this instance. The Court must be taken to have intended that the loss of earnings awards were to be net of tax. It would not be just if that intent was not given effect. There is an order that the judgment and sealed order be amended as moved in the application.

Defendant’s application

[13] The defendant’s application to reduce the interest rate is not in reliance upon Rule 12 although the defendant would seek to invoke that rule if need be. Rule 538 provides for interest on a judgment debt at the rate for the time being prescribed by or under s 87 of the Judicature Act 1908 (currently 11%) or at such lower rate as shall be fixed by the Court. Mr Gunn sought to fix a lower rate at this stage, backdated to the judgment date. He submitted that if the rule is to be properly workable there must be read into it an ability to so apply at any time. He submitted that if the Court had doubts about implying such a power into Rule 538 then the Court should utilise Rule 9 which enables the Court to dispose of the matter, in the absence of a specific provision, in such a manner as the Court thinks best calculated to promote the ends of justice.

[14] Ms Cull submitted that for a sound comprehension one should start with s 87(1) of the Judicature Act which gives vent to the general rule that interest runs from the time when a cause of action arose. Section 87(1) enables the Court to include in the judgment interest at such rate as it thinks fit for the period between the date when the cause of action arose and the date of the judgment. She submitted that this generally reflected a commercial or standard market rate unless a contract or some other special factor required otherwise. Ms Cull compared s 87(2) which, when read with Rule 538, provided in effect that interest from the judgment to settlement is automatically provided for at a prescribed rate unless a lower rate is fixed. She referred to McGechan on Procedure on HR538.06 which recites:

“Provision for a lower rate would be appropriate where judgment is for a contractual debt in itself carrying a lower rate, or where market conditions at the time are such that lower rates apply generally.”

Ms Cull accepted the first proposition but not the second. She submitted that the distinction between a commercial rate of interest in the period from the cause of action to judgment, and the prescribed rate of 11% (currently) for the period after judgment was to provide an incentive for early settlement of claims once judgment had been given. Mr Gunn rejected that proposition and submitted that the principle was no more than that a successful plaintiff is entitled to compensation for actual loss. If an incentive were to be read into the rule then the rule would have made that clear.

[15] I have come to the position that the time for fixing the rate of interest in terms of s 87 of the Judicature Act and Rule 538 is the time when the judgment is made. Where the Court does not fix a rate of interest from the date of judgment then the Court must be taken to have intended that the prescribed rate applies. In the light of the statute and the rule, no question of error or omission can arise under Rule 12, unless some special reason be shown of which an example may be that counsel had raised the question of the interest rate in closing submissions and had sought a ruling, but the judgment was silent on the point.

[16] I consider that where there is no such special circumstance as would bring the matter within Rule 12, then the defendant must seek leave to recall the judgment before the judgment is sealed, raising any special equities whereby the Judge should give further consideration to the rate of interest.

[17] No such leave was sought in this case and I consider that the defendant is too late to apply now. Accordingly the defendant’s application for an order is refused.

[18] The plaintiffs are entitled to costs on the basis of category 2 band B.