Stelmag Pty Ltd v Long Paddock Pty Ltd & Ors [2005] ACTSC 59 (19 July 2005)

Last Updated: 26 July 2005

STELMAG PTY LTD v LONG PADDOCK PTY LTD & ORS

[2005] ACTSC 59 (19 July 2005)

CATCHWORDS

INTEREST - whether plaintiff to pay interest for full period until judgment - whether plaintiff caused six year delay in commencing proceedings - whether there was "inexplicable tardiness" - whether there was reasonable excuse for delay - whether "commencement date" is date on which statement of claim is filed or date of service - whether "lump sum" appropriate.

Supreme Court Rules, O42A r1(1)

Supreme Court Act 1933 (ACT), s 69

J S Hill & Associates Ltd v Dawn [2001] ACTSC 28

Metro Meat Pty Ltd v Werlick (1993) Aus Torts Reports 81-242

Re Hodby: Ex Parte Kenny (1987) 77 ALR 118

No. SC 25 of 1997

Judge: Higgins CJ

Supreme Court of the ACT

Date: 19 July 2005

IN THE SUPREME COURT OF THE )

) No. SC 25 of 1997

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: STELMAG PTY LTD

(ACN 008 571 159)

Plaintiff

AND: LONG PADDOCK PTY LTD

(ACN 008 662 968)

First Defendant

AND: ROBERT JOHN KING

Second Defendant

AND: SUSAN ROSALIE KING

Third Defendant

ORDER

Judge: Higgins CJ

Date: 19 July 2005

Place: Canberra

THE COURT ORDERS THAT:

1. A sum of $295,000.00 be added to the judgment sum as at, and from, 1 April 2005.

1. 1. In this matter, a number of issues have been raised ancillary to my decision handed down on 1 April 2005 (ACTSC 20) and pursuant to leave reserved.

2. The first and second defendants contend that, insofar as a sum is awarded in favour of the plaintiff, interest should not be awarded for the full period from 1991 to judgment.

3. Order 42A rule 1(1) Supreme Court Rules provides:

In any proceedings for the recovery of any money (including any debt or damages or the value of any goods) the court shall, on application, unless good cause is shown to the contrary--

(a) order that there be included in the sum for which judgment is given interest at the rate the court considers appropriate 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 when the 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 instead of any such interest.

4. Miles CJ considered that rule, and its progenitor, s 69 Supreme Court Act 1933 (ACT), in J S Hill & Associates Ltd v Dawn [2001] ACTSC 28. His Honour pointed out that the purpose of the rule is to compensate the plaintiff for being kept out of funds which, according to the judgment, it was earlier entitled to receive. This is regardless of whether or not there was a contractual or other right to receive interest.

5. At [11], his Honour stated:

Although an award of interest under s 69 and similar legislation elsewhere has been described as discretionary, the discretion is not unfettered. Grincelis v House [(2000] 173 ALR 564] is a salutary reminder that the power to award interest according to subsection (1) is not to be withheld unless good cause is shown to the contrary. I suppose that the fact that the parties as part of their contract agree on the matter of interest is so obviously either good cause to the contrary or a fetter on the discretion, that no authority can be found to say so. On the other hand, delay in bringing the proceedings has been accepted by this Court as well as others as good cause to refuse [or not "to"] reduce the award of interest or substitute for it a lump sum in lieu under s 69; Collin v Botany Fork and Crane Hire Pty Ltd (1993) 113 FLR 83, Skywest Aviation Pty Ltd v Commonwealth of Australia (1995) 126 FLR 61, Commonwealth of Australia v Silverton Ltd [1998] ACTSC 22.

6. The principle is that if delay has been caused in the finalisation of a proceeding, not due to any fault of the defendant but due to the fault of the plaintiff, then it would be unjust to burden the defendant with the interest consequences of the delay (see Metro Meat Pty Ltd v Werlick (1993) Aus Torts Reports 81-242).

7. There was, in this case, a delay of nearly six years before action was commenced in 1997). On the face of it, that is "inexplicable tardiness". However, the plaintiff claims to have good explanations for that apparent delay.

8. First, it was not until December 1993 that Mr Pollard discovered that the first and second defendants had received considerable monies from sale of transponders. It is true that the full extent of those receipts was not apparent until after these proceedings had commenced but nothing turns on that. I accept that approximately two years of the six year delay is reasonably explained on this basis.

9. The plaintiff also claims that the delay is attributable to alleged intimidation by Mr King. Specifically, on 26 May 1994, Mr King wrote that any proceedings taken by the plaintiff would be:

... most vigorously (and expensively) defended, and that numerous and substantial cross-claims will be made against [the plaintiff],

and that, if the plaintiff did not accept his view of the matter:

let the battles commence and may the lawyers grow sleeker and fatter.

10. Despite the truculence implicit in these statements, I do not consider that they afford any reasonable excuse for delay in commencing proceedings.

11. There was a further delay of nearly 12 months before the plaintiff served the originating process. The plaintiff attributes that delay, and the preceding delay, to impecuniosity, as well as dissatisfaction with legal advisers.

12. The latter excuse ought not to justify the imposition on a defendant of an order for interest that would otherwise be regarded as occasioned by "inexplicable tardiness".

13. There were delays on both sides in the course of the litigation but I do not consider that those delays are so egregious as to make it unjust not to reduce pre-judgment interest otherwise applicable. No doubt the defendants can correctly claim that, ideally, the action should have been completed by, say, December 1996.

14. However, to apply that standard would be unrealistic.

15. What then of the plaintiff's claimed impecuniosity? A short answer is that the plaintiff had received significant revenue (over $300,000.00) between 1990-1992. It purchased investment properties in May 1993. The plaintiff has not established that impecuniosity, rather than a justifiable reluctance to sue a formidable opponent, was a substantial cause of the delay. Even had the plaintiff shown that it had been impecunious and delayed proceeding on that ground, it could not be just to deny the defendants the benefit of interest relief if they were otherwise entitled to it. That might be otherwise if the defendants had caused that impecuniosity, see, for example, Re Hodby: Ex Parte Kenny (1987) 77 ALR 118. That decision, whilst in the context of security for costs is, nevertheless, indicative of the role that the impecuniosity of a party should be accorded in the conduct of litigation. Generally, it is no excuse for failing to commence or actively prosecute a matter. That is not to say it is irrelevant for various discretionary purposes.

16. None of the other matters relied on by the plaintiff excuses the delay between December 1993 and that date of commencement of proceedings. For that purpose, I do not take the "commencement date" to be the date on which the plaintiff filed the statement of claims. Instead, I take the relevant date to be the date of service, nearly 12 months later. If interest was to be awarded for the entire period before judgment (January 1991 - April 2005), it appears that a sum of $465,700.08 would be generated.

17. This is a case where, given the unhappy history of delay and procrastination, a lump sum should be awarded, eschewing fine calculation. I consider that the addition to the judgment sum of $295,000.00 represents a just compromise between the right of the plaintiff to be compensated for being kept out of its money and the consequences of the "inexplicable tardiness" of which the plaintiff was guilty.

18. It is ordered that a sum of $295,000.00 be added to the judgment sum as at, and from, 1 April 2005.

I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Chief Justice Higgins.

Associate:

Date: 19 July 2005

Counsel for the plaintiff: Mr D J C Mossop

Solicitor for the plaintiff: Lander & Co

Counsel for the defendants: Mr R L Crowe SC

Solicitor for the defendants: Bradley Allen Lawyers

Dates of hearing: 6 May 2005

Date of judgment: 19 July 2005