FEDERAL COURT OF AUSTRALIA

H K Frost Holdings Pty Ltd (in liq) v Darvall McCutcheon (a firm)

[1999] FCA 795

PRACTICE AND PROCEDURE – interest until judgment – principles and practices of Court in applying s 51A(1) of the Federal Court of Australia Act 1976 (Cth) – “good cause to the contrary” and discretion as to rate and period of interest - significance of delay in commencing and prosecuting application – rates of interest to be applied – practice in relation to rates applied by Supreme Court of State or Territory in which matter heard

PRACTICE AND PROCEDURE – costs – discretion to award costs – indemnity costs or party and party costs – lengthy delays in instituting and in prosecution of proceedings – reduction of award to successful applicant

Federal Court of Australia Act 1976 (Cth) s 43, s 51A

Supreme Court Act 1970 (NSW) s 94

Supreme Court Act 1986 (Vic) s 58, s 60

Supreme Court Act 1935 (SA) s 30c

Supreme Court Act 1995 (Qld) s 47

Penalty Interest Rates Act 1983 (Vic)

Batchelor v Burke (1981) 148 CLR 448 referred to

Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382 applied

Australian Guarantee Corporation Ltd v Border Printing Services Pty Ltd (Lockhart, Spender and Hill JJ, 21 April 1989, unreported) applied

Donellan v Watson (1990) 21 NSWLR 335 referred to

Wright v West Australian Trustee & Agency Co Ltd [1987] VR 771 referred to

Border Printing Services Pty Ltd v Australian Guarantee Corporation Ltd (Pincus J, 19 December 1988, unreported) referred to

Namol Pty Ltd v A W Baulderstone Pty Ltd (1993) 119 ALR 187 applied

Nagy v Masters Dairy  Ltd (1997) 150 ALR 301 applied

Geoffrey W Hill & Associates (Insurance Brokers) Pty Ltd v Squash Centre (Allawah North) Pty Ltd (1990) 6 ANZ Insurance Cases §61-012 referred to

De Girolamo v South Australia (1991) 56 SASR 40 referred to

Keates v Nelson (NSW Court of Appeal, Kirby P, Mahoney and Cripps JA, 16 April 1992, unreported) considered

Golden West Refining Corporation Ltd v Daly Laboratories Pty Ltd (Carr J, 16 February 1995, unreported) referred to

BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] WLR 783 referred to

Keithara Pty Ltd v J G L Holdings Pty Ltd, (Supreme Court of Victoria, Smith J, 6 December 1994, unreported) referred to

Re Wilcox;  Ex parte Venture Industries Pty Ltd [No 2] (1996) 72 FCR 151 applied

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 referred to

Hughes v Western Australian Cricket Association (Inc) (1986) ATPR ¶ 40-748 referred to

Spencer v Dowling [1997] 2 VR 127 referred to

Cummings v Lewis (1993) 113 ALR 285 applied

H K FROST HOLDINGS PTY LTD (in liquidation) v DARVALL McCUTCHEON (a firm)

VG 217 of 1998

FINN J

CANBERRA

16 JUNE 1999

THE COURT ORDERS THAT:

(1)        The respondent pay damages to the applicant in the sum of $91,060.00.

(2)        The respondent pay interest on the sum of $55,000.00 from 24 July 1989 until the date of entry of judgment at the rate fixed from time to time for this period under the Penalty Interest Rates Act 1983 (Vic).

(3)        The respondent pay interest on the sum of $20,000.00 from 1 March 1990 until the date of entry of judgment at the rate fixed from time to time for this period under the Penalty Interest Rates Act 1983 (Vic).

(4)        The respondent pay the applicant 85 per cent of the taxed costs of the application.

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

REASONS FOR JUDGMENT

1                     On 5 May 1999 I published reasons for judgment in this matter in which I found the respondent firm of solicitors, Darvall McCutcheon, liable in damages to the applicant company, H K Frost Holdings Pty Ltd (in liq), for breach of retainer and for negligence in the sum of $91,060.00.  Left outstanding were the issues of interest up to judgment and costs.  Written submissions have been provided on both of these matters.

2                     Before dealing with each in turn I merely note that I incorporate the reasons of 5 May 1999 by reference in these reasons.

1.         Interest

3                     The damages award I have made is constituted of three discrete sums:  (i) $55,000, being damages in respect of a lost opportunity to prosecute a breach of confidence action;  (ii) $16,060, being a proportion of Frost Holdings’ liability for taxed costs in respect of proceedings it had brought against the ANZ Bank;  and (iii) $20,000, being a portion of the fees paid by Frost Holdings to Darvall McCutcheon relating to the ANZ Bank litigation.  Interest is sought only on the first and third of these sums.

The Applicable Principles

4                     This Court’s power to award interest up to judgment is contained in s 51A of the Federal Court of Australia Act 1976 (Cth).  Insofar as presently relevant it provides:

“51A   (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.”

5                     I would make the following observations on this section and its application.

6                     (1)        It is well settled that the objective of provisions of this type is to compensate an applicant for the loss it suffers in being kept out of its money or damages:  see Batchelor v Burke (1981) 148 CLR 448 at 455;  Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382 at 396;  and see Tilbury, Civil Remedies, vol 1, 1990, para 3226ff.

7                     (2)        The award of interest under s 51A(1) is mandatory “unless good cause is shown to the contrary”:  Australian Guarantee Corporation Ltd v Border Printing Services Pty Ltd (Lockhart, Spender and Hill JJ, 21 April 1989, unreported);  cf Supreme Court Act 1970 (NSW) s 94 that does not use the “good cause” formula but see eg Donellan v Watson (1990) 21 NSWLR 335 at 345 (“interest is almost invariably to be allowed when claimed”).  Ordinarily it will be for the respondent to establish such “good cause”:  see Wright v West Australian Trustee & Agency Co Ltd [1987] VR 771 at 775;  this does not necessarily require that evidence be adduced for the purpose:  see Clarke v Foodland Stores Pty Ltd, above at 394.  Furthermore, it is open to the court, for example, to take into account such considerations of public policy as may be relevant in the circumstances:  see Border Printing Services Pty Ltd v Australian Guarantee Corporation Ltd (Pincus J, 19 December 1988, unreported).

8                     (3)        Though the matter is and remains one of judicial discretion, it is the usual practice of this Court in applying s 51A(1) to adopt the rates of interest applied by the Supreme Court of the State or Territory in which this Court is dealing with the matter:  Namol Pty Ltd v A W Baulderstone Pty Ltd (1993) 119 ALR 187;  Nagy v Masters Dairy  Ltd (1997) 150 ALR 301 at 317;  though, no less so than a State court, the Court may then depart from those rates as a matter of discretion given the circumstances of the case:  see Clarke v Foodland Stores Pty Ltd, above, at 389.  A justification for this practice is that it helps to ensure that damages are awarded on the same basis at least as to rates of interest whether a proceeding is instituted in this Court or in a Supreme Court.  Parity in the making of interest awards will, though, often be unattainable because the legislation of a particular State may prescribe varying periods for which pre-judgment interest may be awarded (depending upon the nature of the cause of action in question) that differ from what is allowable under s 51A(1):  see eg Supreme Court Act 1986 (Vic) s 58 and s 60;  Supreme Court Act 1935 (SA) s 30c;  Supreme Court Act 1995 (Qld) s 47.

9                     (4)        Given the variations in the language and structure of the pre-judgment interest provisions of the various Australian States, care must be taken in using the decisions of State courts on their own statutes to elucidate the meaning of s 51A(1).  For example, for the purposes of s 51A(1) the formula “good cause to the contrary” would appear on its proper construction to mean only good cause for not allowing interest at all:  see Australian Guarantee Corporation Ltd v Border Printing Services Pty Ltd, above.  The subsection itself otherwise provides discretions as to the rate and the period of an interest award.  In contrast, the same formula as used in s 58 of the Supreme Court Act 1986 (Vic) has been interpreted to mean good cause for allowing interest otherwise than in accordance with the terms of that section:  see Clarke v Foodland Stores Pty Ltd, above, at 391-393.  But s 58, notably, does not provide the same discretions as does s 51A(1).

10                  (5)        It is neither possible nor desirable to define what will constitute “good cause” disentitling a party to interest under s 51A(1);  each case must be considered by reference to its own circumstances:  Australian Guarantee Corporation Ltd v Border Printing Services Pty Ltd, above.

11                  (6)        There is considerable diversity in judicial opinion as to the extent to which, if at all, the rate or (more usually) the period selected for an interest award should as a discretionary matter be moulded adversely to a party that delays in the prosecution or defence of a claim where no resultant detriment to the other party is shown:  see eg Geoffrey W Hill & Associates (Insurance Brokers) Pty Ltd v Squash Centre (Allawah North) Pty Ltd (1990) 6 ANZ Insurance Cases §61-012 (“[t]he principle of punishment is not borne out by a consideration of the purpose of the statutory discretion”);  De Girolamo v South Australia (1991) 56 SASR 40 at 44-45;  but cf Keates v Nelson (NSW Court of Appeal, Kirby P, Mahoney and Cripps JA, 16 April 1992, unreported);  Golden West Refining Corporation Ltd v Daly Laboratories Pty Ltd (Carr J, 16 February 1995, unreported):  Tilbury, above, para 3230;  and see also BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] WLR 783 at 845-847 and McGregor on Damages, 16^th Ed, 1997, paras 668-669.  Nonetheless, insofar as concerns a successful applicant who has been guilty of unreasonable delay, the view I am prepared to follow in the absence of binding authority is that the period for which the interest award is made can properly be adjusted if to allow interest for the whole period for which it could otherwise be ordered would work an injustice to the respondent in the circumstances:  cf Clarke v Foodland Stores Pty Ltd, above, at 400.  Such would seem to be consistent with the policy of the s 51A(1) in that an applicant that has been held out of the benefit of its money because of its own unreasonable actions should not be allowed as of course to cast the effects of a ‘self-inflicted burden’ onto the respondent:  Keithara Pty Ltd v J G L Holdings Pty Ltd (Supreme Court of Victoria, Smith J, 6 December 1994, unreported).

The Claims Made and the Parties’ Contentions

12                  As to the sum of $55,000 awarded in respect of the lost opportunity, Frost Holdings claims that the award should be made from the date when the breach of confidence action was effectively lost to it until the date of judgment.  The former date was 24 July 1989 when the judgment of the Full Court of the Supreme Court of Victoria was entered in the ANZ Bank litigation.

13                  As to the sum of $20,000, interest until judgment is sought either from 24 July 1989 (essentially as a matter of convenience) or from 1 March 1990, the latter date being a few weeks after Frost Holdings made its last payment to Darvall McCutcheon in respect of professional fees.

14                  In each case the rates of interest sought are those contained in the Penalty Interest Rates Act 1983 (Vic) which, in proceedings in the Supreme Court of Victoria, are payable in accordance with the provisions of the Supreme Court Act 1986 (Vic), s 58 and 60.  Both of those sections require within their respective spheres and subject to the good cause to the contrary proviso that interest be allowed at a “rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983”.

15                  Frost Holdings have submitted that there is no warrant in the circumstances either for refusing interest at all or for awarding it for any lesser period than the whole of the period claimed and they point to the fact that Mr Frost was not cross-examined on the issue of delay in initiating or prosecuting this proceeding.

16                  As the issue of delay has loomed large in the respondent’s submissions I should briefly emphasise the following matters of chronology.

(i)         The Full Court judgment that led to the extinction of the breach of confidence claim was delivered on 7 November 1988.

(ii)        Mr Frost’s dissatisfaction with his legal advisers stemmed from that time.

(iii)       On 28 May 1990 Mr Resch of Darvall McCutcheon made the admission of negligence in relation to the loss of the breach of confidence claim that I found to have been made in my 5 May 1999 reasons.

(iv)       The legal advice Mr Frost sought for the applicant from a Victorian Queen’s Counsel (given on 20 December 1990) advised (inter alia) that further instructions as to facts were needed before advice on a negligence claim against the company’s legal advisers could be given.

(v)        By this time the issue had arisen as to whether the applicant company itself could be kept on foot.

(vi)       On 16 January 1991 Frost Holdings commenced quantum meruit proceedings in the Victorian County Court against the ANZ Bank.  These were stayed permanently on 17 October 1991 on Anshun estoppel grounds.

(vii)      On 13 May 1991 the company was wound up having been found to be “hopelessly insolvent”.

(viii)      The present proceeding was initiated in the Supreme Court of Victoria on 4 November 1994 though the writ appears not to have been served until after September 1995.

(ix)       The Statement of Claim was filed on 13 December 1995 shortly after both the applicant’s change of solicitors and the filing of a notice of appearance by the respondent.

(x)        A defence was filed on 22 January 1996 and further and better particulars of the Statement of Claim were then sought.  The latter were provided on 22 March 1996.

(xi)       On 23 February 1996 Frost Holdings sought discovery.  Affidavits of documents were filed by Frost Holdings in May 1996 and by Darvall McCutcheon in July 1996.

(xii)      On 25 September 1996 Frost Holdings was given leave to file and serve an Amended Statement of Claim.  An Amended Defence was filed on 4 November 1996.

(xiii)      On 12 November 1996 leave was given in the Supreme Court to file a Further Amended Statement of Claim.  A process of further requests for particulars and further discovery ensued.

(xiv)     The matter was set down for hearing in the Supreme Court on 23 February 1998.  The issue then arose of the respondent calling as witnesses Senior Counsel who had subsequently become judges as well as those counsel actually called in the hearing before me.  On 4 May 1998 a judge of the Supreme Court ordered that the proceeding be cross-vested to this Court.

(xv)      On 18 March 1999 I granted leave to Frost Holdings to further amend its Statement of Claim.

17                  The respondent’s submissions are first, that no interest award ought be made because Frost Holdings did not particularise its loss and damage until 22 July 1998 and then, insofar as the lost breach of confidence claim was concerned, it merely claimed the sum awarded to it in the ANZ Bank litigation at first instance in relation to its breach of contract claim;  secondly, nothing should be awarded in respect of the $20,000 as the actual amount claimed was subject to continuous substantial revision during the trial;  thirdly, if interest is awarded it should only be payable from 4 November 1994 pursuant to s 60 of the Supreme Court Act 1986 (Vic) – the provision that would have been applicable if interest was being awarded in the Supreme Court of Victoria;  fourthly, interest should (a) be refused as a matter of discretion in relation to both sums of $55,000 and $20,000 or else in relation to the first of these;  or (b) be awarded either from 22 July 1998 (the date particulars of loss and damage were provided) or from the date of commencement of the proceeding.

18                  The reasons advanced for the fourth submission above – I here paraphrase somewhat – related (i) to the delays that occurred after commencement of proceedings in November 1994 and before trial;  to the failure to provide particulars of loss and damage until 22 July 1998;  to problems with the applicant’s discovery;  and to the very late concession that the Statute of Limitations precluded reliance upon any action arising prior to 4 November 1988;  (ii) to the number and lateness of amendments to the Statement of Claim with the alleged consequence that the respondent was denied the opportunity to make offers of compromise in relation to the likelihood of success of the applicant’s case;  (iii) to the applicant’s failure to consent to the matter being cross-vested to this Court resulting in an application to the Supreme Court for such an order;  and (iv) to the lack of explanation of the long delay before proceedings were commenced in 1994 or why it took over a year thereafter before the Statement of Claim was filed.

Conclusions

19                  I should state at the outset that the respondent’s submissions inviting me in effect to apply directly the provisions of the Supreme Court Act 1986 (Vic) misapprehend the power conferred upon this Court by s 51A(1) of the Federal Court of Australia Act 1976 (Cth) and the principles and practices informing its exercise.  I would also note that some issues more germane to the award of costs have been relied upon to defeat or dilute any interest award.

20                  It is clear, in my view, that the case is not one in which an interest award should not be made at all or else not made in relation to one or other of the sums for which it is claimed, because “good cause to the contrary” has been shown.  To deny the applicant interest entirely or in relation to one or other of the sums would be without more to apply the “principle of punishment” – a principle foreign to the purpose of the statutory power given by s 51A(1).  Equally I do not consider that such interest as is awarded should be awarded at a rate less than that fixed from time to time under the Penalty Interest Rates Act 1983 (Vic).  In taking this view I consider it appropriate in this case to adhere to the usual practice followed in this Court in relation to the rates to be used by it to which I referred earlier in these reasons.

21                  The only real question that arises is as to the period or periods for which interest should be awarded bearing in mind that under s 51A(1) it can be “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”.  I should reiterate that it is this provision with its discretion as to period, and not s 60 of the Supreme Court Act 1986 (Vic)with its far more limited period, that I am to apply.

22                  It is unquestionably the case that very lengthy periods elapsed first between the accrual of Frost Holdings’ cause of action and its institution of proceedings and then between that date and the trial of the matter.  Necessarily these “delays” invite scrutiny for the purpose in particular of seeing whether they evidence such unreasonable delay on Frost Holdings’ part as would in the circumstances work an injustice to the respondent were it ordered to pay interest for all or substantially all of the allowable period.

23                  It is fair to say that Mr Frost’s encounter with Darvall McCutcheon was not a happy one.  And it led to much waste of time and money and much misdirected effort on his part.  He cannot, in my view, be faulted for failing to initiate legal proceedings against the respondents prior to Frost Holdings being put into liquidation.  The effort expended on the quantum meruit claim that was stayed in 1991 may have been misguided, but it was explicable given the advice he had received.  It was in a sense emblematic of the misfortune flowing from his dealings with Darvall McCutcheon.

24                  Upon the liquidation of the company it was found to be “hopelessly insolvent”.  It is clear from Mr Frost’s own evidence that he in some fashion provided finance to the liquidator and/or for the company for the purpose of investigating and then initiating and prosecuting the proceeding.  Nonetheless I have no evidence that would warrant my finding that the applicant had, via arrangements with Mr Frost or otherwise, the financial capacity to obtain such advice as was appropriate to justify its initiating proceedings but that it failed so to do and in such circumstances as would permit its actions to be stigmatised as involving unreasonable delay.  It is Mr Frost’s evidence that from late 1992 several opinions were sought from counsel before the writ was served.  The delay before proceedings were instituted was long.  But of itself it provides no justification for depriving Frost Holdings of interest for some period on account of it.

25                  After legal proceedings were instituted a lapse of one year occurred before the Statement of Claim was filed.  Thereafter, though by no means in an orderly, expeditious or efficient fashion, the matter wended its way to trial.  While the initial one year delay would ordinarily invite concern, I do not consider that it calls for a denial of interest for that year in the context of this matter.  I may speculate as to the cause of it – and I note that action resumed on change of solicitors.  But with only skeletal evidence relating to this period and in the absence of cross-examination of Mr Frost, I am unprepared to treat this period differently from the pre-trial period generally.

26                  As to that period, I do not see that there has been such unreasonable delay as would justify denial of a period of interest.  The respondent had now its own means available in the procedures of the respective courts that have dealt with the matter to protect its interests were real prejudice a prospect to be feared – and to an extent it did so via its submissions on costs.  In particular I do not consider the failure of the applicant to provide particulars of loss and damage until a late date had such an effect on the respondent as would in any fashion warrant ordering a period without interest.  Neither do I consider the difficulties that were associated with the cross-vesting of the proceeding as being of particular moment for present purposes.

27                  This proceeding took a regrettably long period in being brought to a hearing.  But it was by no means unusually so.  Nor was the unhurried rush to a hearing such a cause of injustice to Darvall McCutcheon as would require withholding interest from the applicant for a period.  Indeed I am by no means satisfied that the protraction of the pre-trial period was attributable entirely to the applicant alone.

28                  Finally I would have to say that I reject the submission that, because the various sums to be awarded to the applicant were actually ascertained only as a result of my judgment, there is thus provided a basis for refusing to award interest in respect of those sums.  The proceedings were, for s 51A(1) purposes, always proceedings “for the recovery of … money”.

29                  As to the periods for which interest should run on the separate sums that are part of the damages award, I will order that (a) in relation to the $55,000, it be paid from 24 July 1989 to the date of entry of judgment;  and (b) in relation to the $20,000, that it be paid from 1 March 1990 to the date of entry of judgment.  I have chosen the latter date for the commencement of the interest on the $20,000 for the reasons given by the applicant in its original submissions.  That date is shortly after the date on which Mr Frost made the last payment of fees ($7,000) to Darvall McCutcheon.  Given that the amount of damages awarded itself represents a necessarily inexact apportionment, no obvious injustice to the applicant will result from not selecting an earlier commencement date.

2.         Costs

30                  Again I need to emphasise at the outset that the power I am exercising in relation to the award of costs derives from s 43 of the Federal Court of Australia Act 1976 (Cth) and not from the provisions of the Supreme Court Act 1986 (Vic).  Because of the submissions made by the parties it is appropriate to note the principles applied in this Court that govern the undoubted discretion of courts to depart from ordering costs on a party and party basis in favour of an indemnity or other basis.

31                  The Full Court of this Court in Re Wilcox;  Ex parte Venture Industries Pty Ltd [No 2] (1996) 72 FCR 151 at 156-157, in re-endorsing the conclusions of Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, formulated those principles in the following way:

“(1)     Section 43 of the FCA confers an absolute and unfettered discretion on the Court to make orders as to costs but the discretion must be exercised judicially.

 (2)      In order to exercise the discretion judicially the following principles have been accepted by the Court as applicable:

            (a)        the Court ought not to depart from the rule that costs be ordered on a party and party basis unless the circumstances of the case warrant the Court in departing from the usual course;

            (b)        the circumstances which may warrant departure from the usual course arise as and when the justice of the case so requires or where there may be some special or unusual feature in the case to justify the Court in departing from the usual course;

            (c)        while the circumstances in cases in which indemnity costs have been ordered offer a guide, the question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for costs other than on a party and party basis.”

32                  The principles applied in this Court when it deviates from the ordinary rule that costs follow the event are well-known and were conveniently summarised by Toohey J in Hughes v Western Australian Cricket Association (Inc) (1986) ATPR ¶ 40-748.  I need not repeat them here.

33                  The applicant now seeks costs – or at least the costs of the trial itself – on either an indemnity or a solicitor and client basis:  on which see Spencer v Dowling [1997] 2 VR 127 at 163-164;  rather than on a party and party basis.  The bases of its submissions relate (i) to the respondent’s pleading defences said to be unsustainable and to the raising of matters by way of defence (eg abandonment of the breach of confidence claim) that were not pleaded but also were unsustainable;  (ii) the inadequate preparation of the respondent’s case particularly in light of materials available to the parties as a result of the ANZ Bank litigation (eg the full transcript of proceedings before O’Bryan J);  (iii) extensive and often irrelevant cross-examination of Mr Frost;  and (iv) the need to devote a whole morning of the trial to whether the respondent would be put to its election in respect of a no case submission.

34                  For its part the respondent not only resists an order other than on a party and party basis, it seeks to have the costs awarded reduced to take account of the following factors:  (a) the proceeding should have been brought in the Victorian County Court given the sums claimed and costs should reflect that;  (b) the applicant caused unnecessary expense in the proceedings by its regular amendments to the Statement of Claim;  (c) the claims made in respect of legal costs paid to other law firms varied repeatedly over the trial and were in large measure unsuccessful;  (d) significant parts of claims made were abandoned during the trial particularly in relation to the claim of $40,000 for the fees of the liquidator;  (e) delay;  and (f) unnecessary costs contributed by the applicant.

35                  This is a matter in which each side could reasonably find some cause for grievance in relation to the other’s conduct of an aspect or aspects of the progress of the matter from its institution until the end of the hearing.  Both sides, in my view, have occasioned the unnecessary incurring of expenses.  I give by way of illustration (1) the difficulties the applicant occasioned by its needing to revise legal cost figures claimed as damages on a number of occasions during the trial, and its abandonment of a claim for liquidator’s fees after the liquidator had begun to be cross-examined;  and (2) the respondent’s rather adventurous raising of the no case/election issue and its reliance on unpleaded and unsustainable defences, eg abandonment.

36                  While the above comments relate to the conduct of the trial, I expect that like comments could well be made of the pre-trial processes, though it seems probable that in that period the greater fault may have lain with the applicant.

37                  Notwithstanding the criticisms that can be levelled at the respondent (though not only at the respondent), I do not consider that the justice of the case requires my departure from the usual course adopted in exercising the discretion to award costs either in relation to the trial alone or to the proceedings generally.  I will order party and party costs only.  But I do not consider that the applicant is entitled to costs without some reduction.

38                  The most significant factor of which account needs to be taken is that, while successful, the applicant has not been wholly so.  Of itself this would not disentitle the applicant to all of its costs.  But the main matters in which it was not successful or which it abandoned during the trial were the ones that occasioned the expenditure of unnecessary time and costs.  I refer in particular to the claims both for the liquidator’s fees (that was abandoned) and for some of the legal costs sought by way of damages.  Included amongst the latter, I would add, were claims unreasonably brought in this proceeding (eg costs in respect of the quantum meruit claim).  These matters do, in my view, warrant some reduction in the costs award:  see Cummings v Lewis (1993) 113 ALR 285.  And to be added to them are pre-trial matters for which the respondent ought not bear the full burden.  I refer in particular to the regular process of amendment of the pleadings and the consequential need for further discovery and particulars.

39                  Overall, the applicant though successful in the event must suffer some diminution in the costs it recovers.  Any judgment as to the level of that reduction must necessarily be an inexact one.  In all the circumstances I consider that the justice of the case requires that the applicant forego fifteen per cent of its costs.  I will order accordingly.  I should emphasise that, having so reduced the applicant’s costs award, the case is not one in which a pro-tanto order against the applicant would be at all appropriate.

40                  For completeness I should add that (i) my costs order includes the costs of the proceeding in the Supreme Court of Victoria prior to its transfer to this Court;  and (ii) given the interest awards made, no question can arise as to the possible reduction of costs awarded under O 62 r 36A of this Court’s Rules.

3.         Orders

41                  The orders of the Court will be that:

(1)        The respondent pay damages to the applicant in the sum of $91,060.00.

(2)        The respondent pay interest on the sum of $55,000.00 from 24 July 1989 until the date of entry of judgment at the rate fixed from time to time for this period under the Penalty Interest Rates Act 1983 (Vic).

(3)        The respondent pay interest on the sum of $20,000.00 from 1 March 1990 until the date of entry of judgment at the rate fixed from time to time for this period under the Penalty Interest Rates Act 1983 (Vic).

(4)        The respondent pay the applicant 85 per cent of the taxed costs of the application.

Associate:

Dated:              16 June 1999