Alec Finlayson Pty Ltd v Armidale City Council [1998] FCA 170

FEDERAL COURT OF AUSTRALIA DAMAGES - s 51A interest - assessment of lump sum in lieu - utilization by Federal Court sitting in New South Wales of rates prescribed by Supreme Court of New South Wales - date from which interest should be allowed. Federal Court of Australia Act 1976, s 51A Namol Pty Limited v A W Baulderstone Pty Limited (No 2) (1993) 47 FCR 388 ALEC FINLAYSON PTY LIMITED v ARMIDALE CITY COUNCIL NG 29 of 1992 Burchett J Sydney 6 March 1998

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 29 of 1992

BETWEEN: ALEC FINLAYSON PTY LIMITED

Applicant

AND: ARMIDALE CITY COUNCIL

Respondent

JUDGE: BURCHETT J

DATE OF ORDER: 6 march 1998

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The damages, other than interest under s 51A of the Federal Court of Australia Act 1976, be assessed at $1,119,576. 2. There be included in the sum for which judgment is given a lump sum in lieu of any interest under the said s 51A of $360,000. 3. There be judgment for the applicant accordingly against the respondent Armidale City Council for $1,479,576. 4. The respondent Armidale City Council pay the applicant's costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 29 of 1992

BETWEEN: ALEC FINLAYSON PTY LIMITED

Applicant

AND: ARMIDALE CITY COUNCIL

Respondent

JUDGE: BURCHETT J

DATE: 6 March 1998

PLACE: SYDNEY

REASONS FOR JUDGMENT Following the delivery of reasons for judgment in respect of the amount of damages to be awarded in this case, I directed that short minutes of orders be brought in, and that the question whether any sum should be allowed under s 51A of the Federal Court of Australia Act 1976 be then dealt with. I have now heard argument on that issue. I have been referred to the decision of Davies J in Namol Pty Limited v A W Baulderstone Pty Limited (No 2) (1993) 47 FCR 388, where his Honour noted with approval (at 389) the practice of this Court, when sitting in New South Wales, of adopting the rates prescribed under the rules of the Supreme Court of New South Wales. Although counsel for the respondent argued that these rates are not appropriate, I am satisfied that I should follow Davies J in adopting them as the basis of the order that I propose to make under s 51A. Section 51A(1)(a) refers to "interest ... 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". In Namol, Davies J chose only part of this period, being that part of it which commenced on the date of the institution of the proceedings before him. Counsel for the respondent urged that I should do likewise. I think this is a matter within the discretion of the Court in each particular case. I do not understand Davies J to have laid down a general rule for cases, such as the one I am dealing with, that do not involve circumstances of the kind that Namol presented, or anything like the very long delay which there was in that case before the commencement of the proceeding. In the present case, there is no doubt that the applicant's loss of the opportunity to earn profit by the residential building side of its business commenced to be felt by it very soon after 27 February 1990. I have held it was a loss which continued thereafter and will probably continue to be felt until the year 2000, as suggested by the accounting expert, Mr Harris. For that aspect of the damages, I decided to award the sum of $500,000-00. Bearing in mind that part of this sum relates to the future, and also that Mr Harris's calculations, which I took into account in estimating the sum of $500,000-00, included calculations involving as an element the assumption that earnings of the business could have been utilized in enabling further profits to be earned, it is not appropriate to award interest under s 51A on the whole sum of $500,000-00. However, the effect of that element in Mr Harris's calculations upon the very different ultimate assessment at which I arrived was quite small. I have deducted the sum of $100,000-00, and to allow for the accretion of the loss over the period, I have had regard to a calculation, made by the parties at my direction, of interest in accordance with the rates prescribed by the Supreme Court on $200,000-00 (ie half of $400,000-00) from 1 July 1990 to today's date, being $193,760-00. I accept the submission of counsel for the applicant that this approach probably under-assesses the interest that would be appropriate if no allowance were made for the extent to which the element of compensation for loss of the use of earnings is already built into the award. But on the other hand, I do not think that element would be sufficiently reflected without the making of some further deduction, which I shall make in fixing a lump sum under s 51A(1)(b). The deduction of $100,000-00 makes allowance primarily for the fact that part of the $500,000-00 relates to loss yet to be suffered. I have also received from the parties a calculation of interest on the remaining elements of the award which are appropriate to be taken into account for the purposes of s 51A, totalling $197,117-00. That calculation is also for the period 1 July 1990 to this date in accordance with the rates prescribed by the rules of the Supreme Court for that period. It totals the sum of $190,966-94. The parties accept that not the whole of the sum of $197,117-00 would have accrued due as at 1 July 1990, but the great bulk of it would have accrued virtually immediately after 27 February 1990, namely, the sum I have allowed in respect of land rendered unsaleable. Taking all these matters into account, I assess the sum of $360,000-00 as a lump sum, in lieu of any interest under s 51A, which should be included in the sum for which judgment is to be given. It is not disputed that the orders should also include an order that the respondent Armidale City Council pay the applicant's costs. I make orders accordingly. I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Burchett