Lolomanaia v Roads & Traffic Authority of New South Wales [2002] NSWSC 918

New South Wales Supreme Court

CITATION : Lolomanaia v Roads & Traffic Authority of New South Wales [2002] NSWSC 918 CURRENT JURISDICTION: Common Law Division FILE NUMBER(S) : SC 12632/02 HEARING DATE(S) : 30 September 2002 JUDGMENT DATE : 2 October 2002

PARTIES : Kepueli Taufui Lolomanaia (Plaintiff) Roads & Traffic Authority of NSW (Defendant) JUDGMENT OF : Dunford J

COUNSEL : K Kelleher (Defendant) SOLICITORS : Bond & Bond (Plaintiff) Hunt & Hunt (Defendant) CATCHWORDS : PRACTICE & PROCEDURE - costs - interest thereon - common law claim. LEGISLATION CITED : Supreme Court Act 1970, ss 19 & 95 Barclays Australia (Finance) Limtied v GWG Leviny Pty Ltd (unreported - Rolfe J - 10 December 1998) CASES CITED : Grogan v Thiess Contractors Pty Ltd [2000] NSWSC 1101 Puntoriero v Water Administration Ministerial Corporation [2001] NSWSC 1071 Australian Development Corporation Pty Ltd v White Constructions (ACT) Pty Ltd (in liquidation) [2002] NSWSC 280 DECISION : See paras 23 & 24.

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

DUNFORD J

Wednesday, 2 OCTOBER 2002

12632/02 Kepueli Taufui Lolomanaia v Roads & Traffic Authority of NSW

JUDGMENT 1 His Honour: This is an application by the plaintiff for an order pursuant to s 95 of the Supreme Court Act 1970 or otherwise that the defendant pay to the plaintiff interest on the plaintiff's costs payable by the defendant in Supreme Court Common Law Division proceedings pursuant to an order of Greg James J made on 8 August 2000 from the dates when the amounts in respect of such costs was paid by the plaintiff. He also seeks an order that the amount of such interest be assessed. 2 The plaintiff sued the defendant in proceedings CL 11135/90 for damages for personal injuries suffered by the plaintiff in 1986 in the course of his employment with the defendant and allegedly occasioned by the negligence of the defendant. 3 On 7 June 2000 the plaintiff recovered a judgment against the defendant in the sum of $994,357.57. On the same day his Honour granted the defendant's application for a stay of execution upon terms, inter alia, that $430,000 of the judgment be paid to the plaintiff and this amount was paid on 30 June 2000. On 7 July the sum of $262,369.32 was appropriated by the plaintiff's solicitors to the firm for the plaintiff's solicitors and client costs of the proceedings up to that date. 4 On 8 August 2000 his Honour made an order for costs in favour of the plaintiff including indemnity costs from 15 July 1994. 5 The defendant appealed and on 27 August 2001 the appeal was allowed, but only to the extent of reducing the amount of the judgment by $46,584.00. A challenge to the order for indemnity costs was unsuccessful. 6 On 25 September 2001 the defendant paid the balance of the judgment to the plaintiff, whilst the following day $2,773.44 was appropriated by the plaintiff's solicitors on account of their further costs in relation to these proceedings, excluding the appeal. 7 On about 28 November 2001 the plaintiff's solicitors forwarded to the defendant's solicitors an assessment of the plaintiff's costs in the sum of $265,142.76. The amount of such assessment was disputed, but an agreed amount of $228,700.00 was paid on 24 January 2002 and, following a costs assessment, the balance of $34,018.50 was paid on about 16 August 2002. 8 So the history may be summarised by saying that of the judgment of $994,357, $430,000 was paid to the plaintiff's solicitors on 30 June 2000 out of which $262,369 was paid to the plaintiff's solicitors for costs on 7 July 2000 leaving the plaintiff with $167,631 for his own use out of the $430,000. The balance of the judgment was paid on 25 September 2001 and the balance of the costs, was paid by the plaintiff to his solicitor the following day. The undisputed costs were paid by the defendant to the plaintiff on 24 January 2002 and the balance on 16 August 2002. 9 Section 95 of the Supreme Court Act 1970 is as follows: (1) Where judgment is given or an order is made for the payment of money, interest shall, unless the Court otherwise orders, be payable at the prescribed rate from the date when the judgment or order takes effect on so much of the money as is from time to time unpaid. (2) Notwithstanding subsection (1), where, in proceedings on a common law claim the Court gives judgment for damages and the damages are paid within 21 days after the date when the judgment takes effect, interest on the judgment debt is not to be payable under subsection (1) unless the Court otherwise orders. (3) Notwithstanding subsection (1), where, in proceedings for damages on a common law claim, the Court makes an order for the payment of costs and the costs are paid within twenty-one days after ascertainment of the amount of the costs by assessment under Division 6 of Part 11 of the Legal Profession Act 1987 or otherwise, interest on the costs shall not be payable under subsection (1) unless the Court otherwise orders. (4) If an order is made for the payment of costs, the Court may order that interest is to be paid on the amount so ordered, at the prescribed rate referred to in subsection (1), from the date or dates when the amount in respect of costs was duly paid. 10 Subsection (4) was introduced by the Courts Legislation (Further Amendment) Act 1995, later amended by the Law Reform (Miscellaneous Provisions) Act 1996 and commenced on 17 May 1996. 11 I have been referred to a number of decisions on the interaction of the various subsections including Barclays Australia (Finance) Limited v G W G Leviny Pty Ltd (unreported - Rolfe J - 10 December 1998), Grogan v Thiess Contractors Pty Ltd [2000] NSWSC 1101, Puntoriero v Water Administration Ministerial Corporation [2001] NSWSC 1071, and Australian Development Corporation Pty Ltd v White Constructions (ACT) Pty Ltd (in liquidation) [2002] NSWSC 280; and it can now be accepted that subs (1) and (4) of s 95 are both sources of power to order the payment of interest on costs, and subs (4) does not require an applicant to demonstrate a "special case" or "special circumstances" before such an award of interest on costs can be made. 12 In Australian Development Corporation Pty Ltd v White Constructions, Einstein J at [17], by reference to other authorities cited therein, summarised the objectives and principles behind orders for payment of interest on costs and concluded at [28] that the ordering of interest on costs will be appropriate (absent disentitling conduct) where the applicant has been relevantly out-of-pocket from having arranged to pay legal costs from time to time during the course of lengthy litigation in which the applicant has ultimately succeeded and where the respondent may be presumed to have benefited from not having had to pay the costs at the time when they were paid to the applicant's legal representatives and hence having had the use of the money from that time. 13 In that case, the applicants had been paying costs to their solicitors over a lengthy period of almost 10 years and his Honour held that it was appropriate in those circumstances that the applicants be paid interest on their costs from the various dates on which such payments were made until their costs were paid by the unsuccessful party. 14 A similar conclusion was reached by Barr J in Grogan where, once again, the applicant had paid costs to his solicitors to fund the litigation and was ultimately successful in his application for interest on those moneys paid until the balance of the costs were paid by the defendant. 15 It is, however, necessary to have regard to the provisions of subs (2) and (3). Those sections only apply to "common law claims", a term defined in s 19(1) of the Act as claims "for damages or other money or for possession of land or for detention of goods in proceedings in the Common Law Division". 16 In its original form before the addition of subs (4), subs (2) and (3) were provisos to subs (1) and, in my view, that remains the position, although Barr J in Grogan rejected the submission that subs (3) should be read as a proviso to subs (4). Subsections (2) and (3) are, however, special legislation whilst subs (1) and (4) are general legislation and, in my opinion, subs (2) and (3) simply recognise the realities of personal injuries litigation which comprises the vast majority of common law claims in that the defendant is almost invariably an insurance company and, more particularly, in relation to subs (3), unlike in most other forms of litigation, it is unusual for plaintiffs to put their solicitors in funds during the litigation, but generally no costs are paid to the plaintiff's solicitors until the verdict is received and/or agreed or assessed costs are paid, see Grogan at [8]. 17 But subs (3) is not inflexible and expressly provides that its provisions only apply "unless the Court otherwise orders". In my opinion, where the ordinary course of common law claims for personal injury litigation is departed from and, for example, the plaintiff has funded his solicitor before the conclusion of the litigation, it is appropriate to "otherwise order". That is what has happened here because although judgment for the plaintiff was ordered on 7 June 2000, the litigation was not concluded until the judgment of the Court of Appeal on 27 August 2001, and the vast bulk of the plaintiff's costs were paid to his solicitors on 7 July 2000 during the course of the litigation. 18 Because of the stay the plaintiff only received $430,000 on or about 30 June 2000, of which $262,369 was appropriated to his solicitors for costs with the result that he did not receive the $430,000 for his own benefit, but only $167,631. He was out-of-pocket for $262,369 which he had paid to his solicitors, and in respect of most of which he had an order for costs in his favour, from then until the payment of the costs on 26 September 2001 ($228,700) and 11 August 2002 ($34,018). 19 The major reason for this delay was the appeal to the Court of Appeal but, considering that the judgment was only reduced by $45,000 out of $944,357 and the appeal against the order for indemnity costs was unsuccessful, it can hardly be said that the appeal justified the plaintiff being held out of the moneys which he had paid to his solicitors as costs for 15 and 25 months respectively, whilst the defendant had the use of such moneys during that time. 20 For these reasons I am satisfied that the plaintiff should have an order for payment of interest on those costs during such periods. 21 As to the additional costs of $2,773.44 paid to the plaintiff's solicitors on 26 September 2001, this amount was paid out of the payment of the balance of the judgment, very much in the manner envisaged by subs (3) and accordingly I do not consider it appropriate to make an order for payment of interest on that amount which is, in any event, comparatively small, in the overall picture. 22 The costs paid by the plaintiff to his solicitors on 7 July 2000 were $262,369.32 and the costs paid by the defendant to the plaintiff on 24 January 2002 was $228,700. The difference between those two amounts is $33,669.32 and it seems to me that this is the amount on which interest should be paid for the period 7 July 2000 to 24 January 2002 notwithstanding that the amount paid for costs on 16 August 2002 was $34,018.50, because it is only in respect of the $33,669.32 that the plaintiff was out-of-pocket from 7 July 2000. 23 I therefore order that the defendant pay to the plaintiff interest at the rates specified in Schedule J of the Supreme Court Rules on $228,700 from 7 July 2000 to 24 January 2002 and on $33,669.32 from 7 July 2000 to 16 August 2002. 24 I order the defendant to pay the plaintiff's costs of the Summons. 25 I grant liberty to the parties to apply to me on two days notice if agreement cannot be reached as to the calculations. **********