New South Wales Supreme Court CITATION : Siemens v Schenker (No 2) [2001] NSWSC 742 CURRENT JURISDICTION: Equity Division Commercial List FILE NUMBER(S) : SC 50152/98 HEARING DATE(S) : 27/08/01 JUDGMENT DATE : 31 August 2001 Siemens Ltd - Plaintiff PARTIES : Schenker International (Australia) Pty Ltd - First Defendant Schenker International Deutschland GmbH - Second Defendant JUDGMENT OF : Barrett J COUNSEL : Mr I.G. Roberts - Plaintiff Mr R.J.H. Darke - Defendants SOLICITORS : O'Reilly Sever & Co - Plaintiff Blake Dawson Waldron - Defendants CATCHWORDS : PROCEDURE - judgment - appropriate currency where company based in Australia put to foreign currency expenditure Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (1989) 15 NSWLR 448 CASES CITED : The Despina R [1979] AC 685 Mitsui OSK Lines Ltd v The Ship "Mineral Transporter" [1983] 2 NSWLR 564 DECISION : Judgment to be entered in Australian currency converted at rates of exchange prevailing on dates of payments made in German currency 5 THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST BARRETT J FRIDAY, 31 AUGUST 2001 50152/1998 - SIEMENS LIMITED v SCHENKER INTERNATIONAL (AUSTRALIA) PTY LTD & ANOR (NO 2) JUDGMENT HIS HONOUR: 1 The substantive judgment of 6 August 2001 left two matters for further submissions and subsequent determination. Those further submissions were made on 27 August 2001. 2 The first matter concerns the currency in which judgment should be entered in respect of the loss the Court found the plaintiff to have suffered through the defaults of the defendants in the transportation and handling of the plaintiff's electronic communications unit. Having heard counsel's further submissions, I am of the view that judgment should be entered in Australian currency. Although the relevant transactions (except for the small amount of survey fees) were in German currency, the plaintiff is an Australian company which operates in Australia. Of necessity, it keeps its books of account in Australian currency and, by and large, no doubt conducts a large part of its business in Australian currency, even though it enters into some German currency transactions, including transactions with its German parent and transactions with the second defendant of the kind represented by the transaction from which the proceedings arose. 3 In an immediate sense, the expenditures to which the plaintiff was put by the defaults found by the Court to have been committed by the defendants were, as to all but the minor item of survey fees, expenditures in German currency. It is likely that, to meet those expenditures, the plaintiff outlaid Australian dollars to purchase the necessary German currency remittance. There is in evidence (Bundle, Tab 43) a copy of a statement of account for September 1997 between the plaintiff and its German parent which is denominated in Deutschmarks and carries handwritten conversions into Australian currency. 4 Given the duty of the Court to express a judgment in the currency which best reflects the loss sustained by the relevant party (Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (1989) 15 NSWLR 448), it seems to me that the appropriate course is for judgment to be given in Australian currency. I consider such an approach to be consistent with the decisions in The Despina R [1979] AC 685 and Mitsui OSK Lines Ltd v The Ship "Mineral Transporter" [1983] 2 NSWLR 564. 5 It therefore becomes necessary to determine the appropriate rate of exchange - or, more precisely, the date for applying the rate of exchange for the time being prevailing. That question is best approached by reference to the time or times at which the plaintiff sustained the relevant loss. This is particularly so where, as here, the loss was represented principally by the outlay of funds. The plaintiff says that the relevant outlay of funds was the German currency price paid by the plaintiff to its parent company for the communications unit which was damaged by the default of the defendants. That sum was outlaid on 17 February 1997. The defendants' contention, on the other hand, is that there were relevantly two financial outlays: first, the sum of DM19,416.80 for the return freight charge for the damaged unit from Melbourne to Berlin and, second, DM1,580,467 being the net sum (after offset for salvage) paid for the replacement unit. These were paid in German currency on, respectively, 15 May 1997 and 23 July 1997. The defendants' position is to be preferred on this. The expenditures which would not have been incurred but for the default of the defendants are the return freight to Berlin and the cost of acquiring the replacement unit. 6 The plaintiff is accordingly entitled to the Australian dollar equivalent of DM19,416.80 at the rate of exchange prevailing on 15 May 1997 and the Australian dollar equivalent of DM1,580,467 at the rate of exchange prevailing on 23 July 1997. According to information published by the Reserve Bank of Australia, the exchange rates on the dates in question were 75.947 Australian cents to the Deutschmark on 15 May 1997 and 74.510 Australian cents to the Deutschmark on 23 July 1997. The respective Australian currency sums are therefore $14,746.48 and $1,177,607.90. 7 The second matter to be determined is interest. It was said in the reasons delivered on 6 August 2001 that interest should be included in the judgment at the rate prescribed by Schedule J to the Supreme Court Rules. In view of the decision on the relevant dates for currency conversion, interest should be computed on the following sums from the following dates to today: $ 14,746.48 - 15 May 1997 (i.e, interest of $6,397.74) $1,177,607.90 - 27 July 1997 (i.e, interest of $487,529.67) $ 1,250.00 - 15 December 1996 (i.e, interest of $527.71). (In view of the fact that the survey fees were incurred within a few days after the date the unit was damaged, being 15 December 1996, I am content for that date to be regarded as the relevant date for present purposes). 8 The total amount of interest to today's date is $494,455.12. Judgment will therefore be entered for a total composite sum of $1,688,059.50 against the first and second defendants jointly and severally. 9 Finally, there is a question of costs. It was said in the judgment of 6 August 2001 that the defendants must pay the plaintiff's costs. This reflects the normal expectation that costs should follow the event. The plaintiff has now put in evidence a settlement offer made by it on 6 July 2001 which the defendants rejected, and which entailed an outcome for the defendants more favourable than that they achieved in the proceedings. On that footing, the plaintiff says, it should have party and party costs up to 6 July 2001 and costs on the indemnity basis thereafter. That, to my mind, is the appropriate outcome in the circumstances and I so order. ********** Last Modified: 09/03/2001 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.