Tellamist Pty Ltd v Port Stephens Shire Council & Anor [2003] NSWSC 317

New South Wales Supreme Court

CITATION : Tellamist Pty Ltd v Port Stephens Shire Council & Anor [2003] NSWSC 317 HEARING DATE(S) : 16 April 2003 JUDGMENT DATE : 16 April 2003 JURISDICTION: Equity Division JUDGMENT OF : Bergin J DECISION : See par [24]

CATCHWORDS : [INTEREST] - Whether interest should be awarded on judgment when the asset damaged by trespasses has been retained and has increased in value - Lengthy delay in bringing proceedings on for hearing - [COSTS] - Claim for indemnity costs by reason of abandonment of Defences and Cross-Claim on 5th day of an 8 day trial. Local Government Act 1919 (NSW) LEGISLATION CITED : Public Works Act 1912 (NSW) Supreme Court Act 1970 (NSW) Falkner v Bourke (1990) 19 NSWLR 574 CASES CITED : Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 Perri v Flavell and Anor (No 2), NSWCA, unreported, 20 September 1995, Kirby P and Powell JA Rentokil Pty Ltd v Channon (1990) 19 NSWLR 417 Tellamist Pty Ltd (Plaintiff) PARTIES : Port Stephens Shire Council (First Defendant) Daracon Engineering Pty Ltd (Second Defendant) FILE NUMBER(S) : SC 2067/93 COUNSEL : Mr JS Drummond (Plaintiff) Mr A Henskens (Defendants) SOLICITORS : Hartmann & Associates Solicitors (Plaintiff) Cantle Carmichael Lawyers (Defendants)

- 8 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BERGIN J

16 APRIL 2003

2067/93 TELLAMIST PTY LTD v PORT STEPHENS SHIRE COUNCIL & ANOR JUDGMENT – INTEREST & COSTS 1 This is an application for interest and costs in respect of a judgment to be entered consequent upon delivery of my reasons for judgment in this matter on 3 April 2003. I found that the plaintiff was entitled to judgment against the defendants in the amount of $365,000 and judgment against the first defendant for an additional amount of $25,000 by way of exemplary damages. Interest 2 The plaintiff claims interest from August 1991 when the cause of action arose. The plaintiff did not file its Statement of Claim until 5 April 1993 and the Council filed its Defence and Cross-Claim on 21 December 1993. The plaintiff's Motion to strike out parts of the defendants' Defences and Cross-Claim was heard by Master McLaughlin in September, November and December 1995 and judgment was delivered striking out parts of the pleadings on 6 August 1996. An appeal from Master McLaughlin was heard by Acting Justice Bennett who delivered her judgment on 4 July 1997 dismissing the appeal from the Master. 3 Part of the claim the plaintiff made before Master McLaughlin was to strike out the Council's pleading in paragraph 6(d) of the Defence that it had a statutory right to enter the land, the subject of the trespasses, pursuant to ss 382, 383 and 524 of the Local Government Act 1919 (NSW) and ss 80 and 82 of the Public Works Act 1912 (NSW). The Master said this in relation to that pleading: The plaintiff adverts to the fact that no evidence has been placed before the Court which would support the allegation that the first defendant has passed any resolution authorising the second defendant to enter upon the land, and the first defendant has failed to provide any evidence to support the purpose, power or function necessary to support the alleged power that the first defendant, by servants or agents, were permitted to enter upon the land pursuant to s 524 of the Local Government Act . 4 The Master then referred to the other sections relied upon in the Defence and said: Once again it is not necessary for me to be satisfied that the defendant Council has under those various statutory provisions the rights of entry alleged by the first defendant to exist thereunder. It is necessary for me to be satisfied only that the first defendant has at least an arguable claim to the existence of such rights. I certainly am not persuaded that reliance upon those statutory provisions would not constitute a basis for the entitlement to enter upon the land asserted in paragraph 6. It has been submitted on behalf of the defendant that there was no obligation on the Council to pass a formal resolution before exercising those powers. I am not satisfied that there was such an obligation upon the Council to pass such a resolution. In those circumstances, the fact that there is no evidence of such a resolution having been passed is not of itself fatal to the reliance by the Council upon the statutory provisions. Accordingly, I do not propose to strike out sub-paragraph (d) in respect to paragraph 6. 5 The Council filed a Further Amended Defence and Cross-Claim on 1 August 1997 in which it claimed an entitlement to enter the plaintiff's land pursuant to the two statutes referred to earlier. 6 Between 1997 and 2002 little was done in these proceedings. In 2002 the plaintiff changed solicitors and a Notice pursuant to the Rules was filed in July 2002. 7 In written submissions the plaintiff conceded that "the only period during which the defendant could raise any issue in respect to delay is that between late 1998 and early 2000". However the plaintiff made the point that during that period the defendant did nothing to bring forward the proceedings by having them re-listed and was content to let the proceedings lie. 8 Section 94 of the Supreme Court Act 1970 (NSW) provides a discretion to the Court to include interest in the sum for which judgment is given at such rate as the Court thinks fit on the whole or any part of the money, for the whole or any part of the period between when the date when the cause of action arose and the date when judgment takes effect. The purpose of the discretion is to allow a party entitled to a judgment to recover the full value of that judgment and money that could have been earned upon it if it had been paid at the date at which it was due: Perri v Flavell and Anor (No 2), NSWCA, unreported, 20 September 1995, Kirby P and Powell JA. It is only in rare cases that interest is refused: Falkner v Bourke (1990) 19 NSWLR 574 per Priestley JA at 576. The defendants submitted that this is one of the rare cases in which interest should be refused. 9 The basis upon which the defendants claim that no interest should be awarded is the fact that the plaintiff has retained ownership of the land which has increased in value from the date of the trespasses to the date of judgment. In reliance upon evidence given in the trial the defendants claim that the plaintiff has obtained a capital gain of approximately $2.4 million by retaining ownership of the land. 10 The land to which reference is made is the land upon which the proposed cluster-development was to occur including the "buffer" area upon which the trespasses occurred. The defendants submitted that the assessment of damages was reliant upon the evidence of Mr Howes, who based his valuation on an "hypothetical" development. It is submitted that the plaintiff is now in a position to enjoy the capital gain on the property which offsets the necessity for interest to be awarded in its favour. 11 In my reasons for judgment I said: I am not assessing the damages in this case as an actual loss of profits. I am assessing the diminution in value of the plaintiff's land at the time of the trespasses by reference to the impact of the removal of the buffer upon the land as it was then which included the consent to the cluster-development. (par [102]) 12 Mr Drummond submitted that the defendants' contention that it is appropriate to take the value of the land in 1991 and compare it to the value in December 2002 is contrary to the general proposition that damages for trespass, diminution of value of the land, are generally to be assessed at the time of the trespass. He submitted that the issue of valuing land at different times was "soundly" rejected by Samuels JA in his dissenting judgment in Rentokil Pty Ltd v Channon (1990) 19 NSWLR 417. 13 If the defendants' submission is correct it would mean that parties who are entitled to judgment by reason of damage to an asset incurred by tortious conduct by other parties should not be awarded interest on the judgment if they have made a decision to retain the asset, the subject of the tort, and that asset increases in value. It seems to me that as a matter of principle that is not correct. If a party is entitled to a judgment and there is a delay in payment between the date upon which the money was "due", that is, the date of the commission of the tort, and the date the judgment takes effect, that party is entitled to interest on that amount irrespective of the maintenance of the asset and its increase in value. 14 However the defendants' alternative submission that some reduction in the amount of interest because of the extraordinary delay in these proceedings has more force. The parties pursued interlocutory proceedings which concluded in 1997. There has been no proper explanation for the delay between late 1997 and early 2002. Although it is true that the defendants did not move to strike the matter out for want of prosecution, I am satisfied that it is not appropriate to include that period in the interest calculation. Interest claimed up to 8 April 2003 of $461,337 should be increased to $462,057 to reflect the interest up to 16 April 2003. That amount is to be reduced by $165,115 for the period between 1 September 1997 and 28 February 2002. Interest in the amount of $296,942 will be awarded on the judgment.