New South Wales Supreme Court CITATION : A & P Parkes Constructions v Como Hotel Holdings [2004] NSWSC 792 HEARING DATE(S) : 20 August 2004 JUDGMENT DATE : 20 August 2004 JUDGMENT OF : McDougall J at 1 DECISION : See paras [14] and [15] of judgment CATCHWORDS : BUILDING AND CONSTRUCTION - INTEREST - whether plaintiff entitled to interest from date payments due as determined by referee - where contract provides for date from which interest to run - where plaintiff entitled to interest only at Schedule J rates and not at contractual rate - whether regard had to contract on question of date of accrual of entitlement to interest - where no claim of interest notified until proceedings commenced - whether plaintiff only entitled to interest from date of commencement of proceedings - where defendant had benefit of use and occupation of premises, and known of claim, before proceedings commenced - whether excessive delay in prosecution of plaintiff's claim - COSTS - where plaintiff succeeded for part only of the amount that it claimed - where no dominant issue that led to plaintiff receiving substantially less than the amount of claim - whether plaintiff entitled to costs without reduction Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322 Anderson's (Pacific) Trading Co Pty Ltd v Karlander New Guinea Line Ltd [1980] 2 NSWLR 870 Forster v Farquhar & Ors [1893] 1 QB 564 CASES CITED : Cretazzo v Lombardi (1975) 13 SASR 4 Abigroup v Peninsula Balmain (21 May 2003 unreported) Waters v P C Henderson Australia Pty Ltd (6 July 1994 unreported) Mackinnon v Petersen (19 April 1989 unreported) PARTIES : A & P Parkes Constructions Pty Limited (Plaintiff) Como Hotel Holdings Pty Limited (Defendant) FILE NUMBER(S) : SC 55028/02 COUNSEL : I Faulkner SC (Plaintiff) D Farrar, Solicitor (for Administrator) SOLICITORS : Cowley Hearne (Plaintiff) Minter Ellison (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY & CONSTRUCTION LIST McDOUGALL J 20 August 2004 Ex tempore (revised 23 August 2004) 55028/02 A & P PARKES CONSTRUCTIONS PTY LTD v COMO HOTEL HOLDINGS PTY LTD JUDGMENT (on interest and costs) 1 HIS HONOUR: In these proceedings I gave judgment on 8 June 2004 in which I ordered that the report of the referee be adopted, with a conceded arithmetical error being corrected. The result was that the plaintiff was entitled to judgment in the sum of $1,858,181.23. Of that amount the defendant had, during the course of the hearing on 7 June 2004, conceded that it was liable to the plaintiff for a certain amount of the plaintiff's claim. The conceded liability was ultimately quantified at $576.737.46 and judgment for that amount was entered pursuant to Pt 31 r4 on 29 June 2004. 2 The parties are in dispute as to interest and costs. 3 The plaintiff's claim was in substance for the cost of variations to the work comprised in the building contract. As the referee pointed out in his report, and as was confirmed in the hearing before me on 7 June 2004, the defendant has never contended that any of the work for which the variations were claimed had not been done. Nor has it ever contended that the work was done imperfectly or defectively; on the contrary. The evidence shows that completion occurred on about 31 August 2001, and that the defendant has had the benefit of use and occupation of the premises (a hotel) since the beginning of September 2001. 4 As to interest, the plaintiff submits that on ordinary principles, it should have interest from the date when it became entitled to the amount that, ultimately, the referee found was due. It made three progress claims during September 2001, and what was called a final claim on 16 October 2001. Each of those claims was an attempt to quantify the variations to which the plaintiff said it was entitled. The final claim was for an amount of $4,992,944 which is, of course, substantially more than the amount the referee found was ultimately due. 5 The contract between the parties provided by cl 17(a) that the plaintiff was entitled to be paid progressively during the work. It provided by cl 20(a) that the plaintiff was entitled to the balance of any amount payable under the contract when the works were practically complete. That means that the plaintiff's entitlement, in respect of the various claims that the referee upheld, accrued no later than the beginning of September 2001. 6 The plaintiff claims interest from 13 November 2001. It claims from that date because it is 21 days after the date of the final claim. That reflects the provisions of cl 17(f) of the contract which provides for interest to run at the rate of 2 per cent per month on the amount of any progress claim or final payment claim which is not paid within 20 days. In my judgment given on 8 July 2004 I held that the plaintiff was entitled to interest only at Schedule J rates and not at the contractual rate. Nonetheless, I think it is appropriate to have regard to cl 17(f) on the question of the date of accrual of the entitlement to interest. 7 For the defendant it was submitted that no claim for interest had been notified until these proceedings were commenced. Therefore, it says, the plaintiff is only entitled to interest from that date. The defendant relies on the decision of the Court of Appeal in Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322, and on the decision of Hunt J in Anderson's (Pacific) Trading Co Pty Ltd v Karlander New Guinea Line Ltd [1980] 2 NSWLR 870. In the first of those cases, the Court found that there had been an excessive delay between the making of a claim and the ultimate quantification and that, in substance, it would be unjust to inflict upon the defendant a liability for interest for the whole of the period. That reasoning was followed by Hunt J in Anderson. 8 There is no suggestion in the present case, and if there were a suggestion made I would reject it, that there has been delay, let alone excessive delay, in the prosecution of the plaintiff's claim. The simple facts are that the defendant has had the benefit of use and of occupation of the completed premises since the beginning of September 2001, has known of the claim for payment since September and October 2001, and (by virtue of its refusal to pay) has had use of the money that, according to the report of the referee, was properly due to the plaintiff. In those circumstances I see no reason to withhold any entitlement to interest. It is at least arguable that the plaintiff is being generous to the defendant in claiming interest only from 13 November 2001. However, since that is the maximum of the plaintiff's claim I do not propose to second guess its generosity. 9 There is a mathematical error in the quantification of interest. That error occurs in the way the earlier judgment is taken into account. Interest should run on $1,858,181.23 up until 29 June 2004. Interest under s 94 after that date should run on the amount of $1,281,443.77 only, and not on the amount stated in the calculation. With that correction, I will give the plaintiff the interest that it claims. 10 As to costs, the defendant pointed to the fact that the plaintiff has succeeded for part only of the amount that it claimed. It does not appear that the defendant has made an offer of compromise under the Rules, or that it has written a Calderbank letter seeking to introduce some element of rationality into the quantification of the plaintiff's claim. Nor does it appear that there was any particular issue that was substantially responsible for the reduction in the amount of the plaintiff's claim. 11 The defendant relied on the decisions in Forster v Farquhar & Ors [1893] 1 QB 564 and Cretazzo v Lombardi (1975) 13 SASR 4. They were both cases where, on a proper analysis, it could be seen that there was a dominant issue that led to the plaintiff receiving substantially less than the amount of his claim. 12 In my judgment, where that cannot be shown the proper approach is that indicated by Nicholas J in Abigroup v Peninsula Balmain (21 May 2003 unreported). His Honour guided himself by reference to amongst other things to the decision of the Court of Appeal in Waters v P C Henderson Australia Pty Ltd (6 July 1994 unreported). 13 In Mackinnon v Petersen (19 April 1989 unreported), Cole J indicated that in a building case, where ordinarily the quantification of the plaintiff's claim will involve the examination of a large number of individual items, it would be inappropriate to award the plaintiff less than the full amount of its costs simply because it had not achieved the full amount of the claim unless, as his Honour pointed out, there was a clearly dominant or severable issue that had in substance led to the reduction. As I have said, it does not appear there was any such issue in this case. 14 I therefore conclude that, in the ordinary way (SCR Pt 52a r 11), the plaintiff should have its costs without reduction. 15 I direct the parties to bring in short minutes of order to define the amount of the judgment inclusive of interest on a proper basis to which the plaintiff is entitled. That is to be done within the next 7 days by arrangement with my associate. ****** Last Modified: 08/30/2004 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.