New South Wales Court of Appeal CITATION: Stanilite Pacific Ltd. (In Liq) & Anor. v. Seaton and Ors. (No.2) [2005] NSWCA 412 HEARING DATE(S): Matter dealt with on written submissions in Chambers JUDGMENT DATE: 25 November 2005 JUDGMENT OF: Hodgson JA at 1; McColl JA at 13; Bryson JA at 14 DECISION: 1. Appeal allowed. 2. Order 1 made in the Court below on 12 May 2004 set aside and in lieu thereof judgment for the first appellant. 3. Respondents to pay the first appellant damages of $1,576,000.00 plus interest calculated pursuant to Schedule 5 of the Rules for the period from 4 December 1995 to the date that these orders are made. 4. Order 1 made in the Court below on 8 June 2004 set aside. 5. Respondents to refund the costs paid by the appellants, being $2,150,000.00, in respect of the trial and the respondents are to pay interest on the amount to be refunded calculated pursuant to Schedule 5 of the Rules for the period from 12 July 2004 to the date that these orders are made. 6. Respondents to pay one-third of the appellants' costs of the proceedings at first instance, and one-half of the appellants' costs of the appeal, and to have a certificate under the Suitors' Fund Act if otherwise eligible. CATCHWORDS: PROCEDURE - Costs and interest - Whether liquidation of plaintiff and delay should reduce interest - Apportionment of costs where plaintiff partially successful. CASES CITED: Screenco Pty. Ltd. v. R.L. Dew Pty. Ltd. [2003] NSWCA 319, 58 NSWLR 720 Stanilite Pacific Limited (In liquidation) - first appellant PARTIES: SL Electronics (NSW) Pty. Limited (In liquidation) - 2nd appellant William Henry Seaton and those persons listed in Annexure A to the Notice of Appeal trading as Price Waterhouse - respondents FILE NUMBER(S): CA 40444/04 Mr. F.M. Douglas QC with Ms. C.E. Adamson SC and Ms. E. Raper for appellants COUNSEL: Mr. I.M. Jackman SC with Mr. M.R. Elliott for respondents Deacons, Sydney for appellants SOLICITORS: Minter Ellison, Sydney for respondents LOWER COURT JURISDICTION: Supreme Court - Equity Division LOWER COURT FILE NUMBER(S): ED50055/01 LOWER COURT JUDICIAL OFFICER: Bergin J IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40444/04 ED 50055/01 HODGSON JA McCOLL JA BRYSON JA Friday 25 November 2005 STANILITE PACIFIC LTD. (IN LIQUIDATION) & ANOR. V. SEATON & ORS. (NO.2) Judgment (On Interest and Costs) 1 HODGSON JA: Following delivery of judgment in this matter on 14 September 2005, the Court has received submissions concerning interest and costs. 2 Prima facie, a successful plaintiff in a commercial claim will be entitled to interest from the date of the accrual of the cause of action until judgment, at the rates prescribed by Schedule 5 of the Rules. 3 However, the respondents contend that Pacific should not receive interest, or should receive interest at a lesser rate or for a lesser period, because of the effect of winding up, because it has not suffered a loss justifying an award of interest, and because of delay. Reliance is placed on Screenco Pty. Ltd. v. R.L. Dew Pty. Ltd. [2003] NSWCA 319, 58 NSWLR 720. 4 In my opinion, Screenco does not support the proposition that there is an onus on a plaintiff claiming interest to prove loss arising from not having the money from the time when it was entitled to have it. In that case, the Court found as a fact that there was no loss in respect of a certain period, and awarded no interest for that period. 5 In my opinion, the fact that Pacific has been wound up does not mean that it has not suffered loss from not having the money it paid out on 4 December 1995. It is true that, in the hands of a liquidator, the money would not have been used for income-producing purposes other than earning interest, and it otherwise would have been used in meeting expenses or paying dividends to creditors. However, in so far as creditors have been delayed in receiving dividends, in my opinion this can be considered a disadvantage to Pacific for which an award of interest is appropriate; and in so far as interest has been lost because money would otherwise have been earning interest, this too is such a disadvantage. 6 Further, the respondents had the benefit of the use of this money for the period since 4 December 1995, when Pacific's cause of action arose. 7 The fact of winding up, and the delay in commencing and (to a lesser extent) prosecuting the proceedings, could perhaps raise a question whether interest should be awarded for the whole ten year period at the Schedule rates, which are somewhat in excess of rates obtainable by putting money out at interest. However, the circumstance that there is no compounding of interest is a factor supporting interest at a higher rate than (say) that for 90 day bank bills. 8 On the whole, I do not think the above matters justify awarding interest either at a lower rate than the Schedule rates, or for something less than the whole period. I propose that there be interest, at Schedule rates, from 4 December 1995 to the date of judgment. 9 The costs that were paid to the respondents following the hearing at first instance should be repaid, with interest at Schedule rates. 10 As regards the costs of the proceedings and the appeal, the appellants have failed in most of the claims they made; but the greater part of the factual circumstances were relevant to the claim on which they succeeded. The general rule in such circumstances is that the successful plaintiff should get the general costs of the proceedings, but pay the costs caused by the extension of proceedings by severable issues on which it failed. 11 Doing the best I can on that basis, and assuming the costs incurred on each side were approximately equal, I think an appropriate order for costs at first instance would leave the appellants bearing one-third of the total costs of both parties, which is equivalent to about two-thirds of their own costs. That would be achieved by an order that the respondents pay one-third of the appellants' costs at first instance. I think the appropriate order for the costs of the appeal would leave the appellants bearing one-quarter of the total costs of the appeal, which is equivalent to approximately one-half of their own costs; and that would be achieved by an order that the respondents pay one-half of the appellants' costs of the appeal. 12 Accordingly, I propose the following orders: 1. Appeal allowed. 2. Order 1 made in the Court below on 12 May 2004 set aside and in lieu thereof judgment for the first appellant. 3. Respondents to pay the first appellant damages of $1,576,000.00 plus interest calculated pursuant to Schedule 5 of the Rules for the period from 4 December 1995 to the date that these orders are made. 4. Order 1 made in the Court below on 8 June 2004 set aside. 5. Respondents to refund the costs paid by the appellants, being $2,150,000.00, in respect of the trial and the respondents are to pay interest on the amount to be refunded calculated pursuant to Schedule 5 of the Rules for the period from 12 July 2004 to the date that these orders are made. 6. Respondents to pay one-third of the appellants' costs of the proceedings at first instance, and one-half of the appellants' costs of the appeal, and to have a certificate under the Suitors' Fund Act if otherwise eligible. 13 McCOLL JA: I agree with Hodgson JA. 14 BRYSON JA: I agree with Hodgson JA. ********** 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. 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