Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Bunnings Group Limited v CHEP Australia Limited (No 2) [2011] NSWCA 384 Hearing dates: 1 December 2011 Decision date: 01 December 2011 Before: Allsop P at 1 & 20 Giles JA at 18 Macfarlan JA at 19 Decision: 1Appeal allowed in part. 2Order number 1 made by the Supreme Court on 18 May 2010 and entered on 20 May 2010 be set aside and in lieu thereof judgment for the first plaintiff against the defendant in the sum of $1,262,317, comprising damages of $927,555, interest thereon up to 18 May 2010 of $284,762 and further damages including interest of $50,000. 3Order that the first respondent pay to the appellant by way of restitution the sum of $12,213,483, plus interest on that sum at court prescribed pre-judgment rates from and including 15 June 2010 to 1 December 2011, being $1,552,367. 4The respondents pay the appellant's costs of the appeal. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Cases Cited: Armory v Delamirie (1722) 1 Stra 505; 93 ER 664 Enzed Holdings v Wynthea Pty Limited [1984] 57 ALR 167 Heydon v NRMA (No 2) (2001) 53 NSWLR 600 Houghton v Immer (No 155) (1997) 44 NSWLR 46 JLW (Vic) Pty Limited v Tsiloglou (1994) 1 VR 237 McCartney v Orica Investments Pty Ltd [2011] NSWCA 337 Category: Consequential orders Parties: Bunnings Group Limited (Appellant) CHEP Australia Limited (First Respondent) CHEP Equipment Australia Pty Ltd (Second Respondent) Transpacific Cleanaway Pty Ltd (Third Respondent) Representation: Mr R Garratt SC, Mr D L Priestley (Appellant) Mr F Douglas QC, Mr N J Kidd (Respondents) Ligeti Partners (Appellant) Allens Arthur Robinson (Respondents) File Number(s): 2007/266437 Decision under appeal Jurisdiction: 9111 Citation: CHEP v Bunnings [2010] NSWSC 301 Date of Decision: 2010-05-07 00:00:00 Before: McDougall J File Number(s): 2007/50102 Judgment 1ALLSOP P : In this matter reasons for judgment were delivered on 10 November 2011: [2011] NSWCA 342. Further submissions were sought on the formal orders including costs. The parties have provided helpful written submissions to which they have added today. 2The first issue in dispute is whether there should be relief in respect of what might be said to be ad hoc conversion before 8 August 2006. In my view there should be. The evidence is sufficient to establish the practice of Bunnings to use Chep pallets after unloading as their own. There is enough evidence in my view upon which it can be safely concluded that this was more than minimal. Bunnings store managers sent surplus empty Chep pallets to distribution centres. During peak periods they were used to transfer goods from distribution centres to stores. There is a body of evidence as to how many empty pallets there were at distribution centres: 1,000 at any one time at the Victorian centre and a similar number in Sydney, with fewer in Brisbane and Perth. A Mr Hammond gave evidence of calculating in October 2005 1,520 pallets at Sydney. One must recognise, in my view, the entitlement of the Court to be robust in assessing damages in a case such as this. 3One must take into account however other evidence referred to in the main proceedings including the policy of Bunnings generally not to use Chep pallets in this way. Mr Skermer said that notwithstanding this general policy a number of pallets were used from time to time, "probably up to one to two per cent of all Chep pallets, that's about all" he said. This answer was given in answer to a question expressly framed by reference to "peak periods". He was being cross-examined on an affidavit in which he had made some disclosure as to the use of pallets. There is, however, no evidence of any precision at all as to what peak periods means, whether it was once or twice a year or more. One can infer, however, from the expression used in a business context, some business regularity. There was also evidence that this practice did not occur in Western Australia but there was no more precise evidence. The holding of pallets at the distribution centres is not the relevant conversion. The evidence was to the effect that they were transferred there for storage. When needed to be returned for returns to truck drivers, pallets came back to stores. Without understanding more precisely what "peak periods" means it is impossible to know what precise proportion were or might have been converted. There is also the question of the number of non-commercial pallets, NCPs. They were generally in the order of 79 per cent of all pallets as calculated by his Honour. 4The above brief recitation of the evidence makes it clear that one cannot be precise, as the respondent has sought to be, by taking 79 per cent of 2,000 pallets and calculating hire on 1,580 pallets. In the circumstances all that can be said is that there would be more than de minimis use. The respondent's calculations come to a sum of over $400,000 together with interest. For the reasons I have indicated I do not think the evidence permits one to be so precise. Some damages however should be awarded to reflect the evidence that more than minimal use was made. Though it is an arbitrary figure, to a degree, I would be prepared to award a lump sum including any component interest of $50,000. 5Two questions of principle may be seen to intrude at this point. First, it was submitted that there was no reasoned basis to be robust because the principle in Armory v Delamirie (1722) 1 Stra 505; 93 ER 664 should only be called in aid when the wrongdoer (Bunnings) has made proof more difficult. It was said that it did not do so here, putting on evidence as to its use and making witnesses available for cross-examination. That expression of the so-called rule in Armory v Delamirie however, is too narrow. This Court recently in McCartney v Orica Investments Pty Ltd [2011] NSWCA 337 at [148]-[161] discussed the so-called principle in Armory v Delamirie and expressed the matter somewhat more broadly, in line with what Handley JA had said some years ago in Houghton v Immer (No 155) (1997) 44 NSWLR 46 at 59. 6Secondly, it was submitted that the occasion did not permit robust guesswork. Reliance was placed on JLW (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237. The expressions of principle in that case and by the Federal Court in Enzed Holdings v Wynthea Pty Ltd (1984) 57 ALR 167 at 182-183 permit a degree of arbitrariness here. The question was always going to be imprecise. It is somewhat unrealistic to expect the cross-examiner necessarily to go further than he did. It may have helped him, it may not. What we do know is that from a reasonable inference non-minimal use and conversion occurred and $50,000 is, in my view, robustly fair but not generous, bearing in mind what can perhaps be taken as the outer limits of the respondent's calculations, which were based on estimated numbers of pallets held at distribution centres. 7The parties were agreed on the principal figure for damages for conversion after 8 August 2006, that sum being $927,555. Their calculations differed as to interest up to 18 May 2010 (the date of the primary judge's orders). The appellant calculated $257,078; the respondent calculated $284,762 rounding cents up. The difference in bases of calculation is the timing of the calculation, whether from a midpoint of the period or otherwise. The respondent, rather than undertake 418 separate interest calculations calculated interest at the rates in the schedule from the midpoint of the period to which the hire fee relates, that is from 1 July 2007 for the later period and from 4 December 2006 for the earlier period. This can be seen by reference to p 2 of the respondent's written submissions. No real argument as to the inappropriateness of this calculation was put up, save and except that it was not how interest was calculated below. The respondent's calculation should be adopted. 8The third issue was costs. In my view, the respondent should retain its order for costs at the trial. It had to fight a case on a wide front. It has, even after appeal, won a not insubstantial sum. There was no clearly severable or dominant issue worthy of disturbing the usual order of costs following the event. 9Submissions were put by the appellant that the judgment of this Court departed from how the case was put below and if it had been thus put below the case may have resolved or taken a different direction. That, with the utmost respect, is somewhat speculative. The way this Court resolved the matter was within the framework of an otherwise more ambitious case. If the primary judge had found the case as this Court has it would still have been a substantial victory entitling the then plaintiff to costs. 10As to the appeal, the same considerations apply. The appellant has been substantially successful in overturning a judgment of over $13,000,000 and having it replaced by a judgment a little over $1,000,000. Most of its arguments succeeded. The respondent should pay the appellant's costs. 11Finally, the question of restitution arises. In my view there should be an order for restitution of the $13,475,800 that was paid on 15 June 2010. Discussion and argument took place as to the proper interest rate. The respondent sought to limit recovery to 3.3 per cent, being the return on Wesfarmers' (that is the parent company's) cash deposits. This is not the occasion to reconsider practice long-held in this Court that provides stable and clear guidance as to the payment of interest on restitutionary claims such as this for sums paid pursuant to judgments of the Court. In Heydon v NRMA Ltd (No 2) [2001] NSWCA 445; 53 NSWLR 600 the then President said that it was the practice of the Court "to award restitutionary interest at the rates payable on judgments unless special circumstances exist". (See [32] of his Honour's reasons.) Here, in my view, no sufficient basis for special circumstances has been demonstrated. The significant sum of money involved throws up real questions as to how it would have been employed. It is not adequate, in my view, simply to refer to Wesfarmers', the parent's, cash deposit position. The enquiry would have the potential to be a significant one and of some complexity. Those kinds of considerations and, with respect, the inadequate nature of the basis put up for special circumstances reveal the wisdom, if I may put it that way, of the usual practice providing for clear and stable guidance to parties. 12As to the judgment rate there are now two different interest rates, one for pre and one for post-judgment interest. In my view pre-judgment interest is more appropriate. It is the lower of the two rates but more particularly it is appropriate because this is in effect pre-judgment interest. No substantial argument was directed to the contrary of that. 13The judgment to which the respondent is entitled is therefore $927,555, plus pre-judgment interest of $284,762, plus $50,000. This judgment should take effect as at 18 May 2010 from which date post-judgment interest would run. The judgment to which the appellant is entitled, $13,475,800 should bear interest at pre-judgment court rates from 15 June 2010. 14It was submitted by the respondent, but faintly, that there should be no restitution of the $13,000,000 or no interest on the $13,000,000 because the claim for restitution was not expressly included in the notice of appeal. No prejudice to the respondent was shown. There are cases in which adequate notice may be very important to particular litigants in relation to these kinds of restitution claims, in particular when the litigants are persons. Here the litigants are two substantial commercial entities. There could have been no doubt whatsoever in Chep's mind that should it lose the appeal or a substantial part of it Bunnings would have wanted back the money it paid pursuant to the judgment, with interest. Therefore, to the extent necessary, the appellant should be granted leave to amend its notice of appeal accordingly. 15I will identify what orders I think should be made in a moment. What I propose to do is have the parties draw up formal short minutes today and deliver them to my chambers. Giles JA has raised with me the question of the appropriate form of the orders. I think there should be two orders because they run from different dates and one is the inserted order number 1 in the primary judge's orders but the set off can take place by a lower restitutionary order with a notation that the judgment has been satisfied. The parties are better able to work out the appropriate amounts than we are. 16The orders that I would make are of the following character: I would direct that the parties bring in short minutes delivered to my chambers by 4.30pm this afternoon. The orders that I would make are that the appeal be allowed in part. Order 1 made by the Supreme Court on 18 May 2010 and entered on 20 May 2010 be set aside and in lieu thereof it be ordered that there be judgment for the plaintiff against the defendant - in the amount of (being the correct addition of the sums I have identified) - comprising damages of $927,555, interest on damages to 18 May 2010 of $284,762, together with damages of $50,000. That there be judgment for the appellant against the respondent in the appropriate restitutionary sum, plus interest at pre-judgment rates from 15 June 2010 and the respondent pay the appellant's costs of the appeal. Parties to provide agreed short minutes to my chambers by 4.30pm today. 17GILES JA : I agree with the President. 18MACFARLAN JA : I agree also. 19ALLSOP P : Those therefore will be the orders of the Court formulated in short minutes which will be executed upon compliance with the direction to deliver up short minutes. The Court is grateful to counsel and solicitors for the conduct of the appeal and the quality of the assistance the Court received. 20[Orders were made in chambers upon short minutes being submitted.] ********** 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. Decision last updated: 13 December 2011