Gujarat NRE Coke Limited v Wollongong Coal Limited; Wollongong Coal Limited v Gujarat NRE Coke Limited (No 2) [2017] NSWSC 384

Supreme Court New South Wales

Medium Neutral Citation: Gujarat NRE Coke Limited v Wollongong Coal Limited; Wollongong Coal Limited v Gujarat NRE Coke Limited (No 2) [2017] NSWSC 384 Hearing dates: 27 March 2017 Date of orders: 27 March 2017 Decision date: 27 March 2017 Jurisdiction: Equity - Commercial List Before: McDougall J Decision: Plaintiffs, Wollongong Coal and Wongawilli Coal, to have judgments for amounts claimed, with interest and costs. Claim by Gujarat Coke to be dismissed with costs. Catchwords: CONTRACTS – action to recover price of coal sold and delivered – no question of principle – INTEREST – where judgment sought in another currency – whether to calculate interest at the rate applicable to the currency of the judgment Legislation Cited: Civil Procedure Act 2005 (NSW) Cases Cited: Maschinenfabrik Augsburg Nurenburg Aktiengesellschaft v Altikar Pty Ltd [1984] 3 NSWLR 152 Swiss Bank Corporation v State of New South Wales (1993) 33 NSWLR 63 Batchelor v Burke (1981) 148 CLR 448 Rossiter v Core Mining Limited [2015] NSWSC 360 Category: Principal judgment Parties: Gujarat NRE Coke Limited Wollongong Coal Limited Wongawilli Coal Pty Limited Representation: Counsel:

D L Williams SC and C D Wood (Wollongong Coal Limited & Wongawilli Coal Pty Limited)

Solicitors:

Thomson Geer (Wollongong Coal Limited & Wongawilli Coal Pty Limited) File Number(s): 2014/3472462014/339422

Judgment (EX TEMPORE – REVISED 28 March 2017) 1. HIS HONOUR: In reasons given earlier today, I outlined the parties, the nature of the disputes and the issues in the two actions that were listed for hearing. For the reasons given earlier, I decided not to vacate the hearings (as Gujarat Coke urged), whereupon counsel for Gujarat Coke, who had been briefed to appear on a limited basis, withdrew (to the extent necessary, with my leave). 2. The plaintiffs, Wollongong Coal and Wongawilli Coal (to whom I will refer together as "the coal companies") pressed ahead with the hearing of their claim against Gujarat Coke. I outlined the basis of that claim and the essential issues raised in it in what I said earlier today and I will not repeat what I said. 3. Mr Williams has taken me to the issues on the pleading in the coal companies' case against Gujarat Coke, to the issues as they are defined in those pleadings, and to the evidence that bears on those issues, to the extent that it is the coal companies' case. The claim was articulated by reference to a schedule which has been marked PX1, and the evidence has focused on the deliveries referred to in that schedule which are the ones for which the coal companies say they have not received payment. 4. In some instances the obligation was one to pay direct. In other instances, the coal companies initially recouped themselves from a bill facility set up by Gujarat Coke. Had Gujarat Coke complied with its payment obligations, it would have credited the bill facility account and that would have discharged the coal companies' liabilities under the bills. Since Gujarat Coke did not do so, those companies remained primarily liable, and were bound to satisfy the bank accordingly. The evidence proves that they have done so. 5. In short, on the evidence, I am satisfied that the shipments in question were indeed delivered to Gujarat Coke, that they were accompanied by documents as required by the sale contract, and that one way or another, the relevant vendor coal company has not been paid. It follows that I am satisfied that the coal companies have made out in chief their claims. 6. That leads to the defences that were raised. As I observed this morning, those defences are matters on which Gujarat Coke bears the onus of proof. Since Gujarat Coke was not represented in the hearing and its evidence has not been read, it must follow that those defences have not been made good. 7. I add to that that in some respects the evidence for the coal companies trespassed into evidence in reply referring to the essence of the allegations and in effect rebutting them. Although it was not necessary for me to take that into account, I have nonetheless done so for the purpose of satisfying myself that this is not a mere device to procure a judgment in circumstances where the essence of the defence was inarguably correct. On the evidence put before me, it certainly cannot be so described. 8. In those circumstances each of the coal companies has made good its claim to the principal claimed by it, being the contract price for coal sold and delivered but not paid for, and an entitlement to interest. The coal companies seek judgment in United States dollars, on the basis that that currency was the currency of the contracts. Clearly, they are entitled to judgment accordingly. 9. Interest has been calculated in accordance with practice note SC Gen 16. That of course is the practice note that (pursuant to s 100 of the Civil Procedure Act 2005 (NSW)) establishes rates of interest for judgments in Australian currency. 10. It may very well be asked why, when judgment is sought in another currency, interest is not assessed at a rate applicable to debts in the country where that currency prevails. This issue was discussed by Rogers J in Maschinenfabrik Augsburg Nurenburg Aktiengesellschaft v Altikar Pty Ltd [1984] 3 NSWLR 152. His Honour at 153, noted with approval the proposition that the Court's judgment ought be given in the currency that best expresses the plaintiff's loss. That is undoubtedly correct, and that is why the coal companies in this case are entitled to judgment in United States dollars. 11. However, his Honour said, in his view it was prima facie incorrect to apply to such a judgment, rates of interest applicable in this jurisdiction, determined by reference to local conditions. His Honour said that this might (and in the conditions he was considering would) lead to a "windfall". Accordingly, his Honour said at 154, the preferable course was to calculate interest at the rate applicable to the currency of the judgment. 12. That proposition was considered by Giles J, in Swiss Bank Corporation v State of New South Wales (1993) 33 NSWLR 63. His Honour said at 64-65, that although the proposition stated by Rogers J, was correct in the ordinary course, "it will not always be so". Giles J said that there may be "particular circumstances [where] the plaintiff's loss may come home in a currency other than that in which obtains judgment". Finally, of present relevance, his Honour said that a selection of the appropriate rate of interest depends on all the circumstances of the case. 13. The guiding principle by which courts award interest is that it is intended to compensate a plaintiff for the detriment that it has suffered by being kept out of its money. That purpose, which was expressed by the High Court in Batchelor v Burke (1981) 148 CLR 448 at 455, underlies s 100 of the Civil Procedure Act. 14. The evidence of Mr Sharma, who is the company secretary and either is or was the chief commercial officer of Wollongong Coal, is to the effect that although the supply contracts were written in United States dollars, the practice of the coal companies was to convert the payments into Australian dollars and use the proceeds in their Australian business activities. Sometimes, he said, the practice was different and the proceeds were used to pay bank interest or other amounts without conversion. 15. Where a plaintiff carries on business in Australia (as the coal companies do) and where their shareholders are in Australia (as for at least part of the time was the case for the coal companies) and where at least some of their outgoings and borrowings are in Australia, it is easy to infer that the appropriate rate of interest is that which should be applicable to borrowings in Australia. It is self-evident that one consequence of a failure to pay (in whatever currency the obligation to pay may be denominated) is that the creditor will be out of pocket and may be forced to borrow or otherwise raise money to fund its operations, which of course are conducted in Australia. Where the creditor would do so in the currency in which payment was denominated, it is easy to see why interest should be calculated at the rates applicable to that currency. Where funds are raised in another market, it may equally be easy to see that the rate of interest should be that applicable in the other market. 16. In this case, I am satisfied that in all the circumstances of the case, and taking into account the guiding purpose of s 100, the appropriate currency for the calculation of interest is Australian currency, so that the interest rates applicable pursuant to the Practice Note should be utilised. I take into account the fact that the loss of use of the money must have impacted adversely on the coal companies' ability to deploy it for the purposes of their business activities in this country. 17. I am fortified in that conclusion by noting that Adamson J, reached a similar conclusion in Rossiter v Core Mining Limited [2015] NSWSC 360. 18. The amount of interest so calculated has been proved by affidavit, and I am satisfied that it should be awarded. 19. That leaves for consideration the separate action brought by Gujarat Coke against the coal companies. Gujarat Coke has not appeared to prosecute that action, and pursuant to UCPR r 29.7(4), the Court may dismiss the proceedings. Mr Williams has asked that I dismiss on the basis that the dismissal operates to preclude Gujarat Coke from bringing fresh proceedings, or otherwise seeking to maintain, the same claims for relief. To the extent that that is necessary, I think it is appropriate. I qualify the matter in that way because it may very well be that the judgment I am about to pronounce in the coal companies' case would have the effect, bearing in mind the issues raised on the pleadings in that case, of creating estoppels in any event. 20. Finally, the coal companies seek their costs of each action and interest on costs. It is easy to see why they should have costs. Rule 42.1 so provides, as a general guide to the costs discretion. In circumstances where it may be inferred they have incurred very substantial costs over the last two or three years, it seems to me that the compensatory principle to which I have referred makes interest also applicable. I am assuming that interest would be calculated on the "Lahoud" basis, and although I will not now attempt to make that order in terms from memory, it should be clearly understood that that is how I intend that interests on costs should be calculated. 21. In 2014/339422 I make orders in accordance with paras 1 to 3 as amended of the short minutes of order initialled by me and dated today's date. 22. In 2014/347246 I make orders in accordance with paras 1 to 4 of the short minutes of order initialled by me and dated today's date. 23. I direct that the Court Book and exhibits, excluding exhibit PX1, and excluding exhibits WX1 to WX3 on the application to vacate the hearing date, be returned.