District Court New South Wales Medium Neutral Citation: Junair Spraybooths ANZ Pty Ltd v Rydalmere Prestige Smash Repairs Pty Ltd (No. 2) [2019] NSWDC 459 Hearing dates: On the papers Date of orders: 03 September 2019 Decision date: 03 September 2019 Jurisdiction: Civil Before: Abadee DCJ Decision: See paragraph 22 – 23. Catchwords: DAMAGES – calculation of extra labour expenses. PRACTICE AND PROCEDURE – whether pre-judgment interest must be specifically claimed on the pleading – basis for interest to be calculated on 'replacement value' head of damages. Legislation Cited: Sale of Goods Act 1923 (NSW) Civil Procedure Act 2005 Category: Costs Parties: Junair Spraybooths ANZ Pty Ltd (Plaintiff) Rydalmere Prestige Smash Repairs Pty Ltd (Defendant/ Cross-Claimant) Representation: Counsel: Mr A Byrne (Plaintiff) Mr D Knackstredt (Defendant/ Cross-Claimant) Solicitors: Mills Oakley (Plaintiff) Somerville Legal (Defendant/ Cross-Claimant) File Number(s): 2018/90606 Publication restriction: Nil Judgment Background 1. I gave judgment in this matter on 30 July 2019 (Junair Spraybooths ANZ Pty Ltd v Rydalmere Prestige Smash Repairs Pty Ltd [2019] NSWDC). I directed the defendant and cross-claimant, ('RPSR'), who substantially succeeded, to bring in short minutes after conferring with the plaintiff and cross-defendant ('Junair'). 2. The parties agree on the costs outcome of the proceeding, but they disagree on: 1. the amount that should be awarded for damages for the head of damage concerning 'extra labour' expenses; and 2. the amount that should be awarded (if any) for pre-judgment interest. 1. Since the disagreements relate more to matters of principle than arithmetic, I will address the arguments in principle, and in the light of those findings, direct the parties to confer again with the object of reaching agreement on the calculations for these disputed matters. Damages for extra labour costs 1. In my reasons for judgment, I found (at [275]) that the extra labour costs should be confined to only one additional labourer that was utilised; not the three labourers that Mr Mullins, RPRS's forensic accounting expert, was asked to assume. 2. In quantifying this head of damage, Mr Mullins had considered the loss for the financial years ended 30 June 2017 and 30 June 2018 (paragraph 3.19). 3. On the basis that there was only one labourer (not three), and on that basis only [1] , I granted RPSR the opportunity to have Mr Mullins re-calculate his sums. 4. In its submissions, RPSR submits that the amount of loss for this head of damage should extend back to the financial year ended 30 June 2016 (specifically, 1 February 2016) and up to 30 July 2019, being the date that my reasons for judgment were published. 5. This submission exceeds the grant of liberty to RPSR to re-calculate damages that I had provided in my reasons for judgment. I accept, also, that to permit RPSR to extend its claim of damages for this head of damage would unfairly prejudice Junair, which proceeded on the assumption, reasonably enough, that the additional labour was limited to the period considered by Mr Mullins in his report. 6. To be clear, the calculations should be re-done on the basis of one labourer for the two financial years identified by Mr Mullins in his report. Pre-judgment interest 1. Both parties commonly proceeded on the basis that the position as to pre-judgment interest, if it is to be awarded at all (see Junair's position below) needs to separately address the issues (a) the extra labour costs (see above) and (b) on the replacement value of the machines. Junair's threshold submission 1. Before getting to that point, however, Junair submits that no pre-judgment interest should be awarded at all, since it was not specifically claimed in the pleading. It says that a bare claim for "interest" is insufficient to make it clear that a claim for pre-judgment interest is sought under s 100 of the Civil Procedure Act. 2. There is no merit to this submission. For one thing, RPSR hardly had cause to seek post-judgment interest (although it may do so now); and particularly in light of the circumstance that it had brought its claim partly as a set-off in defence of Junair's claim against it. Until the result of the set-off became apparent, it had no definite basis to know whether a claim for post-judgment interest was valuable. This explains, in part, the existence of rule 36.1 of the Uniform Civil Procedure Rules, to enable the Court to fashion appropriate orders once findings are made. For another thing, it is hardly customary to see claimants seek post-judgment interest as a prayer for relief in their originating process. Further yet, if there was any ambiguity in what the claim for interest meant, Junair, consistently with what I consider is its case management obligations in s 56 of the Civil Procedure Act 2005, in furthering the ascertaining and determination of the real issues in dispute, could and should have sought clarity as to what RPSR's claim for interest meant. It is not apparent that it did so. As such, it only raises the point now, after it has lost. Heads of damage Extra labour costs 1. Junair accepts that if I was against it, on the threshold submission, as I am, interest on the extra labour costs should be calculated on the basis of the two financial years the subject of Mr Mullins' evidence. 2. I accept that this is the appropriate way to proceed. Replacement value 1. RPSR submits that pre-judgment interest should run on the damages awarded for this component ($308,000) from 1 February 2019 to the date of judgment. 2. Junair submits that no pre-judgment interest should run at all on the basis that the nature of the damages award is such that it cannot be said that RPSR has been kept out of any money at all. 3. The Court's power to award pre-judgment interest under s 100 is discretionary and it is well-established that the primary purpose of the award is compensatory for the practical loss that it has suffered. 4. I explained in my reasons for judgment (at [213], [216]-[217]) that this award of damages was to be a proxy or substitute for the head of damage recognised in s 54(3) of the Sale of Goods Act 1923 (NSW). That provision postulated, in theory, that a buyer of defective goods in a competitive market could readily go out and buy a substitute good, so that it should be awarded the difference between what it had previously paid and the price of acquiring the replacement good. Mr Todhunter gave unchallenged evidence not only as to the replacement cost of the good, but also the removal costs of the existing structure (and other incidentals) and this is what resulted in the findings (at [280]-[292], factoring in the set-off). 5. I do not agree with Junair's submission that RPSR has not been kept out of money. It was, to the contrary, kept out of the full value of having goods that were not in breach of the implied contractual warranty. That would prima facie indicate that it should be placed in the position it should have been in when it was supplied the defective goods. 6. But I accept that there is force in Junair's point that the evidence it relied upon to support a claim for replacement value was the evidence of Mr Todhunter when that expert provided his report of 29 November 2018. That evidence was evidence of replacement value as and from that date. There was no evidence as to replacement value prior to that date. 7. In my view, exercising discretion, interest on the component for loss of replacement value should be calculated from 29 November 2018 to 30 July 2019. ORDERS 1. In light of the above reasons, as foreshadowed, the parties should confer again to see if they can reach agreement on the quantum of the claim for damages for extra labour costs and for pre-judgment interest, in the light of these reasons. 2. I will make the order, by consent, that the plaintiff/cross-defendant is to pay the defendant/cross-claimant's costs of the proceedings, as agreed or assessed. In terms of date range, however, that is from the date the proceedings commenced up to 30 July 2019. Since then, the parties have had mixed success in their submissions as to the dispositive orders, so I make no order for costs in the subsequent period from 31 July 2019 to the date of this judgment. 3. I encourage the parties to try to resolve the calculations in the light of this agreement. I would not have thought that for such dispute as remains, there is likely to be scope for further serious disagreement. Should further application be necessary, requiring the Court's attention, however, I expect that the unsuccessful party will be at risk of being subject to an adverse costs order and, if appropriate, possibly post-judgment interest as well. 4. I direct Junair to submit further short minutes of order, giving effect to the above reasons, and after it has conferred with RPSR, within 7 days. Should RPSR dispute those orders, it should convey its objections (with reasons) within a further 7 days. 5. If the final orders are still in dispute, Junair is to provide me with short minutes of order, RPSR's objections and Junair's response within a further 3 days after that. 6. Absent indication to the contrary, I expect that final orders will be made on the papers. ********** Endnote 1. Paragraphs [278] and [317] of the Reasons for Judgment dated 30 July 2019. 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: 03 September 2019