Cape Byron Power 1 Pty Ltd & Ors v Downer Energy Systems Pty Limited & Ors [2023] QSC 76

INTEREST - RECOVERABILITY OF INTEREST - IN GENERAL - where the defendants allege that there were unreasonable delays by the plaintiffs in initiating and litigating its claims - where the defendants contend the period of interest should be the period from 14 November 2019 to the date of judgment - where the plaintiffs contend that the period of interest should be the total period of 12 years from the incident date when loss was first suffered to the date of judgment - whether the plaintiffs' delay was unreasonable so as to warrant a reduction of the interest awarded

Civil Proceedings Act 2011 (Qld), s 58

Uniform Civil Procedure Rules 1999, r 5

Bishopsgate Insurance Ltd (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863, cited

Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541, cited

Cape Byron Power 1 Pty Ltd & Ors v Downer Energy Systems Pty Limited & Ors [2022] QSC 294, cited

Cerutti v Crestside Pty Ltd [2016] 1 Qd R 89, cited

Department of Transport v Chris Smaller (Transport) Ltd [1989] AC 119, cited

Fulcher v Knott Investments Pty Ltd [2012] QSC 232, cited

Interchase Corporation Ltd (in liq.) v Grosvenor Hill (Queensland) Pty Ltd (No. 3) [2003] 1 Qd R 26, cited

Jackamarra v Krakouer (1998) 195 CLR 516, cited

Latrobe Country Credit Co-operative Ltd v Smith [1999] 1 VR 44, cited

The Queen v Edwards [2009] HCA 20; (2009) 255 ALR 399, cited

[1] The defendants accept that, in the light of my reasons,[1] the first plaintiffs ("the plaintiffs") are entitled to judgment for a certain sum, namely, $2,230,447.[2] They also agree that the plaintiffs are entitled to an award of interest on that amount. The Court has a discretion under s 58 of the Civil Proceedings Act 2011 (Qld) to give interest "at the rate the court considers appropriate for all or part of the amount and for all or part of the period between the date when the cause of action arose and the date of judgment".

[2] The usual practice of the Court is to apply the rates of interest prescribed in Practice Directions for default judgments, and neither party suggests a departure from that practice.

[3] The issue is the period over which interest should be calculated. The plaintiffs submit that it should run from the incident date (5 July 2010) when loss was first suffered to the date of judgment.

[4] The defendants submit that interest should not be awarded for that period because of the plaintiffs' unreasonable delay in initiating and litigating its claims to trial. They submit that the period of interest should be from 14 November 2019 (when the matter was placed on the Case Flow List) to the date of judgment.

[5] According to the defendants, the total period of about 12 years between the incident in July 2010 and the trial in mid-2022 is prima facie excessive in the absence of an explanation for the plaintiffs' delay. They develop that submission by dividing the period into five stages:

(a) the period from the grate failure (5 July 2010) until the commencement of the proceedings (20 November 2014) (the pre-commencement stage);

(b) the period from the commencement of the proceedings (20 November 2014) until service of the Claim and Statement of Claim upon the defendants (30 June 2015) (the delay in service);

(c) the period from service upon the defendants (30 June 2015) until the date of receipt of a Case Flow Intervention Notice from the Court (14 November 2019) (the initial stage);

(d) the period during which the matter was subject to the Case Flow review process (from 14 November 2019) until the matter was listed on the Supervised Case List (31 May 2021) (the Case Flow intervention stage); and

(e) the period between listing the matter on the Supervised Case List (31 May 2021) until the commencement of the trial (30 May 2022) (the Supervised Case review stage).

[6] The plaintiffs submit that periods of delay are explained and that there is an insufficient basis to deprive them of interest for any period since the incident. They say that they have been kept out of the damages to which they are entitled, and the defendants have had "the benefit of the money, and may be assumed to have put it to good use".[3]

[7] An award of interest is not designed to punish a defendant for not having paid the successful plaintiff sooner. Instead, its purpose is restitutionary and to compensate the plaintiff for having been kept out of the use of money as a result of the defendant's wrong.[4]

[8] McPherson JA observed in Interchase:[5]

"In a perfect world, a defendant who injured a plaintiff would immediately recognise the wrong done and pay the amount of compensation but that 'never happens in practice' so the 'justification' for interest is to compensate for delay in payment."

"[i]t is...not immediately apparent why, as a matter of justice, that delay should operate to defeat or reduce a plaintiff's right to receive interest...for the whole of the period during which the amount was not paid. Quite apart from the loss to the plaintiff, the defendant has had the benefit of the money, and may be assumed to have put it to good use."

[9] The Court of Appeal in Interchase,[7] and subsequently in Cerutti,[8] recognised that "unreasonable delay in prosecuting the claim" may be one reason not to award interest for the whole period. That is especially so in cases in which the plaintiff's delay has caused the defendant detriment.[9]

[10] In Cerutti McMurdo P and Gotterson JA agreed with my statement that:

"There is no rule that delay in itself restricts the period over which interest may be awarded. Unreasonable delay may be taken into account, but even in such a case, the plaintiff has been kept out of its money for the entire period."

"Reducing the period over which interest is awarded is not the most appropriate device to ensure that a plaintiff conducts proceedings with expedition, and the governing principle remains that interest is awarded to compensate the plaintiff for having been kept out of money from the date the cause of action accrues."

[12] Little is to be gained by simply comparing the periods of delay in different cases that have applied these general principles. For example, Cerutti was a simple defamation case in the District Court in which the trial judge was entitled to take into account the unexplained delay in taking seven years between the publication and the matter coming on for trial. Interest was awarded over a period of five years. Interchase involved a total period of 12 years. The trial judge in that case was satisfied that the plaintiff had provided a detailed explanation as to why the proceeding was not instituted or brought to trial sooner than it was. That explanation included a lack of funds due to the plaintiff's insolvency and liquidation to which the defendants' negligence must have contributed.

[13] There is no period fixed by law or by the authorities between the date when a cause of action accrues and the date of trial, beyond which delay becomes unreasonable. The finding of unreasonable delay depends upon the facts of each case, including its complexity and what each party did to resolve it. Moreover, whatever period may emerge from old authorities in comparable cases is an uncertain guide. Rules and practices change, as do waiting times for matters to be set down for trial. Developments have included the enactment of rule 5 of the Uniform Civil Procedure Rules 1999 ("UCPR").

[14] In some cases, the facts are reasonably ascertainable from the outset and there may be no real issue on liability. Other cases are more legally and factually complex. They require extensive investigation to ascertain if there is a viable claim and what its quantum might be, to engage expert witnesses, to obtain legal advice, and for the client to make commercial decisions about the merit of pursuing litigation that is uncertain. In some cases, the anticipated aggregate legal costs of all the parties may exceed the realistic quantum of the prospective claim. That said, every claim, whether large and complex or small and simple, having been initiated is to be conducted according to the implied undertaking that each party gives to the Court and to the other parties to proceed in an expeditious way.[11]

[15] Although expressed in different legal contexts, including issues governing dismissal for want of prosecution, it has been said that when a party starts proceedings at the very end of the limitation period, there is an obligation to proceed with due expedition, and any later delay is less likely to be excused.[12]

[16] One reason is the potential for prejudice from delay. Limitation periods have a variety of justifications, and in certain circumstances they may be extended. The rules permit, in certain circumstances, causes of action to be added after the expiry of a relevant limitation period. McHugh J observed in Brisbane South Regional Health Authority v Taylor[13] that legislatures enact limitation periods because they make a judgment that the chance of an unfair trial occurring after the limitation has expired is sufficiently great to require termination of the plaintiff's right of action at the end of that period.

[17] It might be suggested that delay in starting a proceeding and delay after having commenced cut both ways, and disadvantage the claimant that has the onus of proof as much as it disadvantages the defendant. The loss of witnesses, documents, and other detriments through delay may disadvantage a claimant as much as they disadvantage a defendant. But that does not alter the general proposition that a party that has unreasonably delayed commencing proceedings until close to the end of the limitation period, is expected to proceed with due expedition once the proceeding is commenced, and that a defendant can complain if the claimant does not do so.

[18] The law tolerates delay and the detriment suffered to a defendant by loss of evidence during the limitation period, and for some period after it. In the context of the criminal law, the High Court has observed that trials involve reconstruction of events and:[14]

"...it happens on occasions that relevant material is not available; documents, recordings and other things may be lost or destroyed. Witnesses may die. The fact that the tribunal of fact is called upon to determine issues of fact upon less than all of the material, which could reasonably bear upon the matter, does not make the trial unfair."

The same general observation applies to the loss of relevant material during a limitation period and during the course of civil proceedings. While the law tolerates delay as an inevitable aspect of the initiation and conduct of complex cases, it should not be so tolerant of unreasonable delay.

[19] The case for compensating the plaintiff for being kept out of the use of money for the entire period that the defendant has had the benefit of that money is weakened where the claimant has been responsible for unreasonable delay. One reason is that unreasonable delay contributes to a diminution in the quality of evidence, and that detriment may not be recognised, even by the parties.[15] Whereas, specific prejudice may be able to be identified, general prejudice may be inferred from a lengthy delay. The longer the delay in commencing proceedings, and then in prosecuting them, the more likely it is that the case will be decided on less evidence than would have been available if the case had been commenced within a reasonable time and prosecuted without unreasonable delay.

[20] Unreasonable delay adds to costs. So does forcing a matter to trial in an excessively short period. Doing so may increase costs above the amount that would be incurred during an optimal period for preparation for trial. Few proceedings are able to be litigated over what, in retrospect, may be an optimal period in terms of minimising aggregate costs. However, at a certain point, unreasonable delay in prosecuting a claim or in defending it adds unnecessarily to costs. One aspect is the stop-start process. Personnel, including legal representatives, witnesses, and representatives of clients who are familiar with the matter, come and go. This adds to costs. Even if the personnel remain constant, excessive delay means that they have to reacquaint themselves with a matter after memories have faded and, to some extent, duplicate work that has already been done.

[21] Defendants that encounter unexplained delay by a plaintiff in litigating a claim are not without a remedy. They can protect themselves by making timely offers to settle and seek directions, including in appropriate circumstances, guillotine orders. They can apply for a proceeding to be case managed on a list such as the Supervised Case List. In this matter the defendants did not do so. Instead, the matter was placed by the Court on the Case Flow List. Both parties must share some responsibility for the fact that there was no active case management between mid-2015 and late 2019.

[22] The fact remains, however, that the plaintiff is the party which is usually in the driving seat. That is so, even if it is possible for a defendant to ask the court to direct the plaintiff to not take the scenic route, and instead to reach the trial destination as soon as is reasonably possible.

[23] A defendant which can point to actual prejudice as a result of unreasonable delay may have a higher claim to the favourable exercise of the discretion to not award interest over a certain period, than a defendant who cannot point to such a detriment. However, where the proceeding has been unreasonably delayed by the plaintiff's conduct or inactivity, the discretion to confine the period over which interest is awarded should not depend on the defendant proving specific detriment. Delay that is attributed to the plaintiff is usually taken to have caused financial detriment to the defendant. As Gummow and Hayne JJ stated in Jackamarra v Krakouer:[16]

"Delay in a case will almost always add to the costs."

[24] The purpose of civil litigation, as stated in rule 5, namely the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense, is better advanced by ensuring that unreasonable delay by a party in prosecuting or defending a proceeding should have consequences. One such consequence is to deprive the plaintiff of interest for part of the period in question.

(a) The periods of delay in the proceeding being ready for trial;

(b) The extent to which the plaintiff may be said to be wholly or partly responsible for periods of delay;

(c) The plaintiff's explanation for periods of delay;

(d) The extent to which the defendant contributed to delay, including by not applying to have the matter actively case-managed; and

(e) The specific and general prejudice caused to the defendant by any unreasonable delay by the plaintiff.

[26] The ultimate issue remains whether unexplained delay by the plaintiff should deprive it of interest for part of the period that it has been kept out of the damages to which it is entitled, and during which the defendants have had the benefit of that money.

[27] The following discussion of the lengthy history of the claim and the proceeding does not recite the large amount of detail that appears in the parties' respective chronologies and their solicitors' substantial affidavits relating to that history. The chronologies are exhibited to the relevant affidavits. I will grant leave to the parties to file their written submissions on interest and the associated chronologies. It is convenient to address the various periods that are the subject of the parties' submissions and evidence. In the following sections, I draw extensively upon the parties' written submissions as a convenient summary of that evidence.

Pre-commencement stage: 5 July 2010 - 20 November 2014

[28] The plaintiffs do not seek to claim interest for the period immediately after their claims for breach of contract accrued. Understandably, they seek interest for the period after 5 July 2010, when the breaches were productive of substantial loss.

[29] The defendants note that the proceeding was not filed until 20 November 2014, one day short of six years after the Date of Practical Completion, which was the expiry of the limitation period in contract. The plaintiffs explain their conduct during the relevant period as follows:

"(a) despite the incident occurring on 5 July 2010, the plaintiffs did not discover its cause until around 25 August 2010 and did not complete the repairs (which the defendants partially carried out and were paid for) until May 2011;

(b) during the period from May 2011 to November 2014:

(i) Carter Newell were instructed by AAI Limited t/as Vero Insurance (the lead co-insurer) to commence a subrogated recovery action against the defendants in March 2013;

(ii) the plaintiffs sent letters of demand to the defendants in May 2013;

(iii) the plaintiffs' legal representatives carried out investigations, interviews, gathered relevant material for the purposes of preparing the claim, provided advice and received instructions and documents, and attended a site inspection at the BCP;

(c) the plaintiffs commenced the proceeding within the 6 year limitation period of the contractual cause of action (as they were entitled to do so)."

[30] The defendants say in response that although Carter Newell were instructed by the insurer to commence a recovery action in March 2013, it is not clear whether those were the first instructions received, or that Carter Newell was previously instructed to advise or investigate the matter. I will assume that it had previously advised in the matter, and that either it or loss assessors and other agents had advised the insurer prior to March 2013.

[31] The essential point is that the cause or causes of the loss and damage were and remained complex and controversial. The quantum and calculation of each plaintiff's claim under different categories of loss and damage also remained an area of complexity.

[32] It was not unreasonable for a commercially-minded insurer considering the prospects, costs, benefits and risks of pursuing a subrogated recovery action against the defendants to carefully assess the matter and obtain advice. I am not persuaded that the period that was taken to commence proceedings was unreasonable in all the circumstances.

[33] As for any prejudice caused by delay during this period, the alleged cause or causes of the loss and who was responsible for the loss were the subject of meetings and investigations by the parties shortly after the incident. Some matters might have been agreed, but many remained in contention. The defendants had an opportunity to assemble evidence and did so prior to May 2013, when the plaintiffs' solicitors issued letters of demand. Those letters advised that the plaintiffs' solicitors were currently liaising with their client to quantify any further losses. The defendants' representatives denied liability in May 2013, and in June 2013 the defendants' current lawyers were engaged. A partner of that firm, Mr Brackin, has had the day-to-day conduct of the matter ever since. Prior to mid-2013, the defendants were in a position to obtain witness statements and confer with potential witnesses, including potential witnesses who had been employed by the defendants.

The delay in service: 20 November 2014 - 30 June 2015

[34] The plaintiffs did not effect service until 30 June 2015, seven months after the proceedings were filed. It is not to the point that they did not need leave under rule 24 to serve the proceeding within a year after filing. The relevant issue is why they delayed in serving the proceeding after it was filed. The plaintiffs' solicitors explained that during this period they continued investigations, conducted interviews, liaised with counsel, gathered more documents, and attended a further site inspection at the plant.

[35] If those steps were required in order to confirm matters that had been pleaded in the Statement of Claim, to amend certain matters in that document that required amendment in the light of further investigations, or to supplement that pleading with additional particulars, then a six-month period is not unreasonable to conduct those investigations and to discuss matters with counsel. That period does, however, need to be seen in the light of the lengthy period that was taken to commence proceedings, and the substantial period that followed service.

The initial stage: 30 June 2015 - 14 November 2019

[36] The defendants note that it took almost two years to resolve issues in relation to pleadings and particulars and that, although reasonable progress was maintained between 31 October 2017 and 30 January 2018, little progress was achieved for almost two years thereafter, until 14 November 2019, when the parties received a Case Flow Intervention Notice from the Court.

[37] As for the first two years of this period, the defendants submit that although the plaintiffs' chronology refers to matters taking place during that period, they do not justify the period of two years that was taken. In response, the plaintiffs submit that there was not unreasonable delay on their part during the initial period because:

"(a) the defendants issued multiple requests for rule 222 documents and further particulars and raised various complaints about the plaintiffs' pleading (which necessitated amendments to the plaintiffs' pleading);

(b) between July 2015 to May 2016, the plaintiffs' legal representatives were required to liaise with the plaintiffs, their representatives, relevant co-insurers and counsel about potential recovery of uninsured losses of the plaintiffs that were relevant to the events the subject of this proceeding;

(c) alternative junior counsel for the plaintiffs was engaged in December 2015;

(d) the plaintiffs' legal representatives received instructions to engage Queens Counsel in November 2016, and took steps to advance and finalise the amendments to the pleading which were not resolved until June 2017;

(e) the defendants did not file their notice of intention to defend and defence until 3 August 2017, and there was reasonable progress of the matter between 31 October 2017 to 30 January 2018 (as the defendants acknowledge at [31] of their submissions);

(f) the defendants inspected the Broadwater and Condong plants on two separate occasions in April 2018 and June 2018;

(g) despite the plaintiffs proposing in March 2018 that a mediation occur, the defendants did not agree to participate in a mediation and postpone disclosure until January 2019;

(h) the parties agreed to postpone disclosure until a mediation had occurred;

(i) during the period from January 2019 to August 2019, the parties liaised about agreeing on a mediator and the parties agreed to the mutual exchange of expert reports before mediation (such exchange occurring on 14 November 2019);

(j) between June 2019 and November 2019, the parties liaised about a suitable date for mutual exchange of expert reports (such exchange occurring on 14 November 2019);

(k) the caseflow intervention notice was sent on 14 November 2019, a period of approximately 2 years since the defendants filed their notice of intention to defend."

[38] In reply the defendants submit that the plaintiffs' account of factual events during the two-year period does not sufficiently explain the delays and that, having taken until the very end of the limitation period to commence the proceeding, the plaintiffs should have acted with greater expedition.

[39] In my view, the plaintiffs have explained events during this period. Incidentally, the plaintiffs served an application in September 2016, and the defendants consented to the orders proposed.

[40] It was reasonable for the parties to agree to postpone disclosure until a mediation had occurred, but the defendants did not agree to this until January 2019. The mediation could not occur until expert reports were exchanged.

[41] The relevant period of approximately four years between mid-2015 and late 2019 is very substantial. In retrospect, it may have been better to hold a mediation after disclosure. I am unable to conclude that the plaintiffs were wholly responsible for this period of delay, as the defendants contend. Both parties were responsible in varying degrees for the slow progress of the matter and must share some responsibility for the delay.

[42] Moreover, any dissatisfaction by the defendants with the slow rate of progress did not prompt it to apply to place the matter on the Supervised Case List, which would have been appropriate for a matter of this complexity. Rather than seek active case management, both parties waited for the court itself to intervene in November 2019, when they received a Case Flow Intervention Notice from the court.

The case flow intervention stage: 14 November 2019 - 31 May 2021

[43] After November 2019, Bowskill J (as the Chief Justice then was) conducted regular reviews. The plaintiffs defaulted on certain orders about disclosure and filing and serving evidence. In November 2020, the plaintiffs foreshadowed supplementary or additional lay evidence, the last of which was not produced until December 2021, and only after Brown J had made a guillotine order at a supervised case review.

[44] The defendants note that four of the additional statements, or supplementary statements, substantially changed the evidence that had been presented in earlier witness statements.

[45] The plaintiffs submit that it was not unreasonable to conduct matters during the case flow stage as they did. This is because:

"(a) a mediation occurred on 24 February 2020, and the parties had agreed to postpone disclosure until after a mediation had occurred;

(b) despite the plaintiffs having first proposed a Document Plan and Categories for Disclosure to the defendants in March 2018, the Document Plan and Categories for Disclosure were not agreed by the parties until April 2020;

(c) in respect of disclosure:

(i) the plaintiffs' legal representatives were required to review 80,000 documents, and the plaintiffs then produced 5,418 documents in July 2020 and further documents thereafter;

(ii) the defendants produced disclosure of 3,233 documents in June 2020 and then produced further documents thereafter (including 1,245 documents in March 2021);

(d) in September 2020 and October 2020, the plaintiffs served on the defendants the affidavit of Mr Lowry (exhibiting his reports dated 14 November 2019 and 3 x reports dated 24 September 2020), an affidavit of Martin Miller, and witness statements of Chris Connors, David Moller, David Ells, Ian Fletcher, Regan Sawatzki and Daniel Rojo;

(e) the experts (Mr Lowry and Dr Dixon) delivered their expert reports which the parties had exchanged on 14 November 2019. Further reports from Mr Lowry and Dr Dixon were served on 25 September 2020 and they then participated in three joint expert conferences in October 2020 and produced a joint report in November 2020;

(f) given the volume of issues in dispute in the proceeding (as is apparent from the Court's reasons for judgment), the process of preparing expert evidence and lay witness evidence (which was given by statement) was obviously complex and lengthy;

(g) junior counsel for the plaintiffs did not have the necessary availability required to continue to assist with these proceedings and new junior counsel was then engaged in late 2020;

(h) there was an impact on the plaintiffs' prosecution of the proceeding due to the COVID pandemic during this period, in relation to the ability of solicitors, counsel, lay and expert witnesses to meet in person due to Qld/NSW border closures, causing delays with preparation of evidence and receipt of signed statements for filing and service in the Court."

[46] In reply, the defendants reiterate that the one-and-a-half-year period that the proceeding was subject to case flow involved slow progress by the plaintiffs and defaults by them in complying with directions. They submit the delays were unreasonable and have not been properly explained. I disagree. The delays during this period were unfortunate, but had been explained.

[47] The plaintiffs, the defendants and the court might have hoped that the completion of disclosure, witness statements and expert evidence would have taken less time. I have had the advantage of reading the relevant witness statements and expert reports. This was an extraordinarily complex matter involving a wide range of factual issues about the plant's performance, both before and after the incident, the losses that the various plaintiff entities suffered, their proof and quantification.

[48] The onset of COVID in March 2020, shortly after the case flow stage commenced, slowed proceedings.

The supervised case review stage: 31 May 2021 - 30 May 2022

[49] The defendants make similar points about the plaintiffs' delay during this period. The matter was the subject of regular reviews by Brown J, as part of the Supervised Case List. The material and submissions point to non-compliance with orders in relation to the filing and service of lay evidence. They also point to the fact that an earlier substantial report by an expert who "professed to be a forensic accountant" in September 2020, was overtaken by a decision to call that expert as a factual witness and to engage KordaMentha to prepare a forensic accounting report.

[50] The plaintiffs explain the delay during the supervised case review stage partly as a result of further document review, further disclosure by both parties and for a number of other reasons. These other reasons are as follows:

"(b) in assisting the witnesses with preparation of their statements during this period, the plaintiffs' legal representatives were faced with some difficulties associated with the witness' interstate location, lack of or limited computer access, requirements for documents for the witness' review and draft statements to be sent to the witness by post, witness availability, personal matters and communication capabilities;

(c) given the volume of issues in dispute in the proceeding (as is apparent from the Court's reasons for judgment), the process of preparing expert evidence and lay witness evidence (which was by statement) was obviously complex and lengthy;

(d) in July 2021 and August 2021, following case review and the complaint of the defendants' solicitors about Martin Miller's report, the plaintiffs' counsel took a period of time to provide advice on that matter and during that period, preparation of Bruce O'Shea's report was put on hold;

(e) in August 2021 and September 2021, the plaintiffs served on the defendant witness statements of Paul Stanley-Jones, Stephen McLennan, Dougal Forsyth, David Timms and Gavin Dann;

(f) in early September 2021, the plaintiffs' senior counsel (Declan Kelly QC, as his Honour then was) was appointed as a judge of the Supreme Court of Queensland. Tom Sullivan QC (as his Honour then was) was then retained in the matter in mid‑September 2021 and required time to read into the matter (including providing input into the witness statements delivered by the plaintiffs in September 2021 and thereafter);

(g) on 24 September 2021, the parties were notified (during a case review before Brown J) that the matter had been listed for trial commencing on 30 May 2022.

The trial dates were not adjourned at any time after 25 September 2021.

On that basis, in the plaintiffs' submission, any complaints on the part of defendants about events that occurred after 25 September 2021 (such as the timing of delivery of further witness statements) are not relevant to consideration of the award of interest."

[51] The plaintiffs also note that the trial dates were not adjourned at any time after 25 September 2021.

[52] The relevant period, in my view, is not the period of a year between the matter going on to the Supervised Case List and the date when the trial commenced. The relevant period is when the matter was considered ready for trial, and listed for trial.

[53] In my view, the plaintiffs have sufficiently explained how it attempted, with difficulty, to progress the matter to trial. I do not consider their conduct during this period was unreasonable. They were entitled to make forensic decisions about proper proof of their economic loss claim, which was hard-fought by the defendants.

[54] Mr Brackin's evidence is that, as a result of the plaintiffs' repeated delays in prosecuting the proceedings, the defendants suffered prejudice in relation to:

(a) the unavailability of witnesses;

(b) the unavailability of documents; and

(c) additional legal costs the defendants incurred.

[55] In response, the plaintiffs contend that it is unsurprising that both the defendants and the plaintiffs had difficulty with the availability of witnesses in circumstances in which practical completion of the May 2005 contract was not achieved until 21 November 2008, the incident did not occur until 5 July 2010, its suspected cause was not discovered by the plaintiffs until 25 August 2010, that cause was not accepted by the defendants at the time or subsequently, the matter remained controversial, required further investigation and did not result in proceedings commencing until November 2014.

[56] As to the defendants' lay witnesses and potential lay witnesses, the plaintiffs note that the defendants had five lay witnesses at trial and it has not been suggested that the defendants could not have subpoenaed witnesses, including former employees. They further submit that Mr Brackin has not explained the points of time at which potential witnesses were contacted by the defendants' legal representatives. Given the history of the matter, it seems unlikely that the potential witnesses were only contacted by the defendants' investigators or solicitors at a late stage close to trial. If this is the case, then the defendants' delay in doing so is largely unexplained. Further, according to the plaintiffs, it was always likely that there were going to be difficulties with the availability or willingness of some witnesses to assist because:

"(a) Rick Phillips was engaged by the defendants on a contract basis (not as an employee) and had not been engaged by any entity associated with the defendants for 'several years';

(b) Keith Harvey was engaged by the second defendant on a contract basis and ceased his engagement 'shortly after practical completion in approximately late 2008';

(c) Terry Cole left his employment with the second defendant in mid to late 2012;

(d) Adrian Hughes left his employment with the second defendant 'shortly after practical completion of the Broadwater co-generation project in or about late 2008."

[57] The defendants respond that the plaintiffs' criticisms of Mr Brackin's evidence about prejudice should be rejected because of the inherent difficulty in pin-pointing such prejudice with any precision.

[58] I accept, consistent with the authorities to which I have referred, that some general prejudice may be inferred by reason of delay itself. However, the plaintiffs make a valid point about the lack of clarity as to whether any of the potential witnesses who were not called were approached years earlier, why their accounts of events were not the subject of statements soon after the events, or at least soon after the May 2013 letters of demand. I cannot be satisfied that the potential witnesses were not spoken to by the defendants' representatives, loss adjusters or solicitors at an early stage. I cannot conclude that their evidence would have been of any great assistance to the defendants had they been approached sooner and been prepared to talk. Moreover, if potential witnesses were expected to give evidence favourable to the defendants, but were not willing to provide statements, they might always have been subpoenaed. Overall, I am not satisfied about the extent of prejudice claimed by the defendants due to the unavailability of potential witnesses.

[59] As to the availability of documents, the plaintiffs submit that:

"...it is unsurprising that both the defendants and plaintiffs would have had difficulty with the availability of documents given the matters set out [in paragraph 29] above. Further it is noted that:

(a) Mr Brackin does not identify the basis upon which he gives evidence of the matters about availability of documents at [74] of his affidavit;

(b) Mr Brackin does not identify at [74(a)] of his affidavit which (or what type of) commissioning documents could not be located, that were not otherwise produced by the plaintiffs in the plaintiffs' disclosure;

(c) a significant number of operator logs were included in Annexure A of Mr Rossner's statement for the period from 10 July 2008 to 31 October 2008;

(d) it was not apparent that the DCS was actually even recording information at all relevant times."

[60] Mr Brackin says that the extended duration of the proceeding caused legal costs incurred by the defendants to substantially increase through additional court attendances, additional administration and reporting to the client, and staff turnover. These matters are said to inevitably cause additional legal costs to be incurred over the extended duration of the matter. I accept his evidence.

"...it is difficult to envisage how mere delay on the part of the plaintiffs could have caused the defendants to incur additional legal costs (of the type referred to in Mr Brackin's affidavit at [75]) that would not have otherwise occurred in the course of the litigation. In complex case managed litigation with a trial of the duration as like in this proceeding, it is to be expected that the duration of the proceeding will be of some length and that, in that time, there will be legal staff turnover."

[62] Mr Brackin has not purported to quantify the legal costs that are attributable to further court attendances, additional administration and additional reporting. The plaintiffs submit that, in any event, there were cost orders made in the defendants' favour during the course of the proceeding, in relation to some delay, including orders made on 21 August 2020 and 3 December 2021.

[63] I consider that it would have been invidious, and not particularly helpful, for Mr Brackin to hazard a guess about the additional legal costs that the defendants incurred as a result of specific delays or certain periods of what the defendants contend are unreasonable delays. I am prepared to conclude that any period or periods of unreasonable delay by the plaintiffs led to additional costs.

[64] That consideration needs to be tempered by the realisation that, even if the proceeding had been conducted with greater expedition, its nature was such that many years would be occupied in the pre-trial process, with changes in personnel including counsel, solicitors, potential experts, and representatives of clients.

[65] I have considered each period of delay, including the sufficiency of the plaintiffs' explanation for the long period, overall, between the incident and the matter finally being ready for trial in September 2021. That substantial period is confronting. The plaintiffs' various explanations have rejected the defendants' contention that each period of delay was unreasonable in all the circumstances. I conclude that many of those explanations have substantial validity. However, I regard the relevant period as excessive, even for a matter of such complexity. The matter entailed an enormous body of lay evidence, records, observations and opinions of engineers who were associated with the project or the plant, and expert reports and opinions that required a great amount of effort to assemble, distil, and present at trial.

[66] The last few years of the proceedings were delayed due to COVID, which limited personal contact between interstate witnesses and Brisbane-based lawyers for substantial periods.

[67] The proceeding might have proceeded through interlocutory stages, with inevitable and substantial amendments to pleadings, witness statements and supplementary statements, expert reports, ongoing disclosure and all that occurred in this proceeding in less than the six-and-a-half years that this proceeding took. This fact alone does not necessarily prove that the plaintiffs' conduct was unreasonable. Also, the defendants must share some responsibility for the matter not being case-managed until the court itself intervened in November 2019.

[68] If the period of more than six years between the commencement of the proceeding in November 2014 and the matter being ready to be listed for trial does not itself bespeak unreasonable delay on the part of the plaintiffs, that substantial period cannot be viewed in isolation. It must be viewed against the period of years between when a probable cause of the July 2010 damage was identified in August 2010, and the commencement of proceedings in November 2014. The plaintiffs' apparent delay in this pre-commencement phase has been explained and that explanation has considerable validity.

[69] However, having regard to the various periods and the overall period that the plaintiffs' insurer took to commence the proceeding and then litigate it to trial, I conclude that the plaintiffs did not conduct the proceeding with appropriate expedition. There were periods of unreasonable delay that have not been sufficiently explained. Because of unreasonable delay, the proceeding took too long to be set down for trial.

[70] The evidence of prejudice and escalating costs has been addressed by me. It is not possible to quantify how much costs escalated due to periods of unreasonable delay on the part of the plaintiffs. I am prepared to assume that additional substantial costs were incurred as a result of periods of unreasonable delay by the plaintiffs.

[71] The fact that the proceeding might have been commenced sooner, and litigated with greater expedition, does not establish a case of unreasonable delay. This includes periods when the plaintiffs were unable to comply with court directions in providing lay witness statements and expert reports, for reasons that they explained at the time. On occasions, the defendants received cost orders in their favour. Moreover, I am not considering issues of costs at this stage, including whether the costs of reviews would have been incurred in any event. Had the plaintiffs not obtained the indulgences that they did to have additional time, then there may have been applications to supplement the lay statements with additional oral evidence that could not have been reasonably included in the original statements. This would have delayed the fair conduct of the trial.

[72] In retrospect, the parties may have been well-advised to settle the matter years ago, possibly at the mediation. However, for whatever reason or reasons, they were unable to settle the matter. Therefore, an enormously complicated piece of litigation had to be prosecuted to trial at great expense.

[73] Substantial delay was inevitable in a matter of this complexity. The defendants' case itself evolved on the eve of trial and during the course of trial when I allowed new evidence from it to be introduced via Mr Stirling. In the circumstances, the plaintiffs should not be unfairly criticised because over the years their pleaded case was amended, the evidence of lay witnesses supplemented, and supplementary expert reports were obtained.

[74] Despite these considerations in the plaintiffs' favour, I consider that it is appropriate to deprive the plaintiffs of what otherwise would be an entitlement to interest over the entire period between when it first suffered loss and judgment.

[75] The defendants' contention that the plaintiffs should be awarded interest only from when the case flow intervention notice was issued on 14 November 2019 until judgment, is unmeritorious. In any event, the plaintiffs should be presumptively entitled to interest between September 2021 when the matter was ready to be set down for trial and the date of judgment. The defendants' contention would, in effect, award interest only for an additional period of about two years between November 2019 and late 2021. Such a short period cannot be justified for a matter of such complexity and in circumstances in which the defendants had the financial benefit of the damages to which the plaintiffs are entitled for a period of more than 12 years after the date of loss.

[76] By the same token, the period between the plaintiffs suffering loss in July 2010 and the matter being ready for trial in late 2021, is an excessive period over which to award interest. I accept that the potential claim required a long period of investigation and careful consideration before letters of demand were sent, and also before proceedings were commenced. The plaintiffs' insurer, which was subrogated to its rights against the defendants, was entitled to carefully assess the strengths and quantum of the plaintiffs' case and to make a difficult commercial judgment about commencing proceedings.

[77] The pleading and particulars stage of such a proceeding was always likely to be lengthy. Once the issues were defined, disclosure would take a very substantial period.

[78] Unfortunately, neither party sought case management on the Supervised Case List. The defendants' solicitors once foreshadowed an application to place the matter on the Commercial List, but that was not pursued by them.

[79] The matter took longer than it should have. Both parties bear some responsibility for this delay. However, there were periods of unreasonable delay and, overall, the plaintiffs did not act with the expedition required of them.

[80] In all the circumstances, I consider that the period over which interest should be awarded should be confined to a period of 8 years between 10 July 2010 and 9 July 2018.

[81] I direct the parties to calculate interest according to the applicable Practice Direction rates for the relevant period. I will make further directions for the early submission of any submissions on costs, so that, if required, I can decide any outstanding issue of costs.

[1] Cape Byron Power 1 Pty Ltd & Ors v Downer Energy Systems Pty Limited & Ors [2022] QSC 294.

[2] This differs slightly from the figure of $2,107,152 stated in [754], [806], and [844] of the reasons.

[3] Interchase Corporation Ltd (in liq.) v Grosvenor Hill (Queensland) Pty Ltd (No. 3) [2003] 1 Qd R 26 at 53 [61] ("Interchase").

[4] Interchase at 52-53 [59]-[61]; Cerutti v Crestside Pty Ltd [2016] 1 Qd R 89 at 120 [90] ("Cerutti").

[6] Interchase at 53 [61] (footnote omitted).

[9] Fulcher v Knott Investments Pty Ltd [2012] QSC 232 at [165].

[10] Cerutti at 123 [102] (emphasis added).

[11] UCPR, rule 5(3).

[12] Department of Transport v Chris Smaller (Transport) Ltd [1989] AC 1197 at 1207-8; Bishopsgate Insurance Ltd (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863 at 874-5; Latrobe Country Credit Co-operative Ltd v Smith [1998] VSCA 74; [1999] 1 VR 440 at 445-6.

[13] [1996] HCA 25; (1996) 186 CLR 541 at 555 ("Taylor").

[14] The Queen v Edwards [2009] HCA 20 at [31]; [2009] HCA 20; (2009) 255 ALR 399 at 405.

[16] (1998) 195 CLR 516 at 526 [29].