CENTREPOINT FREEHOLDS PTY. LTD. v T.N. LUCAS PTY. LTD.

Federal Court of Australia|1985-04-22|Before: Neaves JJ

Trade practices - lease of commercial premises - findings of trial judge that representations made by lessor were misleading and deceptive and fraudulently made - whether conduct of lessee amounted to affirmation of agreement - whether lessee entitled to damages in nature of interest from the commencement of the action until the entry of judgment - further heads of damages raised by lessee's appeal.

Costs - effect of payment into court under invalid notice of

deposit - matters relevant to exercise of court's discretion.

Trade Practices Act 1974 (Cth.) 38.52(1), 82, 87. Judiciary Act 1903 (Cth.) ss.77N, 79.

Supreme Court Act 1958 (Vic.) ss.60, 79A(1). Federal Court of Australia Act 1976 (Cth.) s.52.

CENTREPOINT FREEHOLDS PTY. LTD. v T.N. LUCAS PTY. LTD.

T.N. LUCAS PTY. LTD. v CENTREPOINT FREEHOLDS PTY..LTD.

V.G. 109 of 1984 ere a ; wa a af = a Sweeney, Woodward & Neaves JJ. AN . SeUN 22 April 1985 v

IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) VG No. 104 of 1984 oye )

On appeal from a single judge of the Federal Court of

The order that T.N. Lucas Pty. Ltd. recover against the

All questions as to the entitlement of T.N. Lucas Pty. Ltd. to damages in the nature of interest be referred to

the learned trial judge to be determined by his Honour

Liberty to apply to the court as presently constituted

(Note: Settlement and entry of orders are dealt with in

) ) VICTORIA DISTRICT REGISTRY ) VG No. 104 of 1984 ) GENERAL DIVISION )

On appeal from a single judge of the Federal Court or

) ) VICTORIA DISTRICT REGISTRY ) VG No. 109 of 1984 ) GENERAL DIVISION )

On appeal from a single judge of the Federal Court of Australia. BETWEEN: T.N. LUCAS PTY. LTD. Appellant

The facts which have given rise to these appeals, which

by consent have been heard together, are conveniently set out

an the reasons for judgment of the learned trial judae, as

"Ttoollis Neophytou Lucas 1s a pastry-cook, born in Cyprus 56 years ago, who settled here in 1949, He worked as an hotel waiter, bought and conducted and then sold a suburban milk bar. In 1954 he bought a business in North Balwyn : cake shop and bakery, with a dwelling upstairs. The price he paid fell a little short of $7,000. He sold the business in 1971 for $40,000. In the year before sale the assets of Mr. Lucas and his wife, other than the assets of the business, exceeded their liabilities by more than $100,000. The surplus had been achieved by employing the profits of the business in the acquisition of real property. Mr. and Mes. Lucas had also discharged out of those profits the

expenses of rearing, and educating at private schools, their four children. In 1974 Mr. Lucas

bought a similar business at "the Doncaster Shopping Town" for $8,000. He sold the business in November 1977 for $45,000. Mr. Lucas learnt the

pastry and bakery crafts from tradesmen he employed

at North Balwyn. All the stock of both businesses was manufactured in the shops : nothing sold was

bought in. He and his wife worked in the shops, making and selling.

Mr. Lucas and his wife have at all material times been the only members, the only beneficial owners

of the issued capital, and the directors of the applicant T.N. Lucas Pty. Ltd. The activities of the applicant with which this proceeding 1s concerned were in execution of a trust, accepted by the applicant in March 1979, of a fund for the benefit ot Mr. and Mrs. Lucas and certain relatives of theirs. The powers conrerred on the applicant by the trust deed authorised those activities.

By a deed dated 16 May 1979 the applicant and the respondent agreed for a lease by the respondent to the applicant of certain premises in the basement of a building in Bourke Street, Melbourne, known as the Centrepoint Mall, for a term or 4 years [rom a date to be ascertained in accordance with provisions of the deed. Pursuant to the provisions of the deed the applicant took on iv October 1979, and for about 15 weeks retained, possession of the premises, and conductea therein a retail cake shop and bakery. Then the respondent excluded the applicant from possession of the premises, which the applicant has not re-taken. In this proceeding the applicant claims against the respondent damages in respect of conduct proscribed by s.52(1), s.53(aa) and s.53A(1) of the Trade Practices Act 1974, and constituting rraudulent misrepresentations, which 1s alleged to have caused the applicant to execute the deed, and damages in respect of breaches alleged of warranties, which the same conduct was said to have constituted, collateral to the execution ot the deed, and damages for negligence in respect ot the same conduct. The several statements of which the impuaqned conduct consisted are alleged in sub-paragraphs, alphabetically designated, oft paraqraph 4 of an amended statement of claim which was tiled on 19 October 1982."

(Lucas v Centrepoint Freeholds (1984) 52 ALR 467 at 46B-9).

His Honour found that representations had been made on behalf of Centrepoint Freeholds Pty. Ltd. (Centrepoint) to Mr Lucas on behalr ot T.N. Lucas Pty. Ltd. (the applicant) that agreements had been reached for the lease of premises in the basement of the Centrepoint Mail to "McDonalds" and to

"Gilbertsons". His Honour also tound that representations

had been made that Centrepoint's intention was to treat the

applicant's tenancy as upon the terms, including the terms as

to rent, specified in the written application for tenancy, notwithstanding the terms of the deed presented by Centrepoint for execution by the applicant.. The terms as to rent in the written application for tenancy provided for an annual rental of s27,680 with rental review by mutual agreement in two yearly periods; whereas the deed provided for an annual rent of $27,680 subject to adjustment in accordance with the movement in a specified price index over the period between the quarter ending 31 December 1978 and the quarter prior to the commencement date of the lease. His Honour found these representations to be false and to

constitute contraventions of s.52(1) of the Trade Practices

Act 1974 (the Act) and that they induced the applicant to execute the deed. He also found the representations

His Honour went on to consider the question of damages

Both the applicant and Centrepoint have appealed from

In its notice of appeal Centrepoint appeals from those parts of the judgment whereby it was ordered that the applicant recover against Centrepoint $51,431.16 and that the

applicant's costs of the proceedings (including costs

The first ground of appeal relied upon was that the learned trial judge should not on the evidence before him have decided that the applicant had not atfirmed the agreement for its lease before 1t was dispossessed by

Late 1n October 1979 the applicant received a statement by Centrepoint of its account with Centrepoint in respect of the tenancy. The rent was charged at a rate increased in accordance with the provisions of the agreement for the lease which we earlier explained. Charges were raised in respect of ""apportionable outgoings" and in respect of the applicant's membership of an association of tenants for which that agreement also provided. After allowing the applicant credit in respect of $2,306.66 previously paid, as Mr Lucas believed for the tirst month's rent, and in respect of a proportionate part ot the "advertising allowance" (to which reference 1s made in a letter dated 5 February 1979 from Centrepoint to Mr and Mrs Lucas), Centrepoint asserted that the balance due in respect of the period from 16 Uctober 1979

By a summons issued out of the County Court of Victoria

on 14 November 1979 Centrepoint sued the applicant as lessee and Mr and Mrs Lucas as guarantors for that balance (in the summons stated to he $4,457.47), together with interest on

that sum at a rate of $1.82 per day from 14 November 1979

until payment or judgment. The evidence did not disclose

A letter dated 16 November 1979 trom the applicant's

solicitors to Centrepoint Custodian Pty Ltd, a company

"We act for T N Lucas Pty Ltd (the company) which 1S 1n occupation of the above-mentioned shops and which executed a lease document with Centrepoint

Freeholds Pty Ltd in respect thereof. We also act for Vasiliki Lucas and Ttoollis Lucas.

Uur clients relied upon representations made and warranties qiven by Centrepoint representatives that the Centre would open at a specified time which tin the event) was sianificantly earlier than the date upon which the Centre in tact opened. Indeed, as late as February 1979, letters to our clients confirmed that the Centre was ta open in March 1979. When the Centre did not open in March, our clients were given further assurances as to an

early opening date and were induced thereby to act to their prejudice.

Further, representations were made and warranties were given to our clients as to the nature of the other tenancies in the Centre, and these representations have now been discovered to be

demonstrably untrue and the warranties have been breached.

The next matter concerns proceedings in the County Court at Melbourne $931016 by Centrepoint Custodian Pty Ltd against 'B & T Lucas'. Agreement was reached in negotiations with the lessor of the shops that all costs associated with the provision of three phrase power and as much electricity and other requirements as were needed for the establishment of the bakery and cake business to be

established at the shops would be met by Centrepoint. In any event, 1t 1s noted that, on no view of the facts, are Mr & Mrs Lucas the occupants of the shop nor the proprietors of the business

conducted thereat. The proceedings which have been instituted will be strenuously resisted.

The company has received from Centrepoint Custodian Pty Ltd a letter dated 24 October 1979 requiring payment of what are alleged to be 'apportionable outgoings under the lease document that has been

executed. Whilst the company would join 1ssue in any event with its liability to pay all or any of the items which are claimed to be 'outgoings' and to contest the amount thereof, it 1s observed that the whole of those 'outgoings' are stated to relate to an assessment 'for the period to 30 June 1979'. The whole of the period to which the 'outgoings' relate therefore antedates the commencement date stipulated by your letter dated 3 August 1979. On no view of the matter, therefore, can the company be liable for any part of those 'outgoings'. Accounts rendered in reliance upon the same are manifestly without foundation, and the company denies liability to pay any part thereof. The company also disputes the purported increase in rental above the level of $2,306-66 per month.

In the circumstances, our clients have an entitlement to rescind and determine any tenancy or other transaction into which they or any of them may have entered and to claim damages from Centrepoint. They are, however, prepared to abstain for the time being from exercising their various rights pending your response to this letter. Their abstention is, however, not to be construed 1n any way as derogating from or an abandonment of the rights that they have or may have. Falling a response satisfactory to our clients within seven days, we are instructed that, without further notice to you, we are to take such steps as may be necessary to protect the position of our clients.

We should be pleased if you would bring the contents ot this letter to the attention of the various Centrepoint companies, including

Centrepoint Freeholds Pty Limited, the lessor of the premises.

The foregoing 1s not to be taken as an exhaustive statement of the matters of which our clients complain and they reserve to themselves the right to raise such other matters (including, for example, the flooding of the shops by the sprinker system) as they may be advised."

The letter dated 24 October 1979, to which reference 15 made in the letter just quoted, was from Pacific Shopping

Centres Pty Ltd, another company associated with Centrepoint, not from Centrepoint Custodian Pty Ltd, and it was posted

with the statement of account to which we have referred.

At the request of Mr Powderly, the credit manager ot the group of companies which included Centrepoint, Mr Lucas called at an office in South Melbourne on or about 21 November 1979. Mr Powderly asked him why he would not pay the rent of his premises at the Centrepoint Mall. Mr Lucas asserted 1n reply that he had already paid the rent for October and that the amount claimed for rent was not "according to the original agreement" Mr Lucas claimed to have with Centrepoint. During the conversation a Mr Tallent, who was sworn by Mr Powderly to be, at the time Powderly was qiving evidence, the property manager of a company associated with Centrepoint, joined Powaerly and Lucas. Mr Tallent said something during the conversation which Lucas understood to be an expression of Centrepoint''s willingness to accept, for the time being, rent at the rate of $27,680 per annum ithe amount specified in the form of application for a lease), together with a promise to send Lucas the next day a letter

confirming what Tallent had said. No such letter was

His Honour was not persuaded that Lucas correctly reproduced in evidence the words Tallent used, nor that Lucas correctly reproduced the conversational context in which Tallent''s statement concerning the rent was made, nor that Lucas''s understanding of what Tallent said was justified by

"ft is not that I doubt Lucas's veracity in relation to the conversation, but the evidence of

Lucas and Powderly leaves me uncertain what was said."

On 27 November 1979 the applicant's solicitors received

from Centrepoint's solicitors a letter in these terms:-

has been referred to us and 18S to be answered in the near future,"

"In the ainterim kindly refrain from directing further correspondence direct to our client."

On or about 8 January 1980 the applicant received from

"To: T N LUCAS PTY LTD ot 8 The Moor, North Balwyn, being the Lessee of shops WNo(B.01) and (B.02), Centrepoint Mall, Bourke Street, Melbourne, pursuant to a Lease dated 16th May 1979 made between you and Centrepoint Freeholds Pty Ltd of 158 City Road, South Melbourne.

BY THE ABOVE-MENTIONED LEASE you the Lessee covenanted to (inter alia) -

(1) Pay to the Lessor throughout the said term thereby created annual rental in the sums therein specified by equal calendar monthly instalments 1n advance.

(i1) Pay to the Lessor the Lessee's proper proportions of the apportionable outgoings as estimated in advance by the Lessor and

charged to you the Lessee in accordance with the provisons of Clause 6.02.

(1i1) Pay to the Lessor interest at the rate of fifteen per centum per annum on any rentals

or other moneys payable by the Lessee thereunder and remaining unpaid (whether demanded or not) for seven days such interest to be computed from the date upon which moneys in question became due and payable to the date upon which they are fully paid to the Lessor.

THE ABOVE-MENTIONED COVENANTS have been broken and the particular breaches complained of are:-

'ai 'That you the said Lessee have railed to pay to the Lessor the monthly ainstalments ot the annual rental reservea by the Lease assessed" and applicable to the calendar months of Jcetober, November, December 15/9 and January 1980.

ib) That vou the said Lesseeé have failed to pay to the Lessor the Lessee s proper proportions of the apportionable outgoings assessed by the Lessor and charged to you pursuant to Clause 6.02 or the Lease, the particulars whereof have been notified to, and are known to you.

tc) That you the said Lessee have failed to pay to the Lessor interest at the rate of rifteen per centum per annum on any rentals or other moneys payable by you to the Lessor and remaining unpaia for seven days.

THEREFORE TAKE NOTICE that Centrepoint Freeholds Pty [td, the Lessor or the above-mentioned premises, requires you within tifteen days arter the date of service or this WNotice upon vou to remedy the afore-mentionea breaches of covenant in so far as the same may be capable ot remedy by you.

AND FURTHER TAKE NOTICE that 1n the event ot you the said Lessee falling to comply with this Notice

within the time atroresaid it 1s the Lessor s intention to re-enter upon his demised premises and determine the said Lease.

DATED the 7th day of January 19B0. Madden Butler Elder & Graham.

Signed by the said Madden Butler Elder & Graham of 500 Collins Street, Melbourne as duly authorized

solicitors and agents tor Centrepoint Freeholds Pty Ltd."

At about the same time the applicant's solicitors sent to Centrepoint's solicitors a letter, dated 8 January 1980,

"We reter to our letter dated 18 November 1979, your letter dated 27 November 1979, and our more recent attempts to communicate with you by telephone, and now advise that our client 1s

response 18 received within 14 days of the date hereof.

of our client's shop, at least one of its employees has suttered injuries and will be seeking damages."

The "monthly instalments of the annual rental reserved by the Lease" (to which the notice dated 7 January 1980 refers) exceeded the monthly instalments appropriate to an annual rent or $27,680 by reason of the operation of the provisions of the lease with respect to adjustment of the rent. Accounts claiming rent instalments in respect of the months of October, November and December 1979 and January 1980 had been rendered to the applicant: the instalments claimed exceeded the ainstaiments which would have been

Accounts had been rendered which claimed amounts in respect of "maint." by which "the Lessee's proper proportions of the apportionable outgoings assessed by the Lessor" was designated in those accounts. The agreement for lease did provide for estimation, "in advance", of apportionabie outgoings and for payment of the estimated amount in advance,

as well as for subsequent adjustment if the estimate should

The agreement tor lease made provision for the payment of interest on moneys payable by the lessee under the agreement, but the provision made was for payment on demand

and there was no evidence that any demand 1n respect of

unterest had preceded service of the notice dated 7 January 1980, unless the claim for interest in the summons issued on

While the applicant's leased premises were unattended and closed, agents of Centrepoint entered the premises and re-took possession thereof late on 25 January 1980, and

thereatter Centrepoint excluded the applicant from possession

The applicant had before "the commencement day" of the lease paid $2,306.66 to Centrepoint in respect of rent, but the applicant had otherwise made no payment to Centrepoint in

respect of rent, "apportionable outgoings" or interest.

His Honour dealt with the question of affirmation as

"In my opinion the applicant had not affirmed or disaffirmed the agreement for its lease before it was dispossessed by the respondent. In the letter dated 16 November 1979 the applicant's right to abstain for the time being from electing between affirmation and disaffirmation was asserted. The respondent's reply by the letter received on 27 November 1979 impliedly invited the applicant to defer election and to defer any other change in the course which the applicant was then following until the answer of the respondent should be received. I do not consider that the giving of the notice dated 7 January 1980 requiring remedy of breaches of covenants should be regarded as the answer for which the applicant had been, in effect, asked to wait. The giving of the notice was a course of action available to the respondent under the terms of the lease and constituted an assertion by the respondent that the legal relationship between the applicant and the respondent with respect to the shop was still regulated by the provisions of the agreement for lease. Such an assertion was not

inconsistent with the assertions contained in the applicant's solicitors' letter dated 16 November 1979 (although allegations of breaches specified in the notice were contradictory of assertions in that letter), mor inconsistent with the intention expressed in the letter received on 27 November 1979. It may be inferred, from the terms of the letter dated 16 November 1979, that the applicant's directors then knew of the rights, which misrepresentation inducing the making of the agreement for lease conferred on 1t, to disaffirm or to affirm the agreement at its election. By continuing in possession of the shop the applicant may be said to have exercised rights which would not exist unless that agreement remained in force and to have thereby affirmed that agreement. But, as the letter suagests, and as I find, the applicant's directors and agents were not at that time aware of the falsity of the representation that the respondent would treat the applicant's tenancy as upon the terms as to rent which are stated in the form of application for tenancy. The accounts rendered and to be rendered before possession of the shop was re-taken by the respondent suggested that the respondent would not treat the tenancy as upon those terms, but the conversation between Messieurs Lucas, Powderly and Tallent on or about 21 November 1979 gave Mr Lucas ground for believing that the respondent would treat the tenancy as upon those terms. It might be said that no such a beliet could be held in the face of the notice given by the respondent on or about 8 January 1980. But even on 25 January 1980 the applicant's directors and agents could reasonably have expected an explicit answer to the letter dated 16 November 1979 and in all the circumstances I consider that the applicant's retention of possession of the leased premises until that time did not constitute an affirmation of the agreement for lease (see Cheshire and Fifoot: Law of Contract (3rd Aust ed) pp 324-5; Spencer Bower and Turner, op cit, paras 236-8, 288-93; and cases there cited; Sargent v ASL Developments Ltd (1974) 4 ALR 257; 131 CLR 634)." (Lucas v Centrepoint, above, at pp.496-7).

"The trial Judge's finding that the applicant had not affirmed the agreement for the lease of the premises was based on the fact that the Applacant's solicitors' letter of loth November 1979 was responded to by letter from the Respondent's solicitors dated 27th November 1979 saying the

letter would be answered and i1t never was. The learned trial Judge said that that letter impliedly invited the applicant to defer election and that at

that time the applicant was not aware of the falsity of the representation that the Respondent would treat the tenancy as upon the terms as toa rent stated in the tenancy application.

However that awareness must have existed by the time the notice of 7th January 1980 was served and the re-entry occurred on 25th January 1980. After those dates the applicant proceeded on the basis of the re-entry being ineffective, the agreement being

on foot and affirmed and it being entitled to possession."

In support of the latter submission we were referred to the writ issued by the applicant out of the Supreme Court of Victoria on 8 February 1980, the relief sought in paragraph 4 and sub-paragraph 5(a) of the application filed in this Court on 26 October 1981 and the terms of paragraph 11 and 12(g) of the statement of claim filed with that application which were later amended by an amended statement of claim filed on 19 October 1982. These matters were said to be only consistent with the applicant having treated the agreement as being on

The letter from the applicant's solicitors to Centrepoint's solicitors dated 8 January 1980 stated that "our client is contemplating to vacate the shop premises if no response 1S received within 14 days of the date hereof." Counsel for Centrepoint accepted that it could not really be said that the applicant had affirmed the lease prior to the expiration on 22 January 1980 of the period referred to in the letter, but maintained that the applicant had affirmed

the lease by the time 1t was excluded from possession of the

premises on 25 January 1980, and that this affirmation was

further evidenced or underlined by the later conduct of the

Counsel for the applicant submitted that the events subsequent to 25 January 1980 referred to by Centrepoint and said to demonstrate that the applicant's continued possession of the premises from 22 January onwards amounted to affirmation of the lease were all explicable by reference to the strategies of the applicant's legal advisers, and the applicant's expressed willingness to resume possession was conditional upon Centrepoint's agreeing that the terms of the

lease were as the applicant said they had been represented.

We consider that 1t was reasonable for the applicant to expect, up to January 25, that a reply would be received by its solicitors to their letter of January 8. In these circumstances there was ample evidence to justify his Honour's finding that the applicant had not affirmed the

agreement for lease and we see no reason why it should be

Reference will be made later to the only other ground relied upon by Centrepoint, that the learned trial judge should not have ordered that it pay the applicant's costs but

rather, that the applicant should have been ordered to pay

It will be convenient to turn next to the argument of

the applicant based upon s.79 of the Judiciarv Act 1903,

"The laws of each State or Territory including the laws relating to procedure evidence and the competency of witnesses shall except as otherwise provided by the Constitution or the laws of the Commonwealth be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable."

It was submitted that his Honour was in error in failing to hold that the section was applicable in the present case so as to pick up the effect of s.79A(1). of the Victorian

"(1) The Judge upon application shall in all actions for the recovery of debt or damages give damages in the nature of interest at such rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 as he thinks fit from the commencement of the action until the entry of the judgment unless good cause is shown to the contrary over and above the debt or damages awarded by the court or jury."

Section 79A is in Pt VII of the Supreme Court Act 1958. Section 60 of that Act provides:

"The several rules of law enacted by Part VII of this Act shall unless' express provision 18 otherwise made be in force and receive effect in all courts whatsoever so far as the matters to which such rules relate shall be respectively

In the present case, the award of damages in favour of the applicant was based upon findings 1n favour of the applicant on the cause of action arising under s.52(1) of the Act, and causes of action arising under the common law in the exercise of the accrued jurisdiction of the court. These latter causes of action would otherwise have been tried in the courts of the State of Victoria and judgments upon them could have included damages by way of interest in accordance

Section 79 of the Judiciary Act 1s not limited to laws relating to procedure and evidence and the competency of witnesses but includes them in the laws of the State which subject to the exceptions set out in the section are binding on all courts exercising federal jurisdiction in that State. The policy of that section 1s that except as otherwise provided by the Constitution or the laws of the Commonwealth there should be uniformity in the law applicable to the resolution of a matter whether it is tried in a federal court in that State or by a court of that State. On principle, 1t seems that this policy should apply in a case such as the

present to a judgment based upon the law of the State.

Since judgment was delivered by the learned trial judge the High Court has had occasion to consider the question of

the effect of s.79 of the Judiciary Act in a remitter application in State Bank of New South Wales v The

Commonwealth Savings Bank of Australia (1984) 58 ALJR 394, 53

ALR 625. Gibbs CJ (at ALJR p.397, ALR p.629) referred to the view expressed by Mason J in Australian National Airlines Commission v Commonwealth (1975) 49 ALJR 338, that s.79 did

not render the provision in the Supreme Court Act 1970 (NSW)

which gave the Supreme Court of New South Wales power to award interest applicable to proceedings in the High Court,

"If that view 1s correct, of course s.79 equally does not render s.94 applicable in the Federal Court. The expression of opinion made by Mason J. was unnecessary for his decision, since the action in that case was not commenced until after the Supreme Court Act had come into operation and s.16(1) of that Act made it clear that s.94 was not intended to apply to proceedings already commenced, With certain exceptions which Mason J. held inapplicable. The operation of s.79 of the Judiciary Act 1n a case such as this raises very difficult questions, as the differences of opinion manifested in John Robertson & Co. Ltd. v. Ferguson Transformers Pty. Ltd. (1973) 129 C.L.R. 65 reveal.

Without having heard full argument I would not express any concluded opinion on the question whether s.79 does render s.94 applicable to proceedings in this Court or in the Federal Court."

Lockhart, J in Hubbards Pty Ltd v Simpson, (1982) 41 ALR 509 at 525-6.

In Robertson's case Gibbs J (as he then was) held (at p.89) that a South Australian statute of limitations did not,

standing alone, refer to actions brought under s.li of the

Australian Industries Preservation Act and when applied by

virtue of s.79 of the Judiciary Act, 1t did not get an

extended meaning so as to include such actions. His Honour

"If the right owed nothing to State law, and the remedy could only be pursued ina federal court, the State Parliament could not legislate either to extinguish the right or bar the remedy".

(In the present case, the learned trial judge found in favour of the applicant against Centrepoint both in respect of breach of the common law and of contravention of s.52(1) of the Act. (52 ALR at p.480). He then turned, in the first instance, to consider damages for deceit. In the course of doing so, his Honour held (at p.514) that the applicant's claim for interest could not be justified by reference to s.79. However, 1t is clear that the cause of action for deceit owed everything to the law of the State of Victoria

McTiernan, A.C.J., held (at p.75) that on the true construction of the State statute 1t was not applicable to a proceeding under s.11, which was not an action "for penalties

damages or sums of money given to any party by any statute."

Menzies J expressed the opposite opinion (at p.80) and

"the words "in all cases to which they are applicable" in 3.79 must mean, therefore, cases in which this Court 15 exercising federal jurisdiction in the State and to which the State law would in terms apply were it not that the proceedings are in the Hagh Court. I

have had the advantage of reading the judgment of Mason J and I agree with what

he has written in fuller explication of the function of 8.79 of the Judiciary Act".

(In the present case this Court 1s exercising federal jurisdiction in the State of Victoria and in the course of doing so is enforcing rights which derive from the law of that State. It seems hardly appropriate to construe 5.79 in a fashion which would make part only of that law applicable to the grant of the appropriate relief, so that there would be a difference between the award to be made in this Court and that which would be made ina State court in respect of

Walsh J (at p.84) said that the State statute "should be held not to include in the actions to which it relates an

action which could never be brought i1n any court of that

Mason J (at p.95) observed that "the broad purpose of s.79 1s to ensure that the laws of the States are applied by courts in the exercise of federal jurisdiction. In general that purpose 1s achieved by the application of a State law

"To ensure that State laws dealing with the particular topics mentioned in the section are applied in the exercise of federal jurisdiction by courts other than State courts, it is necessary that State laws be applied according to the hypothesis that federal courts do not necessarily Lie outside their field of application. Section 79

courts lie within the field of application of State laws on the topics to which it refers, at least in those cases in which the State laws are expressed to apply to courts generally. This departure from the general principle that the section requires a State law to be applied according to its terms is justified, indeed demanded, by the clear requirement that State laws on the topics mentioned are to be applied in federal jurisdiction. Whether that requirement supports the broader view that a similar approach is to be taken in applying s.79 to substantive as well as procedural laws it 1s not now necessary to determine."

applicable by s.79 to the proceeding in the High Court.

Commonwealth (1975) 49 ALJR 338, the opinion expressed by Mason J was based upon his Honour's characterisation of the Supreme Court Act (at p.340) as "a statute

designed to define and regulate the powers and procedures of

With all respect to this opinion, it seems to us" that $s,79A of the Victorian Supreme Court Act 1958, while it addresses its command to the judge, 1s not so much' concerned with the definition and regulation of the powers and procedures of the Court as it is with conferring upon a party entitled to recovery of a debt or damages an additional right to receive damages by way of interest unless good cause is shown to the contrary. The command to the judge is merely

Blackburn J in Commonwealth v Crothall Hospital Services

(Aust) Ltd (1981) 36 ALR 567 at 571, pointed out that the

tact that a right is created by a section of an Act

case the Supreme Court Act 1970 of New South Wales), which is

almost entirely procedural, does not mean that the right

In Simonius Vischer & Co v Holt and Thompson (1979) 2

"Thus, although a provision is made in a and itself is procedural in form by providing a

proceedings, the provision, on examination, may not be procedural only, and may confer new substantive right, or destroy a past immunity. Section 94 1s in a= procedural

statute and, as indicated, 1s procedural form; but the power given 1s to create

obligation of a kind which did not previously from the right which did exist. A person owing

nature of interest until the person to whom the money was owed succeeded in obtaining a judgment. The enactment of s.94 removed that

immunity. The order for the payment interest pursuant to 8.94 cannot be unless the cause of action exists, but

National Airlines Commission case (above), his Honour there

respects s.79 does not in my view pick up and apply in this Court a provision which empowers @ particular court of a state to make orders and enter judgments in proceedings in that court. The relevant powers of this Court are

conferred by the Judiciary Act and the High Court Procedure Act 1903-1966, as amended; as I see it they are not to be supplemented by the operation of s.79 of the Judiciary Act in the manner suggested. Section 26A of the High Court Procedure Act, which provides that judgments of the Court shall carry interest, should be regarded as a comprehensive expression of the entitlement in this Court of a litigant to interest on damages to the exclusion of any provision in State law which would otherwise be made applicable by virtue of s.79",

So far as the first sentence of this passage is concerned, the present case can be distinguished because, by virtue of s.60 of the Supreme Court Act, s.79A 1s a provision applying to all Victorian courts having jurisdiction to determine "actions for the recovery of debt or damages". The language of s.60, when it speaks of "all courts whatsoever"

1s wide enough to apply to the Federal Court of Australia.

The balance of the passage, although unnecessary for his Honour's decision, as already noted, must of course have

Section 26A appeared in Part II of that Act, entitled "Procedure of the High Court", as part of Division 8, the

title of which was "Judgment and Execution". The provision

is now to be found as_ s.77N of the Judiciary Act 1903, in

Division 5 of Part XA of that Act, and the tities remain the

Section 52 of the Federal Court of Australia Act 1976

provides that "a judgment debt under a judgment of the Court

carries interest at such rate as is fixed by the Rules of Court from the date as of which the judgment is entered". It is to be found in Part VI of the Act under the heading "General" and the heading of the section itself is "Interest

As Ellicott J pointed out in the Crothall case (above, at p.585), historically "the question of interest on the judgment debt and the question of interest on the debt or sum certain and later on the money sued for have been treated as

two separate matters and different considerations have been

In our respectful opinion, s.52 should be regarded as dealing only with the question to which it in terms relates, namely interest upon a judgment debt from the date of entry. We do not consider that it should be construed as excluding the provision in Victorian law dealing with the award of "damages in the nature of interest" from the commencement of

At a glance

Court

Decision date

Before

Source

Judgment (360 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (6)