Commonwealth of Australia v. Crothall Hospital Services (Aust) Ltd (formerly) Crothall & Co (NSW) Pty Ltd [1981] FCA 142

Claim for interest on amount claimed - power of Supreme Court to award such interest - whether Common Law Procedure Act 1889 (N.S.W.}) applies in the Territory - whether the awarding of such interest a matter of "practice and procedure" - Supreme Court

COMMONWEALTH OF AUSTRALIA v. CROTHALL HOSPITAL SERVICES (AUST.) LTD.

No. A.C.T. G.37 of 1980 Coram: Blackburn, Deane and Ellicott JJ. 17 August 1981

IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY

ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

ORDER Judges Making Order: Blackburn, Deane and Ellicott JJ. Date of Order: 17 August 1981

1. the appeal be dismissed;
2. the cross-appeal be dismissed;
3. the appellant pay two-thirds of the respondent's taxed

I have had the great advantage of reading the reasons for judgment of Ellicott J. On the appeal, I agree with those reasons. I have, however, the misfortune to differ on the question of the cross-appeal. I proceed to express my reasons

for holding that the cross-appeal should be dismissed.

The cross-appeal is from the trial judge's decision on the plaintiff's claim to interest from 1 July 1974 on the amount claimed by it. He held that this claim failed, as there was no statutory provision in the law of the Territory for interest to be awarded on amounts claimed (as distinct from judgment debts), and as the case did not come within any of the exceptional cases

Before this Court, the respondent based its claim to interest on alternative submissions. The first of these relied upon s.140 of the Common Law Procedure Act 1899 (N.S.W.) as in force (so it is said) pursuant to s.6(1) of the Seat of Government Acceptance Act 1909. I entirely agree with the reasons for judgment of Ellicott J. on this point. Even if s.140 of the Common Law Procedure Act is "applicable" in the Territory after 1 January 1911, I agree that this Court should follow Hough v. Whitty (1903) 3 S.R.(N.S.W.) 677, and hold that the terms of the

contract now before us do not provide a "date or time certain".

My disagreement with Ellicott J. is in respect of the respondent's second submission, which was that the interest claimed

can be awarded by this Court by virtue of s.94 of the Supreme Court

Act 1970 (N.S.W.), which is to be applied in pursuance of s.27 of

the Australian Capital Territory Supreme Court Act 1933. Section 94 of the Supreme Court Act 1970 (N.S.W.) is as

"Interest up to judgment. (1) In any proceedings for the recovery of any money (including any debt or damages or the value of any goods), the Court may order that there shall be included, in the sum for which judgment is given, interest at such rate as it thinks fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date when the judgment takes effect.

(a) authorise the giving of interest upon interest;

(b) apply in relation to any debt upon which interest is payable as of right whether by virtue of any agreement or othersize; or

(c) affect the damages recoverable for the dishonour of a bilk-of

Section 27 of the Australian Capital Territory Supreme Court Act

"Where no provision in relation to a matter of practice and procedure of the Supreme Court is contained in this or any other Act, an Ordinance or Rules of Court, that matter shall be governed, as nearly as may be, by the practice and procedure of the High Court in similar matters and, if that practice and procedure is not applicable, that matter shall be governed, as nearly as may be, by the practice and procedure of the Supreme Court of New South Wales."

I assume for the moment, and only for the sake of argument, that s.94 deals with a matter of practice and procedure. In my opinion s.27 is intended only to deal with a hiatus in the

procedure of the Court; that is to say, a situation in which some

procedure is necessary, but none is provided. The section was

in the Act as originally enacted. It is not surprising to find such a section in an Act which set up a new Court in a Territory over which jurisdiction had previously been exercised by the

High Court of Australia, and in which the law of New South Wales has effect except to the extent that it is superseded by

Ordinance of the Territory. But, in my opinion, in this case there is no hiatus upon which s.27 can operate. It is not a case where there is a right in a plaintiff to obtain such interest, but no procedure whereby such right can be enforced. The situation is

not that there is a hiatus in the practice and procedure of the Court, but that that practice and procedure is not to award interest on claims before judgment. The argument for the respondent entails that every time a new procedural provision (i.e. one which has not previously existed in New South Wales or Territory law) is introduced into New South Wales law, it takes effect also in the Territory because ex hypothesi there is no provision in relation to that matter in an Act, an Ordinance, or the Rules of Court. In my opinion s.27 was not intended to mean that, and its terms do not

There is a further, and similar, reason why s.27 of the A.C.T. Supreme Court Act does not help the respondent. Let it be assumed that under s.27 the absence of any provision relating to interest before judgment from the law of the Territory sends us to the practice and procedure of the High Court. That practice is not to award such interest. That practice is "applicable" in the

Territory, since it may be applied without repugnance to any law

or practice of the Territory. It follows that s.27 in this matter does not require any recourse to the practice and

But there is in my opinion a more fundamental reason why this argument of the respondent must fail. I cannot accept that the awarding of interest on claims before judgment can properly be characterized as a matter of practice and procedure. I say this with the utmost respect for those Courts and judges who have thought otherwise, for example, Barwick C.J. who said

in Government Insurance Office of New South Wales v. Atkinson-

Leighton Joint Venture (1980) 31 A.L.R. 193, at p.209:

"The question whether the arbitrator has power or authority to award interest on the sum awarded is a matter of procedure to be resolved by procedural law. It is not a matter of substantive law. Quite clearly, in the law of contract there is no right to the payment of interest whete there is no promise to pay it. But in point of procedure the payment of interest on moneys due and payable could be ordered by courts."

This dictum seems to me to equate the distinction between a right provided for in a contract and a right not provided for in a contract, with the distinction between a substantive right and a procedural right. But the latter distinction cannot depend upon the former. A party to a contract may have a right to avoid the contract on the ground of public policy. Ex hypothesi that right does not arise out of the contract, but can it be said to be a

I suggest with some trepidation that a satisfactory test of whether a right is procedural or substantive is whether the

right gives the person entitled to it an advantage valuable in

itself, or merely a tactical or ancillary benefit which assists

him in seeking or obtaining such advantage, or (as in the case of orders for costs) protects him from loss incurred in the process of seeking or obtaining it. In my opinion, the right

to interest before judgment (which may be called a right, though of course it is a "right" which is blurred by the Court's discretion) is clearly an advantage valuable in itself. It is not merely a piece of machinery which assists a party to achieve his main object. The fact that the right is created by a section of an Act (the Supreme Court Act 1970) which is almost entirely

procedural, does not mean that the right itself is procedural:

see Simonius Vischer s Co. v. Holt and Thompson (1979)2 N.S.W.L.R. 322, per Moffitt P. at p.336:

"Thus, although a provision is made in a statute dealing with procedural matters,

and itself is procedural in form by providing a power exercisable only in

on examination, may not be procedural only, and may confer a new substantive right, or destroy a past immunity. Section 94 is ina procedural statute and, as indicated, is procedural in form; but the power given

is to create an obligation of a kind which did not previously exist, and which is different in nature from the right which did exist. ae ee oe . - -> ot ste eee eon te SU TR Ee Nata ae ae LE ee OSE ER

"] certify that this account is correct within the meaning of sub-section 34 of the Audit Act 1901 (as amended)

I assume that this last mentioned certificate was intended to be a reference to sub-section (1) of s.34 which provided: - :

(1) No accounting officer shall pay any account unless he shall have been authorized so to do by some person appointed by the Treasurer for that purpose and unless such account shall have been duly certified as correct by some person appointed by the Treasurer for that purpose,

payment of any account, or any account of a class specified by the Treasurer, before it has been certified, if the account has been checked by a responsible officer and dealt with as prescribed, and if he is satisfied that undue delay in the payment of the account would be caused if, before payment,

it had to be dealt with as provided in this sub- section"

The Examining Officer's certificate stated:- "Examiner I certify that this account is correct as regards compilation castings, rates of charge,

is covered by proper authority and the amount thereof noted on such authority.

The respondent's claim from 27 November 1973 until 30 June 1974 covered a period of 30 4/5ths weeks. It alleges, on the basis of the claims submitted and paid, that as at 27 November 1973 the agreed weekly rate was $10,227.41 and claims that the total amount payable to it for the period was $315,004.22. Two additional amounts of $196.50 and $2331.31 which were not in dispute were also claimed making the total amount claimed $317,532.03. As stated earlier during this period the Commonwealth paid the respondent $173,076.30. The difference between the two amounts, $144,455.73 is the amount to which Connor J. found the respondent was entitied by the order in question in the appeal. Before Connor J. the respondent also claimed interest on this amount from and including 1 July 1974. His Honour declined to award interest and the respondent has filed a cross appeal in relation to this.

The respondent's claim as appears from its statement of claim was based on a series of alleged variations to the original contract. By virtue of thesevariatimsthe price payable by the Commonwealth to it under the contract allegedly increased for the reasons contained in certain letters from the respondent to the Commonwealth. The respondent claimed that the Commonwealth had accepted the variations either expressly, impliedly or by payment.

The Commonwealth for its part denies that these variations had been accepted by it and alleged that the respondent was only entitled to payment strictly in accordance with the contract unaltered, that the payments made were not in fact binding on the Commonwealth, that in fact there had been over-payments

which were not authorised to be made from consolidated revenue and

were therefore illegal and void and, on the basis of certain

principles applicable to the Crown, were recoverable by it.

In effect, the Commonwealth asserted that none of the actions of its servants in considering and deciding to pay and subsequently paying accounts submitted by the respondent were binding on it, that none had authority to accept the alleged variations of them, that it was entitled to go behind the payments and that to the extent to which they were outside the strict provisions of the written contract of 1 November 1967 it was entitled to claim them by way of overpayment.

The amount which the Commonwealth agrees is due to the respondent in respect of the period 27 November 1973 to 30 June 1974 ($278,501.93) has been calculated in accordance with what it regards as the proper interpretation of the contract. In his judgment Connor J, made a number of findings of fact which the Commonwealth said were in error. In essence these findings were that the Department had agreed either immediately or subsequently to the rises sought by the respondent due to wage rises and in cases of variations of area had agreed to the area to be varied and as to the amount to be added to or subtracted from the then current rate in respect thereof.

At no stage did Counsel for the Commonwealth before us or in the court below allege that the Commonwealth's officers had been misled by the respondent. Mr Simmonds the officer who certified many of the claims for payment for the period up to 26 November 1973 was called but gave no evidence of being misled or mistaken in giving his certificate. On the contrary, it appears to be conceded that officers whose duty it was to consider and process such claims considered them and in some instances, letters

and other information supplied by the respondent and certified

them for payment mainly as claimed though sometimes in a varied amount. What Counsel for the Commonwealth contended was that in fact the payments did not conform with the written contract and that whatever led the officers to authorise payments, these payments were not authorised by the contract. No evidence was adduced to show that those who handled the claims were not officers authorised to do so. However, the Commonwealth contends that it

is for the respondent to prove that the amount upon which it bases its claim, namely $10,227.41 per week, was the agreed rate as at

26 November 1973 as a result of a series of agreed variations and that in fact it has failed to do so., It submits that it is not

for it to establish mistake or lack of authority in officers either in order to resist the plaintiff's claim or be entitled to recover the alleged overpayments.

Before considering the effect of the evidence it may be helpful to set out some long established principles of the common law.

It is open to the parties to a written contract to vary it. This may be done in writing or,except where the contract is required by law to be evidenced in writing, by oral agreement. The agreement to vary may be express or implied from conduct (See generally Halsbury's Laws of England 4th Edition, volume 9 paragraphs 566-570; Anson's Laws of Contract 18th Edition pp. 318 et seq. Goss v. Lord Nugent (1833) 5B and Ad $8,110 E.R. 713;

Bruner v. Moore (1904) 1 CH.D 305; Tallerman s Co.Pty. Limited v. Natharis Merchandise (Victoria) Pty. Limited (1957) 98 C.L.R. 93

In practical terms the real question for decision in this appeal is whether the parties as a result of what transpired between the signing of the contract and the end of 1973 had agreed to the contract price being varied from an amount of $3,047.93 per week to $10,227.41 per week.

For the purpose of the resolution of the question, which is essentially one of fact, the Commonwealth is in no different position to an ordinary subject. Section 56 of the Judiciary Act 1903 as amended renders the Commonwealth liable to suit in contract in the courts therein mentioned. Section 64 provides that in any suit to which the Commonwealth is a party, the rights of parties shall as nearly as possible be the same and judgment may be given and costs awarded as in a suit between subject and subject. This latter section applies to substantive

as well as procedural rights. (Maguire v. Simpson 139 C.L.R. 362).

Quite apart from s.64,the ordinary common law rules governing the law of contract would, I think, have applied to the determination of the rights and obligations between the Commonwealth and the respondent resulting from their conduct after 1 November 1967. However the provisions of s.64 make it unnecessary to express a concluded view on that question,

In my view the proper conclusion from the evidence before His Honour is that the respondent and the Commonwealth varied the amount payable to the respondent for the services performed by it under the contract from $3,047.93 per week as at the date of the contract to $10,227.41 per week as at

However I do not think it possible to conclude from the evidence that the variations in the contract price as a result of variation in award wages were in strict compliance with clause 5 of the contract.

It is not disputed by the Commonwealth that under this clause the respondent was entitled to claim a variation which included not only the actual increase in wages but also the consequent increase in such items as worker's compensation, payroll tax etc.

However, the respondent's claims based on award variations were not arrived at by adding to the existing rate the increases in award wages plus increases in such items. They were calculated by applying to the existing agreed rate a percentage usually equal to or slightly less than the award variation and claiming the resultant amount as the variation in the contract price to which the respondent was entitled.

In other words the approach adopted by it was in essence that suggested by it in its letter of 7 November 1967. There is no evidence that this suggested approach was either accepted or rejected in writing by the Commonwealth. The letter however in the context appears to have provided the method which the respondent, in principle, followed in calculating the increases it sought due to award variations.

The Commonwealth was clearly aware of this and claims submitted on this basis were considered by its officers for payment. They were on occasions not accepted but never it would seem in the period up to 26 November 1973 because

The evidence relating to variations due to increases in awards points to independent consideration being given each time to the respondent's claim and to a decision being made by the officers concerned either to agree to it or to query it. The evidence available relating to cases where the claim was queried indicates that the claim was subsequently accepted and on occasions after consideration lasting some months.

It is of particular significance that the variations, whether for increase in awards or increase in areas,related not only to the particular claims which were lodged but also provided the rate upon which future work would be done in accordance with the contract. The variations therefore were of considerable significance to the future operation of the contract and the Commonwealth in accepting them by payment through its officers must have been aware of this.

In relation to areas, it is to be noted that clause 14, concerning variation of areas to be cleaned, and clause 15, concerning cleaning of additional areas, anticipated the amount of the variation being agreed upon between the Secretary, Department of Defence and the contractor. In each case the clause provided that the amount was not to exceed an amount equal to the amount payable under the contract for the cleaning of "an equivalent area" in the existing buildings. The Commonwealth contended that this was to be calculated by applying to new areas the varied rate which the respondent was entitled to receive per square foot for existing areas cleaned. The respondent on the other hand contended it required the identification of an area equivalent in physical terms e.g.

Connor J, favoured the latter view but also found that, whenever over the period there was a variation in the area to be cleaned, it was the subject of a specific agreement between the parties.

Having considered the evidence on these matters I agree with His Honour's finding. The fact that the amounts paid in respect of additional areas or variations of areas are not shown to have been within the limits specified in clauses 14 and 15 on either interpretation does not in my view matter. As I have said the proper conclusion on the evidence is that in each case an agreement was reached and I do not think that the limitations contained in these clauses prevented the parties from agreeing that higher amounts would be payable. On this basis it is unnecessary to consider the true construction of the words "equivalent area" in clauses 14 and 15.

In tendering its evidence the respondent relied mainly on the documents relating to claims submitted by it from May 1972. Of these, the claims made and the correspondence which passed following the National Wage increase in May 1972, illustrate clearly how agreement was reached between the parties to vary the price payable under the contract at that time. Not only was there a National Wage increase but,shortly thereafter a decision resolving an industrial dispute which varied the

relevant award and increased the hourly rate by 22.1%.

In a letter dated 14 June 1972 it explained its claim in relation to these increases. With regard to that based on the award settling the industrial dispute, the respondent stated that it had looked very closely at every possible way of absorbing the additional charges which increased wages by 22.1% but indicated that in the circumstances it sought an increase of 19.5% resulting in a new rate of $8,361.31 per week, The relevant Form 12 claim lodged by the respondent (Exhibit "G") was passed for payment by officers but contained a note that it was paid without prejudice "pending examination and calculation of_wage increases and costs". The Department then informed the respondent by letter dated 23 June 1972 (Exhibit "J") that:- "pending a detailed examination of the increased costs as they apply to the cleaning contract with your firm, we have paid your claim for $28,289.36 for the period 16 May 1972 to 12 June 1972 without prejudice. Any adjustment that may be found necessary will be taken up with you and adjusted against future claims under the contract." This claim was considered over several months and on 19 September 1972 the Secretary, Department of Defence,

"The above claim which was paid without prejudice has been examined and passed as correct."

In the meantime in August 1972 the respondent had notified the Commonwealth that an appeal by employers against the decision granting a 22.1% increase had met with some success which enabled it to reduce by $237.47 per week the amount payable to it under the contract. This was allowed by it in claims made

In my opinion only one proper conclusion can be drawn from these documents and events, namely, that the Commonwealth and the respondent agreed to vary the contract price in the manner sought by the respondent and that, even though this did not accord with the terms of clause 5, it was an effective variation of the contract price.

As stated earlier, the Form 12 claim forms submitted by the respondent were endorsed with three certificates before being sent for payment. One of these was under s.34(5) of the Audit Act which provided at the time:-

(5) The correctness of any account in regard to rates of charge and faithful performance of the services charged shall be certified by the person incurring the expense or by the person appointed for that purpose by the Minister administering the Department concerned.

Act by the person said to be incurring the expense. In many instances this was Mr Simmonds a principal executive officer

with the Department of Defence who was called to give evidence.

He said in evidence that he had signed the forms as the person

incurring the expenditure which he said was a formal delegation. As has been mentioned no-where in his evidence did Mr Simmonds suggest that when he gave these certificates he was mistaken

or misled. Nor did any other officer involved with this contract. The giving of the certificate under the Act is not a mere formality. It testifies both to the correctness of the account in regard to rates of charge as well as faithful performance of

the services and in the absence of evidence to the contrary the

assumption must be that the officer satisfied himself, from his own knowledge or from information placed before him by other officers, that what he was certifying was correct. In this case, when variations of price and area were involved in particular claims, it can only be assumed that the certifying officer had satisfied himself that a decision had been made by the relevant officers to agree to the variations and to reflect this in the payments to be made for the services performed. When payments were made therefore they reflected not a mistaken belief on the part of the relevant officers but their agreement that the particular variations involved should be accepted whether based on increases in wages or changes in areas.

The only relevance of considering the evidence relating to these certificates and the actions of the officers leading up to their signature is to demonstrate that far from supporting a case that these payments were made by mistake it is completely inconsistent with it. Apart from this it is, in itself, of no ultimate significance to the question whether the contract price was varied.

officers agreed but that the Commonwealth when it received

the claims and made unqualified payments in accordance therewith,

was thereby in each case, agreeing to vary the contract by adopting the price shown thereon as the contract price for the work covered by the claims and for the future until varied

A variation to the original contract could only take place by agreement, that is, by offer and acceptance. Here the respondent offered to vary the contract by submitting claims specifying an increased contract price based either on increases in wages or changes in areas. The Commonwealth in each case, except when it was qualified, accepted that offer by making a payment in accordance with the claim. Its action in making this payment in each case was not only performance but constituted acceptance (cf. Brogden v.

applied in such cases as Auckland Harbour Board v. King 1924

A.C. 318; Commonwealth v. Burns (1971) V.R. 855; and King v.

Toronto Terminals 1948 Ex C.R. (Canada) 563. These cases establish that where moneys are paid out of Consolidated Revenue without authority they may be recovered in an action by the Government. .

This could occur if a condition on which money was appropriated by statute had not been met at the time it was paid out or if money was paid out by mistake even though not recoverable under ordinary principles. The basis of the action is that there has been a payment out of the revenue fund without authority.

In relation to actions by the Commonwealth a question arises as to whether s.64 of the Judiciary Act has had the effect of destroying the Commonwealth's cause of action in such a case. This problem was mentioned by Gibbs J.

(as he then was) in Maguire v. Simpson (1977) 139 C.L.R. 362

at pp. 387-8). I think the better view 1s that the section

does not have this effect. However, having regard to my view that, in any event, the principle has no operation in this case, it is unnecessary to express a concluded view on the matter.

Here, as I have indicated, there is nothing to support a claim that the payments were made by mistake.

Nor were the moneys for cleaning services appropriated

subject to conditions which were not fulfilled. Appropriations were made from time to time to meet the cost of cleaning the Defence Department's offices. But clearly enough where

those cleaning services were provided pursuant to a contract the moneys so appropriated could be applied in meeting the accounts payable under that contract.

This is, of course, conceded by the Commonwealth, but it says that in the present case many payments were not authorised by the original contract and that they are therefore recoverable. This submission would, I think, have considerable weight were it not for the fact that subsequent to the original contract the parties in my view agreed to vary the original contract by varying the contract price payable thereunder from time to time and in the manner I have already analysed. The principles enunciated in the Auckland

Harbour Board Case do not in my view operate to exclude the

application to contracts made by the Commonwealth of the ordinary rules of contract law. For instance they do not

exclude the principle referred to earlier that payment may

not only constitute performance but also acceptance of

an offer. It was open to the Commonwealth if it wished, to qualify its payments of claims made by the respondent. Had it done so in an appropriate way the principles of the Auckland Harbour Board Case would no doubt have applied. However, the payments relied upon were made without qualification.

In these circumstances I think the variations of the contract are a complete answer to the Commonwealth's claim. The Commonwealth was able to agree to vary the price payable for cleaning services and this it did and in so doing it provided lawful authority for the payment out of Consolidated Revenue of the moneys in question. The Commonwealth's claim for repayment therefore fails.

The Commonwealth also relied on non-compliance with the Treasury Regulations made under the Audit Act, in particular Regulations 46, 47, 52A.and 52B. Regulation 46 deals with requisitions for supplies (which by definition includes services) and in the case of departments such as Defence required the use of Form 11. Regulation 52A deals with purchase orders and requires the use of Form 13. Mr Simmonds' evidence was used to support a conclusion that these forms were not used in this case. In accordance with the contract claims by the respondent were submitted using Form 12 which under Regulation 54 is to be used for accounts for general purposes. The evidence supports the conclusion that these forms were submitted, checked and then passed on

His Honour was not satisfied that Mr Simmonds' evidence establishes that there was a breach of Treasury Regulations. If there was, he thought the regulations were modal in character and did not matter as far as the respondent is concerned. He did not think non-observance by its officers could be used by the Commonwealth to defeat a claim for payment for services rendered to and accepted by it under the running contract. I agree with the views expressed by His Honour and do not regard any non-observance of the regulations as a defence to recovery by the respondent or as a proper basis for claiming repayment of the amounts paid,

The regulations in their relevant parts provide a procedure which is binding on public servants involved in the making of payments out of Consolidated Revenue. Non-compliance can constitute a breach on their part but it does not preclude the normal effects in law of the payments made by the Commonwealth brought about by its acceptance of the respondent's offers to vary the original contract and the discharge of the obligations of the respondents and the Commonwealth under the contract so

Had I not been of the view that the parties had agreed to vary the contract as to the weekly amount payable for cleaning services it would have been necessary to consider whether, at least in relation to its counter-claim, the Commonwealth was estopped from asserting that the weekly amount payable was not the amount claimed by the respondent. This would have raised a matter of some substance but as it has turned out it is unnecessary to consider it.

The respondent before Connor J. claimed interest from 1 July 1974 on the amount claimed. His Honour held that there was no statutory provision for interest in the Territory and that the case did not come within any of the exceptional cases referred to in the authorities. He therefore dismissed the claim to interest. The respondent has cross~appealed against His Honour's decision.

In the Court below the respondent argued that it was entitled to interest. It appears to have based this argument on an exception to the general common law rule independently of any specific legislativa provision to that effect.

In this Court it reserved this line of argument without pressing it and preferred to base its claim to interest on alternative submissions. The first asserted that s.140 of the Common Law Procedure Act 1899 (N.S.W.) applied to confer power on the Court to award such interest. The second claimed that the Court could exercise the same power as was conferred on the Supreme Court of N.S.W. by s.94 of the Supreme Court Act 1970.

I shall deal first with the claim based on s.140 of the Common Law Procedure Act 1899 (N.S.W.). This section,

in relation to the Supreme Court of New South Wales, empowered

the jury, on the trial of any issue or assessment of any damages, to allow interest at a stipulated rate upon all debts or sums certain recovered in any action "from the time when such debt or sum was payable (if payable by virtue of some written instrument, and at a date or time certain)". The respondent submitted that this section remained in force in the Territory by virtue of sub-section 6(1) of the Seat of Government Acceptance Act 1909 which

"6.(1) Subject to this Act, all laws in force in the Territory immediately before the prociaimed day shall, so far as applicable,

• continue in force until other provision is made."

There are I think several grounds on which the claim based on s.140 of the Common Law Procedure Act 1899 should be rejected.

First, I do not think that s.140 is a law which could in any useful or practical way continue in force in the Territory. The Common Law Procedure Act 1899 governs the powers, practice and procedure of the Supreme Court of New South Wales. Section 140 confers power on a jury exercising the jurisdiction of that Court. The Seat of Government Acceptance Act 1909 did not vest jurisdiction in the Supreme Court over matters arising in the Territory. Indeed by

s.8 of that Act it was vested in the High Court and this

remained so until 1933 when the Supreme Court was established.

Section 6(1) of the Acceptance Act only continued laws in force "so far as applicable" and the Common Law Procedure Act could not apply because the Supreme Court of New South Wales to which it was directed was given no jurisdiction over matters arising in the Territory. This view is consistent with the views expressed by Mason J. on the effect of s.79 of the Judiciary Act on the power of the

N.S.W. Supreme Court to award interest in Australian National

Airlines Commission v. The Commonwealth((1975} 49 A.L.J.R 338

Secondly, even if,contrary to this view,s.140 remainedin force in the Territory to empower the Supreme Court to award interest, I do not think it should be construed as conferring that power in this case.

Clause 12 of the contract provided,in effect that, subject to the work being satisfactory, payment at the agreed rate shall be made monthly in arrears. Under this clause the actual date of payment was not fixed but it could be ascertained once the circumstances occurred giving the right to payment. Section 140 was in substance an adoption of the Civil Procedure Act (3 and 4 Wm. 4 c.42 s.18) and there was, prior to its adoption.a difference of opinion in English decisions as to the true construction of the provisions upon

which it was based. In Merchant Shipping Co. v. Armitage

(L.R. 9 Q.B. 114) the Exchequer Chamber held that the instrument itself must actually mention the time for payment.

In Duncombe v. Brighton Club Co. (L.R. 10 Q.B. 371) it was

held that it was sufficient if an event or time was fixed

the date of which could be ascertained upon its happening. -

The same question arose in relation to s.140 shortly after (N.S.W. ) its enactment in Hough v. Whitty 3 S.R./677. In that case

the Full Court of the New South Wales Supreme Court held that it was bound to follow the decision in Armitage's

Case even though two of the three Judges wovld have

preferred Duncombe's Case had they been free to follow it.

Having in mind the assumption I have made that s.140 is applicable by virtue of the Seat of Government Acceptance Act 1909 I do not think we should decline to follow the decision in Hough v. Witty. The interpretation in question had been adopted prior to 1909 and if the section, contrary to my view, operates in the Territory to confer power to award interest on the Supreme Court of the Territory, I think it should be construed by this Court as requiring the ianstrument itself to specify the date. Since the contract here did not do so, s.140 could not, in my view, in any event assist the respondent to

The alternative submission put by the respondent to support its claim for interest is that, by virtue of s.27 of the Australian Capital Territory Supreme Court Act 1933, s.94 of the Supreme Court Act 1970 (N.S.W.) is part

of the practice and procedure of the Territory Supreme Court

with the result that it had a discretion to award interest on the amount owing to the respondent at least from the

date the last monthly payment fell due on 1 July 1974.

"27. Where no provision in relation to a matter of practice and procedure of the Supreme Court is contained in this or any other Act, an Ordinance or Rules of Court, that matter shall be governed, as nearly as may be, by the practice and procedure of the High Court in similar matters and, if that practice and procedure is not applicable, that matter shall be governed, as nearly as may be, by the practice and procedure of the Supreme Court of New South Wales."

""(1) In any proceedings for the recovery of any money (including any debt or damages or the value of any goods), the Court may order that there shall be included, in the sum for which judgment is given, interest at such rate as 1t thinks fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date when the judgment takes effect."

At the outset it is important to note that s.54 of the Australian Capital Territory Supreme Court Act 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. There has never been any provision in that Act dealing with interest between the date when the cause of action arose and the

Since 1921 High Court judgments have carried interest from the date judgment is entered. (See s.26A of the High Court Procedure Act 1903 as amended which was repealed in 1979 and replaced by s.77N of the Judiciary Act 1903 as amended). No provision has been made by Act or by Rules of Court or otherwise for the payment of interest on amounts recovered in the High Court between the time the

cause of action arose and the time of entry of judgment.

In order for s.27 of the Australian Capital Territory Supreme Court Act 1933 to have the éffect contended for, it is necessary to establish that there is no applicable provision in relation to the awarding of interest pre-judgment in that Court or in the High Court and that the power which s.94 confers is indeed "a matter of practice and procedure". For the moment I shall

was the first statutory provision conferring a power on

an English Court to award interest prenvjudgment. It was

enacted after the decision of the Court of Kings Bench

in Page v. Newman (1829) 9 B. & C. 378; 109 E.R. 140) which

in the contract between the parties, The section, 1t will

be noted, did not create a right to interest but conferred

a discretion on the Court, it was confined to debts or

sums certain and it empowered the Court to award it from

the time the debt or sum certazrn was due and payable or was

In New South Wales s.140 of the Common Law Procedure

Act 1899 adopted in substance s.28 of the English Act. On

the repeal of the Common Law Procedure Act it was replaced

section extended the proceedings "for the discretion as to the should be ordered on

Court's power significantly to recoyery of money". It conferred a rate of interest and as to whether it the whole or part of the money or for

By the time the Supreme Court Act 1970 was passed s.28 of the Civil Procedure Act 1833 had already been repealed in England and replaced by s.3 of the Law Reform (Miscellaneous Provisions) Act 1934 which was in substance the same as s.94 of the Supreme

I have already referred to the specific provisions relating to interest on judgment debts in the Territory Supreme Court and the High Court. Section 95 of the Supreme Court Act 1970 (W.S.W.) and prior to it ss.142 and 143 of the Common Law Procedure Act 1899 (N.S.W.) provided for interest on judgment debts in the Supreme Court. All these provisions appear to have their origin in s.18 of the Judgments Act (U.K.) 1838. All of them conferred on the plaintiff at least a prima facie right

Historically therefore 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

Under the Australian Capital Territory Supreme Court Act no specific power is given to that Court to award pre-judgment interest; nor 1s there any under any Act,

Ordinance or Rule of Court relating to that Court. There is

a provision imposing post judgment interest but this

In the High Court, on analysis, a similar situation emerges. There is provision for interest on the judgment debt (now s.77N Judiciary Act 1903) but no provision relating to pre-judgment interest on moneys

It might be argued that because there is no such provision relating to the High Court the practice and procedure there is not to allow interest pre-judgment on moneys recovered and that therefore, pursuant to s.27 this becomes the practice and procedure in the Territory Supreme Court. One might think this is a curious result because the basis on which one considers the position in the High Court is the absence of any provision on the

Mason J. in Australian National Airlines Commission v.

the Commonwealth ((1975) 49 A.L.J.R. 338 at p.340) might

In that case Mason J. dealt (inter alia) with a submission that by virtue of s.79 of the Judiciary Act he as a justice sitting in the original jurisdiction of the High Court was entitled to exercise the powers

conferred by s.94 of the Supreme Court Act 1970 (N.S.W.).

Section 79 provides that the laws of each State, including the laws relating to procedure 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 in all cases to which they are applicable.

"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

Although capable of being read to support the argument I have mentioned, these comments are not, on examination, directed to the same question. His Honour, in his earlier reasons, was concerned to indicate that s.94 of the Supreme Court Act 1970 (N.S.W.) could not apply to the High Court because it was a power being vested by s.94 in the Supreme Court. In the passage quoted His Honour was merely indicating the result of this view, namely, that s.26A (the provision then so providing) expressed the complete

entitlement of a litigant to interest in that Court.

In my opinion therefore on the assumption I have made there is no applicable practice or procedure in

the High Court on the matter of pre-judgment interest on

It follows that pursuant to s.27 of the Australian Capital Territory Supreme Court Act 1933 this matter is to be governed as nearly as may be by the practice and procedure of the Supreme Court of New South Wales. Assuming it is a matter of practice or procedure it follows that s.94 would in my view govern the awarding of interest pre-judgment on moneys recovered in the Supreme Court of the Australian Capital Territory. It remains to

consider whether this is a matter of practice and procedure.

The meaning of the phrase "practice and procedure" has arisen in innumerable cases. Although no clear cut definition has emerged several cases are of

p.333-4) Lush L.J. in considering a power to frame rules and orders for regulating the practice 'of and the forms

""tpractice' in its larger sense - - the sense in which it was obviously used in that Act like 'procedure' which 1s used in the Judicature Acts, denotes the mode of proceeding by which a legal right is enforced, as distinguished from the law which gives or defines the right, and which by means of the proceeding the Court is to administer the machinery as distinguished from its product. 'Practice' and 'procedure' as applied to this subject I take to be convertible terms."

In A.G. v. Sillem (1864) 10 H.L.c. 704 at p.723 (11 E.R. 1200 at p.1209)) Lord Westbury dealing with a

"Here the word 'practice' is used in the common and ordinary sense, as denoting the rules that make or guide the cursus curiae and regulate the proceedings in a cause within the walls or limits of the court itself", In White v. White ((1947) Arg L.R. 342) J. (at p.344) speaking of the word 'procedure' said:- "In the appropriate context it comprehends all steps necessary to be taken in litigation for the establishment of a right in order that the right may be judicially recognised and declared in such manner as will enable the party asserting the right legally to enjoy it; it covers not only the acts of the judges of the Court, but also the acts of the officers of the court which are necessary to give effect to judicial pronouncements." Another gloss to the meaning of the words 'practice and procedure' is found in Young v. Toynbee ((1910) 1K.B. 215) where Buckley L.J. (at p.220) said:- "The expression 'practice and procedure' is not confined to steps in the action itself but covers also matters in connection with the action." In that case an appeal against a master's refusal to order the defendant's solicitor to pay the plaintiff's costs was held to be an appeal on a matter of practice and procedure. Further examples of matters held to be matters of practice or procedure are - a provision conferring a right of appeal within the Supreme Court of

N.S.W. in a proceeding brought to enforce a substantive

right (Minister for Army v. Parbury Henty & Co. (1945)

70 c.L.R. 459 per Latham C.J. at p.489); an order for committal or attachment (Lever Bros. v. Kneale (1937)

2 K.B. 87); an appeal from an order giving leave to bring

an action against the owners of a mental institution (In re Shoesmith (1938) 2 K.B. 637); a provision for an order staying proceedings until a party submits to

a medical examination (Christie v. Webb & Anor(1951)

One of the most difficult questions which can arise is whether the fact that a particular provision creates a right or liability which did not previously exist prevents such a provision from being a matter of practice or procedure. Section 94 of the Supreme Court Act 1970 (which replaced s.140 of the Common Law Procedure Act 1899) gave the Court a much wider power to award interest

It could be said from the debtor's point of view that s.94 removed an immunity that previously existed from having interest imposed on the amount of the judgment from the time the cause of action arose. From the creditor's viewpoint it could be said that it

created the possibility of such interest being awarded.

by the N.S.W. Court of Appeal in Simonius Vischer v. Holt

and Thompson (1979) 2 N.S.W. L.R. 322. After referring to the presumption against retrospectivity of a law which

alters substantive rights liabilities or immunities

(discussed in Maxwell v. Murphy (1957) 96 C.L.R. 261)

Moffat P. (with whom Reynolds J.A. and Samuels J.A.

"Thus although a provision is made ina statute dealing with procedural matters, and itself is procedural in form by providing a power exerciseable only in

the course of proceedings, the provision, on examination may not be procedural only, and may confer a new substantive right or destroy a past immunity. Section 94 is

in a procedural statute and, as indicated, is procedural in form; but the power given is to create an obligation of a kind which did not previously exist, and which is different in nature from the right which did exist."

as s.94 is not "a matter of practice or procedure"?

It is clear that s.94 does not alter or impair the cause of action. It does not confer a right to interest but confers a discretion on the court in the proceedings. It enables the Court to ensure that a plaintiff will enjoy the fruits of his cause of action. So far as the proceedings are concerned it makes it less likely that they will be unduly delayed by a defendant seeking to avoid payment and it enables the plaintiff to be compensated for any delay. It is a power which must be

exercised in the proceedings themselves and its exercise

So conceived the provision is, in my opinion, part of the machinery or procedure within which the cause of action is enforced. It is an aid in administering justice.

The fact that such a provision removes an immunity or creates a benefit which did not previously exist does not in my view prevent it from being a matter of practice or procedure. A right of appeal within a court, a liability to attachment or committal, a right to enter premises, an obligation to submit to a medical examination, a right to costs all confer important rights or subject parties to substantial liabilities but they have all been regarded as matters of practice or procedure.

The statements of Moffatt P. in Simonius Vischer v.

Holt & Thompson (supra) do not in my view necessarily support

a conclusion that s.94 does not deal with a matter of practice and procedure. The question there was whether it was "retrospective" in the sense that it empowered the Court to award interest for a period prior to the commencement of the section.

It was a question of construction and the members of the Court of Appeal concluded that because s.94 removed an immunity and created a benefit not previously in existence it should not be construed as operating retrospectively. This may have justified the application of the rule of construction against retrospectivity but it dad not in my view, for the reasons I have given, involve the conclusion that it was not

XI would add that, in any event, I find some difficulty with the reasoning of the Court of Appeal in Simonius Vischer v. Holt & Thompson (supra). Section 16(1) made it clear that, unless the Court otherwise ordered, the-~Act was not to apply to proceedings commenced in the Court before the commencement of the Act. In this sense the Act contained its own provision against retrospectivity i.e. it provided that neither s.94 nor any other provisions of the Act were by their own force to apply to prior proceedings.

The insertion of s.16 is therefore completely consistent with -the view that s.94 is a procedural provision which might, but for s.16, have operated retrospectively so as to apply to. current proceedings whenever commenced.

It is interesting to note that in England in Bank of Athens v. Royal Exchange Assurance (1938) 1 K.B. 771 Branson J. held that the equivalent English section, in the absence of a provision like s.16, did so apply.

The nature of provisions such as s.94 has been considered in other cases. For instance Gibbs J. (as he then was) in Ruby v. Marsh (1975) 132 C.L.R. 642 at 656) regarded a similar but not identical Victorian provision as "adjectival". Reynolds J.A. in Pheeney v. Doolan (No. 2) ((1977) 1 N.S.W. L.R. 601 at p.613) expressed a similar view.

More recently in Government Insurance Office of N.S.W.

v. Atkinson-Leighton Joint Venture (not yet reported) Barwick C.J.

(dissenting from the view that the N.S.W. arbitrator in that case had the same power to award interest as the Supreme

"the question whether the arbitrator has power or authority to award interest on the sum awarded 1s a matter of procedure to be resolved by procedural law. It is nota Matter of substantive law. Quite clearly,

Wilson J. agreed with this reasoning. Although this distinction was critical to the view the Chief Justice formed it does not appear to have been relevant to the approach adopted by the majority who took the view, as Stephen J. expressed it, that -"an arbitrator may award interest where interest would have been recoverable had

For these reasons, supported as they are by authority, I am of the opinion that s.94 is a provision anvolving "a matter of practice and procedure" and that these words as used in s.27 of the Australian Capital Territory Supreme Court Act 1933 comprehend such a

This being so, it follows that s.94 governs the practice and procedure on this matter in the Australian Capital Territory Supreme Court and that the Court below was empowered to award interest to the

allowed and that the appellant pay the respondent's