The Court gave its principal judgment in these proceedings on 1 September 2017: Curnow Consulting Pty Ltd v JPD Media & Design Pty Ltd t/a Durie Design [2017] NSWSC 1171 ("the principal judgment"). The Court gave its second judgment on 1 February 2018: Curnow Consulting Pty Limited v JPD Media and Design Pty Ltd t/a Durie Design (No. 2) [2018] NSWSC 28 ("the second judgment"). These reasons should be read with the Court's previous two judgments. Events, matters and persons are referred to in both judgments in the same way.
The Court's principal judgment made findings: as to the terms of the oral Management Agreement between the parties; as to whether that Management Agreement had been varied in February 2012; as to whether there was a trial period for the plaintiff to perform the Management Agreement; and as to the nature of the rights of termination of the Management Agreement and its duration, including its relationship to a parallel Services Agreement. Finally, the Court determined that JPD had wrongfully terminated both the Management Agreement and the Services Agreement, and that Curnow Consulting had accepted that wrongful repudiation. The Court's findings in the principal judgment are conveniently summarised at [438] - [441].
When the matter came back before the Court on 12 October 2017, the parties agreed to dismiss the proceedings against Mr Durie (Order 2). Little had been said in the written submissions about the plaintiff's separate case about Mr Durie as distinct from JPD. In the Court's principal judgment, the Court reserved the position in respect of Mr Durie and said the following:
"436. The parties did not focus sufficiently in their final submissions on the issue of Mr Durie's liability, if any, separately from that of JPD. This issue is reserved for further consideration. If it is necessary to determine that question before the quantum hearing then the parties may approach the Court for further directions. "
The dismissal of the proceedings against Mr Durie presented costs issues that featured in the current dispute.
The Court's second judgment determined three issues after a hearing on the quantum of damages. The three issues and the Court's determination of each of them were as follows:
1. Is the contract between JPD and Channel 9 within the Sean Anderson carve-out that was provided for in the terms of the Management Agreement? On this first issue, the Court decided that the Nine Network contract revenue was introduced by Mr Sean Anderson through his company, 22 Pty Limited, or personally, and that was sufficient to exclude liability to Curnow Consulting for commission based on the receipt of that revenue.
2. Should certain otherwise unallocated payments made by JPD to Curnow Consulting be credited to JPD against Curnow Consulting's claim for damages? On this second issue, the Court concluded that the better inference in the circumstances is that the unallocated payments made by JPD to Curnow Consulting should be treated as payments of commission and should be accounted for, as Mr Shanley first did, in reduction of the commission due to Curnow Consulting. But there should be an adjustment in Curnow Consulting's favour on this account of $10,909.90.
3. Has Curnow Consulting proved its loss with respect to a number of small specific commission claims, where the evidence was incomplete? On this issue, Curnow Consulting has not established its entitlement to commission on a deal involving Diversified but has established its entitlement to commission with respect to the VME deal.
As a result of the giving of the second judgment, the parties were able to calculate the judgment in favour of Curnow Consulting against JPD exclusive of interest. On 8 March 2018, the Court entered judgment for $563,049.02 against JPD exclusive of interest up to judgment.
This third judgment deals with the issues of interest and costs that were unresolved by the previous judgments. These issues were the following.
On the issue of interest up to judgment under Civil Procedure Act 2005, s 100, the Court is asked to determine: (1) whether interest up to judgment should run on any amount outstanding during the period from November 2013 to February 2015 when the proceedings were stayed as a result of non-payment by Curnow Consulting of a costs order in the first defendant's favour; and (2) whether Curnow Consulting should only have interest from the date of service of expert evidence which expanded its claims, when those claims were first raised.
On the issues as to costs, the Court is asked to determine: (1) whether an order for costs should be made against Curnow Consulting and in favour of Mr Durie; (2) what order for costs should be made overall between Curnow Consulting and JPD, and in particular, whether JPD should be ordered to pay Curnow Consulting's costs on the party/party basis; (3) should any order for costs that would otherwise be made, in Curnow Consulting's favour be discounted on account of parts of Curnow Consulting's claim that was covered by the JPD Calderbank offer; and (4) should any costs order be discounted on account of parts of Curnow Consulting's claims upon which it lost and which claims may be severable from issues upon which Curnow Consulting was successful.
In this part of the proceedings on the issues of interest and costs, Mr L. Gor of counsel continued to appear for the plaintiff. Mr Neggo of counsel continued to appear for the defendants. The remaining issues the subject of this judgment were the subject of written submissions and oral argument. The matter was heard on 8 March and 17 April 2018. Orders for written submissions were made. The last written submissions were delivered on 7 May 2018.
The Court has just been told by the parties that an administrator, Mr Simon Cathro of Worrells, was appointed as an administrator to JPD on 3 May 2018. It has been suggested to the Court that the provision of these reasons as expeditiously as possible may assist the parties and JPD's administrator at a second meeting of creditors to take place on 6 June 2018. These reasons have been produced in that context. They do not cover as much of the detail and the course of argument as they might otherwise have done had more time been available.
A comment must be made about delivery of this judgment in relation to Corporations Act 2001 (Cth), s 440D. Section 440D provides that, during the administration of a company, proceedings against that company or any of its property cannot be begun or proceeded with except: (a) with the administrator's consent; or (b) with leave of the Court. That section has been found not to stay the delivery of judgment in circumstances where an administrator is appointed to a company after hearing, and during the time that judgment is reserved. Lansdowne AsJ said in M F Ltd v Compliance and Risk Services Pty Ltd (2013) VSC 213 at [11]: "The section… does not prevent the delivery of judgment in respect of an application already heard, which is a step taken by the Court, not by a party". In a more recent decision of this Court, In the matter of Tolco Pty Limited [2016] NSWSC 1069, Brereton J was of the view that "even if s 440D did not stay the delivery of a reserved judgment, it had the effect that no orders could be made without the administrator's consent or the leave of the Court". In those proceedings, his Honour delivered judgment indicating the decision of the Court, but without, at that stage, making formal orders. The course taken by Brereton J seems to be practical and it is the course that I will adopt. That is, I will publish my reasons setting out what orders would be made, but will reserve the making of formal orders until a later date, and grant liberty to apply.
The parties gave the Court considerable assistance by providing to the Court an agreed narrative of procedural facts relevant to the issues to be decided in this judgment. That narrative set out below has enabled the Court to determine these remaining issues expeditiously. The Court then deals with the issues for determination.
[2]
The Agreed Narrative of Procedural Facts - October 2013 to March 2018
This narrative of facts is confined to the principal procedural events that occurred after the commencement of these proceedings. Some of these events are referred to in more detail in the Court's principal and second judgments. The reader is referred to those judgments should more detail be required concerning the underlying facts and issues that gave rise to these proceedings.
Commencement to Calderbank Offers - May to October 2013. On 7 May 2013, the proceedings were commenced by Statement of Claim.
On 9 June 2013, the Daily Telegraph published an article relating to the proceedings. The Daily Telegraph article headed "Jamie Durie digs in for fight over $750,000 contract dispute" under the byline of Brenden Hills, illustrated that these proceedings would draw public attention to Mr Durie. The article contained a fair report of events up to that date. The report is set out below, excluding some reference to other proceedings in United States courts:
"CELEBRITY gardener Jamie Durie has applied to have his former business partner pay his legal costs if he wins a $750,000 contract dispute.
Durie made an application in the Supreme Court on Tuesday for a security of costs motion against Michael Curnow.
Mr Curnow, who worked in the Mona Vale office of Durie's landscape and interior design business, is suing Durie in a claim worth more than three quarters of a million dollars.
It is understood Mr Curnow's claim relates to a breach of contract. Durie has indicated he will fight the claim which relates to allegedly unpaid monies.
The pair worked together for four years before falling out.
In court Durie's barrister Daniel Neggo made an application to force Mr Curnow to pay legal costs if the celebrity gardener wins the case.
Security for costs laws aim to prevent pointless court actions being launched.
The court also heard that Mr Curnow had issued a demand to Durie for financial records. Mr Curnow is believed to have ended his tenure as group business manager in February.
The Sunday Telegraph understands Mr Curnow worked on a contract basis and was not employed full-time.
Durie has won seven Logies and has appeared on lifestyle shows around the world.
He made his name on Australian television's long-running garden show, Backyard Blitz.
Durie is now based on Sydney's northern beaches and focused on his design company.
The matter will return to court in July."
On 8 July 2013, Curnow Consulting served the affidavit of Mr Curnow sworn on that date. Mr Curnow's affidavit became the subject of indirect controversy. A number of its paragraphs were objected to and ultimately not read (for example, paragraphs 68-72). These paragraphs are said by Mr Durie to be a reason why it was necessary for him to defend these proceedings personally and vigorously. It is not necessary to reproduce these paragraphs in this judgment, other than to say that they contain allegations about the conduct of Mr Durie's business affairs, which Mr Curnow regarded as imprudent. Whilst it is not easy with the benefit of hindsight to see how Mr Durie would have seen these matters when the affidavit was served in July 2013, the so-called damaging material seems, in hindsight, to be relatively mild. The inevitable result of a dispute of this nature, being a falling out between two business partners, would be the public revelation of information that would not otherwise have seen the light of day.
Curnow Consulting could only ever have calculated the commissions said to be due to it once it had adequate information about JPD's revenues. The Services Agreement contained provisions entitling Curnow Consulting to such information. The Management Agreement was unwritten. Either the law would imply, or equity would order, one party to account to the other under the Management Agreement for information to be provided by the principal to the agent so that the agent's commission could be calculated. Clauses 7.1 and 7.2 of the Services Agreement gave Curnow Consulting the right to this information.
Within three months of the proceedings being commenced, and a month before a mediation, Curnow Consulting sought this financial information. On 29 July and 1 August 2013, Curnow Consulting requested access to JPD's books and records pursuant to clause 7.1 of the Services Agreement. The TressCox letter of 29 July 2013 anticipated the forthcoming mediation, noted JPD's refusal to agree to the joint appointment of an independent accountant to carry out the reconciliation of Curnow Consulting's invoices against JPD's accounting records, and referred to the Services Agreement, clauses 7.1 and 7.2, which required the keeping of books by JPD and a right of inspection. Their letter then proceeded to say, "Our client hereby appoints Deborah Cartwright of Pitcher Partners as its representative to carry out the inspection allowed for by clause 7.2 of the Agreement". The letter then sought advice as to a convenient time for Ms Cartwright to carry out her inspection.
By letter dated 30 July 2013, JPD declined to agree to provide Curnow Consulting with access as requested. In its reply of 30 July 2013, M & K Lawyers took issue that JPD had "refused to agree to the joint appointment of an independent accountant". M & K Lawyers took the view that it seemed to be an unnecessary expense in preparation for mediation.
But the reality was that JPD had refused to co-operate in making its books of account available. It said the following:
"In relation to your request for access to books and records under clause 7.2 of the Services Agreement - Licensing Agent agreement, our client does not agree to provide your client with the access requested. As you are aware, our client alleges that the services agreement was validly terminated as of 28 March 2013, such that the parties are discharged from further obligations to perform, including in respect of clause 7.2.
In the circumstances, our client will not be making arrangements for Deborah Cartwright to carry out the inspection requested by you."
TressCox took issue with Mr Curnow's letter of 30 July 2013. In its letter of 1 August 2013, TressCox made its position clear in its opening paragraph:
"We refer to your letter of 30 July 2013 regarding our client's request for access to JPD Media & Design Pty Limited's books and records in accordance with the provisions of the Services Agreement - Licensing Agent. With respect it is apparent that our client is entitled to inspect the books and records kept by this company and consequently it presses its entitlement in that regard"
The TressCox letter then set out a well-reasoned argument to the conclusion that, upon the construction of Services Agreement, clauses 7.1 and 7.2, JPD had an obligation to maintain its financial records for two years after the termination of the agreement and that Curnow Consulting had a right to inspect continuing for at least that period of time after termination.
Again, in a well-reasoned argument, TressCox contended that, on its proper construction, termination of the Services Agreement did not discharge JPD from its obligation to permit Curnow Consulting to inspect its financial records.
The 1 August 2013 letter then concluded in a way that made clear that if the matter did not resolve at mediation, this issue would be raised later in Court:
"In light of the above, we ask that your clients reconsider their position and allow our client to inspect the books and records referred to in clause 7.1 as soon as possible, and certainly before the mediation, so that both parties are equally informed as to the amount in issue between them. Should your clients continue to refuse our client access to the books and records in accordance with its clear rights under the agreement then, if the matter cannot be resolved at mediation, our client will raise this access issue with the Court and seek an order that your client provide the requested access and pay our client's costs of any such application. In light of the fact that your client's position regarding refusal of access cannot be supported by the wording of the agreement, our client will seek the costs of any such application on an indemnity basis".
Curnow Consulting did not receive a response to its 1 August 2013 letter. The defendants later suggestion that the TressCox 1 August 2013 letter did not call for a response is, in one sense, correct. A response was not needed, other than by the production of the documents requested. Non-response merely indicated that the defendants remained well aware that the plaintiff was continuing to seek these documents.
On 2 September 2013, the parties participated in a mediation, which did not resolve their dispute. On 29 October 2013, each of the first and second defendants served Calderbank offers on Curnow Consulting. These Calderbank letters became part of the current controversy.
Shortly after the mediation, the Calderbank letter sent on behalf of JPD from M & K Lawyers to TressCox on 29 October 2013 was in the following terms:
"We refer to the mediation in this matter on 2 September 2013.
In an effort to resolve all issues between our respective clients, and notwithstanding that our clients continue to maintain that all relevant contractual relations between the parties have been validly terminated, we advise that our clients are prepared to settle their dispute with your client, Curnow Consulting Pty Ltd ("Curnow Consulting"), on the following basis:
1. JPD Media & Design Pty Ltd ("JPD Media") pay Curnow Consulting the following amounts:
a) $100,000, inclusive of GST, within 28 days of acceptance of this offer; and
b) In respect of the agreement between Woolworths Limited and JPD dated 6 July 2009, as amended ("Big W Agreement"), payments up to a maximum of $305,250, inclusive of GST, as follows (subject to the Big W Agreement being terminated either by expiration of time or otherwise, as referred to in clause 5.3(a) of the Services Agreement dated 6 November 2008):
i) in respect of the royalty period 1 July 2013 to 30 September 2013, $49,500, inclusive of GST, to be paid by 15 January 2014; and
ii) in respect of the royalty period 1 October 2013 until 30 June 2015, 15% of any payment received by JPD, to be paid to Curnow Consulting within 30 days of any such payment being received by JPD;
2. The proceedings be dismissed, on the basis that each party pay its or his own costs;
3. The parties enter into a formal deed of settlement, which includes relevant mutual releases, as applicable; and
4. No settlement will be binding until the relevant deed of settlement has been executed.
This offer is made in accordance with the principles of Calderbank v Calderbank [1975] 3 All ER 333 and Section 131(2)(h) of the Evidence Act (NSW), and without any admission on the part of our clients.
If this offer is not accepted and your client falls to obtain a judgment more favourable to it than the terms of this offer, our clients intend to produce this letter to the Court in relation to the question of costs. Our clients will seek mat your client pays the costs of the proceedings on an indemnity basis from the date of this letter.
This offer remains open until close of business on Thursday, 7 November 2013."
The Calderbank letter sent on behalf of Mr Durie the same day was in the following terms:
"This letter is written on behalf of the second defendant, Jamie Paul Durie.
Jamie Paul Durie offers to settle the claims made by your client in the proceedings as against him personally on the basis that:
1. Jamie Paul Durie pay your client $5,000 within 28 days of acceptance of this offer;
2. The proceedings as against Jamie Paul Durie be dismissed; and
3. Each party pay their own costs of the proceedings.
This offer is made in accordance with the principles of Calderbank v Calderbank [1975] 3 All ER 333 and Section 131(2)(h) of the Evidence Act (NSW), and without any admission on the part of our client.
If this offer is not accepted and your client fails to obtain a judgment as against the second defendant that is more favourable than the terms of this offer, our client intends to produce this letter to the Court in relation to the question of costs. Our client will seek that your client pays his costs of the proceedings on an indemnity basis from the date of this letter.
This offer remains open until close of business on Thursday, 7 November 2013."
JPD submitted that Curnow Consulting's requests for access to books and records on 29 July and 1 August 2013 was only made in the context of the mediation and was not thereafter pursued. This submission does not accord with the correspondence of the time. It is quite clear from that correspondence that although Curnow Consulting's access to JPD's financial documents was raised before the mediation, Curnow Consulting's intention was to persist in this request if the mediation failed.
One cannot read the correspondence any other way. The correspondence first appeared when it did because the mediation was imminent. Curnow Consulting needed the data to calculate its claimed entitlements at the mediation. But it cannot be doubted that JPD was well aware that the claim for access to documents was a continuing one. Moreover, the defendants were well aware that their refusal to provide access to the requested documents would inhibit Curnow Consulting from understanding the amount in dispute and from calculating its proper entitlements. In these circumstances, Curnow Consulting was therefore ill-equipped to deal with the Calderbank offers made to it either by JPD or by Mr Durie. It was quite reasonable of Curnow Consulting not to accept the Calderbank offers made to it.
The Curnow Consulting Statement of Claim also made clear that further claims would be made following interlocutory procedures to secure documents from the defendants. The pleading made clear that Curnow Consulting may well increase the amount claimed once it had better access to information from the defendants. It was never realistic for the defendants to say that they thought that Curnow Consulting's claim would never be more than what was set out in the Statement of Claim. And to the extent that the matter was not actively pressed between the mediation and the filing of the defendants' evidence, this largely was to be explained by a probable expectation that the material would be provided after the defendants' evidence was filed. And as the course of the proceedings show, there was a protracted delay in the filing of that evidence, but the financial documents under Court order were produced, after the defendants' evidence was filed.
Security for Costs to Stay Lifted - October 2013 to February 2015. On 8 November 2013, JPD's and Mr Durie's security for costs application came on for hearing before Registrar Musgrave. During argument, Curnow Consulting applied for, and obtained, an adjournment in order to obtain further evidence to be led in response to the application. The application was stood over for further directions on 5 December 2013. But Registrar Musgrave ordered that Curnow Consulting pay JPD's and Mr Durie's costs thrown away by virtue of the adjournment, and that the proceedings be stayed pending payment. This order turned out to have momentous consequences in the proceedings.
Curnow Consulting's further evidence in response to the security for costs application was served on 4 December 2013.
On 5 December 2013, Registrar Musgrave ordered that by 20 December 2013, the defendants notify Curnow Consulting of the quantum of their costs thrown away.
On 20 December 2013, the defendants sought payment of $17,745.03 (plus GST) for their costs thrown away. The parties could not agree on the amount of the defendants' costs thrown away. That dispute was referred to costs assessment on 7 March 2014. The defendants' costs thrown away by the adjournment were then assessed in the sum of $11,241.46. A copy of the costs assessor's assessment was provided to the parties on 8 July 2014.
In the meantime, the defendants' application for security for costs was heard on 24 March 2014 and orders were made requiring Curnow Consulting to pay into Court an amount of $120,000 as security on 7 May 2014.
On 25 August 2014, Curnow Consulting informed the defendants that it was unable to obtain necessary funding to satisfy the security for costs order and that the director of Curnow Consulting, Mr Michael Curnow, and his wife had listed their residence in Avalon for sale to satisfy the security for costs order. TressCox's letter of 25 August 2014 enclosed detailed evidence that Mr Michael Curnow and his wife had taken steps to list their property for sale and that, in an orderly way, the proceeds of that sale would be used to satisfy the security for costs order.
And that is indeed what happened. The funds were used to meet the security for costs order and the order for costs thrown away by the adjournment. On 10 February 2015, Curnow Consulting paid $120,000 into Court by way of security for costs. On 19 February 2015, Curnow Consulting paid the costs thrown away by the adjournment. The stay of proceedings was then lifted.
From Stay Lifting to the Hearing - February 2015 to December 2015. On 25 February 2015, Registrar Musgrave ordered that JPD and Mr Durie serve any affidavits upon which they intended to rely at trial by 12 June 2015. The defendants did not comply with that order.
On 30 June 2015, Curnow Consulting wrote to the defendants inquiring when they would serve their evidence in reply. TressCox's letter of 30 June 2015 referred to the Court's orders of 25 February 2015 requiring the defendants to serve their evidence for trial by 12 June 2015 and then said, "…No evidence has yet been served by your clients. Please advise when your clients will serve that evidence". The letter further noted that the matter was listed for further directions on 1 July 2015 so that the parties could obtain a hearing date.
On 30 June 2015, the defendants sought an extension of time to 31 July 2015 to serve their affidavit evidence in reply. On 1 July 2015, Curnow Consulting consented to this extension of time.
On 1 July 2015, Registrar Walton ordered that the defendants serve by 31 July 2015 any affidavits upon which they intended to rely at trial. The defendants did not comply with that order. At the request of Curnow Consulting, Registrar Walton also ordered that the proceedings be set down for hearing commencing on 30 November 2015 for 5 days before me.
On 27 July 2015, the defendants sought a further extension of time for the service of their evidence in reply to Friday, 14 August 2015. On 29 July 2015, Curnow Consulting declined to consent to the extension of time for service of the defendants' evidence to 14 August 2015, but did consent to an extension to 5 August 2015. TressCox's letter of 29 July 2015 pointed out the obvious: that since the stay on proceedings had been lifted on 19 February 2015, the defendants had had about 5 months to put on evidence in respect of an affidavit that had been served in July 2013, and noted that when the matter came before me at a proposed pre-trial directions hearing on 7 August 2015, the lack of the defendants' evidence would disable the parties from properly informing the Court about the likely length of the hearing and about the issues to be raised. On 5 August 2015, the defendants renewed their request to serve their evidence in reply by Friday, 14 August 2015.
The defendants did not serve their evidence in reply by 5 or 14 August 2015.
On 14 August 2015, Curnow Consulting served a Notice to Produce requiring production by 28 August 2015. The Notice to Produce selected 28 August 2015 because this was a date which had been set aside by the Court for a pre-trial directions hearing. The trial was then anticipated to commence on 30 November 2015. In their clearly worded letter of 14 August 2015, Messrs TressCox pointed out as follows:
"In light of the fact that your client has not consented to our client inspecting your clients' books and records pursuant to clause 7.1 of the Services Agreement (as requested in our letters to you of 30 July 2013 and 1 August 2013), and the fact that your clients still have not served their evidence in these proceedings, our client requests that your clients make available for inspection the documents set out in the attached Notice to Produce.
In our view, each of the requested documents is clearly relevant to a fact in issue in the proceedings, namely whether your clients have paid our client the amounts to which our client says it is entitled under the relevant agreements.
To avoid any further delay in our client's preparation for the hearing, which we not is set down to commence on 30 November 2015, we ask that your clients please provide the requested documents by 28 August 2015".
The Notice to Produce then sought the basic financial information which would be necessary for Curnow Consulting to calculate its quantum case. The Notice to Produce was detailed. But in the circumstances of this case, as the quantum hearing ultimately developed, the detail requested was necessary.
The defendants did not respond to this Notice to Produce. On 21 August 2015, the plaintiff served a Notice of Motion seeking an order requiring production of the documents sought in the 14 August 2015 Notice to Produce.
The Court held a directions hearing on 28 August 2015. It was unusual for a Court to face, as it did on this occasion, a matter that had been set down for trial but in which one of the parties had not yet filed their evidence. The Court adjourned the motion for production on the Notice to Produce and any issues of production to 24 September 2015, and extended the time for the defendants to file their evidence to 5pm on 18 September 2015. But the Court warned counsel for the defendants, as the transcript records, "Mr Neggo I will expect to see your clients here if they have not done what they have supposed to". The Court made it perfectly clear that it expected compliance with the order for the filing of evidence and the production of documents.
The Motion was listed for hearing on 24 September 2015. Between 21 and 23 September 2015, the defendants served their affidavit evidence in reply in the proceedings.
On 24 September 2015, the Court made orders requiring both JPD and Mr Durie to produce the documents sought in the 14 August 2015 Notice to Produce.
On 15 October 2015, JPD produced documents in response to the Notice to Produce. On 21, 26 and 29 October 2015, TressCox wrote to the defendants' solicitors indicating that the production was incomplete. TressCox's letter of 21 October 2015 offered a detailed and reasoned analysis of what Curnow Consulting thought had not been produced.
On 2 November 2015, Curnow Consulting served a second Notice to Produce on JPD and Mr Durie. But the hearing on 30 November 2015 was approaching. The lack of response to Notices to Produce was raised with the Court at the next pre-trial directions hearing on 3 November 2015.
On 3 November 2015, the Court made orders requiring the defendants to supply all outstanding information requested in the letters of 21, 26 and 29 October 2015.
On 11 November 2015, JPD produced further documents in response to the order made on 3 November 2015. On 13, 18, 23 and 24 November 2015, TressCox wrote to the defendants' solicitors indicating that the production was still incomplete. A reading of TressCox's correspondence of these dates shows TressCox had isolated, and was prepared to name, particular contracts which Curnow Consulting alleged had been entered into by JPD, both within Australia and overseas. This correspondence showed that a great deal of material was still unproduced. Much of it was later produced in time for the quantum hearing that resulted in the Court's second judgment.
The hearing commenced on 1 December 2015. The course of the proceedings at hearing is fully described in the Court's principal judgment.
From the Hearing Up To Date - December 2015 to June 2018. Curnow Consulting received unallocated receipts prior to the commencement of the proceedings totalling $185,393, $10,909 of which Curnow Consulting has proven related to the reimbursement of the plaintiff's expenses.
The plaintiff's claim in relation to HGTV succeeded in the amount of $12,353.
On 15 February 2018, Curnow Consulting emailed an Excel spreadsheet to the defendants. This spreadsheet set out Curnow Consulting's calculation of the judgment amount and interest. These calculations were based upon documents which had ultimately been produced in response to the many Notices to Produce that Curnow Consulting had issued, as described in this narrative.
On 5 March 2018, Curnow Consulting emailed to the defendants an Excel spreadsheet setting out its calculation of the interest due.
On 6 March 2018, the defendants consented to judgment being entered in favour of Curnow Consulting against the first defendant, JPD, for $563,049.02, but they disputed Curnow Consulting's calculation of interest.
On 8 March 2018, the Court entered judgment in favour of Curnow Consulting against JPD for $563,049.02.
[3]
The Interest Issues
On the issue of interest up to judgment under Civil Procedure Act 2005, s 100, the Court is asked to determine: (1) whether interest up to judgment should run on any amount outstanding during the period from November 2013 to February 2015, when the proceedings were stayed as a result of non-payment by Curnow Consulting of a costs order in the first defendant's favour; (2) whether Curnow Consulting should only have interest from the date of service of expert evidence which expanded its claims, when those claims were first raised; and (3) some other incidental interest issues. These reasons now deal with each of these questions in turn.
But first, the law relating to the exercise of the discretion to award pre-judgment interest may be shortly stated. Courts may reduce the rate of interest awarded, or the time over which interest is calculated, under Civil Procedure Act 2005, s 100 on account of a plaintiff's delay. The question in this case is whether such an adjustment should be made for the reasons that JPD advances. The Court states in this section the nature of its power to make such an adjustment but concludes that one should not be made on the grounds that JPD now advances.
The principles governing the effect of a plaintiff's procedural delays in litigation on the Court's exercise of its discretion to award Civil Procedure Act, s 100 interest are well established. An award of interest should not be refused merely for the purpose of penalising delay: Bennett v Jones [1977] 2 NSWLR 355. The purpose of the provision is to compensate the plaintiff for being out of its money: MBP (SA) Pty Limited v Gogic (1991) 171 CLR 657; [1991] HCA 3 at 5663; and Grincelis v House (2000) 201 CLR 321; [2000] HCA 42 at [16]. Mere delay in bringing or prosecuting proceedings will not usually provide a compelling basis for refusing an award of interest, because the plaintiff has still been out of the plaintiff's money. But protracted and unreasonable delay, especially where significant differences exist between Court interest rates and prevailing commercial rates of interest, may justify a discretionary reduction either in the rate of interest or in the period over which interest is awarded: Clark v Foodland Stores Pty Ltd [1993] VR 382 at 389, 394, 396, 398; and ICT Pty Ltd v Sea Containers Limited [2006] NSWSC 1280 at [14]-[19]. But the question is one of injustice to the defendant. Unreasonable delay, and amounts of interest at a high rate (in excess of commercial rates), "may mean that the defendant is unjustly left as the source of the plaintiff's investment income": Kalls Enterprises Pty Limited (in liquidation) v Baloglow (No. 3) [2007] NSWCA 298 at [11]. Thus, in some limited circumstances, an adjustment to the rate of interest or to the period over which the interest accrues is permissible.
The second question is whether any such interest adjustments are warranted in the circumstances of this case. JPD says that Curnow Consulting has unreasonably delayed the bringing on of its claim in various aspects. Curnow Consulting concedes some delay, but disputes that its delay warrants any adjustment to the interest to which it is entitled. A short outline of the main relevant procedural steps has been set out earlier in these reasons. This gives background to this interest dispute.
(1) Interest During the Period Proceedings Were Stayed. JPD contends that the delay in the proceedings between 8 November 2013 and 19 November 2015 was the responsibility of Curnow Consulting. JPD submits that the proceedings were stayed during this period due to non-payment of what JPD describes as "a modest costs order", which was the price of an indulgence granted to Curnow Consulting in the form of an adjournment so it could attempt to improve its evidentiary position on the question of security for costs. JPD says that it would be unjust to impose an interest burden on JPD referable to that period. JPD submits that delay on the part of a plaintiff in prosecuting proceedings may, in appropriate circumstances, justify a discretionary reduction, citing my judgment in Lovick & Son Developments Pty Ltd v Doppstadt Australia Pty Ltd (No. 3) [2013] NSWSC 135.
This argument is not persuasive. First, there can be no doubt from the history of the proceedings that the delay was caused by Curnow Consulting's inability to raise funds. Second, Curnow Consulting made more than reasonable efforts to raise the funds to conduct the proceedings by selling the family home of its principals. Third, although this could never have been said in a security for costs application before the Court heard the evidence at trial, it can now be said: Curnow Consulting's impecuniosity was directly caused by JPD's misconduct. During the period of the stay, although this could only be seen retrospectively, JPD owed Curnow Consulting many hundreds of thousands of dollars that it was withholding from Curnow Consulting, which had no other resources to seek the funds that it was, in justice, owed. None of this, in my view, amounts to a circumstance where the Court should deprive Curnow Consulting of its interest.
(2) Interest After the Service of Expert Evidence. JPD further argues that interest should not run until the evidence served by Curnow Consulting's accountant, Mr Shanley, was served and the defendants had an opportunity to consider it. But the Shanley evidence was an analysis of material, including material finally produced under the Notices to Produce. The Shanley evidence was only served when it was, because the defendants had not previously produced documents to Curnow Consulting. The late service of that evidence in this case was not the fault of Curnow Consulting and was interdependent with JPD's failure to produce documents. There is no delinquency here which would disentitle Curnow Consulting to interest on this ground.
(3) Other Interest Issues. JPD contends that interest should not be awarded on Curnow Consulting's pleaded claims after 29 October 2013. This was the date on which JPD served its Calderbank offer of $405,250 to settle the proceedings. JPD's contention on interest repeats its other submissions in relation to that Calderbank letter and says that it was unreasonable for the Calderbank letter not to have been accepted. JPD further argues that it had no reason to suppose that the quantum of Curnow Consulting's claim might increase after that date, JPD points out that specific amounts had been claimed in Curnow Consulting's pleading and there had been "no suggestion that these [specific] amounts did not comprehensively state the plaintiff's claim". From this it is said to follow that interest should not be awarded on Curnow Consulting's pleaded claims after 29 October 2013.
This argument is not persuasive for several reasons. First, for the reasons given below, it was reasonable for Curnow Consulting to reject the Calderbank offer. Second, to the extent that JPD's reasoning depends upon the proposition that it had no expectation that Curnow Consulting's claim would increase after 29 October 2013, the contention is without substance. Curnow Consulting's odyssey in identifying, requesting, securing and analysing financial documents which were solely in JPD's possession right up to the hearing would have made it perfectly clear to JPD that Curnow Consulting's commission claim was likely to increase.
[4]
The Costs Issues
On the issues as to costs, the Court is asked to determine: (1) whether an order for costs should be made against Curnow Consulting and in favour of Mr Durie; (2) what order for costs should be made overall between Curnow Consulting and JPD, and in particular, whether JPD should be ordered to pay Curnow Consulting's costs on the party/party basis; (3) should any order for costs that would otherwise be made in Curnow Consulting's favour be discounted on account of parts of Curnow Consulting's claim that was covered by the JPD Calderbank offer; and (4) should any costs order be discounted on account of parts of Curnow Consulting's claims upon which it lost and which claims may be severable from issues upon which Curnow Consulting was successful.
(1) Costs for Mr Durie? Mr Durie submits that prima facie he should have his costs of the proceedings on an indemnity basis from the commencement of the proceedings: (1) because the case against him was not advanced in any way at the hearing or in submissions; (2) because Curnow Consulting ultimately consented to a judgment in his favour; and (3) because the proceedings against him were not in any way "responsive" to steps taken by JPD but rather Mr Durie was included in the proceedings from the very beginning.
Mr Durie says that "the Court can only speculate why it was that [he] was ever joined to the proceedings, why it was that part of Mr Curnow's affidavit…contained assertions regarding [Mr Durie] which are entirely irrelevant to any part of the case". Mr Durie offers a theory for his joinder, "whatever the reason, the second defendant's involvement in the case did garner some media attention".
Alternatively, Mr Durie submits that he should have his costs on an indemnity basis from the date of the Calderbank offer of 29 October 2013 in which he offered to settle the claim against him by payment of $5,000. He submits that it was unreasonable for the plaintiff to reject that offer, and that he had to defend his reputation against scurrilous allegations. But the case against him was run fairly and reasonably and an order for indemnity costs could not be justified.
And JPD's submission runs counter to the way the case was conducted. The case was run without distinguishing between JPD and Mr Durie. They were treated as one. Other than identifying Mr Curnow's unread evidence in his first affidavit, it would have been open to Mr Durie to make an application such as this to identify particular kinds of costs which he says he incurred personally to give some idea of the general heads of complaint about his separate personal costs. No such evidence was lead.
The entry of judgment in Mr Durie's favour was merely an administrative recognition of the fact that the parties could have sought to commit their time to debating findings against him separately on the causes of action pleaded against him, or Curnow Consulting could elect to have judgment against JPD. That the latter course was chosen does not represent any kind of "victory" for Mr Durie. Nor does it represent a "loss" for Curnow Consulting. It does not, in my view, have particular costs significance.
(2) Costs Overall Between JPD and Curnow Consulting. Prima facie Curnow Consulting has been successful in the proceedings and should have its costs. That is the starting point. But JPD argues for a different result.
(3) Discounts for the Calderbank Offer. JPD argues that of the amount of $563,049.02 on which Curnow Consulting recovered judgment, some $389,070 (or 70%) was referable to the plaintiffs originally pleaded claims against which JPD had made its Calderbank offer in October 2013. The JPD Calderbank offer would have represented a result for Curnow Consulting of more than $389,070. The plaintiff says that had Curnow Consulting accepted the Calderbank offers in 2013, very significant expense would have been avoided. Moreover, JPD argues that any success Curnow Consulting may have had above $389,070 is wholly to be attributed to claims that it added later, after declining to accept the Calderbank offer.
But this argument fails at the threshold. It was never reasonable to expect Curnow Consulting to accept an offer at a time that would have deprived it of the basic opportunity to inspect JPD's financial documents upon which the full value of Curnow Consulting's claim would potentially be based. Particularly at the time that the offer was made in October 2013, it was quite apparent to both parties that Curnow Consulting wanted these documents in order to finalise the quantum of its claim. To expect Curnow Consulting to settle, in such a poor state of knowledge, the claim that was indeed ultimately significantly increased (by a further amount of $158,049) would have been both unreasonable and unfair.
And were it necessary to decide the issue, I would also find that giving less than two weeks to consider the Calderbank offer, as JPD did, was also unreasonable in the circumstances.
(4) Discounts for Allegedly Severable Issues. JPD says that the Sean Anderson deals were a major part of the proceedings on which it was victorious. JPD says the costs should be ordered in a way that is fair having regard to the responsibility of each party for incurring the costs: Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121]. JPD also contends that where a party succeeds on only a portion of a claim, the circumstances may make it reasonable for the plaintiff to bear the expense of litigating the portion which it failed, by not only being deprived of the costs of that issue but by being ordered as well to pay the other party's costs of that issue: Griffith v Australian Broadcasting Corporation (No. 2) [2011] NSWCA 145 at [15] - [16].
JPD says, by reference to the Shanley evidence, that the plaintiff ultimately claimed $136,306 in commissions referable to the Sean Anderson deals, which in the result made up about 15% of Curnow Consulting's claim. JPD submits that the Sean Anderson deals took up a significant part of the trial in evidence and argument, and was a major focus of the 12 December 2017 hearing. As a result, JPD says that Curnow Consulting should not have any costs referable to the Sean Anderson deals. JPD suggests that this result should be achieved justly and simply by discounting any order for costs in favour of Curnow Consulting by 20%.
But Curnow Consulting's answer to this argument is persuasive, and more closely aligns with the actual course of the proceedings. The fact is that neither party contended for the version of the contract which the Court found, in which there was a carve out from the plaintiff's entitlements for the Sean Anderson deals. JPD's case was that the Sean Anderson deals were mentioned in conversation between Mr Durie and Mr Curnow as examples of part of a wider carve out from any commission that was payable. But Curnow Consulting's case was that there were no carve outs of this kind.
In the end, the plaintiff succeeded in a version of the contract that eliminated most of the carve outs for which JPD had contended. Only the Sean Anderson carve out survived against Curnow Consulting. There was not really a contest at trial just about the Sean Anderson deals. There was a contest about a wider issue of the terms of a disputed contract on which, in my view, the plaintiff was substantially successful. And measured by dollars, the plaintiff's case was successful in that it obtained a principal judgment for $563,049.02 as against a total claim of a little over $700,000. I see no basis for discounting the plaintiff's costs on account of the outcome of the Sean Anderson deals issue.
But in one respect JPD's argument is persuasive. The Sean Anderson deals were the subject of argument with other issues on 12 December 2017. On those arguments, JPD was substantially successful, as Curnow Consulting indeed concedes. A costs order should be made in respect of the argument on that day.
[5]
Conclusions and Orders
Curnow Consulting has been substantially successful on the issues of interest and costs. As a result, costs on these questions would normally follow the event and be ordered in Curnow Consulting's favour against JPD. But the Court would order JPD to pay the plaintiff's costs on the ordinary basis in any event. The costs of the present contest would be included in that costs order.
For these reasons, the Court would propose to make the following orders and directions but for the issue discussed earlier, that an administrator has been appointed and Corporations Act, s 440D applies:
1. Order that the first defendant pay to the plaintiff interest under Civil Procedure Act 2005, s 100 up to the date of entry of judgment (8 March 2018), on the judgment sum of $563,049.02.
2. Order that the first defendant pay the plaintiff's costs of these proceedings on the ordinary basis, except for the costs of and associated with the hearing on 12 December 2017, which will be paid by the plaintiff.
3. Make no order for costs between the plaintiff and the second defendant.
4. Grant liberty to apply.
But the Court will for the present only make the fourth order. The administrator and the other parties can take advantage of the liberty to apply to re-list the proceedings at their option to make these orders after the conclusion of the administration, if the making of these orders is both legally available and useful. At that time precise calculations of Civil Procedure Act, s 100 interest can be brought in by agreement or for the Court's determination.
[6]
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Decision last updated: 06 June 2018