Donald Financial Enterprises Pty Ltd v APIR Systems Ltd

Federal Court of Australia|2008-08-20|Before: Edmonds J

REASONS FOR JUDGMENT 1 On 30 July 2008, I made a declaration and orders in this proceeding and at the same time published my reasons. 2 Immediately thereafter, counsel representing the respondents asked whether I would be prepared to vacate the orders as to interest (Order 6) and costs (Orders 7 and 8) and hear the respondents on the making of alternative orders. 3 Orders 6, 7 and 8 were in the following terms: '6. The first, second and third respondents jointly and each of them severally pay interest to the applicant pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) on the sum of the subscription price in order 2 and the purchase price in order 5 from 28 January 2004 to 30 July 2008 at the rate or rates applied by the Supreme Court of New South Wales during this period. 7. The first, second and third respondents pay the applicant's costs of the application; and the fourth, fifth and sixth respondents' costs of defending the application. 8. The cross-claimant pay the first and second cross-respondents' costs of defending the cross-claim.' 4 I indicated that I was not prepared to vacate any orders until I had heard from the parties, but that I was prepared to hear the parties at an early mutually convenient date provided: (1) a notice of motion setting out the alternative orders sought; and (2) an affidavit setting out the facts and circumstances upon which the vacation of orders made on 30 July 2008, and the making of alternative orders, were sought, were filed by 4:00 pm on 5 August 2008. I granted leave for the filing of the notice of motion and supporting affidavit. 5 On 5 August 2008, a notice of motion and affidavit of Bernice Lesley Ellis ('Ms Ellis') sworn the same date were filed on behalf of the respondents. 6 On 13 August 2008, the respondents moved the Court for orders set out in the notice of motion. The orders were: '1. The interest order (Order 5 [sic]) made on 30 July 2008 be vacated and varied. 2. The costs orders (Orders 7 and 8) made on 30 July 2008 be vacated and varied based on the matters set out in the affidavit of Bernice Lesley Ellis sworn on 5 August 2008; 3. The Applicant pay the Respondents' costs (on an indemnity or, alternatively, party-party basis) from 21 April 2007 or such other time as this Honourable Court thinks fit; 4. The orders made on 30 July 2008, and any variation thereof arising out of this Notice of Motion, be stayed pending the Respondents lodging a Notice of Appeal within 21 days of 30 July 2008; 5. Such further orders as this Honourable Court thinks fit; and 6. Costs.' 7 The stay order sought in [4] of the notice of motion was not foreshadowed at the time I granted leave, but no objection was taken to the notice of the motion on that ground. Consequently, I heard the parties' respective submissions on that particular matter as well.

Interest 8 The respondents' notice of motion seeks vacation of Order 6 made on 30 July 2008. In their written submissions filed before the hearing of the motion, the respondents' submission was that the order for interest ought to be varied either: (1) by varying the rate of interest on the basis that the rate provided for by Order 6 does not reflect a 'commercial' rate; and/or alternatively (2) pursuant to s 51A(1)(a) of the Federal Court of Australia Act 1976 (Cth), to restrict the period of interest to 27 March 2007 or alternatively 21 April 2007, on the basis that the applicant was made an open offer on 27 March 2007 for the purchase of all its shares at a price of $2.80, being a 15 cents premium to the purchase price of the shares. The alternative date is the date when the offer expired. 9 On the hearing of the motion, counsel for the respondents informed me that the respondents abandoned the first ground for the variation of Order 6, that is, by varying the rate of interest on the basis that the rate provided by the order does not reflect a 'commercial' rate. However, the second ground, namely, that interest should not run beyond 27 March 2007 or alternatively 21 April 2007, was pressed. 10 Even if the offer made by the respondents by letter dated 27 March 2007 was commensurate with the overall financial result to flow from the orders I made on 30 July 2008, and I hasten to add that I do not think it is, the ground on which the motion is brought is misconceived. As Lockhart J said in Whitaker v Commissioner of Taxation (1998) 82 FCR 261 at 269: 'The primary purpose of an award of pre-judgment interest is to compensate a successful plaintiff for the loss or detriment which he or she has suffered by being kept out of his or her money during the relevant period; that is to compensate the plaintiff for having been deprived of the use of the money: Ruby v Marsh (1975) 132 CLR 642; Batchelor v Burke (1981) 148 CLR 448; and MBP (SA) Pty Limited v Gogic (1991) 171 CLR 657. See P D Finn (ed), Essays on Damages (1st ed, 1992) and in particular the essay by J L R Davis, "Interest as Compensation", pp 149-152.' The applicant has been without its money since 28 January 2004 and that remains the case. It is only appropriate that it should have interest on that money up to the date of judgment. 11 The motion for the vacation of Order 6 is dismissed.

Costs 12 The respondents' notice of motion seeks (at [2]) the vacation of Orders 7 and 8 made on 30 July 2008 and their variation based on the matters set out in the affidavit of Ms Ellis sworn 5 August 2005. It does not say how they should be varied. Nor do their written submissions. What the respondents' notice of motion does seek (at [3]) is an order that the applicant pay the respondents' costs (on an indemnity or, alternatively, party-party basis) from 21 April 2007 or such other time as the Court thinks fit. On the hearing of the motion, the further alternative was introduced, namely, that each party pay its own costs from that date. Presumably, implicit in all this is that the first, second and third respondents should pay the applicant's costs of the application as ordered by Order 7, but only up to 21 April 2007. On the hearing of the motion, nothing was said about the second limb of Order 7, namely, that the first, second and third respondents pay the fourth, fifth and sixth respondents' costs of defending the application. Nor was anything said about Order 8 that the cross-claimant pay the first and second cross-respondents' costs of defending the cross-claim. 13 In the circumstances, the motion to vacate and vary the second limb of Order 7 and the whole of Order 8 should be dismissed. 14 This leaves the motion to vacate and vary the first limb of Order 7. The basis of this motion is the 'open offer' and 'without prejudice save as to costs' offers referred to in Ms Ellis' affidavit. However, in my view, none of these offers is commensurate with the financial result to flow from the orders I made on 30 July 2008. In these circumstances, I am not prepared to vacate and vary the first limb of Order 7 and it follows that the motion seeking the vacation and variation of Orders 7 and 8 must be dismissed.

The Stay 15 The respondents seek a stay of the orders made pending an appeal. 16 At the time of hearing the motion, no notice of appeal had been filed and counsel for the respondents was not able to provide me with a draft notice of appeal. The time for filing a notice of appeal expires today. Until a notice of appeal is filed, I am not prepared to consider a stay of the orders I made on 30 July 2008. On the other hand, if a notice of appeal is filed on a timely basis, then I would be prepared to consider such an application. 17 Since dictating these reasons, it has come to my attention that a notice of appeal was filed in the Sydney registry of the Court yesterday. I have not had an opportunity to fully consider the grounds of appeal in the context of the stay application. 18 In the circumstances, I think it is appropriate that because of the outstanding stay application, the motion as to this matter should be adjourned with liberty for either party to apply for it to be re-listed at a mutually convenient date to all parties and the Court.

19 In the circumstances, the respondents should pay the applicant's costs of opposing the motion to date. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds.

Counsel for the Applicant and Cross-Respondents: Mr D J Higgs SC with Mr R J Bromwich

Solicitor for the Applicant and Cross-Respondents: Gambin Legal

Counsel for the Respondents and Cross-Claimant: Mr M J Heath

Solicitor for the Respondents and Cross-Claimant: Williams Love & Nicol

At a glance

Court

Decision date

Before

Source

Judgment (9 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (4)

Cited By (2)