Supreme Court of WA|2000-12-06|Before: Murray J

Hart v Mossensons & Anor [2000] WASC 295 (6 December 2000)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : HART -v- MOSSENSONS & ANOR [2000] WASC 295

Damages - Negligence - Solicitors allowed bill of sale to become unregistered - Causation of loss - Award of damages to include assessment of value of loss of use of money - Allowance of interest on capital sums

Bannan v Swan Brewery Co Bl (1909) 11 WAR 15

Butler v Egg and Egg Pulp Marketing Board [1966] HCA 38; (1966) 114 CLR 185

ENZED Holdings Ltd v Wynthea Pty Ltd [1984] FCA 373; (1984) 57 ALR 167

Livinstone v Rawyards Coal Company (1880) 5 App Cas 25

MBP (SA) Pty Ltd v Gogic [1991] HCA 3; (1991) 171 CLR 657

National Mercantile Bank Limited v Hampson (1880) 5 QB Div 177

Nikola Andjelic v Stuart Marsland [1996] HCA 55; (1995) 186 CLR 20

Robinson v Harman (1848) 1 Ex 840

The Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64

1 MURRAY J: The plaintiff is now retired and lives in Geraldton. He was formerly an electrical contractor, transport operator, and he was also a pastoralist. In 1974 he purchased a pastoral lease known as Windsor Station. The property is situated near Mt Magnet. It was stocked with sheep and during the period that the plaintiff owned it, it was operated as a working sheep station.

2 By a contract by way of offer and acceptance dated 11 May 1987, the plaintiff sold the station, the stock, plant and equipment to a Mr and Mrs Cook, who appear to have had another property of this kind in South Australia. The total purchase price was $570,000 of which $220,000 was to be paid by the purchasers. The balance of $350,000 was financed by the vendor. Its payment was secured by a second mortgage in favour of Mr Hart over the station property owned by the Cooks in South Australia, by a registered first mortgage over Windsor Station, and by a registered bill of sale of the stock and plant on Windsor Station. A schedule of the plant formed part of the contract documents which were prepared by the plaintiff.

3 Through his agent, Elders Limited, the plaintiff instructed the first defendant as his solicitors to attend to the settlement of the sale of the property and the preparation and registration of the securities for which the contract provided. Although the bill of sale was executed and presented for an assessment of stamp duty in 1987, it was not registered until 16 June 1988. It was a bill of sale by way of security which covered not only the items of plant and equipment listed in the Schedule, but all after acquired plant, motor and other vehicles, etc and existing and after acquired livestock and its progeny.

4 The bill was not in the form of the Tenth Schedule to the Bills of Sale Act 1899 (WA), but was completely set out in the usual form. It provided for the periodic payment of amounts of principal and interest in respect of the loan and for the assignment in the meantime by the Cooks, as grantor, to the plaintiff of the mortgaged property which was and was to be situated on Windsor Station. There was the usual covenant by the grantor to maintain the property covered, to replace it where necessary, not to further encumber it, and not to remove it from Windsor Station "other than in the normal course of the Business" of a pastoral lease. The bill operated in the ordinary way, entitling the Cooks to retain possession of the property, but in case of default in making the payments required or in the performance and observance of any covenant contained in the bill, or where any execution under legal process occurred, the plaintiff could re-enter the station, take possession of the property and deal with it by sale or otherwise to defray the loss which had arisen.

5 I have mentioned that the bill of sale was ultimately registered on 16 June 1988. The effect of registration is expressed in negative terms in the Act, s 25 which deems an unregistered bill to be "fraudulent and void", in a case such as this, as against the Official Receiver or the trustee in bankruptcy of the grantor so far as regards the property in or right to the possession of chattels comprised in the bill which, within three months before the presentation of the petition in bankruptcy were in the possession or apparent possession of the grantor. Further, under s 27 an unregistered bill of sale is not valid or effectual against any bona fide purchaser of any chattel covered by the bill for valuable consideration without express notice of the encumbrance.

6 The point is then that as between grantor and grantee, the bill, although unregistered, remains valid and effectual, but it will not stand at all against a bona fide purchaser without notice and it will not operate to make the grantee a secured creditor of the grantor in a proceeding such as the bankruptcy of the grantor. In addition, where there are two or more bills of sale executed in respect of the same chattels, by s 34 of the Act priority is to be given to them in the order of the date of their presentation for registration provided that occurs within the time periods allowed by the statute.

7 As to that, by s 10 the Act lays down various periods after the date of execution when a bill of sale may be presented for registration, but under s 13A the Registrar has power to extend time for the registration or renewal of registration of a bill of sale. I presume something of that kind occurred in this case. Registration remains effective to confer the priority and secure the rights of the grantee under the terms of the bill for a period of three years from the date of registration. Registration may then be renewed provided renewal is effected within the three year period, or within such extended time as is allowed by the Registrar: s 14. Upon renewal the registration is again effective for a further three year period from that date, but if not so renewed, registration ceases to be of any effect at the expiration of any such period of three years: s 15.

8 The payment of principal and interest upon the purchase of the station was to be made over a period of five years. It is difficult to determine when that period expired, but the plaintiff appears to have been of the view, as were the Cooks apparently, that the period ran from 1 July 1987 to 31 June 1992. In the meantime, of course, the registration of the bill of sale expired on 15 June 1991. By that time it would seem the firm which was the first defendant had become that which was the second defendant, and the action which was tried by me was conducted upon the basis that the relief sought was against the second defendant. As will appear from the findings of fact which follow, that, I think, was a correct view of the action.

9 In any event it appears that June 1991 came and went without the plaintiff giving any instructions and without Mossensons themselves acting to renew the registration of the bill of sale. On 26 November 1991 the plaintiff wrote to Mossensons informing them that he had agreed to the Cooks' request for an extension of the date for final performance of the contract to purchase Windsor Station by a period of nine months to expire on 31 March 1993, provided the plaintiff was assured that he retained mortgage security and "the registration of the bill of sale is altered". The plaintiff and the Cooks entered into a Deed made on 10 April 1992 extending the date for repayment of the loan to 31 March 1993, extending the mortgage securities, referring to the bill of sale as having been registered on 16 June 1988 and extending the time for repayment under the bill of sale to 31 March 1993.

10 On about 26 January 1993 Mr Cook telephoned the plaintiff to ask for a further extension of the time for repayment of the loan. He said he was in the process of selling Windsor Station to a Mr and Mrs Treloar, who were attempting to arrange finance. On 18 February 1993, the plaintiff instructed Mossensons to extend the period until final settlement by a further period of two years and to arrange for the extension of the mortgage securities and the registration of the bill of sale accordingly. That would provide for the contract to be performed by 31 March 1995.

11 Also on 18 February 1993, Mr Hart wrote to Elders to inform them that it had been agreed with the Cooks that the proceeds of the sale by Elders of the current wool clip from Windsor Station should be credited to his account, presumably as consideration for the accommodation by way of extension of the loan which had been agreed. That letter was received and dealt with by a regional finance officer at Elders, a Mr Skinner. On about 30 March 1993 he received a letter from solicitors for Mr and Mrs Treloar. They advised that the Treloars had a dispute with the Cooks over the purchase of Windsor Station, which they had settled on terms which included the grant by the Cooks to the Treloars of a lien over the 1993 wool clip to cover the settlement amount of $20,000. They asked for payment of up to that amount out of the wool cheque.

12 Mr Skinner told Mr Hart of that claim and Mr Hart insisted that he had priority arising out of his registered bill of sale. Mr Skinner passed that on to the solicitors for the Treloars. The solicitors replied by a letter dated 22 April 1993 that their investigation indicated that Mr Hart's bill of sale had not been renewed and was therefore "stale". The solicitors provided a letter of authority from the Cooks directing payment of up to $20,000 to the Treloars.

13 Mr Skinner made his own enquiries to confirm that the bill of sale was not registered and on 11 May 1993 he told Mr Hart that he had ascertained that that was so. He told Mr Hart that Elders were not prepared to attempt to resolve which of the plaintiff or the Treloars were entitled to the net proceeds of the clip. Elders therefore proposed to pay the proceeds to the Cooks and this they did. There was not in truth much money involved. The clip was worth $20,040.73, but Elders had made advances against those proceeds totalling $13,185.46. The net proceeds were therefore $6,855.27.

14 In the meantime, on 29 April 1993, the plaintiff telephoned Mossensons and told them that he had been informed that the registration of the bill of sale had not been renewed. The solicitor to whom he spoke said that in fact the document had been registered and it was covered in the extension deed which was being prepared. Those papers were received shortly afterwards and were executed by both parties. The deed is in similar form to that effecting the first extension of the period of the loan. Again it recites the mortgages and the bill of sale registered on 16 June 1988, all of which, as securities for the repayment of the loan are said in the deed to be extended until 31 March 1995 at which time repayment was to be made.

15 It is not entirely clear to me when the deed was executed. It is dated 8 March 1993. Mr Hart's evidence was that he had the Cooks sign the document on 8 May 1993, having received the documents in early May. It may well be that the date of the deed, 8 March 1993, should have been 8 May 1993. I accept Mr Hart's evidence that he delivered the documents to Mossensons on the afternoon of 10 May 1993. They were submitted to the State Taxation Department on 17 May 1993 for the assessment of stamp duty. I accept that when that deed became operative, the plaintiff had been told that the bill of sale was registered, but that was not the case. Nothing had been done following the initial registration which was effected on 16 June 1988 and Mossensons accept that by failing to make any timely renewal of the bill of sale, they breached their duty of care owed to the plaintiff as their client.

16 The position with respect to the purchase of the station did not thereafter improve. On 1 October 1993 the Official Receiver in bankruptcy wrote to the plaintiff advising that the Cooks had been declared bankrupt on 27 September. As trustee of the estate, the Official Receiver claimed the chattels covered by the bill of sale on the ground that pursuant to the Bills of Sale Act, s 25(1)(a), as it was not registered it was void as against the Official Receiver. An offer was made that the plaintiff might purchase the stock and chattels on the lease from the bankrupt estate. The Cooks were then in default under the mortgage as well as the bill of sale, and the plaintiff's evidence was that he was then owed in excess of $350,000, although the Official Receiver took the view that by reason of the plaintiff's purchase of part of the Cooks' South Australian station, the outstanding debt of the bankrupt estate to the plaintiff was reduced to approximately $180,000.

17 Ultimately, the plaintiff's claim upon the bankrupt estate was settled when he re-purchased Windsor Station from the Official Receiver by a contract dated 17 December 1993. The purchase price was $180,000 of which the sum of $120,000 was attributed to the pastoral lease, $10,000 for plant set out in a schedule, and $50,000 for an estimated 5,000 sheep, including their wool, being carried by the station. The plaintiff went into possession in December 1993, although the transaction was not finally settled until 13 June 1994 by which time, on 10 June 1994, the plaintiff had received $22,446.98 from the sale of part of one of the Cooks' South Australian properties. On 7 April 1995 the plaintiff received a final dividend from the Cooks' trustee in bankruptcy in the sum of $35,495.

18 When the plaintiff went into possession of the station, items of plant which were properly the subject of the bill of sale were found to be missing. They were -

(1) a 1985 Isuzu truck. The plaintiff first saw it on the station in August 1993. It was apparently purchased as a replacement for a truck which was a scheduled subject of the bill of sale. That, of course, was the grantor's duty under the terms of the bill. It appears still to have been on the station in December 1993. Mr Hart gave evidence that he saw it used by the Cooks in January 1994 to remove items of their furniture from the station and that was the last he saw of it.

It appears that he did not attempt to prevent the removal of the vehicle from the station because he understood that it had been sold by the Cooks to their son to defray a debt for unpaid wages arising out of the son's employment on the station. There is evidence of this in the report of the Official Receiver made to the creditors of the bankrupt estate on 4 May 1994, but that is entirely hearsay. For the plaintiff it was submitted that I might have regard to that as evidence because, objection to the admissibility of such material not having been taken pre-trial, according to the programming orders made no objection could be taken at trial. While that may be so, that does not in my opinion alter the character of the evidence or its probative value and so in the end all I know about the truck is that it was covered by the bill of sale, it was on the station when the plaintiff took possession of it, but it was removed therefrom by the Cooks in breach of the bill of sale, apparently without objection by Mr Hart.

He valued it as at 27 September 1993 at $8,100, an estimate of value which he regarded as conservative. In my view the plaintiff's opinion has evidentiary value because he worked for many years in the transport business in South Australia, a business which bought, sold and repaired trucks during that long period which proceeded the plaintiff's purchase of Windsor Station.

That valuation is more than supported by the evidence of a Mr Rhodes, a licensed motor vehicle dealer called by the plaintiff. Mr Rhodes had been in business in that way for 32 years, dealing with all types of vehicles, and he had been asked to value the truck, which he had not seen, as at September 1993. He assumed that this and the other vehicles which he had been asked to value were in average condition and he attributed a value of $15,000 to the particular vehicle. I expect that the plaintiff had a better knowledge of the actual condition of the vehicle and I accept his evidence that its value was about $8,000.

(2) a Suzuki 4 x 4 motor cycle which was of uncertain vintage and was used on the station off-road. Again, the plaintiff said he saw the vehicle first on the station in August 1993. I have no doubt that it was covered by the bill of sale. It seems to have been still on the property in January 1994, but was then removed. It is open to infer that as the plaintiff was not responsible for removing the motor cycle, and that as the Cooks were in the process of leaving the station, they removed it or caused it to be removed.

The plaintiff valued it (conservatively) at $3,500 in September 1993. He said that he had bought and sold many motor cycles while he was the owner of Windsor Station. Having regard to the way in which the vehicle was described to him, Mr Rhodes valued it at $4,000. I accept the plaintiff's valuation.

(3) a Honda trail bike was also part of the plant apparently acquired by the Cooks to replace an item of plant present on the station when it was sold to them. It was, therefore, subject to the bill of sale. It had been used, I gather, off-road on the station. It was still there in September 1993 when the Cooks went bankrupt, but it had disappeared by December when the plaintiff took possession of the station. Mr Hart gave it a value of $1,000 as at September 1993. Mr Rhodes, again not having seen the vehicle and assuming it to be in average condition, valued it at $2,000. Because of his greater familiarity with the vehicle, I prefer the evidence of the plaintiff and accept that this machine had a value of $1,000 in September 1993.

(4) there was a galvanised iron tank curving machine which was part of the equipment the subject of the bill of sale. It remained on the property when Mr Hall was there on 21 October 1993, but when he again visited the station on 26 October, it was gone. Again, what happened to it is not known, but the plaintiff's evidence, which I accept, valued it as at that time at $1,500. I think it reasonable to infer that as the trail bike and the tank kerbing machine both disappeared at about the same time and when the Cooks were in possession of the station, they were responsible for the removal of these items in breach of the bill of sale.

19 Finally, because there was relatively little useable plant on the station when the plaintiff resumed possession in December 1993, the plaintiff engaged his son to supply needed plant. He provided a pump and hoses at a cost of $1,100, a Ford F350 tray top truck and stock crate at a cost of $4,100, a 125 HP road grader at a cost of $7,000 and a diesel powered portable welder for $2,800, a total cost of $15,000.

20 The plaintiff's son also contracted to use a bulldozer to excavate ten new dams and he drilled two new bores for an additional cost of $8,396. The plaintiff was invoiced for a total of $23,396 on 7 February 1994, an account which he paid on 31 December 1994.

21 The plaintiff sues in negligence. The relevant extension of the obligations under the bill of sale was that finally made by the deed which I find to have been executed by all parties on 8 May 1993. The plaintiff was then aware that a third party was challenging that the registration of the bill had been appropriately renewed, and it is clear that in dealing with Mr Skinner for Elders on 11 May 1993, the plaintiff accepted that the bill of sale was unregistered. Mr Hart concedes that he then agreed with Skinner that Elders should pay the net proceeds of the sale of the wool clip to the Cooks. Although the bill of sale continued to have effect as between the plaintiff and the Cooks, it appears that the plaintiff considered that as it was unregistered, it was of no legal effect even against them and he took no further steps to pursue, as against the Cooks or otherwise, this form of security.

22 Of course, the bill of sale having been originally registered on 16 June 1988, the registration should have been renewed on or before 15 June 1991, or thereafter with the approval of the Registrar, to secure the protection afforded by registration until at least 15 June 1994. As I have mentioned, the matter of registration had been brought to Mossensons' attention in November 1991. I can only think that Mossensons thought, as their assurances suggest, that the bill remained registered while it remained in effect, and so even in late April and early May 1993 when Mossensons were effecting the second extension of the bill of sale, they took no action to renew the registration, although again, the plaintiff discussed the matter with them.

23 The relevant pleading of the plaintiff's cause of action is in par 20 - par 23 of the statement of claim. In par 23 the negligence pleaded, which is relevant for present purposes, is in the failure to register or renew the registration of the bill of sale. By accident, the defendant did not plead to this paragraph. The facts which were said to constitute the negligence of Mossensons were therefore deemed to be admitted: Rules of the Supreme Court 1971 (WA), O 20 r 14. However, earlier allegations of negligent conduct had been denied and the parties appear to have dealt with each other for some time upon the basis that liability was in issue until, by counsel, I was told, the defendant ultimately conceded liability informally on 14 September 2000. Certainly it was not in issue by the time of trial.

24 The plaintiff sues for loss said to have been sustained by reason of the failure to renew the registration of the bill of sale. The part of that claim which is not at issue between the parties concerns the fact that, not having a registered bill of sale valid and effectual against the Official Receiver, the plaintiff was unable to insist on his security in respect of the plant which was recovered and the stock and wool which was on the station upon the Cooks' bankruptcy. It will be recalled that the plaintiff paid $60,000 to purchase that plant and stock, against which may be offset the dividend he received ultimately in the sum of $35,495. The defendant concedes that in the judgment to be given in favour of the plaintiff, regard should be had to an effective loss of the difference between the two amounts, the sum of $24,505.

25 I turn then to the sale of the 1993 wool clip. I have mentioned that the livestock on the property, whether there at the time the bill of sale was granted, after acquired livestock, or the progeny of such livestock, was subject to the bill of sale. No doubt the wool severed from the sheep would also be covered as stock-in-trade of the business of a grazier carried on by the Cooks on the pastoral lease. Certainly the progeny of the sheep was expressly included as part of the mortgaged property pursuant to the Bills of Sale Act, s 7. It was not contended that there was any insufficiency of description so as to cause the bill to be void to any degree in relation to stock under s 37 and that being the case, the progeny of such livestock and after acquired livestock was automatically covered by the bill pursuant to s 38 of the Act.

26 But this was not specifically a bill of sale by way of security granted over the wool which might be shorn from the stock described so as to bring in to play s 42 of the Act. Treating the wool as stock-in-trade, however, would allow it to be covered by the bill, at least while it remained on the station from which, pursuant to cl 5(1), it might be removed "in the normal course of the Business." It is not suggested that the Cooks breached the bill of sale by selling the wool clip, comprising 81 bales, through Elders. The Treloars may or may not have had a lien over the wool, but that is irrelevant to this case.

27 There is no evidence that the plaintiff had any entitlement to the proceeds of sale except by the apparently collateral agreement with the Cooks which he asserted in his letter of 18 February 1993 to Elders. There is no evidence that the Cooks were then in default under the bill of sale. The letter refers to the bill and then continues:

"Mr C C Cook has advised me to exercise direction to your company to pay all nett proceeds from this current wool clip of 1993, of which 42 bales are on route to your store and the balance to come when shorn, to my a/c."

The letter then gives particulars of Mr Hart's bank account and adds that he had granted the Cooks an extension of time in respect of the bill of sale and the mortgage debt then still outstanding.

28 Although Mr Skinner in his evidence-in-chief referred to the sale price of the clip, the sum of $20,040.73, and suggested that he would have authorised Elders to make the payment of the proceeds of the wool clip to Mr Hart if the bill of sale had been registered, in cross-examination his attention was drawn to advances made by Elders to pay for shearing and wool packs which, in fact, as I have mentioned, total $13,185.46. He then confirmed that the net proceeds were about $6,855 and I think it is clear that it was payment of that amount which, had Mr Skinner been satisfied about the plaintiff's security in the form of a registered bill of sale, he would have paid.

29 The question then is whether Mossensons' negligent failure to renew the registration of the bill was a cause of loss to Mr Hart in that the sum of $6,855.27 was not paid to him, but to the credit of the Cooks. In March v E & M H Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506 it was held that in a case where liability in negligence is in issue, causation is to be dealt with as a question of fact to be answered by reference to commonsense and experience and without necessarily relying upon commonly accepted tests of causation, such as the "but for" or causa sine qua non test.

30 To my mind, taking that approach to the issue, causation is established. Certainly Hart had a valid bill of sale as against the Cooks, but as I have indicated, the evidence does not establish that he had any capacity or in fact purported to base his claim to the money in the hands of the Cooks' agent, Elders, upon any default under the bill. Certainly it is also the case that Mr Hart ultimately conceded to Mr Skinner that the money should be credited to the Cooks, but pursuant to his agreement with the Cooks he first sought to have the money paid to him and the net proceeds of sale of the wool clip would have been paid to him had Mr Skinner for Elders been able to satisfy himself that Mr Hart had a priority over the competing claim of the Treloars by reason of the registration of his bill of sale. That was not a legally appropriate way of deciding the issue, but in fact it did lead to the loss of $6,855.27 which I infer would otherwise have been paid to Mr Hart on about 21 May 1993, upon which date the evidence reveals the credit was made to the Cooks' account with Elders.

31 In my opinion the claim in respect of the items of plant to which I have referred above is misconceived. Two such items, the Isuzu truck and the Suzuki motor cycle were apparently still on the station and therefore came into the possession of the plaintiff when he went into possession of the station. He took possession of the chattels pursuant to the bill of sale cl 8(3)(a) in December 1993. The fact that he thereafter lost possession to the Cooks or otherwise, and what may have been their liability in respect of that loss, is to my mind irrelevant to the question whether any loss of the kind claimed in respect of these vehicles was sustained by the plaintiff as a result of the negligent failure of Mossensons to maintain the registration of the bill of sale, which clearly it was not.

32 So far as the trail bike and the tank curving machine are concerned, it does appear clear that they were removed from the station, possibly by the Cooks and possibly in circumstances which resulted in a breach of the covenant contained in cl 5(1) of the bill of sale not to remove property covered by the bill from the station or to permit or suffer property to be removed from the station other than in the normal course of the business of the station. However that may be, the loss of that property or its value has nothing to do with the negligent failure to maintain the registration of the bill of sale.

33 I will award as the capital component of an award of damages, the sum of $31,360.27.

34 There is a claim for interest which is put on two bases, the first as an element of the award of damages at common law as discussed in Hungerfords v Walker [1989] HCA 8; (1989) 171 CLR 125 and the second pursuant to the Supreme Court Act 1935 (WA), s 32. The availability of a claim under s 32 does not exclude the claim at common law. As it was held in Hungerfords v Walker of the equivalent section of the Supreme Court Act of SA, such a provision is not a comprehensive and exclusive code governing the award of interest, but was intended only to give a plaintiff some protection against the late payment of damages.

35 The purpose of an award of pre-judgment interest is to compensate the plaintiff for being kept out of his money from the time when the loss was sustained. The award of interest naturally involves a discretionary judgment, but the discretion is to be exercised by having regard to the fact that interest so awarded is a component of an award of damages, governed as any other element of such an award is governed by the compensatory principle that damages, whether in contract or tort, are awarded by way of compensation to place the plaintiff, so far as the payment of money can do so, in the same position as he or she would have been if the contract had been performed or the tort had not been committed. It is compensation which is the cardinal concept and therefore the plaintiff cannot recover more than he or she has lost: Haines v Bendall [1991] HCA 15; (1991) 172 CLR 60 at 63 and see the cases there cited.

36 The evidence of the sums expended by the plaintiff through the medium of his son to acquire plant and do work on the station during the period after he took possession of it has, in my opinion, no relevance to the award of damages. Nor do I think it may be regarded as money expended by the plaintiff, perhaps in an attempt to mitigate his loss arising out of the negligence of Mossensons. It is too remote to be so viewed and I can see no basis upon which this expenditure may be taken into account for the purpose of calculating an award of interest.

37 Particularly in regard to the claim for interest, the plaintiff relied on the evidence of a Mr Samaha, a chartered accountant employed by Hall Chadwick Corporate, who had been engaged to make an assessment of this loss. His report was in evidence. Broadly speaking, his approach was to note what in his view should have been received, having regard to the bill of sale, by about the end of 1993, to note the dividend that was paid out of the bankrupt estate, and to note, apart from the debt to his son, that the plaintiff maintained accounts with the Commonwealth Bank and Elders which were in debit until the station was ultimately sold in September 1994 (and from time to time thereafter) upon which Mr Hart was paying interest.

38 Mr Samaha assumed that had the plaintiff had available to him the money which was represented by the loss directly caused by the failure to keep the bill of sale registered, and had he received that earlier than the dividend was paid out of the bankrupt estate, or to the extent that it was not covered by the dividend, he would have put that money to work by reducing his indebtedness to the bank and to Elders and by investing any surplus available in interest bearing securities. The plaintiff agreed he would have done so, but it should be said that there is, in fact, I think, no evidence which enables me to find what the plaintiff did with the $35,495 dividend received out of the bankrupt estate. The evidence does not establish that it was paid into the Commonwealth Bank or Elders, or perhaps both. There is, however, evidence that the plaintiff from time to time invested in bank bills or otherwise placed money on interest bearing term deposits at commercial rates of interest.

39 In the final analysis it seems to me that while I may endorse generally the approach of Mr Samaha, I am left in the position of being quite unable to rely upon his calculations or variations thereof. In the first place I have not made findings which would enable any endorsement of his calculations of what he describes as a balance of principal, and in the second place such monies received at about the relevant times by the plaintiff in such sums, much greater than the capital component of the damages which I am prepared to award, would no doubt have found their way into his general revenues. They would no doubt have relieved him of an interest burden to a greater or lesser extent, but they may have been used to some degree in other ways which would not save actual expenditure on interest or produce income by way of interest earned. As I have said, I have not been able to make a finding about what happened to the dividend of $35,495 and I have no evidence of how either aspect of an interest component bearing on the plaintiff's income at relevant times was dealt with for taxation purposes.

40 Before finally determining this aspect of the claim for damages, I should make some more particular reference to the law. In Hungerfords v Walker, the principal judgment of the majority was that given by Mason CJ and Wilson J, but it is convenient to refer to the critical aspect of the decision as summarised in the short observations by way of agreement with that judgment by Brennan and Deane JJ at 152 where their Honours said:

"There is, in our view, a critical distinction between an order that interest be paid upon an award of damages and an actual award of damages which represents compensation for a wrongfully caused loss of the use of money and which is assessed wholly or partly by reference to the interest which would have been earned by safe investment of the money or which was in fact paid upon borrowings which otherwise would have been unnecessary or retired. On the one hand, there is no common law power to make an order for the payment of interest to compensate for the delay in obtaining payment of what the court assesses to be the appropriate measure of damages for a wrongful act. If such interest is to be awarded at common law, it must be pursuant to statutory authority. On the other hand, there is no acceptable reason why the ordinary principles governing the recovery of common law damages should not, in an appropriate case, apply to entitle a plaintiff to an actual award of damages as compensation for a wrongfully and foreseeably caused loss of the use of money. To the extent that the reported cases support the proposition that damages cannot be awarded as compensation for the loss of the use of a specific sum of money which the wrongful act of a defendant has caused to be paid away or withheld, they are contrary to principle and commercial reality and should not be followed."

41 There is nothing, in my opinion, in that statement of the law which suggests, as was argued for Mossensons, that there may only be an interest component in an award of damages where the plaintiff seeks repayment of a debt or sues for a liquidated sum, but not if the claim is for damages in an unliquidated amount. That is not the distinction to be drawn. The question is whether interest is properly awarded as a component of the compensation to be afforded to the plaintiff or whether it would be considered to be appropriate to award interest for the late payment of the damages assessed. In the latter case I agree that the interest would be awarded under the Supreme Court Act, s 32. The award would be of a flat rate of interest, having regard to the provisions of the Rules of the Supreme Court, O 36, r 20 and the rates fixed under s 142 of the Supreme Court Act in relation to judgment debts, conveniently set out in Seaman: Civil Procedure WA, par [42.2.3]. In the former case, it will often be appropriate to make an award at an appropriate commercial rate of compound interest.

42 In this case, to borrow the terminology employed by Brennan and Deane JJ in Hungerfords v Walker, I think it is appropriate to make an award of compensation for the negligently caused loss of use of the money which I have held to constitute the proper capital component of the award of damages I propose. There has been, in my view, a foreseeably caused loss of the use of those monies. Firstly there is the sum of $6,855.27 which might have been, but was not, received on about 21 May 1993 when the credit was made in favour of the Cooks of the net proceeds of the sale of the wool. In addition, there was the sum of $60,000 paid for plant and stock under the contract with the Official Receiver dated 17 December 1993 upon its settlement on 13 June 1994. Had the bill of sale been registered, that expenditure would not have been incurred and that would be an amount relevant to consider in respect of compensation for the loss of use of the money up to 7 April 1995 when the dividend was received from the bankrupt estate, leaving the balance by which the plaintiff was out of pocket thereafter as the sum of $24,505.

43 I conclude that had the limited sums in question been available to the plaintiff, they would have been devoted to business or commercial activities, including the payment of debts owed to the Commonwealth Bank and Elders or investments in term deposits. Mr Marsala's evidence was, as I understand it, that the monies owed to the bank and to Elders were incurring interest charges at the annual rate of 11.25 per cent. There was evidence that from 7 April 1995 and in later years, quite substantial sums were placed on deposit at returns of between 7 and 8.5 per cent per annum. It seems to me that if I take a conservative approach I may safely value the loss of use of the funds comprising the capital component of my award, or relevant thereto, by reference to the interest which, upon the evidence before me, might have been earned by safe investment of the money for the various periods which are relevant.

44 Mr Marsala had regard to this in what he assessed as the "lost interest income component of the loss suffered" by the plaintiff. The calculation was made on a monthly compounding basis using the average 30 day bank bill rates for the relevant period. Mr Marsala regarded that as a conservative approach and I agree, but I would not propose that the appropriate calculation for the purpose of this element of the judgment should reflect the numerous variations to that rate encountered over the whole of the period with which we are concerned. For much of the period the rate was generally below or in the order of 5 per cent, although it was much higher, up to about 7.5 per cent, between about August 1994 to August 1997. In my view, for the whole of the period or the various periods with which this component of the award is concerned, there should be an allowance for the loss of the use of the money concerned, assessed by applying a rate of 5 per cent interest, compounded monthly:

(1) on $6,855.27 from 21 May 1993 to the date of judgment,

(2) on $60,000 from 13 June 1994 to 7 April 1995,

(3) on $24,505 from 7 April 1995 to the date of judgment.

45 The plaintiff is to bring in a minute providing for the appropriate calculation to be added to the capital component of the award, the sum of $31,360.27 to which I have previously referred.

Hart v Mossensons & Anor [2000] WASC 295

At a glance

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Decision date

Before

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Judgment (72 paragraphs)

Hart v Mossensons & Anor [2000] WASC 295 (6 December 2000)

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Legislation Cited (2)

Cases Cited (11)