• Lawyers in Sydney
• Lawyers in Melbourne
• Lawyers in Brisbane
• Lawyers in Perth
• Family lawyers
• Employment lawyers
• Criminal lawyers
• Wills and estates lawyers
• Find a lawyer

2 Although no issue has arisen as to the order for costs of the appeal itself, which it was announced ought to be paid by the unsuccessful respondent, it was also implicit that there might be matters of costs resulting from a partial setting aside of the Trial Division judge's judgment and so it has turned out to be the case. Whether or not it was drawn to the Court's attention - and I certainly now have no recollection of it - there had been a Calderbank[2] letter on behalf of the plaintiff dated 20 April 2001, by which the plaintiff offered to accept in settlement $1 million damages together with his costs. This led to the making of an order for indemnity costs against the defendant from 21 April 2001 to 26 July 2002, being the date upon which Smith, J. made the relevant order, which was stated to have been made "by consent". As to this conventional application of the Calderbank practice the appellant claimed that the outcome of the primary issue on the appeal, namely, the reversal of the decision to backdate the judgment to the last day of trial, had the consequence that the sum payable by way of damages was reduced by $260,000 (together, if relevant, with any interest thereon), so that the sum offered to be accepted by the plaintiff/respondent in settlement was not reached. So it was said that the offer was ineffective or more precisely that it was one which the appellant was not fairly obliged to have accepted as defendant to the action, so that the ordinary rule as to the payment of costs on a party-party basis should have applied to the whole of the costs and the judgment in that respect varied accordingly.

3 Finally, the respondent raised in his reply or answer to the appellant's submissions (on these issues) a claim that, in effect in lieu of the inclusion of the component for punitive damages, the respondent as plaintiff ought to be entitled to a setoff or more precisely a diminishment of the appellant's claim for brokerage fees which had been allowed, seemingly with little dispute at the trial, in the sum of $67,017.10. Although originally, by the orders pronounced on the 16 April 2002, there was a separate judgment for the appellant on the counterclaim for that sum and thereafter an order setting off that sum against the damages which were the subject of the plaintiff's judgment, those orders were vacated by the judgment given on 27 June 2002 which resulted, by an implicit setting off of that sum, in a judgment being given for a reduced amount so calculated, being at that time a judgment for $1,039,801.40 (together with interest). The respondent now wishes to say that he should never have been ordered to pay those brokerage fees and, because they arose out of the appellant's conduct so roundly criticised and characterised as negligent by the trial judge, that the respondent is now entitled to say that judgment should have been entered on the counterclaim for the defendant to counterclaim, being the respondent. Moreover, as I would understand it, the respondent's father had paid by way of brokerage sums amounting to $134,061.34, which the respondent now seeks to add (by way of variation) to his judgment. It is not entirely clear whether that includes the $67,000 which was the subject of the counterclaim but, so far as I can ascertain, the respondent now seeks not merely to set aside the effective judgment on the counterclaim but also to add to the damages the sum of $134,061.34. This is said to derive from the Court's powers, pursuant to Order 64.22(2) of the Rules, to give any judgment or make any order which ought to have been given by the trial judge.

4 I shall deal with this latter issue first since it can be disposed of relatively briefly. Although the respondent claimed that the power in the Rules just referred to may be exercised, notwithstanding that no notice of cross-appeal (or contention) had been given, because the duty of the appellate court is "to do justice to the parties and not solely the appellant",[3] it is nevertheless a remarkable proposition that, after a full hearing of the appeal and in the course of submissions intended to be confined to the fixing of the date for judgment, the calculation of interest and any consequential costs below, a substantive matter going to quantum which has not been made the subject of any notice of appeal or cross-appeal or of any notice of contention or of any previous outline of argument, can now be raised and seriously put forward by the respondent. The particular issue seems not to have been raised in the trial; indeed there was little argument about the counterclaim generally. Although the submission asserts in fulsome terms why it is that the appellant should "disgorge the profits it made in breach of its fiduciary duties", no specific evidence is pointed to as showing when and in what circumstances the brokerage fees were earned or paid and the relationship of those fees to the breaches. While one could understand to a degree why it might have been asserted that the unpaid brokerage fees were referable to a period when the appellant was clearly acting in breach of its duties to the respondent's father, in truth the relationship between that claim and the total fee of $134,061 has not been made clear to the Court, save only that the judge in fixing the award of exemplary damages chose to base it on what he described as "double the brokerage" which the appellant had earned during the course of its retainer by Mr Ali.

5 The primary difficulty is that the appeal was brought in relation to a number of specific matters which did not arise out of the initial judgment, except incidentally, but which were dealt with in the course of a later judgment given on 27 June 2002 directed to the issues raised in the present appeal. As a result the court books and related materials do not contain any details as to the issue of brokerage, so that one can examine only the pleadings and the judge's primary judgment. Apart from some incidental references, the counterclaim is dealt with in the judgment in three short paragraphs, [590]-[592], as well as in his Honour's discussion using brokerage as a means of "quantifying" punitive damages. In the course of the judgment it appears, especially from para.[591], that the respondent had not disputed the debt arising from the claim for brokerage but pleaded in the first place some form of estoppel, which from the next paragraph seems not to have been developed in argument, and then only one other argument is discussed, namely that the respondent was entitled to a setoff of the damages found due to him under his principal claims. It is not surprising, therefore, that the judge found that the claim for brokerage had been made out and ultimately proceeded to deal with it by way of setoff, for in substance there seems to have been no argument to the contrary developed. From this limited material it is difficult to be certain what arguments were pursued but the Court can rely satisfactorily only on what the judge has recounted of the case made on behalf of the respondent at the trial. It would seem from this that no argument along the lines now sought to be advanced was put to his Honour. Rather, as is now conceded, the unconscionability of retaining the benefit of the brokerage fees was used to quantify the exemplary damages claimed.

6 None of this can properly be canvassed again, especially at this stage of the litigation. No fair notice was given at a relevant time and in effect the respondent seeks a new trial of issues resolved against him on grounds never raised by way of appeal or notice of contention. It is unnecessary to examine the many authorities, especially in the High Court, which show the unfairness of allowing new issues to be raised so late and without proper notice. In effect the respondent wishes to recast the quantification of its damages claim long after both trial and the hearing on the merits of this appeal, limited though they were. It cannot be permitted, nor can the suggestion that the issue be remitted for further hearing by the trial judge. It is unnecessary to characterise the respondent's conduct as an election, or under any other rubric, for the unfairness is manifest.

7 Moreover the respondent's analysis of the way in which the brokerage fees were used to quantify the exemplary damages suggests some possible misconception in their formulation in the first place. One may doubt whether any attempt to fix upon some improper benefit, wrongfully retained, is a correct method of approaching the assessment of exemplary damages, which are intended to punish for identified wrongdoing. The matter described may, if properly relied upon at the trial, have formed the basis of an award of aggravated damages but it is unnecessary to express any conclusions on the subject. They were matters to be raised by the relevant party at an appropriate time, not in the dying stages of a limited appeal.

8 Consequently the respondent's claim that the award for damages (other than the disallowed amount for exemplary damages) should be increased by $201,078.10 is rejected. It follows, inasmuch as there has been no other dispute as to the quantum of damages awarded, that the primary judgment sum to be substituted in lieu of the judgment for $1,039,801.40 pursuant to the judgment of Smith, J. given 27 June 2002, is $779,801.40.

9 The major dispute therefore at this stage of the proceeding has been as to the interest payable on that sum, which has brought with it incidental questions as the date upon which the judgment should be entered pursuant to the order of this Court and the periods in respect of which interest should be payable, having regard, among other matters, to a number of payments made to the plaintiff or otherwise in satisfaction of the judgment debt. There was at first some dispute as to the date from which the substituted judgment of this Court should apply, in part provoked by comments made by the Court. The general rule in appeals from civil proceedings is that the judgment should not ordinarily be dated back but should speak from the time judgment is delivered in the appellate court: see esp. Nicol v. Allyacht Spars Pty. Ltd.[4] From time to time that has required an order comprehending interest which otherwise, under the Supreme Court Act 1986, would have been payable on the judgment which should have been given at first instance from that time up to the date of the appellate court's judgment. There was an argument that it may have been preferable to date the substituted judgment back to the day on which the trial judge should have given effect to his judgment, but the parties are agreed that the order now to be made should be dated from the day on which this Court pronounced judgment. Formally the Court has not yet done so, but the parties' calculations have been made upon the basis that judgment will be given as at 18 March 2005, when the Court stated that it allowed the appeal and gave its reasons. As will be seen, no interest is in fact payable from the latter part of the year 2002 until the present and, moreover, if the judgment be dated as at 18 March 2005, there will necessarily be a right pursuant to s.101 of the Supreme Court Act 1986 with respect to interest payable on any such balance owing by way of judgment debt. It has also been assumed for the purpose of calculations that it is appropriate to deduct the amounts received or treated as received by the plaintiff at the relevant times rather than to calculate a total and then to deduct the payments. Obviously to take the latter course would be unfair and the Court's discretion would be exercised to disallow interest after the effective time of payment.

10 When I said that there is no dispute that the principal amount owing, other than interest, is $779,801.34, that hid a problem in the parties' calculations, for the respondent has made all its calculations for interest by taking three amounts (dealt with in the Court's reasons as requiring two different commencing dates) which in all total $846,818.54. The reason for this may simply be stated in that it excludes the sum set off by Smith, J. payable pursuant to the judgment on counterclaim of $67,017.10. At one stage it seemed that the appellant was seeking a separate order for interest on its counterclaim but in the end its submissions were, in substance, that, although it might have claimed interest on its counterclaim to be set off against the whole of the plaintiff's reduced judgment debt on the claim, it was simpler to set off the two principal amounts and then calculate interest on the balance, more especially as Smith, J. had clearly determined that it was preferable to set off claim and counterclaim and had effectively varied his judgment accordingly by the judgment given on 27 June 2002. For myself I can see no justification for the respondent's calculation if he is not to concede that there should be an equivalent order for interest on the counterclaim. I think that the respondent's calculations can be explained by reference to the contention already made and disposed of, namely, that the counterclaim should be set aside and that that sum (as well as another $134,061) should be added to the primary judgment sum of $779,801.40. That contention having been rejected (as to both proposed additional sums), there seems little reason to accept the respondent's calculations based on a total $846,818.54.

11 The difficult aspect of the interest calculation, however, is the approach to be taken to various payments made in respect of the judgment sum which were in the first place paid into court because of an interpleader dispute between the plaintiff and his trial counsel, the payments then taking place in June 2002 and the interpleader proceeding being resolved in September that year. For example, the respondent now concedes that the whole of the principal sum of $779,801.34 was paid into court on 4 June 2002 and that a further $260,000 was paid into court on 28 June 2002, being the sum awarded by way of exemplary damages, in respect of which no interest could be awarded and which this Court has set aside. It seems also to be accepted that a further sum of $10,283.60 was paid to the respondent on 1 September 2002 by way of interest on the principal judgment sum for the period between 16 April 2002 and 4 June 2002, being the date that that principal was paid into court for the purpose of the interpleader proceedings.

12 The principal issue seems to be whether one should treat the payments into court as sufficient satisfaction of the judgment debt or whether, as the respondent contends, one should not treat it as paid until the respondent/plaintiff obtained the benefit of the payments on 17 September 2002. It is conceded on his behalf for that purpose that he had the benefit of $932,350.46 by reason of an order made by Beach, J. on that day releasing that sum and in addition, it is conceded, that a further $10,283.60 was paid pursuant to an order made by his Honour on that day describing it as interest pursuant to s.101 of the Supreme Court Act for the period 17 April to 4 June 2002 (see Order No. 3 thereof), although the appellant says that it paid that sum on 1 September 2002. Although the respondent asserts that he was "kept out" of his money until September (and indeed there seems little doubt that he did not have the direct use of it until that time), the history of the proceeding shows how the parties, and in particular, the respondent through his counsel sought to treat the payments in. In particular it is recited in the order of Beach, J. that pursuant to the order of Smith, J. of 3 June 2002 the appellant paid $1,039,801.40 into court subject to an undertaking from the respondent's counsel as to certain matters and "in order, inter alia, to extinguish any continuing claim by the plaintiff for judgment interest on that amount". Some part of the moneys, namely $107,450.94 was stated in a further recital to be held by the appellant's solicitors by way of security for the appeal, presumably to be paid out to the appellant if the appeal were successful. There was a further order in which some $362,728.70 was to be paid by agreement to counsel (for the plaintiff at trial) in satisfaction of the interpleader proceedings but which must in the circumstances be treated as payments effectively for the benefit of the respondent inasmuch as it satisfied the respondent's liability to his counsel. Various orders were made to effectuate these arrangements, as well as other orders of no present significance. Although these recitals appear in the later order, they refer to events taking place on 3 June and the appellant draws attention to the fact that counsel on that day, when appearing before Smith, J., stated that his client had no "objection to the moneys constituted by the judgment debt being paid into court", that is, as was there made clear, the full amount, and in addition stated that his client was "happy for the entire judgment debt to be paid into court ...".

13 The circumstances of these payments into court and the respondent's attitude to them at the time do not seem to be controverted in any of the extensive materials filed on behalf of the respondent. The argument, as I perceive it, by the respondent is that he was "kept out" of his money, i.e. the judgment debt, until the order of Beach, J. on 17 September 2002. It is for that reason that the respondent says that his entitlement to penalty interest remained unsatisfied until the latter date. So he says that, together with the sum by way of interest calculated to 4 June 2002 being $10,283.60, he had by then received a total of $942,634.06. Nevertheless, it is argued on his behalf there was a substantial outstanding sum of $94,969.10 owing on 17 September 2002. In addition the respondent seeks the $201,000 "disgorgement of brokerage fees" and additional interest to 30 April 2005.

14 In my opinion the sums paid into court for the purpose of the interpleader relief on 4 June 2002 should be treated, to the relevant extent, as satisfying the judgment debt owed to the respondent, save for the later interest payment of $10,283. Not only did the appellant wish to and seek to satisfy the principal judgment debt at that time but it appears from the materials, in particular the recitals to the order of Beach, J., that the respondent accepted such payment as effective to that extent and at that earlier time. If the respondent had not had his dispute with his counsel at the time an out-and-out payment could then have been made. The appellant therefore should not be penalised for satisfying (in part) the debt in the way that it did. In consequence the respondent's calculations based upon his being kept out of his money until 17 September should not be accepted, nor should his other detailed calculations for they were based on a principal judgment debt of $846,818.54, so that each calculation based thereon is inappropriate. I should add that alternative minutes of orders were proposed by the respondent which in part increased the principal debt to $980,880 but made interest calculations based on a principal debt of $779,801.40, or so it may appear, but the sum for interest to 4 June 2002 is precisely the same figure calculated in the earlier submission for that period calculated on a higher sum of $851,818. It is therefore of little present assistance.

15 The appellant properly concedes that, although more than sufficient was paid into court to extinguish the judgment debt of $779,801.34, there remains some sum owing by way of interest. This follows because the respondent was paid only $932,350.46 as a result of the order of Beach, J. on 17 September 2002, as well as the $10,283.60 paid on 1 September 2002, making a total, as conceded by the respondent, of $942,634.06 actually paid or released by 17 September 2002. Now at the same time an order was made that some $107,000 of the sums paid into court should be released and paid into a specified account with the appellant's solicitors. As was recited in the order of Beach, J. the sum was to be held as security until the determination of the appeal.[5] The recital also stated that interest would again commence on that amount when paid to the appellant's solicitors, but the question remains whether any interest should be so paid. But in my opinion the use of that money at that time does not deny the fact that by 27 June 2002 sufficient moneys had been paid into court to stop interest running, in that it was sufficient to satisfy the debt for both the principal sum and interest thereon with respect to those elements of the damages which were not affected by the appeal to this Court. This follows because the amount of interest in question as calculated, correct in my opinion, to 4 June 2002 was $202,592.09. That meant that when the payment of $260,000 was paid, more than sufficient had been received by 27 June, to satisfy both the principal judgment sum and interest thereon to 4 June. In fact to make assurance doubly sure the appellant paid the further sum of $10,283.60 on 1 September with respect to interest to 4 June, but that in my opinion was strictly unnecessary, as it turned out, as it assumed that the sum of $260,000 exemplary damages might survive the appeal. Now the $260,000 has in fact to be repaid by virtue of the order of this Court so that notionally it is not the respondent's money. However the money was in fact used for the purpose of the various orders made on 17 September, of which some $107,000 was used by way of security and paid to an account in the name of the respondent's solicitors. There is therefore no obligation to repay it to the respondent. The moneys are, however, available to satisfy the judgment debt, but it is preferable simply to treat those moneys as having been unpaid in the circumstances. In other words, although the payments were more than sufficient to satisfy the debt at the time, subsequent circumstances have shown that the $260,000 cannot be retained or brought to account on behalf of the respondent, except to the extent that it was actually paid to him. What was in fact paid to him at the relevant time was the $942,000 to which reference has already been made. No interest therefore has been accruing since those payments were made in June 2002 and the only obligation is to make payment of the balance which otherwise would have to be returned by way of the $260,000 exemplary damages award.

16 Therefore the amount of interest is, as the appellant claims $202,592.09. It should be noted that of that some $10,283.60 was in fact paid on 1 September 2002. Secondly it should be noted that the effect of the orders made on 17 September 2002 was to treat a further $152,549.06 as having been paid and referable to the interest on $779,801.40.

17 The final matter, that of the order for indemnity costs, is more difficult. The appellant asserts that in consequence of the decision of this Court the quantum of damages has been reduced to the extent that the respondent has not recovered $1 million, so that the basis of the order for indemnity costs based on the "Calderbank letter" must now fall and a different order for costs should be made. The respondent, however, says in the first place that the appellant may not raise that issue presently for it has obtained no leave to appeal against the costs order: see s.17(2) of the Supreme Court Act 1986. That contention, however, misunderstands the requirement under the Act, for it has been properly interpreted as confined only to those cases where a party seeks independently to challenge an order for costs, and is not applicable to cases where the order for costs will ordinarily fall with the substantive order made in favour of the respondent: see e.g. Etna v. Arif[6]. Here the success of the appellant is of a kind which naturally reopened the discretion as to costs, as was pointed out at an interlocutory stage. It does not, of course, follow that all costs orders will fall by reason of a successful appeal but that must be a matter for the appellate court in considering the nature of the appeal and its success. It is inherent to its functions in determining an appeal.

18 Secondly the respondent says that in any event this order ought not to be disturbed for it was correct at the time and remains correct. One basis for that argument is that the amount recovered would in fact exceed $1 million so as to make the judge's exercise of discretion still correct, although the quantum of the amount awarded would have been calculated differently. The calculation of the interest component of the award, however, has produced a total sum including interest of somewhat less than $1 million thus making the offer contained in the respondent's letter of 20 April 2001 ineffective to that extent. However, that would have been an oversimplification, for the principal judgment sum would have been significantly less than $1 million in that it consists of a judgment for $779,801. As a matter of practice the component for interest ordinarily has to be looked at carefully, for in most cases it covers a period well beyond the time for acceptance of an offer made in a formal offer of compromise or in a Calderbank offer. It is customary to consider the amount of interest up to the date for acceptance of the offer but not beyond, unless there is provision to the contrary or the offer contemplates later interest. Here again the amount to 20 April 2001 (the date until which the offer was open) was significantly less than the interest presently to be awarded.

19 But that is not the end of the matter. In the first place it may be accepted that ordinarily the effect of a Calderbank offer should be looked at reasonably in the context of the case. In other words, and it is unnecessary to cite authority for this purpose, it is important to concentrate on whether the party on whom the offer was served was unreasonable in rejecting the offer at the time that it was rejected either explicitly or implicitly by a failure to accept. Ordinarily, moreover, success or failure in the proceeding will be a principal factor in determining whether the response was unreasonable, so that if the plaintiff fails altogether, the issue will become irrelevant. In most cases, where the quantum of the offer is important, the failure of the party refusing an offer to do as well as the terms of the offer rejected will mean that the party making the offer will be able to claim the benefit thereof. In the present case it was the respondent as plaintiff who made the offer and at the trial the amount offered was exceeded, so the conventional order for indemnity costs was made. The appellant says that now that the offer was not exceeded but the original order for indemnity costs from the date of the offer should be set aside and that a conventional order for party and party costs be made.

20 In most cases the logic of the appellant's position would be unassailable. In the present case, however, the circumstances are peculiar, so peculiar that it has taken some time to resolve why it is that the original order with respect to the award of exemplary damages cannot stand. The reason for it being unable to stand is not, however, because the judge misunderstood the nature of exemplary damages (except arguably in the very broadest sense) or in his failure to make a proper assessment of them, for those matters were never raised by way of appeal. The present case assumed that the conventional tests for making an award of exemplary damages were satisfied but said that by virtue of the original plaintiff's death and the operation of the Administration and Probate Act 1958 the rights which the plaintiff formerly had could not be claimed by the present plaintiff as his executor and trustee and that there was no right to date the judgment back to a time before it was in fact delivered. The reasons for that decision have already been stated in detail and essentially depend on the policy of the law. The fact is, however, that at the time the offer was made it was a perfectly valid offer and, moreover, it was an offer which, having regard to the judge's ultimate findings, was an entirely reasonable offer which was for a smaller sum than that which the plaintiff then was entitled to recover, there being no factors at that time which substantially altered during the trial and before the death of the plaintiff. In my opinion, therefore, the defendant was unreasonable in refusing the offer in the very peculiar circumstances of the present case. It is not a set of circumstances which is likely to recur but, if one concentrates on the unreasonableness of the defendant's conduct in rejecting an offer of this kind, then at the time that rejection was unreasonable.

21 Consequently in the very special circumstances of the present case I do not consider it appropriate to reverse the order for indemnity costs made in favour of the plaintiff. It follows that no different order for costs should be made.

22 It follows that in lieu of the judgment previously entered on behalf of the plaintiff there should now be judgment for the substituted plaintiff against the defendant in the sum of $982,393.43 (including the sum of $202,592.09 by way of damages in the nature of interest). The judgment should be dated as from the date upon which this Court pronounced its decision, namely 18 March 2005. That will have the consequence that, after taking into account the various payments received or treated as received as set out earlier in these reasons, interest on judgment

pursuant to s.101 of the Supreme Court Act 1986 will be payable thereon. I should note that the appellant concedes that, although it does not bear interest pursuant to s.60 of the Supreme Court Act, a balance of $39,235.38 remains unpaid. Finally, I would reject the appellant's claim for a stay on the amount outstanding inasmuch as I do not consider that there is sufficient evidence to justify the granting of the stay so sought.