Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd

Court of Appeal (NSW)|2014-12-09|Before: Macfarlan JA, Meagher JA, Barrett JA

Heydon v NRMA Ltd (No 2) [2001] NSWCA 445; 53 NSWLR 600 Maestrale v Aspite (No 2) [2014] NSWCA 302 Management 3 Group Pty Ltd (in liq) v Lenny's Commercial Kitchens Pty Ltd (No 2) [2012] FCAFC 92; 203 FCR 283 Woolworths Ltd v Strong (No 2) [2011] NSWCA 72; 80 NSWLR 445 Category: Consequential orders Parties: Mount Bruce Mining Pty Ltd (Appellant) Wright Prospecting Pty Ltd (First Respondent) Hamersley Iron Pty Ltd (First Cross-Respondent) Hancock Prospecting Pty Ltd (Second Respondent) Representation: Counsel: N J Young QC/M J Darke/Q Rares (Appellant/First Cross-Respondent) A J Myers QC/K A Stern SC/K H Barrett/R J Hardcastle (First Respondent) N C Hutley SC/J C Giles (Second Respondent) Solicitors: Allens (Appellant/First Cross-Respondent) Clayton Utz (First Respondent) Horton Rhodes (Second Respondent) File Number(s): CA 2013/173153 Decision under appeal Jurisdiction: 9111 Citation: Wright Prospecting Pty Ltd v Hamersley Iron Pty Limited [2013] NSWSC 536 Wright Prospecting Pty Ltd v Hamersley Iron Pty Limited (No 2) [2013] NSWSC 709 Before: Hammerschlag J File Number(s): SC 2009/323345

Date to which interest payable 4As to the first issue, WPPL asserted in its written submissions that on 17 September 2014 MBM declined to accept from WPPL a bank cheque for the amount of the restitutionary payment that WPPL paid two days later by way of electronic funds transfer. 5In its written submissions in reply, MBM stated that it did not fully accept WPPL's account of what had occurred and submitted that the Court should not act on that account without evidence of it from WPPL. 6I accept that submission. The facts are in issue and WPPL has not proffered any evidence to support the assertions in its written submissions. It has not therefore proved the factual basis for its submission that MBM should be deprived of interest for the two days in question. 7In any event, I do not consider that the facts asserted by WPPL would, without more, disentitle MBM to interest for those two days. The fundamental purpose of an award of interest is compensatory and the facts asserted by WPPL indicate that WPPL, rather than MBM, had use of the relevant funds for the two days. 8In these circumstances, interest should be calculated to 19 September 2014.

The rate of interest 9The Court's power to award interest on repayments of monies paid under judgments later set aside is not in doubt. The decision of this Court in Heydon v NRMA Ltd (No 2) [2001] NSWCA 445; 53 NSWLR 600 at [12]-[23] identified the common law as a source of this power. The later decision in Woolworths Ltd v Strong (No 2) [2011] NSWCA 72; 80 NSWLR 445 at [5] and [6] identified s 75A(10) of the Supreme Court Act 1970 (NSW), as supplemented by Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") r 51.54, as another source of the power. 10Sections 100 and 101 of the Civil Procedure Act 2005 (NSW) may constitute other sources of this power but HPPL argued that there are difficulties in applying those sections to the award of interest on judgment restitutionary payments. Section 100 of the Civil Procedure Act, which is concerned with pre-judgment interest, enables an award of interest only from the time that the relevant cause of action arose. In the case of a judgment restitutionary payment, it is arguable that the cause of action does not arise until the appellate court makes its order (see generally as to this issue Heydon at [13] and Strong at [31]-[33]). Under s 101, which concerns post-judgment interest, interest is calculated only from the date on which the judgment takes effect or such later date as the court may order. Thus, unless the appellate court orders that its judgment take effect from an earlier date, such as the date of the judgment at first instance, no interest will be payable under s 101 in respect of amounts paid under the first instance judgment that are required to be refunded as a result of the appellate judgment. 11Whatever be the source of the Court's power to award interest in this situation, the Court undoubtedly has a discretion as to the rate of interest to be applied. Whilst prescribed rates are applicable in respect of ss 100 and 101, the Court may depart from those rates. As I see it, the Court's task in a case such as the present is to determine whether the claimant's right more closely approximates that of a claimant for pre-judgment interest or that of a claimant for post-judgment interest. This is the issue upon which the parties' written submissions focused. 12The distinction is important because since 1 July 2010 there has been a difference between the prescribed pre-judgment and post-judgment interest rates. Practice Note SC Gen 16 sets the pre-judgment interest rate applicable to s 100 as 4% above the cash rate last published by the Reserve Bank of Australia (the "RBA") (see also UCPR r 6.12(8)). UCPR r 36.7 prescribes the post-judgment interest rate under s 101 as the RBA cash rate plus 6% (see also UCPR r 51.19). 13The purpose of awards of interest on monies paid under first instance judgments that are required to be repaid as a result of appellate judgments is to compensate the defendant for its loss of opportunity to use the money in question. The ultimate purpose is thus to fulfil the objective that the court "take care that [its] act ... does no injury to any of the Suitors" (Commonwealth of Australia v McCormack [1984] HCA 57; 155 CLR 273 at 276; Woolworths at [33]). This reflects the compensatory purpose (to which I have referred in [7] above) of the more general powers of the Court to award interest, for example under s 100 of the Civil Procedure Act (see Mastraele v Aspite (No 2) [2014] NSWCA 302 at [4], [8]; Heydon at [21]). 14Similarly, the purpose of the statutory requirement under s 101 for payment of post-judgment interest is primarily compensatory. The fact that the rate prescribed thereunder is higher than that applicable to s 100 in respect of pre-judgment interest has been attributed to an intention that the rate for post-judgment interest "provide a disincentive to unsuccessful parties to delay payment of a judgment sum" (Maestrale v Aspite (No 2) at [15]). As stated in respect of a similar situation existing in the Federal Court, "[t]he higher interest rate is chosen to encourage the unsuccessful respondents to comply with the Court's orders" (Management 3 Group Pty Ltd (in liq) v Lenny's Commercial Kitchens Pty Ltd (No 2) [2012] FCAFC 92; 203 FCR 283 at [39]). 15The section's purpose of encouraging prompt payment is emphasised by the incentive provided by s 101(3) which stipulates that interest is not payable on the amount of a judgment if the amount is paid in full within 28 days of the date on which the judgment takes effect (subject to any court order to the contrary). 16This disincentive factor to which I have referred is not applicable to the present circumstances. Here, MBM paid to the respondents the amounts of the judgments awarded against it at first instance. The respondents were entitled to retain the funds so paid until this Court's partial reversal of the first instance judgment. There is no question of the respondents having delayed repayment as they repaid the appropriate amounts promptly after this Court's judgment. 17In my view, there is a closer analogy in the present circumstances to those in which parties are entitled to pre-judgment interest than to those in which they are entitled to post-judgment interest, as the disincentive factor which accounts for the higher post-judgment rate is not here applicable. This is consistent with the view expressed by Allsop P (with the concurrence of Giles JA and myself) in Bunnings Group Ltd v CHEP Australia Ltd (No 2) [2011] NSWCA 384 at [12]. In the absence of any evidence before the Court of interest rates prevailing in the community, the Court should assume that the rate prescribed for payments of pre-judgment interest represents fair compensation for a party that has been kept out of its money. 18Accordingly, interest payable by the respondents should be calculated at the pre-judgment rate of the RBA cash rate plus 4%.

Costs of the proceedings at first instance 19The parties agree that, in light of the partial success of each side on appeal, there should be no order for payment of the costs of the appeal. They also agree that the costs order made at first instance should be set aside because it was based on the respondents' complete success at first instance whereas that result has been reversed in part on appeal. 20MBM submits that there should be no order for the costs of the proceedings at first instance. It contends that, for the purpose of the prima facie rule that costs "follow the event" (UCPR r 42.1), there were two "events": first, the respondents' success on their claims in respect of Eastern Range and, secondly (taking account of the appeal judgment), MBM's success in defeating the respondents' claims in respect of Channar. 21MBM points out that the sub-issues in respect of the second "event" (the "through or under" and "in association with" issues) were the subject of substantial evidence and written and oral submissions at first instance, which examined in detail the exploration activities of MBM and its related entities over a number of years. It submits that the expenditure of this time and effort resulted in the two "events" being "broadly proportionate to one another in terms of their complexity and the extent to which they were the focus of the parties' evidence and written and oral submissions. Indeed, in terms of the evidence, to the extent that any separation of the issues is possible, the 'through or under' and 'in association with' issues predominated" (at [30(f)]). 22WPPL submits that it is entitled to payment of two-thirds of its costs of the proceedings at first instance. It points out that it was successful in respect of about two-thirds of the total value of its claim, being approximately $90 million (inclusive of interest) in respect of Eastern Range. (Its claim of about $45 million inclusive of interest in respect of Channar was unsuccessful.) It submits that significant resources were devoted to the "extension of ore bodies" issue which it was not necessary for this Court to consider, given its finding in favour of the respondents on the "MBM area" issue. It asserts that this was the only issue addressed by the expert reports tendered by both parties and the only issue the subject of oral evidence at the trial. It disagrees with the assertion by MBM that the "through or under" and "in association with" sub-issues were the predominant issues in terms of time at the trial. 23HPPL also seeks an order that MBM pay two-thirds of its costs of the proceedings at first instance. It adopts WPPL's submissions and submits that the starting point for analysis should be that HPPL and WPPL were required to sue to enforce their rights and that they succeeded to a significant extent. It submits that the issues litigated were not readily divisible because the "construction arguments were not wholly distinct and the evidence as to the commonly known factual matrix was, at least generally, not referable only to Eastern Ranges or to the Channar disputed area" (at [21]). 24In reply, MBM submits that to reflect WPPL and HPPL's two-thirds success on their claims by an order for MBM to pay their costs in the same proportion would be "artificial and unjust". It submits that the costs of the litigation in respect of the Eastern Range and Channar areas were at least broadly similar, although arguably they were greater in respect of the latter (in relation to which MBM succeeded) because the "through or under" and "in association with" issues arose only in relation to Channar, and not Eastern Range, whilst the "MBM area" issue was common to both. It also submits that no significance should be attached to the "extension of ore bodies" issue as it related only to the Channar claim, in respect of which MBM succeeded. 25I turn then to resolve the issue as to the proper order for payment of the first instance costs. 26The effect of UCPR r 42.1 is that the Court must exercise the discretion as to costs conferred on it by s 98 of the Civil Procedure Act by ordering that costs "follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs". 27Consistent with this rule, it has long been accepted that a plaintiff who obtains judgment at trial for a monetary sum will ordinarily be entitled to an order that the defendant pay his or her costs, notwithstanding that the plaintiff might not have recovered the whole of the amount he or she claimed. The circumstances of particular cases may warrant departure from this approach. In particular, where the defendant succeeded on a clearly dominant or separable issue, some variation may be warranted. In Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38], this Court provided the following summary of presently relevant principles: "● Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported). ● In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal. ... ● A separable issue can relate to 'any disputed question of fact or law' before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34]. ● Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272." 28These principles have been applied in subsequent cases including, recently, Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [18]. 29Favouring the respondents' position on the present issue are the facts that they were plaintiffs in the proceedings at first instance who were required by the defendant, MBM, to come to court to pursue their claims and that the respondents recovered a large proportion of the amount that they claimed (about two-thirds). 30In MBM's favour is the fact that it succeeded in resisting a distinct part of the respondents' claims (namely, in relation to Channar). The Court does not have any evidence before it estimating the proportion of the costs, time and effort devoted to the proceedings at first instance that was applicable to the Channar, as distinct from the Eastern Range, issue. Nevertheless, it is clear from the material that was before the Court on the appeal that that proportion was considerable. In my view the attention dedicated to that issue at first instance should be reflected in the costs order to be made. 31As MBM submitted, a costs order that simply reflected the proportion of the value of their claim that the respondents recovered would not be appropriate. Instead, recognition should also be given to the significance that the Channar issues assumed in the conduct of the proceedings at first instance. Allowing for this and the plaintiff/respondents' prima facie entitlement to an order for payment of their costs, I would order that MBM pay 50% of the respondents' costs at first instance.

Orders 32The orders that I propose are as follows: (1)Appeal allowed in part, in relation to the Channar area, but dismissed in relation to Eastern Range. (2)Orders 1 to 4 and 7 of the Court below be set aside and in lieu thereof: (a)Judgment for the first respondent against the appellant in the sum of $89,397,091.73, comprising: (i)$69,284,921.27; and (ii)$20,112,170.46 in interest. (b)Judgment for the second respondent against the appellant in the sum of $89,397,091.73, comprising: (i)$69,284,921.27; and (ii)$20,112,170.46 in interest. (c)The first respondent's claim against the appellant in respect of the Channar area is dismissed. (d)The second respondent's cross-claim against the appellant in respect of the Channar area is dismissed. (3)Note that the appellant was entitled to restitutionary payments from each of the respondents of $41,419,165.10 and that the respondents have made those payments. (4)Judgment against each of the respondents in the amount of $3,365,732.70 representing the appellant's entitlement to interest on those restitutionary payments. (5)Note that the Court does not make any order as to the costs of the appeal. (6)Order the appellant to pay 50% of the first instance costs of the first respondent and the second respondent. (7)Note that the cross-appeals filed by the first respondent and second respondent are withdrawn and that the Court does not make any order as to the costs of them. 33MEAGHER JA: I agree for the reasons given by Macfarlan JA, that the orders he proposes should be made. 34BARRETT JA: I also agree.

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