Plaintiff v Defendants [2006] VSC 489 | Case summary

It is to be noted that the commencing date or dates for the purpose of the calculations is subsequent to the date of commencement of the proceeding on 20 December 2000.

4 I was offered the spreadsheets that contained the calculations but counsel for Mr Hilliard did not require them and I considered it unnecessary for me to peruse them let alone check the calculations. I considered it appropriate to act on the basis that the figures in the calculation sheet faithfully recorded the calculations in the spreadsheets.

5 Counsel for Mr Hilliard opposed these orders on the following bases. Dealing first with the calculation sheet, he accepted as correct the amount calculated as 75% of the face value of the cheques; that amount was $1,545,489.04. He also accepted the amount calculated under s 60 as interest on the face value of the cheques from the date of payment to 8 December 2006; that was $1,002,441.68. He did however challenge the allocation of interest paid by Westpac to the PAS Group which totalled $931,324, and consequentially the amount of $535,603.49 calculated as interest thereon under s 60.

6 Then, on the matter of costs counsel for Westpac submitted that costs follow the event that Westpac was successful. Counsel for Mr Hilliard submitted that it was appropriate to order that Mr Hilliard pay Westpac's costs but not on the issue of payments made under a mistake as to the mandate or authority including the issue of forgery of the $50,000 mandate or authority, and the related case based on representations and deceit, which he submitted should be paid by Westpac on an indemnity basis. He also submitted that Westpac should pay the costs of the plea in para 19 of the statement of claim that it had been reasonably entitled to admit liability to the PAS Group.

7 Finally, counsel for Mr Hilliard submitted that the costs payable by Westpac should be ordered to be paid to Mr Hilliard's solicitor, in support of which submission the following was said. Mr Hilliard was a pensioner without means and whose assets, including all assets covered by the Mareva injunctions granted by the Court, had been expended in living expenses and litigation costs, since which time the defence had been conducted without funding. I was told that the submission accorded with Mr Hilliard's instructions, which is understandable enough both because of the moral obligation to see his lawyers paid and because if the costs were paid to him and he became bankrupt the funds may have to be disgorged. An additional reason for making the order is to avoid the possibility of a set off of such costs on a taxation.

8 I now deal with the issues thus raised, commencing with the matter of interest.

9 I commented on how the claim was made up and on the matter of interest at [39]-[42] of my judgment. I particularly commented on the matter of interest at [40].

10 The starting point is cl 2.1 of the Deed of Settlement under which Westpac agreed to bear responsibility for losses arising from the Unauthorised Drawings (as defined) in accordance with the formula in Schedule A. Clause 2.2 stated that interest was to be included in calculating the losses and the rate at which interest would be calculated. The formula in Schedule A provided that Westpac was liable to pay 15% of the face value of cheques under $10,000 and 75% of the face value of cheques over $10,000, plus interest.

11 The simple application of this formula in the present litigation was this. If, as was the fact, Westpac compensated the PAS Group in accordance with the formula in respect of cheques having a face value less, or more, than $10,000 the entire amount including the interest component would be claimed. That, as I understand it, is how the claim was structured when the proceeding was commenced. If however as later came to be the case by amendment, Westpac proceeded only to seek recovery in respect of cheques with a face value of $10,000 plus then its claim must thereby have been limited to the amount being 75% of the face value of such cheques plus interest thereon. Interest under s 60 of the Supreme Court Act would be another matter.

12 I was informed by Westpac's counsel that in preparing the schedule the amount paid by Westpac on account of interest was apportioned to the 61 cheques sued upon. I understood counsel to mean that the interest paid in respect of cheques under $10,000 was excluded.

13 I should say as to this, referring to [40] in my judgment, that Westpac paid two amounts for interest, $731,350.79 on 6 December 2001 and $250,000 on 25 September 2002, totalling $981,350.79. As I have said I did not know how these amounts were calculated. Further, the former figure was a negotiated amount from a larger figure, and I did not know if the latter figure included compensation for cheques under $10,000. I do however note that the amount of the allocated interest stated in the schedule is $931,324, which is $50,026.79 less than the figure advised at trial and referred to at [40]. According to counsel that reduction would be accounted for by allowing off interest paid on cheques under $10,000.

14 I need at this stage to consider the basis on which Mr Hilliard's counsel opposed allowance of the allocated interest and the s 60 interest thereon. He submitted, by reference to Halsbury's Laws of Australia[2] and Hungerfords v Walker[3], that generally speaking, and in cases of restitution based on unjust enrichment by reason of payments made under a mistake, the common law allows simple interest. The allowance of compound interest is exceptional. Further, in the present case Westpac had not claimed interest on damages on the basis of the principles in Hungerfords. Thus, it was submitted, Westpac was limited to recovering simple interest.

15 The next step in the argument was that Westpac had not established that the interest it was seeking to recover was simple interest. That being so, that part of the claim should be rejected for want of satisfactory proof. It followed that the related claim for s 60 interest must fail. In aid of this submission it was said that every indication was that rather than simple interest the amount represented a compromise of a claim put by Mr Vizard and the PAS Group. Although the full circumstances of the claim had not been disclosed to the Court, it appeared that the PAS Group had made a claim for the loss of use of money. That is, not a mere claim for simple interest. Furthermore, that claim was compromised in circumstances not disclosed[4], and an amount was settled upon.

16 In his submissions in reply Westpac's counsel did not inform me of the basis of calculation of the interest paid to the PAS Group. He did however say that to suggest, as Mr Hilliard's counsel had, "that some quite different interest calculation might have been appropriate is an invitation to unpick the basis of the settlement entirely". That and the subsequent discussion indicated that the interest paid to the PAS Group, and what is sought to be recovered, was not calculated on a simple interest basis in respect of the amount being 75% of the face value of the 61 cheques. At the same time, what counsel said left the basis of the calculation unclear.

17 To enable me to fairly, and reasonably as between the parties, consider this aspect of Westpac's claim I require evidence as to the calculation of the interest paid to the PAS Group including the basis thereof. Without that evidence I am working in the dark, and am unable to fairly deal with this part of the claim. To enable Westpac to consider the position and, if desired, place before me such evidence as it may be advised I will adjourn the further hearing of the proceeding to a convenient date.

18 I now deal with the issue of costs. The long established practice stated by Lord Sterndale in Ritter v Godfrey[5] is that "in the absence of special circumstances a successful litigant should receive his costs". Of course, as counsel accepted without need for elaboration or reference to authority, the Court has a discretion, indeed a wide discretion on costs. But, like all discretions, the discretion must be exercised judicially and, if the general practice is to be departed from it must be on some ground properly available in the circumstances of the case.

19 The question that arises is whether, as Mr Hilliard's counsel submits, good reason exists to depart from the normal practice. He sought a special order in relation to two areas of the case. First was Westpac's case based on a mistake as to its mandate or authority and the alleged $50,000 forged mandate or authority and the alternative claims based on representations and deceit, in respect of all of which Westpac failed. The second area was Westpac's claim that it had been reasonably entitled to admit liability to the PAS Group. This claim was not pressed as indicated at [37] in my judgment and hence was not established.

20 Of these two areas I consider that the non-establishment of the second issue would not properly result in a departure from the normal practice. Time was not wasted on the issue. Furthermore, the mere fact that a successful plaintiff does not succeed on an issue does not mean that the plaintiff should be denied costs on that issue or even be ordered to pay the unsuccessful party the costs of the issue. See Cretazzo v Lombardi[6] referred to with approval in Victoria v Master Builders' Association of Victoria[7]. In any event it would not be reasonable to make such an order in this case.

21 The considerations on the first area are quite different. Not only did Westpac's case based on mandate or authority fail both on the allegation that the $50,000 mandate was a forgery and an instrument of Mr Hilliard's fraud but more generally in relation to the practice in relation to cheques. The allegations of forgery and fraud were very serious and such as might attract penalties under the criminal law and they failed. Moreover the allegation of forgery in para 10(a) was added to by the plea of deceit in para 17 and the representation case in para 16.

22 Further, the fundamental allegation of forgery or, more precisely, that Mr Hilliard placed the signature of Mr Vizard on the $50,000 authority without Mr Vizard's approval, was not supported by the document examiner called by Westpac and Mr Vizard's evidence on the point was unconvincing as I discussed in the judgment.

23 These issues on which Westpac failed occupied an appreciable amount of time at the trial. The issues may more particularly be identified as those in para 10(a), 16 and 17 of the statement of claim. The evidence of Mr Vizard provided a slender basis for the allegations, and they must have been made with an awareness of the risk of failure which eventuated. Further, they were separate and distinct allegations that did not have to be made.

24 I have regard to all that counsel said but in my view, regarding Westpac's failure on those issues, including in the overall context of the case, and the severity and nature of the issues, it is not fair or reasonable that Mr Hilliard should be required to pay the costs on them. Nevertheless regarding matters overall I do not consider it fair that Westpac should pay Mr Hilliard's costs on those issues. Accordingly I will order that Mr Hilliard pay the plaintiff's costs of the proceeding including reserved costs but excluding the costs of the issues in para 10(a), 16 and 17 of the second further amended statement of claim. It seems convenient to make that order when final orders are made in the proceeding.

Plaintiff v Defendants

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Judgment (10 paragraphs)

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Cases Cited (2)