Sands & McDougall (Wholesale) Pty Ltd (in liq) & Anor v Commissioner of Taxation [1999] VSCA 36

Sands & McDougall (Wholesale) Pty Ltd (in liq) & Anor v Commissioner of Taxation [1999] VSCA 36 - VSCA 1999 case summary — Zoe

[10]

Grbavac v. Hart was a case of personal injuries, where the applicable rule was rule 26.02, and moreover a case in which, the plaintiff having succeeded in obtaining a verdict and judgment, her cause of action had merged in the judgment, so that there no longer existed the "claim" to which the rule referred. The case is not authority for the proposition that an offer of compromise under rule 26.11 can only be made before judgment. But in my opinion the court mentioned in rule 26.11 is the court of trial and does not include the Court of Appeal, and the costs in respect of the claim mentioned in the rule are the costs at first instance and do not include the costs of any appeal. The court the subject of the rule is the court in which the plaintiff has obtained a judgment on the claim, that is to say, the trial judge. The same may be said of rule 26.12, with which we are not directly concerned. No doubt, where the offer of compromise has been made before judgment as contemplated by rule 26.11 and an appeal is taken from that judgment, an offer of compromise outside Order 26 may be made, as Tadgell, J.A. said in considering the effect of the rules dealing with offers of compromise in claims for damages for personal injuries. Quite apart from the possibility of an offer of compromise made outside Order 26, it will be open to a plaintiff who before judgment made an offer answering the requirements of rule 26.11 to contend, in the event of a successful appeal by the plaintiff or an unsuccessful appeal by the defendant, that the making of the offer and its non-acceptance should induce the court, in disposing of the appeal, to award the costs of the appeal on a solicitor and client basis. In doing this the plaintiff would be founding an argument upon the presence in the rules of rule 26.11 but would not be suggesting that it operated of its own force in relation to the appeal. In the end counsel on both sides accepted that, notwithstanding the tenor of their outlines of submissions, the correct view was that rule 26.11 had no direct operation in relation to the costs of an appeal.

[26]

The real basis of the decision of the Full Court was that no "application" for interest had been made at the hearing as required by the section, and its decision on this point was upheld by the High Court: Whitlock v. Brew [1968] HCA 71; (1968) 118 C.L.R. 445. The decision of the Full Court in Brew v. Whitlock (No.3) was distinguished by the High Court in L. Shaddock & Associates Pty. Ltd. v. Parramatta City Council (No.2) [1982] HCA 59; (1983) 151 C.L.R. 590 as depending upon the statutory requirement that an order awarding interest be made "at the hearing ... upon application". In that case the trial judge dismissed the action, holding that no duty of care existed, but went on to assess damages in case he was wrong on the issue of liability. He determined that if liability had existed the plaintiffs would have been entitled to judgment for $173,938, which included interest to the date of judgment (20 March 1978). The Court of Appeal of New South Wales dismissed an appeal by the plaintiffs, but a further appeal by them to the High Court succeeded, the judgment of the trial judge being set aside and in lieu thereof judgment being made for the plaintiffs in the sum of $173,938. That order was made by the High Court on 28 October 1981. By oversight counsel for the plaintiffs did not ask the High Court to award interest on the amount of $173,938 in respect of the period from 20 March 1978 until 28 October 1981. Such an award of interest was made by the High Court under the slip rule on 22 October 1982 in the reported decision. The statute there empowered the Supreme Court, in any proceeding for the recovery of damages, to order that there should be included, in the sum for which judgment was given, interest at such rate as it thought fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date when the judgment took effect. The High Court observed, at 594, that the trial judge possessed that power, that the Court of Appeal possessed that power on the appeal to it and that it possessed a like power on the appeal to it from the Court of Appeal. At 595 the Court observed that it was not disputed on behalf of the Council that, if interest was to be awarded, the appropriate rate was 10%. These two decisions, among others, were considered by McHugh, J.A. in Storey & Keers Pty. Ltd. v. Johnstone (1987) 9 N.S.W.L.R. 446. See too what was said by Gobbo, J. in Mario Piraino Pty. Ltd. v. Roads Corporation (unreported, 8 November 1991).

[28]

As at present advised, and notwithstanding what was said by the Full Court in Brew v. Whitlock (No.3), I should be reluctant to hold that the slip rule may not be invoked in a case in which it is clear that, had the matter been adverted to, the primary judge would have made an award of interest in the exercise of a statutory power merely on the ground that there is room for debate about the rate of interest or the period for which it should be allowed. But I need not pursue this question, for in my opinion it is unnecessary to decide whether in the present case the fact that rule 26.11(2) gives a discretion concerning the period in respect of which solicitor and client costs are to be awarded prevents the application of the slip rule. I consider that the rule cannot be applied for a more fundamental reason. This is the impossibility of saying, with the necessary degree of conviction, that an award of solicitor and client costs would have been made had the matter been drawn to the attention of the Court of Appeal. I am here considering for the moment what I will call the direct application of rule 26.11, by which I mean its application at the trial of the proceeding, and asking myself whether it is clear that the Court of Appeal would, had the matter been raised, have awarded solicitor and client costs below in framing the order to be substituted for that of the judge. It may well be that the Court would have done so, but I do not think that it can be said that there can be no real difference of opinion, no controversy, about whether that was the appropriate order to make. I have referred to the discretion conferred by rule 26.11(2). The respondent says that it is fairly arguable that solicitor and client costs would not have been awarded had the matter been raised before the Court of Appeal. He draws attention particularly to the facts I have earlier summarised concerning the delivery of affidavits, including the fact that some of the affidavits dealing with insolvency that had been delivered by the time of the offer of compromise were ultimately not relied upon. My view is that it is probable that the Court of Appeal would have awarded solicitor and client costs below had the matter been debated at the right time, but, notwithstanding Mr Nash's valiant attempts to persuade us to the contrary, I am not prepared to say that the matter is beyond argument.

At a glance

Court

Decision date

Before

Source

Judgment (31 paragraphs)

Parties

Cases Cited (1)