CITATION: Ceccon Transport Pty Ltd & Ors v Tomazos

Group Pty Ltd (No 2) [2017] NTSC 55

PARTIES: CECCON TRANSPORT PTY LTD (ACN

009 595 911)

and

CECCON, Suzanne Yoko

and

CECCON, Antonio

and

TOMAZOS GROUP PTY LTD (ACN 009

618 704)

and

TOMAZOS GROUP PTY LTD (ACN 009

618 704)

and

TOMAZOS TRANSPORT PTY LTD

(ACN 159 500 857)

and

CECCON TRANSPORT PTY LTD (ACN

009 595 911)

and

CECCON, Antonio

and

CECCON, Suzanne Yoko

2

TITLE OF COURT: SUPREME COURT OF THE

NORTHERN TERRITORY

JURISDICTION: SUPREME COURT OF THE

NORTHERN TERRITORY

EXERCISING TERRITORY

JURISDICTION

FILE NO: No 108 of 2014 (21451042)

DELIVERED ON: 24 July 2017

DELIVERED AT: Darwin

WRITTEN SUBMISSIONS: 19 April 2017, 11 May 2017, 24 May

2017, 5 June 2017 and 7 June 2017

JUDGMENT OF: HILEY J

CATCHWORDS:

CIVIL LAW - PROCEDURE – Supreme Court Procedure - Practice

Direction No. 6 of 2009 – Defendant’s failure to comply with Practice

Direction No. 6 of 2009 caused delay and unnecessary costs to be incurred

by plaintiffs and prevented proper consideration of an appropriate resolution

of the proceedings – Defendants ordered to pay costs on an indemnity basis

CIVIL LAW – PROCEDURE – Discovery - Failure to give proper discovery

prolonged the dispute – Conduct falls far short of the conduct expected of a

litigant properly advised in relation to the seriousness of complying with the

obligation to give discovery – Indemnity costs may be allowed

CIVIL LAW - PROCEDURE – COSTS – Calderbank settlement offer made

by plaintiffs - Judgment less favourable to defendants than Calderbank offer

– Refusal of offer was unreasonable

3

INTEREST – Interest on costs – Whether a higher interest rate should be imposed

where there is failure to comply with Practice Direction No. 6 of 2009

INTEREST – Interest on pre-judgment damages – Interest should be allowed at

ordinary commercial rates – Where there is no evidence of relevant commercial rates a

fair and reasonable rate should be applied – Prescribed post judgment rates are a useful

guide

Sherwin and Sherwin v Commens and Commens [2008] NTSC 45, Applied

Colgate-Palmolive Pty Limited v Cussons Pty Limited [1993] FCA 801; 46 FCR 225,

Cullen v Trappel (1979-80) [1980] HCA 10; 146 CLR 1, Edgar v Public Trustee for

the NT [2011] NTSC 21, Elite Protective Personnel Pty Ltd & Anor v Salmon [2007]

NSWCA 322, Groote Eylandt Aboriginal Trust Inc v Deloitte, Touche Tohmatsu (No

3) [2017] NTSC 30, Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover

Authority (No 2) [2005] VSCA 298; 13 VR 435, Hobartville Stud Pty Ltd v Union

Insurance Co Ltd (1991) 25 NSWLR 358, LO v NTA [2017] NTSC 24, Miwa Pty Ltd v

Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344, SMEC Testing Services Ply

Ltd v Campbelltown City Council [2000] NSWCA 323, Spadaccini v Grice [2012]

NTSC 41, The Silver Fox Co Pty Ltd (No 3) (2004) 214 ALR 621, Veetemp

Australasia Pty Ltd v GRD Group NT Pty Ltd [2012] NTSC 93, Referred to

Territory Sheet Metal Pty Ltd v ANZ Banking Group Limited [2010] NTSC 3,

Distinguished

Michael Grant QC (ed) Civil Procedure Northern Territory (Presidian Legal

Publications)

Federal Court of Australia Act 1975 (Cth) s 52(2)(a)

Federal Court Rules 2011 (Cth) 39.06

Supreme Court Rules (NT) 26.03(3), 63.74, 63.74(1), 59.02, 59.02(3)

Supreme Court Act 1979 (NT) s 85,

Northern Territory Supreme Court, Practice Direction No. 6 of 2009 Trial Civil

Procedure Reforms, 11 June 2009.

4

REPRESENTATION:

Counsel:

Plaintiff: B Ilkovski

Defendants: M Crawley

Solicitors:

Plaintiff: Clayton Utz

Defendants: De Silva Hebron Barristers & Solicitors

Judgment category classification: B

Judgment ID Number: Hil1710

Number of pages: 48

IN THE SUPREME COURT

OF THE NORTHERN TERRITORY

OF AUSTRALIA

AT DARWIN

Ceccon Transport Pty Ltd & Ors v Tomazos Group Pty Ltd (No 2)

[2017] NTSC 55

No. 108 of 2014 (21451042)

BETWEEN:

CECCON TRANSPORT PTY

LTD (ACN 009 595 911)

First Plaintiff

AND:

CECCON SUZANNE YOKO

Second Plaintiff

AND:

CECCON ANTONIO

Third Plaintiff

AND:

TOMAZOS GROUP PTY LTD

(ACN 009 618 704)

Defendant

AND:

TOMAZOS GROUP PTY LTD

(ACN 009 618 704)

First Plaintiff by Counterclaim

AND:

2

TOMAZOS TRANSPORT PTY

LTD (ACN 159 500 857)

Second Plaintiff by Counterclaim

AND:

CECCON TRANSPORT PTY

LTD (ACN 009 595 911)

First Defendant by Counterclaim

AND:

ANTONIO CECCON

Second Defendant by

Counterclaim

AND:

SUZANNE YOKO CECCON

Third Defendant by Counterclaim

CORAM: HILEY J

REASONS FOR JUDGMENT

(Delivered 24 July 2017)

3

Introduction ............................................................................................. 4

Applications for stay.......................................................................... 5

Plaintiffs’ main submissions ................................................................... 11

Practice Direction 6 of 2009 ................................................................... 15

Indemnity costs ...................................................................................... 26

Discovery .............................................................................................. 27

Settlement offer of 7 August ................................................................... 29

Interest on costs ..................................................................................... 34

Interest payable under the Loan Agreement ............................................. 37

Interest on amounts found due in [213(g)] ............................................... 38

Interest up to judgment ........................................................................... 45

Orders ................................................................................................... 47

4

Introduction

[1] On 31 March 2017 the Court published its reasons for decision

(Reasons)1 and invited submissions from the parties on what orders

should be made consequential upon the Court’s findings and

conclusions set out in the Reasons, in particular orders relating to

interest and costs.

[2] On 11 April the plaintiffs (Ceccon parties) provided draft orders that

included the following:

1. In respect of paragraph 213(a) of the reasons for judgment given

by the Court on 31 March 2017, judgment for the Third Plaintiff

against the Defendant in the amount of:

(a) $901,183.62; and

(b) $221.77 per day for each day after 11 April 2017 until the

amount at paragraph 1(a) above has been paid

2. In respect of paragraphs 213(b), (c), (d), (e) and (f) of the

reasons for judgment given by the Court on 31 March 2017,

judgment for the First Plaintiff against the Defendant in the

amount of $1,023,597.63.

3. The Amended Counterclaim is dismissed.

1 Ceccon Transport Pty Ltd & Ors v Tomazos Group Pty Ltd [2017] NTSC 25 .

5

[3] The plaintiffs also foreshadowed written submissions in relation to:

(a) the proper rate of interest payable on the amounts found due in

paragraphs 213(b), (c), (d), (e) and (f) of the Reasons;

(b) costs, including costs on an indemnity basis; and

(c) interest on costs and the rate of interest.

[4] The defendant and plaintiffs by Counterclaim (Tomazos parties)

indicated that they:

(a) propose to appeal against the Court’s decision, apart from the

Court’s dismissal of the claim regarding the transfer of a unit;

(b) do not agree with the plaintiffs’ calculations concerning interest

on the loan, oppose an order for costs and wished to make

submissions on the rate of interest otherwise payable; and

(c) sought a stay of the question of costs and of execution of the

judgment pending the outcome of the proposed appeal.

Applications for stay on costs and stay of execution

Stay on costs

[5] On 30 May 2017 I rejected the application for a stay on the costs issue.

The main reason underlying that stay application was a contention that

the submissions would involve the disclosure of confidential

information such as without prejudice offers and things said and done

6

in the course of mediation. Tomazos contended that the disclosure of

such material may be prejudicial to the foreshadowed appeal. 2 Counsel

also submitted that the fact that a successful appeal would render any

costs order otiose is a relevant matter, but accepted that this is not

decisive.3

[6] Counsel for the Tomazos parties indicated that they might call

evidence from Mr Maurice QC, who had conducted a mediation on

4 August 2015. The parties agreed that they would attempt to provide

the Court with a document indicating relevant matters concerning the

mediation without the need for the mediator to give evidence.

However counsel for the Tomazos parties did not proceed with either

of these proposals. I indicated that I was prepared to make appropriate

orders, if requested, to preserve the confidentiality of settlement

discussions including settlement offers. As matters transpired, the only

disclosure that was made about such matters was the two settlement

offers made by the plaintiffs, the first on 7 August 2015, three days

after the unsuccessful mediation, the second on 7 March 2016, the first

day of the hearing.

[7] No attempt was made to identify any possible ground of appeal. Costs

orders are part of the final orders disposing of most cases, and are

often the subject of the appellate intervention. Even if the Tomazos

2 In this context the Tomazos parties referred to The Silver Fox Co Pty Ltd (No 3) (2004)

214 ALR 621 at 624. 3 In this context the Tomazos parties referred to Groote Eylandt Aboriginal Trust Inc v

Deloitte, Touche Tohmatsu (No 3) [2017] NTSC 30 at [14].

7

parties were successful on appeal it does not necessarily follow that if

a costs order is made it will be quashed. Much will depend upon the

basis for the successful appeal.

[8] In those circumstances I considered there was no proper reason why the

matter should not be finalised in the normal way by dealing with costs

now, notwithstanding the possibility of an appeal.4

Stay of execution

[9] In their written submissions of 19 April 2017 the Tomazos parties

stated that they understand the first plaintiff has ceased trading and

that nothing is otherwise known of the financial position of the

plaintiffs. Absent any such assets, a successful appeal would be

rendered nugatory if the plaintiffs had no capacity to repay the

judgment. They sought the opportunity for this issue to be addressed

by affidavits and supplementary submissions.

[10] In his affidavit of 10 May 2017 Mr De Silva stated that he was

instructed to appeal the judgment both in respect of the claim and

counterclaim. He said:

The Tomazos entities are concerned that if the judgment is paid

and the appeal is successful, the plaintiffs may not have the

capacity to repay the judgment. Apart from the fact that Ceccon

Transport Pty Ltd has ceased trading, nothing is known of the

financial position of any of the plaintiffs. Accordingly, the

4 See for example discussion in LO v NTA [2017] NTSC 24, The Silver Fox Co Pty Ltd (No

3) (2004) 214 ALR 621 at 624 and Groote Eylandt Aboriginal Trust Inc v Deloitte, Touche

Tohmatsu (No 3) [2017] NTSC 30 at [14].

8

Tomazos entities seek a stay of the judgment on such terms as

the court may deem appropriate.

[11] No further affidavits were provided. In their further submissions of

11 May 2017 the Tomazos parties simply stated that they rely upon the

previous submissions.

[12] In their submissions in reply, counsel for the plaintiffs referred to s 57

of the Supreme Court Act (NT) which empowers the Court or the Court

of Appeal to stay the whole or part of a proceeding under a judgment

appealed from where an appeal has been instituted. Subsection 57(3)

provides that:

Except as expressly provided by this section or by the Rules or

any other law in force in the Territory, the institution of an

appeal does not operate as a stay of execution

[13] Counsel cited relevant decisions5 and summarised the relevant factors

to be considered in the discretion to grant or refuse a stay as follows:

(a) A successful party at first instance is entitled to the “fruits of their

victory”;

(b) The onus is upon the applicant for a stay to demonstrate a reason

or an appropriate case to warrant the exercise of discretion in

favour of a stay;

5 Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685, pp 693-695; followed by

Kearney J in Enterprise Gold Mines NL v Mineral Horizons NL (1988) 52 NTR 13; see

also to like effect Henderson & Ors v Purairclean Pty Ltd & Anor[No 3] [2013] NTSC

73.

9

(c) The onus is upon the applicant for a stay to demonstrate a proper

basis for a stay that will be fair to all parties;

(d) In determining what terms will be fair to the parties, the Court

will weigh considerations such as the balance of convenience and

the competing rights of the parties;

(e) This may require a condition on the grant of a stay that the

applicant pay either part or whole of the judgment debt or give

security for part or whole of the judgment debt to reflect a fair

adjustment of the rights of the parties;

(f) Where there is a risk that, if a stay is granted, the assets of the

applicant will be disposed of the Court may, in the exercise of its

discretion, refuse to grant a stay;

(g) Where there is a risk that the appeal will prove abortive if the

applicant succeeds and a stay is not granted, courts will normally

exercise their discretion in favour of granting a stay; and

(h) In considering whether to exercise their discretion to grant a stay,

courts will not generally speculate about the appellant's prospects

of success. However this does not prevent making some

preliminary assessment about whether the appellant has an

arguable case when considering the specific terms of a stay that

will be appropriate fairly to adjust the interest of the parties.

10

[14] I do not consider that the Tomazos parties have shown that a stay

should be granted. More is required than the vague concerns expressed

by the Tomazos parties and their lawyers. They have the onus of

showing why a stay should be granted. There is no evidential onus on

a respondent to an application for a stay to show why it should enjoy

the fruits of victory.

[15] Although it may not normally be relevant for a court to consider the

prospects of an appeal against its decision succeeding, the fact that no

appeal has been instituted and that the scope of a potential appeal has

not been described is relevant. This is particularly so in the present

matter where a substantial part of the plaintiffs’ success on their claim

is based on admissions made, albeit late, by the Tomazos parties.

[16] Counsel for the plaintiffs submitted the Tomazos parties have not

explained why there is any need or imperative to protect the subject

matter of the litigation where much of the judgment debt relates to

admitted facts. The Counterclaim is not a legal set off against these

amounts, nor, most probably, an equitable one. The Tomazos parties

merely wish to not have to pay over anything on the speculation of an

offsetting claim. An attempt to secure such a benefit in these

circumstances is totally destructive of the Ceccon parties ’ legitimate

interests in enjoying the fruits of victory. The denial of the fruits of

victory require appropriate conditions on the grant of a stay, and the

Tomazos parties’ failure to offer any appropriate conditions is, again, a

11

failure to discharge its onus to enliven the Court’s discretion in a

proper and justified manner.

[17] I agree with those contentions. I reject the application for stay of

execution.

Plaintiffs’ main submissions

[18] The Ceccon parties seek the following orders for costs and interest.

(1) Tomazos Group Pty Limited and Tomazos Transport Pty Limited

jointly and severally pay the costs of the Plaintiffs and Defendants

by Counterclaim on an indemnity basis;

(2) In the alternative to (1), Tomazos Group Pty Limited and Tomazos

Transport Pty Limited jointly and severally pay the costs of the

Plaintiffs and Defendants by Counterclaim on:

(i) the standard basis up to and including 6 August 2015; and

(ii) an indemnity basis from 7 August 2015;6

(3) In the alternative to (1) and (2), Tomazos Group Pty Limited and

Tomazos Transport Pty Limited jointly and severally pay the costs

of the Plaintiffs and Defendants by Counterclaim on:

6 On 7 August 2015 Ceccon offered to settle the claims and counterclaims in the proc eeding

on the basis that the Tomazos parties pay $2,100,000 (plus any applicable GST) to the first

plaintiff. That offer was not accepted.

12

(i) the standard basis up to and including 6 March 2016; and

(ii) an indemnity basis from 7 March 2016;7

(4) In the alternative to (1), (2) and (3), Tomazos Group Pty Limited

and Tomazos Transport Pty Limited jointly and severally pay the

costs of the Plaintiffs and Defendants by Counterclaim on:

(i) an indemnity basis in respect of costs incurred or determined

to be attributable to the November 2011 Sale Agreement or

Alternative November 2011 Sale Agreement; and

(ii) the standard basis otherwise;

(5) In the alternative to (1)-(4), Tomazos Group Pty Limited and

Tomazos Transport Pty Limited jointly and severally pay the costs

of the Plaintiffs and Defendants by Counterclaim on the standard

basis;

(6) Tomazos Group Pty Limited and Tomazos Transport Pty Limited

jointly and severally pay interest on costs at a rate of 15.5% per

annum; and

(7) Tomazos Group Pty Limited to pay interest on the balance of any

amounts found to be payable in the Reasons at the rate of interest

prescribed for post judgment interest under the Supreme Court

7 On 7 March 2016 Ceccon offered to settle the claims and counterclaims in the proceeding

on the basis that the Tomazos parties pay $2,500,000 (plus any applicable GST) to the

first plaintiff. That offer was not accepted.

13

Rules 1987 (NT) (the Rules) for each relevant period plus an

additional 8% as simple interest.

[19] The Ceccon parties’ advanced the following contentions underpinning

these orders:

(a) The orders sought in:

(i) 2(1) and 2(7) above are justified because the Tomazos parties

did not comply with Practice Direction 6 of 2009 (PD6) in

any material respect on the claim or the counterclaim and

notwithstanding being given a reasonable opportunity to do

so;

(ii) 2(1) above is justified because of the Court’s findings in

respect of the Tomazos parties' failure to properly comply

with the order for general discovery and failed to discover

documents in accordance with their continuing duty to do so

and only well after the failure to discover was brought to

their attention;

(b) The orders sought in 2(2) and 2(3) above are justified because the

Tomazos parties did not accept two Calderbank offers (one dated

7 August 2015 and the other 7 March 2016) which:

(i) were a genuine compromise;

14

(ii) had terms less favourable to the Ceccon parties than the

findings made in the Reasons; and

(iii) were, in the circumstances, unreasonably rejected by the

Tomazos parties;

(c) The order sought in 2(4) above is justified as a more limited

alternative to proposed order 2(1) in view of the Court's findings

about the Tomazos parties' failure to comply with the order for

general discovery;

(d) The order sought in 2(5) above is justified because the Ceccon

parties succeeded on substantially all of their claims and in

successfully defending the Tomazos parties’ counterclaim; and

(e) The order sought in 2(6) above is justified because it compensates

the Ceccon parties for having to finance this litigation by paying

fees to their legal representatives, however, the rate is higher

because it is related to the orders sought in 2(1) and 2(7) and the

argument developed below in respect of the Tomazos parties'

failure to comply with PD6 in any material respect.

15

Practice Direction 6 of 2009

[20] In Spadaccini v Grice8 Barr J explained the history and purpose of

PD6. At [44] he said:

… PD6 requires that parties to a dispute “should follow a

reasonable procedure, suitable to their particular circumstances,

which is intended to avoid litigation.” PD6 provides substantial

detail as to the required pre-commencement procedure, but I

briefly summarise the first two steps in the procedure as

follows: (1) the plaintiff should send a letter to the defendant

with details of the claim, supported by copies of the essential

documents on which the plaintiff relies and any documents

(except privileged documents) which might significantly impair

the plaintiff’s case; (2) the defendant should acknowledge the

plaintiff’s claim letter promptly, and then provide a full written

response, as appropriate, accepting the claim in whole or in part

and making proposals for settlement; or stating that the claim is

not accepted. The defendant must be precise about what parts,

if any, are accepted and what parts are rejected and provide

detailed reasons (including supporting documents) for non-

acceptance. PD6 requires pre-commencement discovery of

documents by both sides.

[21] The relevant costs and interest provisions in PD6 are:

13. If, in the opinion of the Court, non-compliance with this

Part has led to the commencement of proceedings which

might otherwise not have needed to be commenced, or has

led to delay or costs being incurred in the proceedings that

might otherwise not have been incurred, the orders the

Court may make include:

13.1 an order that the party at fault pay the costs of the

proceedings, or part of those costs, of the other party

or parties;

13.2 an order that the party at fault pay those costs on an

indemnity basis;

8 [2012] NTSC 41 at [37] - [47.

16

13.3 if the party at fault is a plaintiff in whose favour an

order for the payment of damages or some specified

sum is subsequently made, an order depriving that

party of interest on such sum and in respect of such

period as may be specified, and/or awarding interest at

a lower rate than that at which interest would

otherwise have been awarded;

13.4 if the party at fault is a defendant and an order for the

payment of damages or some specified sum is

subsequently made in favour of the claimant, an order

awarding interest on such sum and in respect of such

period as may be specified at a higher rate than the

rate at which interest would otherwise have been

awarded.

…

27 The Court will take into account, amongst other matters,

whether a party has complied with its duties under the

Rules and further this Practice Direction when considering:

27.1 the exercise of its discretion as to costs under r.63.03;

27.2 the exercise of its discretion in relation to interest

under s 84 of the Supreme Court Act.

28. Notwithstanding O.63.74, where the Court decides that a

party has failed to comply with its duties under the Rules

and this Practice Direction, the Court may award interest

on costs at a rate not exceeding the rate fixed by the Rules,

plus 8%.

[22] The Ceccon parties contend:

(a) that the Tomazos parties did not comply with PD6 in any material

respect on the claim or the counterclaim notwithstanding being

given a reasonable opportunity to do so; and

17

(b) their failure to comply with PD6 in the circumstances of this

proceeding is such as to justify the Court making orders that the

Tomazos parties:

(i) pay the Ceccon parties' costs on an indemnity basis

(PD6 [13.1] and [13.2]);

(ii) pay interest on amounts awarded at a higher rate than the rate

at which interest would otherwise have been awarded

(PD6 [13.4]); and

(iii) pay interest on costs (PD 6 [28]).

[23] The relevant circumstances in relation to compliance with PD6 are

deposed to in paragraphs [4] to [17] of the affidavit of Mark Spain

made on 19 April 2017 and the annexures referred to therein (Spain

Affidavit) and in paragraphs [3] to [17] of the affidavit of David De

Silva made on 19 April 2017 (De Silva Affidavit).

[24] The plaintiffs contend, and I accept, that the solicitors for Ceccon

Transport Pty Ltd (Ceccon Transport):

(a) filed the writ and a general endorsement of claim on 31 October

2014 to preserve the claims due to the potential expiry of

limitation periods;

18

(b) thereafter complied with the requirements of PD6 as soon as

reasonably possible, commencing with a detailed letter on

7 November 2014 (the PD6 letter); and

(c) served an amended writ and a general endorsement of claim on

4 February 2015 following a period of approximately three months

during which Tomazos Group Pty Ltd (Tomazos Group) failed to

provide any meaningful response or reasonable explanation as to

why a response could not be provided in accordance with the

requirements of PD6.

[25] Indeed it appears that no meaningful response was forthcoming from

the Tomazos parties until 29 April when they filed their defence and

counterclaim. Moreover the Tomazos parties appear to have made no

attempt to provide their own PD6 letter before filing their

counterclaim. That counterclaim raised a significant number of

complex issues which were independent of those raised by the

plaintiffs and were responsible for a very significant part of the

proceedings, particularly leading up to and during the hearing of the

matter.

[26] The PD6 letter provided details of the claims referred to in these

proceedings as the Loan Agreement, Material Sale and Supply, the

November 2011 Sale Agreement, the Supply and Fit Agreement, the

Validation and Accessibility Agreement, and the Gunn Point

19

Rehabilitation Agreement. It also contained a claim for damages for

breach of an agreement by Tomazos to transfer freehold title in an

apartment to be selected by Ceccon. The letter included a Schedule

quantifying the amount said to be due, a copy of a number of important

documents and a copy of PD6 and an explanatory document.

[27] The plaintiffs were substantially successful in establishing those

claims, apart from the claims regarding rehabilitation (which was not

ultimately pressed) and the claims regarding the apartment and some

small items such as the $600 genset hut. There was no contest in

respect of the claims regarding the $400,000 owing under the Loan

Agreement and that interest of at least 7% per annum was payable

thereon, the $322,886.79 owing for the Material Sale and Supply

(Reasons [213(b)]), liability to pay about $101,000 for the stockpiled

materials (Reasons [141] – [143]), the $2,500 owing under the Supply

and Fit Agreement (Reasons [213(d)]), the $5,782.26 payable under the

Supply and Haulage Agreement (Reasons [213(e)]) and the

$133,029.50 payable under the Validation and Accessibility Agreement

(Reasons [213(f)]). These items comprise at least $1.1M of the

defendant’s liability. Apart from the dispute concerning the tran sfer of

the apartment, the main issues at trial concerned items of much lower

monetary significance than the obvious and longstanding indebtedness

exceeding $1.1M. These concerned the rate of interest payable on the

$400,000 outstanding under the Loan Agreement, the precise quantities

20

of building materials and machinery and equipment used by Tomazos

(and hence the total amount payable under the November 2011 Sale

Agreement), claims for relatively small amounts such as the $600

genset hut, the $10,000 fuel bund wall, the $12,720.26 on Ceccon’s

account with Boral, and the Counterclaim.

[28] The PD6 letter complied with the requirements set out in

subparagraphs [6.1] to [6.7] of PD6. This included requesting that

Tomazos Group acknowledge receipt of the PD6 letter within 14 days

and provide a full response to the PD6 letter by no later than

28 November 2014. The PD6 letter asserted that 28 November 2014

was a reasonable period on the basis that the matters claimed had been

the subject of numerous discussions between the parties. The letter

also indicated Ceccon’s desire to enter into mediation once Tomazos

provided a detailed response.

[29] Over the next weeks and then months there were further

communications between the solicitors, mainly initiated by Ceccon ’s

solicitors. On 14 November De Silva Hebron wrote and advised that it

acted for Tomazos Group, acknowledged receipt of the PD6 letter and

stated that a substantive response would be provided "in due course”.

De Silva Hebron first met and received instructions from its clients,

presumably Tony and John Tomazos, on 21 November. On

1 December, after receiving a letter from Clayton Utz querying the

delay, De Silva Hebron wrote requesting further information and

21

foreshadowing a response on 19 December. Clayton Utz provided

further information including copies of numerous tax invoices on

12 December. On 17 December De Silva Hebron wrote again,

indicating that it would not be responding to the PD6 letter until

16 January and would not be able to participate in mediation before

16 February 2015. De Silva Hebron wrote again on 16 January and

indicated that it would respond to the PD6 letter on 23 January. This

did not occur either. No explanation was provided as to why this did

not occur.

[30] Following a directions hearing before the Master when concerns were

expressed about the fact that the writ had not been served, Clayton Utz

filed and served an amended writ and endorsement on Tomazos on

4 February. In his affidavit of 19 April 2017 Mr De Silva said that a

substantive response to the PD6 letter was nearly completed by

4 February 2015 but that once the amended writ was served focus was

given to the proceedings and not responding to the PD6 letter. No

other explanation was provided as to why Tomazos did not reply to the

PD6 letter either soon after 4 February 2015, or ever.

[31] De Silva Hebron filed an appearance on 11 February 2015, instructed

counsel on 19 February and requested further and better particulars on

27 February.

22

[32] By letter dated 17 March, De Silva Hebron advised that the loan

monies were owed to Mr Tony Ceccon, not to the then plaintiff Ceccon

Transport. The letter also stated that a counterclaim was being

considered, and proposed that a mediation be held in no less than four

weeks’ time. No information was provided about a potential

counterclaim apart from reference to a possible breach of the

“Validation and Accessibility Contract” dated 26 October 2012.

[33] On 1 June Ceccon Transport amended its statement of claim, inter alia

adding Mr and Mrs Ceccon as plaintiffs. The Tomazos parties

amended their defence and counterclaim on 9 June. The Master

ordered general discovery on 24 June.

[34] The parties engaged in mediation before Mr Maurice QC on 4 August,

however the matters were not then resolved. Three days later, on

7 August, the plaintiffs offered to settle the whole of the proceedings

by accepting $2.1 million plus any applicable GST inclusive of costs.

[35] Little was said by De Silva Hebron in its correspondence between

14 November 2014 and 17 March 2015 to explain why no meaningful

response to the PD6 letter could be provided. In his affidavit of

10 May 2017 Mr Da Silva says that he first met his clients on

21 November 2015 and took initial instructions from them then. He

said that from that meeting he anticipated that he would be in a

position to deliver a formal response to the PD6 letter within a

23

reasonable period. However he failed to take into account a number of

things, including various other commitments that he had between then

and the end of January 2015, the fact that Tomazos’ business like the

balance of the construction industry in Darwin shuts down from

roughly the middle of December to the middle of January, and that

John Tomazos and Tony Tomazos would be absent from Darwin at

various times over the Christmas break period.

[36] I agree with counsel for Ceccon that the time afforded for the Tomazos

parties to respond was generous and reasonable having regard to the

object and purposes of PD6 and the indicative timeframe contemplated

in PD6. I also agree that the Tomazos parties did not comply with PD6

in any material respect on the claim or counterclaim, notwithstanding

being given a reasonable opportunity to do so. The explanations for

the continuing delays from 14 November 2014 until Tomazos filed a

defence and counterclaim on 29 April 2015 are unsatisfactory. Had

Tomazos Group responded to the PD6 letter when its lawyers said they

would, or even by the latest of the dates which they indicated,

23 January 2015, it is unlikely that the plaintiffs would have had to

incur the cost and delays associated with preparing and filing such a

detailed statement of claim as was filed on 17 March 2015.

[37] I also agree with Ceccon’s counsel that the following reasons,

individually and collectively, demonstrate that the Tomazos parties'

failure to comply with PD6 caused delay, unnecessary costs to be

24

incurred and (ultimately) prevented a proper consideration by the

parties of an appropriate resolution of the proceeding.

[38] First, it can be inferred that the absence of a substantive response to

the PD6 letter meant that Tomazos did not give early and proper

consideration to the matters required in paragraphs [8] to [10] of PD6.

Tomazos Group had access to and control of necessary documents to

verify and assess the claims. Had Tomazos given early and proper

consideration to a substantive PD6 response then the admissions that

were made much later in the proceeding could have been made much

earlier. If Tomazos had done this, the complexion of the entire

litigation would have been different: positions based on proper

documentary records would have been advanced, and discussions at a

mediation could have had better prospects of resolving the matter. All

this should have occurred before the parties became more entrenched in

their positions and invested so much in the legal process and in legal

costs. Delay and increased costs inevitably followed from Tomazos’

lack of engagement with PD6.

[39] Secondly, Tomazos’ failure to give early and proper consideration to

the matters required in paragraphs [8] to [10] of PD6 carried over into

Tomazos’ approach to giving discovery. The Court’s findings in

connection with the Tomazos parties’ failure to give discovery are of a

serious nature. Had the Tomazos parties given early and proper

consideration to PD6 and then to their discovery obligations, the

25

admissions that were made much later in the proceeding could have

been made earlier. The Tomazos parties failed to comply with two

fundamental disclosure regimes, the PD6 pre-action disclosure regime

and discovery during the course of litigation. Failure to deal properly

with the former disclosure regime defeats an important policy of

litigating in this Court, and the failure to deal properly with the latter

disclosure regime goes to the heart of fundamental obligations in

adversarial litigation. The failure to comply with PD6 and discovery

obligations increased the number of issues in dispute, made the

litigation more complex, and caused it to be more protracted and costly

overall.

[40] Thirdly, the Tomazos parties did not make any attempt to engage in the

PD6 process in relation to their Counterclaim. The Counterclaim was

the single biggest component of this litigation. Had PD6 been

complied with, the inherent difficulty of some of different causes of

action and their speculative nature, could have been given early and

proper consideration. There was avoidance in dealing with the Ceccon

parties’ claim and more interest given to setting up the (unsuccessful)

artifice of the Counterclaim. This also increased the number of issues

in dispute, made the litigation more complex, and caused it to be more

protracted and costly overall.

[41] In summary, although the main claims of the plaintiffs were not in

dispute, the Tomazos parties appear to have attempted to stall payment

26

of them for as long as they could and to have belatedly asserted the

counterclaim as a further attempt to further delay the inevitable.

[42] The Tomazos parties did not comply with PD6.

Indemnity costs

[43] I consider that this failure constitutes proper reason for the Tomazos

parties to pay costs of the Ceccon parties on an indemnity basis under

[13.1] and [13.2] of PD6.

[44] I consider it fair and just that Ceccon’s costs be paid on that

(indemnity) basis from 23 February 2015. That is, one month after the

latest of the dates by which De Silva Hebron had indicated they would

respond to the PD6 letter. Had they done that then, made concessions

of the kind referred to in [19] above, attempted to define the real issues

in dispute, and engaged with the plaintiffs in a meaningful way, it is

likely that the plaintiffs would not have had to incur the kind of costs

that they subsequently incurred.

[45] Costs payable by the Tomazos parties to the Ceccon parties up to

22 February 2015 will be assessed on a standard basis. This will

include Ceccon’s costs of complying with PD6.

[46] Because I have reached these conclusions on the basis of Tomazos’

failures to comply with PD6 there is no need for me to consider in

detail, at least in respect of the costs issue, the ramifications, all

27

adverse to the Tomazos parties, of Tomazos’ inadequate discovery and

of their failure to accept the offers made on behalf of the Ceccon

parties, particularly the offer made on 7 August 2015. However, I shall

discuss those matters as they are relevant to other aspects of the

plaintiffs’ claims, for example the quantum of interest payable on

costs.

Discovery

[47] A Court can order costs on an indemnity basis where there is evidence

of particular misconduct that causes loss of time to the Court and to

other parties Colgate-Palmolive Pty Limited v Cussons Pty Limited.9

[48] Orders for general discovery were made by the Master on 24 June

2015, some two weeks before the mediation attempted before

Mr Maurice QC and almost nine months before the commencement of

the trial on 7 March 2016.

[49] At paragraphs [161] – [165] of the Reasons I made findings critical of

the very late and, even then, inadequate disclosure of documents by the

Tomazos parties. The documents produced during the final days of the

hearing, particularly on 26 May 2016, included a very large number of

invoices dockets and similar documents that occupied two cardboard

cartons. I agree with Ceccon’s counsel that the failure to give

discovery prolonged the dispute about the stockpiles. Had discovery

9 [1993] FCA 801; 46 FCR 225 at [24].

28

been given promptly, Tomazos’ denials that they used the stockpiles

could not have been maintained for as long as they were.

[50] Counsel for the Tomazos parties responded by saying that “ultimately,

the discovery was made and is in evidence.” They also submitted that

the plaintiffs did not rely upon that discovery in support of their case at

all and the late discovery had no bearing on the outcome of the case as

determined by the Court.

[51] I accept from Ceccon’s counsel that the late discovery given by the

Tomazos parties on use of the stockpiles was very significant to the

way that the Ceccon parties were forced to run their case. First,

Mr Preston’s evidence would not have been necessary if it were not for

the fact that the Tomazos parties denied use of the stockpiles and

documents created by Mr Preston indicated the contrary. Mr Preston

was called to explain documents he created whilst employed by

Tomazos Group and which should have been discovered by the

Tomazos parties, but were not.

[52] Secondly, the late discovery necessitated the post-hearing amendment

concerning the Alternative Sale Agreement. If the documents were

discovered earlier, the amendment may have been made sooner or the

Tomazos parties may have admitted the claim, as they should have.

Once those documents were produced, albeit late, the ability of the

Ceccon parties to supplement the evidence of Mr Preston and

29

successfully prove Tomazos’ substantial use of the stockpiles was

considerably enhanced. The documents did have a bearing on the

outcome of the case.

[53] I agree with Ceccon’s counsel that Tomazos Group’s conduct falls far

short of the conduct expected of a litigant properly advised in relation

to the seriousness of complying with the obligation to give discovery.

I agree this was a case where a dispute was unnecessarily prolonged

and Court time lost in dealing with a factual reality that should not

have been contested.

Settlement offer of 7 August

[54] On 7 August 2015, three days after the full day mediation before

Mr Maurice QC, the Ceccon parties sent a letter to De Silva Hebron

expressed to be “without prejudice save as to costs.” It said:

1. Our clients offer to settle the claims and counterclaims in

the Proceeding on the following terms:

(a) the Defendants pay $2,100,000.00 to Ceccon

Transport Pty Ltd on or before 14 September 2015

(plus any applicable GST);

(b) the parties release and discharge each other from all

matters arising on the claims and the counterclaims in

the Proceeding; and

(c) the parties consent to orders that the Proceeding by

claim and by counterclaim be dismissed.

30

2. The above offer is made inclusive of costs and interest and

pursuant to Rule 26.11 of the Supreme Court Rules.

3. If the offer is accepted it will be immediately binding and

enforceable but our clients will require all parties to

execute a deed of settlement and release to formalise and

more fully give effect to the terms of settlement.4.The

above offer is made inclusive of costs and interest and

pursuant to Rule 26.11 of the Supreme Court Rules.

4. Our clients reserve the right to allocate the settlement sum

to the various claims in the Proceeding at their discretion

and for this to be recorded in the proposed deed of

settlement and release.

5. The offer is open for acceptance before 4:00pm on Friday,

14 August 2015.

The offer is made without prejudice except as to costs in

accordance with the principles discussed in Cutts v Head [1984]

Ch 290. If the offer is not accepted and any further litigation

and shoes, reserve the right to refer to the letter on questions

respecting costs in accordance with those principles. Please let

us know if your clients accept this offer, in which case we will

prepare the deed of settlement and release.

[55] There was no attempt made on behalf of the Tomazos parties to put a

counter-offer, either whilst Ceccon’s offer was open, or subsequently,

or to seek further time for consideration of Ceccon’s offer.

[56] Ceccon contends that as a result of the judgment that will follow from

the Reasons, the Tomazos parties will be ordered to pay $1,924,781.25

plus interest plus costs plus interest on costs. This will exceed the

amount that Ceccon offered to accept. Consequently Ceccon would be

entitled to indemnity costs from the date of the offer.

31

[57] The general principles regarding offers of the kind made by the Ceccon

parties on 7 August are well established.

[58] An offer made inclusive of costs can be properly considered to be a

Calderbank offer.10 A Calderbank offer does not automatically result

in the court making an order for indemnity costs. 11 The question that

the court has to determine in deciding whether to award indemnity

costs is:

…whether the offeree's failure to accept the offer, in all the

circumstances, warrants departure from the ordinary rule as to

costs, and that the offeree ends up worse off than if the offer

had been accepted does not of itself warrant departure.12

[59] In the context of a Calderbank offer, this generally devolves into a

consideration of the following two questions:

(a) whether the offer was a genuine offer of compromise; and

(b) whether it was unreasonable for the offeree not to accept the offer

in the circumstances.13

[60] As to the first of these questions, a genuine compromise involves a

party giving something away.14 As to the second of these questions, a

court will take into account various factors such as the stage of the

10 See Elite Protective Personnel Pty Ltd & Anor v Salmon [2007] NSWCA 322; Veetemp

Australasia Pty Ltd v GRD Group NT Pty Ltd [2012] NTSC 93. 11 See SMEC Testing Services Ply Ltd v Campbelltown City Council [2000] NSWCA 323. 12 Ibid at [37]. 13 See Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [8] and

Edgar v Public Trustee for the NT [2011] NTSC 21. 14 See Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358 at 368 and

Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344.

32

proceeding at which the offer was received, the time allowed to the

offeree to consider the offer, the extent of the compromise offe red, the

offeree's prospects of success assessed as at the date of the offer, the

clarity with which the terms of the offer were expressed and whether

the offer foreshadowed an application for indemnity costs in the event

of the offeree's rejecting it.15

[61] Counsel for the Tomazos parties did not challenge Ceccon’s contention

that the offer was less favourable to the plaintiffs and hence more

advantageous to Tomazos than the amount to which the Ceccon parties

were found to be entitled. However counsel contended that the offer

did not satisfy all of the criteria noted in paragraphs [59] and [60]

above. Amongst other things counsel contended that the offer was

imprecise in terms of dollars because it included the possible addition

of GST, it was inclusive of costs as a result of which its real value was

difficult to assess, the offer did not clearly foreshadow an application

for indemnity costs, and that the failure to accept the offer was not

unreasonable. Reasons for the latter contention included that the

defendants were still actively engaged in assessing the merits and value

of the counterclaims, that the loan was found to be with Tony Ceccon,

not Ceccon Transport, and that the offer was made shortly after the

attempted mediation.

15 See Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005]

VSCA 298; 13 VR 435 and Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011]

NSWCA 344 at [12].

33

[62] In my view the offer did meet the two criteria noted in paragraph [59]

above. It was made three days after the attempted mediation. This

would have been a time in the proceedings, perhaps the most

appropriate time prior to the period leading up to the hearing itself,

when both parties would have been extremely cognisant of the

respective strengths and weaknesses of their cases. This was the time

for settlement to be seriously explored by both part ies. Although the

time for acceptance was only seven days, less than the 14 day period

required for offers under SCR 26.03(3), I think that time was

reasonable in the circumstances. Those circumstances included the fact

that the PD6 letter had been sent more than eight months earlier,

pleadings had been exchanged and discovery provided, and position

papers would have been prepared for and used during the full day

mediation on 4 August.

[63] In Elite Protective Personnel Pty Ltd & Anor v Salmon Basten JA stated:

Greater sympathy may be accorded a defendant who receives an

offer early in proceedings where there has been no reasonable

opportunity for it to assess its questions of liability or its likely

exposure in damages. Such matters must be assessed on a case

by case basis. Usually litigation will not be the first that the

defendant hears of the claim. However, a defendant which

receives an offer of settlement in circumstances where it

reasonably requires more time to consider its position would no

doubt be advised to respond to that effect and, if necessary,

make a counter-offer in due course.16

16 [2007] NSWCA 322 at [147].

34

[64] I consider that it was unreasonable for the Tomazos parties not to

accept the offer in the circumstances. It seems that the only

uncertainty in the minds of the Tomazos parties concerned the strength

or otherwise of their own counterclaim rather than the strength and

likely quantum of the plaintiffs’ claims.

[65] Quite apart from the consequences that might flow from the Tomazos

parties’ failure to comply with PD6 and with their discovery

obligations, their failure to accept the offer would also lead me to

decide that Tomazos should pay Ceccon’s costs on an indemnity basis.

Interest on costs

[66] I have found that the Tomazos parties are liable to pay the costs of the

Ceccon parties on a standard basis until 22 February 2015 and then on

an indemnity basis.17

[67] Ceccon submits that the Tomazos parties should also pay interest on

those costs at a rate of 15.5% per annum. That rate is derived by using

the rate fixed under the Rules, namely 7.5%, and adding another 8% as

contemplated by paragraph [28] of PD6 because of Tomazos’ failures

to comply with PD6 and their discovery obligations under the Rules.

[68] Counsel for the Tomazos parties did not respond to this submission

except to submit that the Court should adopt the usual course of

leaving it to the Taxing Master to determine entitlement to interest on

17 See [44] - [46] above.

35

costs, both as to the rate and from when it should run, a course

provided for by SCR 63.74. In light of the fact that I am also dealing

now with other aspects regarding costs and interest, I consider it more

appropriate that I deal with this issue now rather than leaving it to the

Taxing Master.

[69] As Ceccon’s counsel pointed out, SCR 63.74(2) provides that a rate of

interest that the Taxing Master may fix under SCR 63.74(1) in respect

of costs, shall not exceed the rate from time to time fixed in accordance

with SCR 59.02 as interest payable on a judgment debt.

[70] Counsel noted that SCR 59.02(3) states that a judgment debt carries

interest from the date of judgment at the rate per annum fixed for

s 52(2)(a) of the Federal Court of Australia Act 1975 (Cth) from time

to time. Section 52(2)(a) states that interest in respect of the post

judgment period is payable at the prescribed rate fixed by rule 39.06 of

the Federal Court Rules 2011 (Cth). Rule 39.06 sets the prescribed

rate as:

(a) for the period from 1 January to 30 June in any year – the rate that

is 6% above the cash rate last published by the Reserve Bank of

Australia before the period commenced; and

(b) for the period from 1 July to 31 December in any year – the rate

that is 6% above the cash rate last published by the Reserve Bank

of Australia before the period commenced.

36

[71] The cash rate last published by the Reserve Bank of Australia before the period

from 1 January to 30 June commenced was 1.50%. Accordingly the rate of

interest fixed is payable on a judgment debt is 7.5% per annum.

Counsel for the Tomazos parties have not challenged any of these

conclusions, presumably accepting that the Tomazos parties should pay

interest on the costs to be ordered in Ceccon’s favour at the rate of

7.5% per annum.

[72] The question for the Court is whether a higher interest rate should be

imposed, as appears to be contemplated by paragraph [28] of PD6.

Although neither counsel adverted to this point, it is arguable that [28]

is inconsistent with the intention if not the wording of SCR 63.74(2).

Without needing to answer that question I see no particular reason in

the present matter to allow interest on costs at a rate higher than that

contemplated by SCR 63.74, namely the rate of 7.5% per annum

payable on a judgment debt. The situation might be different , for

example, if normal commercial interest rates were higher than they

have been for the last several years or if there was some evidence that

the Ceccon parties did or were obliged to incur higher interest rates in

order to pay their costs. In light of my conclusion that most of

Ceccon’s costs are to be paid on an indemnity basis, I doubt that the

Ceccon parties will be disadvantaged by not being awarded inte rest on

their costs at a higher rate.

[73] Accordingly I will order that the Tomazos parties pay interest on the

37

costs awarded in favour of the Ceccon parties at the rate of 7.5%` per

annum.

Interest payable under the Loan Agreement

[74] In the draft orders provided on 11 April 2017, counsel for the Ceccon

parties contended that there should be judgment for the Third Plaintiff

in the amount of $901,183.62 and $221.77 per day for each day after

11 April 2017 until that amount has been paid. That amount of

$901,183.62 included the $400,000 of the original debt still owing plus

interest amounting to $501,183.62.

[75] In their submissions of 19 April 2017 the Tomazos parties contended

that the total amount owing as at 3 April 2017 was $854,206, of which

the interest component was $454,206. With their reply submissions of

24 May 2017 the Ceccon parties provided a detailed schedule showing

how they made their calculations and submitted that at that date,

24 May 2017, the interest due was $510,719.83, and was continuing at

a daily rate of $221.27. Interest would continue to accrue at that rate

until judgment when the covenant to pay interest in the Agreement

would be merged in the judgment. Thereafter the total judgment debt

would carry interest at the rate fixed under the Rules, namely at 7.5%

as I have already concluded.

[76] In their supplementary submissions of 5 June 2007 the Tomazos parties

contended that the difference between the calculations of the

38

competing parties relates to the timing of assessment. They wrongly

assumed that Ceccon calculated interest on a daily basis , as a

consequence of which Ceccon’s figures were higher than they should

have been.

[77] In their submissions in reply to those submissions, the Ceccon parties

agree that interest was to be calculated and compounded annually in

accordance with paragraph [112] of the Reasons, and pointed out that

their calculations were so performed. Included with those submissions

was a detailed explanation of the calculations set out in the schedule

that was attached to their reply submissions of 24 May 2017.

[78] I am satisfied that interest was compounded annually, as at 3 April

each year, and that the plaintiffs’ calculations are correct. The total

sum owing as at 3 April 2017 was $899,409.44 and interest is accruing

on that amount at the rate of $221.77 per day and will continue to

accrue at that rate until judgment.

Interest on amounts found due in [213(g)]

[79] The Ceccon parties contend that Tomazos Group Pty Limited should

pay interest on the balance of any amounts found to be payable in

paragraphs [213(b)] to [213(f)] of the Reasons at the rate of interest

prescribed for post judgment interest under the Rules for each relevant

period plus an additional 8% as simple interest.

39

[80] Section 84 of the Supreme Court Act 1979 (NT) gives the Court the

power to order that “there shall be included in the sum for which

judgment is given interest at such rate as it thinks fit on the whole or

any part of that sum for the whole or any part of the period between the

date when the cause of action arose and the date of the judgment.” It

does not authorise the giving of interest upon interest, and this could

only apply to amounts referred to in paragraphs [213(b)] to [213(f)] of

the Reasons.

[81] Where, as here, no particular rate is prescribed, interest should be

allowed at “ordinary commercial rates”.18 It is open to a party to call

evidence about interest rates, but it has been held that where no such

evidence has been called, it is appropriate to apply the rates applicable

to post judgment interest under the Rules. I have already discussed

this in [70] - [71] above. In Sherwin and Sherwin v Commens and

Commens19 at [67] - [72], this Court found that the rates applicable to

post judgment interest under the Rules was a fair and reasonable rate of

interest.

[82] Accordingly, the Ceccon parties submit that the appropriate base rate

of interest is the rate applicable to post judgment interest under the

Rules. This rate of interest varied during the period from when the

causes of action for the amounts payable in respect to paragraphs

18 Cullen v Trappel [1980] HCA 10; 146 CLR 1 at 21. 19 [2008] NTSC 45 (Sherwin).

40

[213(b)] to [213(f)] of the Reasons accrued, from between 10.75% and

7.75%.

[83] The Ceccon parties submit in the alternative that the appropriate base

rate of interest is 9% as this was the continuing interest rate that the

parties had agreed on in respect of the Loan Agreement.

[84] They also point out that PD6 [27] provides that the Court will take into

account whether a party has complied with its duties under the Rules

and PD6 when considering the exercise of its discretion in relation to

interest under s 84 of the Supreme Court Act 1979 (NT) . Paragraph

[13.4] of PD6 also contemplates that where the Court considers that

non-compliance with PD6 has led to delay or costs being incurred in

the proceedings that might otherwise not have been incurred, it may

order interest on part or all of the amount which the defendant is

ordered to pay the plaintiff at a higher rate than the rate at which

interest would otherwise have been awarded. The Ceccon parties

submit that had the Tomazos parties complied with PD6 the

proceedings might otherwise have resolved. Although PD6 does not

specify a higher rate for the purpose of pre-judgment interest the

Ceccon parties contend that the rate of 8% contemplated in [28] of PD6

for interest on costs is appropriate.

41

[85] Counsel for the Tomazos parties accept that prejudgment interest

should be allowed at ordinary commercial rates. However they dispute

that the rate claimed by the Ceccon parties can be so described.

[86] Counsel contended that Sherwin should not be followed because there

was no effective contradictor to the proposition put by the plaintiffs.

Counsel also submitted that the decision in Sherwin does not reflect the

practice adopted in the Northern Territory, citing the following passage

in paragraph [8.24.21] of Grant, Civil Procedure Northern Territory .20

Grant QC (as he then was) said:

Interest should be referable to the yield the plaintiff would have

received for the past, not the rate of interest which the plaintiff

as a notional borrower would have paid: see Guley v Sabbadin

(1979) 41 SASR 142. This is because interest is to compensate

the plaintiff for being kept out of the money, not to put the

plaintiff in the position of a commercial lender over the period.

For that reason, retail deposit and investment rates will be the

appropriate measure, rather than the lending rates such as the

small business variable and the housing loan variable rates .

[87] Counsel for the Tomazos parties then referred to the decision of this

Court in Territory Sheet Metal Pty Ltd v ANZ Banking Group Limited 21

where the Court took an average of cash management account rates and

short-term fixed deposit rates to arrive at a rate of 3.8%. However in

that matter the Court had the benefit of data from four major banks

indicating commercial rates relating to cash management account

20 Michael Grant QC (ed) Civil Procedure Northern Territory (Presidian Legal

Publications). 21 [2010] NTSC 3 at [196] – [197] (Territory Sheet Metal).

42

transactions and short-term fixed interest deposit transactions during

applicable periods.

[88] No such evidence was tendered in the present matter. As counsel for

Ceccon submits, the only evidence that might be relevant is the fact

that the parties agreed to the 9% rate under the Loan Agreement.

[89] In Territory Sheet Metal ,22 Olsson AJ referred to and did not disagree

with what Southwood J had said in Sherwin. Just below the passage

quoted in [86] above Grant QC said:

It is open to the plaintiff to call evidence about interest rates,

but in more recent cases (see, eg, Sherwin v Commens [2008]

NTSC 45 at [67] – [68]; Helvixa Pty Ltd v Lederer [2007]

NSWSC 49 at [16]), it has been held that in the absence of such

evidence it is appropriate to apply the rates from time to time

applicable to post judgment interest which, under SCR 59.02(3),

is the rate of interest specified in the Federal Court Rules: Acer

Forester Pty Ltd v Complete Crane Hire (NT) Pty Ltd [2013]

NTSC 62 at [51].

[90] After further discussion about Sherwin and Territory Sheet Metal Grant

QC said:

The matter of determining the appropriate rate of interest

requires a broad and practical approach, whereby the purpose

for which interest is awarded is considered and care is taken not

to over compensate the plaintiff or to do an injustice to the

defendant.

[91] I consider that the approach adopted in Sherwin should be followed

where there is no evidence of relevant commercial interest rates. That

22 Ibid at [195].

43

is, the rates fixed for post-judgment interest pursuant to s 85 of the

Supreme Court Act 1979 (NT) and under SCR 59.02(3) should normally

be applied.

[92] However in the present case I consider that an interest rate of 9% is

appropriate. Although that is a little higher than the current rate for

post-interest judgment, that is the rate that was agreed to when the

Loan Agreement was entered into. There has been no significant

change to commercial interest rates since then. The imposition of that

rate is also intended to reflect the fact that PD6 contemplates that in

situations such as I have found to exist in the present matter, the

interest might be higher than that that might otherwise be ordered.

[93] Despite Ceccon’s submissions to the effect that I should increase the

rate by 8%, the figure referred to in paragraph [28] of PD6 in relation

to interest on costs, I consider that the plaintiffs would be adequately

compensated by allowing them interest at the rate of 9% agreed under

the Loan Agreement, noting also the orders that I will be making

concerning indemnity costs and interest thereon.

[94] The remaining question concerns the starting point for the payment of

interest on each of the items referred to in paragraphs [213(b)] to

[213(f)] of the Reasons.

[95] As to interest on the amount owing for the Material Sale and Supply

referred to in [213(b)] of the Reasons, the only challenge on the part of

44

the Tomazos parties concerned the rate. Interest should run from

1 November 2011.

[96] In relation to the Alternative November 2011 Sale Agreement the

Tomazos parties point out that the plaintiffs’ original case based on the

sale of all of the stockpiles, machinery and equipment was abandoned

and the Court found that Tomazos was only liable to pay for what was

used. They also point out that the Notice of Claim was not given until

7 November 2014 and that no invoice was issued until 22 July 2015. In

light of this, they submit that interest should run from that date.

[97] I agree with Ceccon’s reply to the effect that the production of an

invoice did not create the obligation to pay. Rather it was the use and

appropriations of the stockpiles over the 13 month period from

1 November 2011 to about 1 December 2012 that created the obligation

to pay and gave rise to the cause of action. As it is not possible to

know the exact dates on which particular stockpiles23 were used during

that 13 month period, I consider that interest on the amount due in

relation to the stockpiles should run from about midway between those

dates, namely from 15 May 2012.

[98] I also agree with Ceccon that interest on the miscellaneous machinery

and materials24 should run from 1 November 2011, as those items were

immediately available for use and many were used when Tomazos

23 Reasons [213(c)(i)]. 24 Reasons [213(c)(ii)].

45

commenced operating from the Boral yard. So too for the $10,000

payable for the fuel bund wall, as Tomazos had the benefit of the fuel

bund wall from 1 November 2011.25

[99] As to interest on the amount owing for the supply and installation of

the hungry boards, referred to in [213(d)] of the Reasons, I reject

Tomazos’ contention that interes t should not commence until

21 January 2015 when an invoice was issued. I agree that the

obligation to pay arose in October 2012 when Ceccon supplied the

hungry boards and that interest should run from 30 October 2012.

[100] In relation to the amount owing for supply and haulage referred to in

[213(e)] of the Reasons, Tomazos accepts that interest should accrue

from November 2011. As there is some uncertainty as to when in

October and November 2011 those events occurred, it is appropriate

that interest accrue from 1 November 2011.

[101] The parties agree that interest on the amount payable under the

Validation and Accessibility Agreement referred to in [213(f)] of the

Reasons should run from 24 September 2014.

Interest up to judgment

[102] As at 24 July 2017, the amount payable under the Loan Agreement is

$924,248. It comprises the $899,409.44 that was due on 3 April 2017

25 Reasons [213(c)(iii)].

46

plus interest from then at the rate of $221.77 per day namely

$24,838.49.26

[103] In relation to interest payable in respect of the other items referred to

in [213(b)] to [213(f)] of the Reasons it is convenient to provide the

following table. I have rounded up or down some amounts to the

nearest dollar.

Item Principle

$

Start

date

Period Interest

@ 9%

Total $

P & I

Material

Sale and

Supply

322,887 1/11/1127 5 Y +

266

days

166,477 489,364

Stockpiles 494,05528 15/5/1229 5 Y + 71

days

230,974 725,029

Machinery

and

materials

55,344 1/11/1130 5 Y +

266

days

28,535 83,879

Fuel bund 10,000 1/11/1131 5 Y + 5,156 15,156

26 See [78] above. 27 See [95] above. 28 This amount includes GST. 29 See [97] above. 30 See [98] above. 31 See [98] above.

47

266

days

Hungry

boards

2,500 30/10/1232 4 Y +

268

days

1,065 3,565

Supply and

Haulage

5,782 1/11/1133 5 Y +

266

days

2,981 8,763

Validation

and

Accessibility

Agreement

133,030 24/9/1434 2 Y +

304

days

33,917 166,947

TOTAL 1,023,598 469,105 1,492,703

[104] Accordingly the total amount payable in respect of the items referred to

in [213(b)] to [213(f)] of the Reasons is $1,492,703, which comprises

$1,023,598 principle and $469,105 interest.

Orders

[105] I make the following orders:

32 See [99] above. 33 See [100] above. 34 See [101] above.

48

1. Judgment for the Third plaintiff against the Defendant in the

amount of $924,248.

2. Judgment for the First Plaintiff against the Defendant in the

amount of $1,492,703.

3. The Amended Counterclaim is dismissed.

4. The Defendant and the Plaintiffs by Counterclaim jointly and

severally are to pay the costs of the Plaintiffs and Defendants by

Counterclaim on a standard basis up to 22 February 2015 and on

an indemnity basis thereafter, together with interest thereon at the

rate of 9% per annum.

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