Case: HK Frost Holdings Pty Ltd (in liq) v Darvall McCutcheon (a firm) [1999] FCA 795
Outcome: applied
general principles applicable to s 51A have been helpfully summarised by Finn J in HK Frost Holdings Pty Ltd (in liq) v Darvall McCutcheon (a firm) [1999] FCA 795 at [6] to [11] as follows (citations omitted): [6] (1) It is well settled that the objective of provisions of this type is to compensate an applicant for the loss it suffers in being kept out of its money or damages ... [7] (2) The award of interest under s 51A(1) is mandatory "unless good cause is shown to the contrary" ... Ordinarily it will be for the respondent to establish such "good cause" ... Furthermore, it is open to the court, for example, to take into account such considerations of public policy as may be relevant in the circumstances ... [8] (3) Though the matter is and remains one of judicial discretion, it is the usual practice of this Court in applying s 51A(1) to adopt the rates of interest applied by the Supreme Court of the State or Territory in which this Court is dealing with the matter ... though, no less so than a State court, the Court may then depart from those rates as a matter of discretion given the circumstances of the case ... A justification for this practice is that it helps to ensure that damages are awarded on the same basis at least as to rates of interest whether a proceeding is instituted in this Court or in a Supreme Court. Parity in the making of interest awards will, though, often be unattainable because the legislation of a particular State may prescribe varying periods for which pre-judgment interest may be awarded (depending upon the nature of the cause of action in question) that differ from what is allowable under s 51A(1) ... [9] (4) Given the variations in the language and structure of the pre-judgment interest provisions of the various Australian States, care must be taken in using the decisions of State courts on their own statutes to elucidate the meaning of s 51A(1). For example, for the purposes of s 51A(1) the formula "good cause to the contrary" would appear on its proper construction to mean only good cause for not allowing interest at all ... The subsection itself otherwise provides discretions as to the rate and the period of an interest award. In contrast, the same formula as used in s 58 of the Supreme Court Act 1986 (Vic) has been interpreted to mean good cause for allowing interest otherwise than in accordance with the terms of that section ... But s 58 , notably, does not provide the same discretions as does s 51A(1). [10] (5) It is neither possible nor desirable to define what will constitute "good cause" disentitling a party to interest under s 51A(1) ; each case must be considered by reference to its own circumstances ... [11] (6) There is considerable diversity in judicial opinion as to the extent to which, if at all, the rate or (more usually) the period selected for an interest award should as a discretionary matter be moulded adversely to a party that delays in the prosecution or defence of a claim where no resultant detriment to the other party is shown ... Nonetheless, insofar as concerns a successful applicant who has been guilty of unreasonable delay, the view I am prepared to follow in the absence of binding authority is that the period for which the interest award is made can properly be adjusted if to allow interest for the whole period for which it could otherwise be ordered would work an injustice to the respondent in the circumstances ... Such would seem to be consistent with the policy of the [sic] s 51A(1) in that an applicant that has been held out of the benefit of its money because of its own unreasonable actions should not be allowed as of course to cast the effects of a 'self-inflicted burden' onto the respondent ... Cited: Hanave Pty Limited v LFOT Pty Ltd (formerly Jagar Products Pty Ltd) (in liq) [2003] FCA 1154 at [31] . Of particular relevance to the present proceeding is the significance to be given to the delay that has been experienced. As noted by Finn J in HK Frost Holdings [1999] FCA 795 , delay may be relevant to both the rate at which interest is awarded and the period of time during which interest is to be paid. See also: ICT Pty Ltd v Sea Containers Ltd [2006] NSWSC 1280 at [15] .