PARTIES:	IN THE MATTER of an appeal from the judgment of Justice Thomas in proceedings numbered 323 of 1986 made the 13th day of February 1995

	BETWEEN:
	BORONIA PARK PROPERTIES PTY LTD
	Appellant

	AND:
	FRANK DAVID JOHNSTON
	Respondent
	
TITLE OF COURT:	In the Court of Appeal of the Northern Territory of Australia 

JURISDICTION:	Supreme Court of the Northern Territory of Australia exercising Territory jurisdiction

FILE NO:	AP7 of 1996
	
DELIVERED:	16 February 1996

HEARING DATES:	

JUDGMENT OF:	MARTIN CJ, ANGEL AND MILDREN JJ

CATCHWORDS:

Appeal - Aircraft valued at $60,000 as at 11 May 1983 by trial Judge - Valuation based on aircraft being in average condition - Whether evidence supported a conclusion that the aircraft was in above-average condition - Whether appellant entitled to rely upon an assumption that the aircraft was in the best condition for aircraft of that type
Appeal - Failure to award any interest according to s84 of the Supreme Court Act - Whether claim for statutory interest should be pleaded - Interest pleaded but s84 of the Supreme Court Act not identified - Issue of statutory interest not raised in the court below - Discretion of the judge in awarding interest - Considerations which delay may have in allowing an award for interest - Delay caused by appellant's former solicitors

Legislation

Companies Ordinance 1961 s365(1)
Companies Code 1986 (s535(1))
Corporation Law (s1318(1))
Supreme Court Act (NT) s84(1)
Cases

Warren v Coombs and Another (1979) 23 ALR 405, applied.
Armory v Delamirie 1722 1 Strange 505, mentioned.
Cook v Saroukos and Another (1989) 97 FLR 33, mentioned.
Poat v Australian Guarantee Corporation Limited (unreported Martin CJ, 10 January 1996), mentioned.
Hungerfords and Another v Walker and Others (1990) 171 CLR 125, mentioned.
Lawrence v Mathison and Another (1981) 11 NTR 1, mentioned.
City Mutual General Insurance Ltd v Green (unreported Kearney J 28 October 1995), followed.
Simonius Vischer & Co Hold and Thompson (1979) 2 NSWLR 322, followed.
Water Board v Moustakas (1988) 77 ALR 193, applied.
Osborne v Kelly and Another (1993) 61 SASR 308, followed.

REPRESENTATION:

Counsel:

	Applicant:	S. Walsh QC
	Respondent:	G. Hiley QC

Solicitor:

	Applicant:	Elston & Gilchrist
	Respondent:	Ward Keller
	
JUDGMENT CATEGORY:	CAT  
JUDGEMENT ID NUMBER:	MIL96001
NUMBER OF PAGES:	11

IN THE COURT OF APPEAL
OF THE NORTHERN TERRITORY
OF AUSTRALIA
						
AP7 of 1996 

		IN THE MATTER of an appeal from the judgment of Justice Thomas in proceedings numbered 323 of 1986 made the 13th day of February 1996

		BETWEEN:
		BORONIA PARK PROPERTIES PTY LTD
	Appellant

	AND:
		FRANK DAVID JOHNSTON
	Respondent

CORAM:  MARTIN CJ, ANGEL & MILDREN JJ

	REASONS FOR JUDGMENT
	(Delivered 16 February 1996)

MARTIN CJ:

	I have had the benefit of a draft of the reasons and decision of Mildren J.  I agree with his Honour and have nothing to add.
ANGEL J:
	I concur with Mildren J.

MILDREN J:
	The appellant was the holder of a Bill of Sale over a Piper PA32 Lance aircraft to secure the balance of the price of the aircraft which it had sold to Northern Territory Air Charter Pty Ltd in November 1982, as well as other debts owing.  On 29 March 1983 the respondent was appointed provisional liquidator of Northern Territory Air Charter Pty Ltd., which later changed its name to Arramunda Airways Pty Ltd.  For a time, the respondent continued on the company's business, including the chartering of the aircraft.  The aircraft was last flown on behalf of the respondent in May 1983.  It was then still operational.
	On 18 August 1983, this Court approved a scheme of arrangement between the company and its creditors.  The respondent became the scheme administrator.
	Between May 1983 or June 1983 the appellant became aware that the company had gone into provisional liquidation and the appellant lodged a proof of debt with the respondent.

	In August 1983, the appellant was advised by the respondent that the aircraft was not flying as the respondent did not have funds to carry out a major overhaul, but that it was "in the hangar and in good condition."  The appellant was given the name of an accountant acting for a Mr Timm who was interested in restructuring the company.  The appellant decided to leave the aircraft in Darwin, believing it to be hangared, to await the outcome of the proposed restructuring, rather than repossess the aircraft.  In October 1983 the appellant was informed that the restructuring would not go ahead, and that the scheme of arrangement, which had been the intended vehicle for the restructuring, had fallen through.
	The appellant enquired of the respondent by letter dated 26 October 1983 as to the respondent's intentions concerning the aircraft but received no reply.  On 21 December 1983 the appellant wrote to the respondent requesting the aircraft's log books, which the appellant received in January 1984.  The appellant forwarded the log books to a Mr Schuh whom the appellant appointed in February 1984 to repossess the aircraft, to fly it to Sydney, and to arrange for its sale.  Because of bad weather Mr Schuh postponed the trip to Darwin on two occasions, finally arriving in June 1984.  When he arrived, he found that the aircraft was not in a hangar, but outside on the grass some distance from the hangars.  The aircraft was found to be in poor condition.  Mr Schuh carried out the 100 hour inspection and then flew the aircraft to Bundaberg where further repairs were made to the aircraft to bring it to saleable condition.  The aircraft was eventually sold in August 1985 for $56,300.
	The learned trial judge found that the appellant relied upon the respondent's assertion in August 1983 that the aircraft was hangared and in good condition in deciding to leave the aircraft in Darwin to await the outcome of the proposed restructuring of the company.  She also found that the respondent, as provisional liquidator and scheme manager had a fundamental duty to preserve the assets of the company with the least possible harm to all concerned, and was required to preserve the assets of the company for the benefit of those ultimately found to be entitled to them.  Her Honour found that the respondent should have been aware or made himself aware that the aircraft was not in a hangar, but exposed to the weather, and that this exposure caused the aircraft to deteriorate.  She also found that the respondent was negligent in representing to the plaintiff on 4 August 1983 that the aircraft was hangared and in good condition, that the appellant relied upon this representation to its detriment.  Her Honour considered whether the respondent should be excused from his negligence or breach of duty under s365(1) of the former Companies Ordinance 1961 or the equivalent sections of the Companies Code 1986 (s535(1)) and the Corporation Law (s1318(1)).  She held that the circumstances did not warrant relieving the respondent.  Her Honour then assessed damages in the sum of $14,491.74 and entered judgment for that sum.  The damages awarded comprised two amounts:  $10,791.74 for repairs and maintenance to the aircraft, and $3,700 being the difference between the value of the aircraft ($60,000) and its eventual sale price.  A claim for interest was refused.
	The appellant appeals to this Court on two grounds, the first relating to Her Honour's finding that the aircraft was valued at $60,000 as at 11 May 1983, and the second related to her Honour's failure to award any interest.  The other grounds in the notice of appeal were abandoned at the hearing of the appeal.  There is no cross at appeal and no notice of contention by the respondent as to any of Her Honour's findings.
	It is convenient to deal with the question of the valuation of the aircraft first.  The critical finding of the learned trial judge was that there was no evidence to support a finding that the aircraft was in perfect condition or above average condition as at 11 May 1983, although she accepted that the evidence established that the aircraft was airworthy and in good condition at that time. Her Honour based her valuation of $60,000 on a passage in the cross‑examination of the appellant's valuer that, had the aircraft then been in average condition, it would have been worth $60,000, and would have held this value as at the time of sale in August 1985.  The appellant's contention was that, on the evidence, the only inference open was that at the relevant time, the aircraft was not in average condition, but in excellent condition.
	The only witness called by either party who had any expertise to value the aircraft was Mr Shuh.  Although there was other evidence as to value, the learned trial judge rejected it, preferring to rely upon the evidence of Mr Shuh, whose expertise her Honour accepted.  Mr Shuh had prepared a report (Ext P7) in which he had said:

	..."this aircraft in average condition would have a market value approaching $60,000, whilst in the condition and situation I found at Darwin the value would have been reduced to around $30,000."

	Her Honour accepted the valuation arrived at by Mr Shuh in this report, and based her ultimate finding as to value on a finding that the aircraft was in average condition.  The appellant contended that the finding so arrived was wrong as her Honour had misunderstood Mr Shuh's evidence.  The appellant contended that Mr Shuh's evidence was that this particular aircraft was, at the relevant time, in good condition and worth between $85,000 to $100,000, and that `good condition' meant something rather better than `average condition'.  It was submitted that the basis for Mr Shuh's opinion that the aircraft was in `good condition' rested upon its low recorded flying time, and the history of its recorded maintenance, which showed it to have been well maintained prior to May 1983, whereas Mr Shuh regarded an aircraft of this type to be in average condition only if it had had at least 5,000 hours flying time recorded.
	In my opinion it is clear that Mr Shuh distinguished between an aircraft of this type in `average' condition from one in `good' condition.  In evidence in chief he was asked:

	"Mr Shuh, when the aircraft was repaired for sale, was it put back into the condition that you understood it was in Brisbane on 11 May; that is, in good condition, hangared, had been looked after?‑‑‑No.
	Or were there compromise made?‑‑‑There were many compromises made, yes.
	And what were those compromises?‑‑‑Well, the aeroplane just looked as it was.  It was an aeroplane that had been weather‑beaten and that's all we could do.  To bring that aeroplane up into the condition that it should have been for its hours and for the general fly‑ability of the aeroplane, if there's such a word, would have cost too much ... So what we did, we tried to bring it to an average sort of condition that would sell at an average rather than at a top of the range price where it should have been.
	The compromises were made in what areas, without going into a lot of ‑ ‑ ? ‑ ‑ ‑ In paintwork, upholstery, and, well, general appearance and - examples.  Let me give you a couple of examples."

	He then went on to explain, by way of example, that the hydraulic legs for the undercarriage was pitted from standing in the weather.  Instead of replacing them, they were cleaned and left.
	In cross‑examination, Mr Shuh repeated the same point.  He was referred to his report and asked:

	"That $60,000 was what you considered that aircraft would normally be worth, but for the damage that had occurred in Darwin?‑‑‑No, I don't know that I was referring specifically to (this particular aircraft) there; I was referring to an average Cherokee 6 at market value at that stage.  If it was an average Cherokee 6 in average condition.  But this wasn't an average Cherokee 6 because it only had 1950 hours on it.  An average aeroplane in my possession (?opinion) would be - would have at least 5000 hours on it and be fairly well worn and fairly average.  That would be my position there.
	I see?‑‑‑This aeroplane at the time, you know, I don't think I realised just how good that aeroplane was at the time I'd have said that, because when I looked at it, frankly, I felt like walking away from it ...
	So it wasn't referable to the condition it was ultimately in.  It was referrable to the condition that you expected it to be in when you picked it up from Darwin?‑‑‑No, that's not right; it was referable to an average aeroplane.  Well, all right, it could've been an average aeroplane when I picked it up in Darwin.  It could've been; but it shouldn't have been, it should've been better than that."

	Elsewhere in cross‑examination, Mr Shuh conceded that at the time he wrote the report, he was aware that the aircraft had low flying hours, and, according to the log‑books and maintenance releases, in very good condition.  However it is clear from his evidence that he maintained, and was not shaken from this position, that this particular aircraft, given its age, maintenance record, low recorded hours, the fact that it had already had a top overhaul on its engine and did not require a major overhaul, pointed to the aeroplane having been in good condition rather than in average condition.
	Counsel for the respondent sought to persuade us on the evidence that the valuation arrived at by her Honour ought not be disturbed.  Except for the evidence of Mr Shuh, none of the other evidence sought to be relied upon shed any light, in my opinion, on the value of the aircraft, and in my opinion her Honour was right to disregard that other evidence for the reasons which she gave.  It was not disputed that Mr Shuh's evidence supported a valuation of between $85,000 to $100,000 had the aircraft been in good, as opposed to `average' condition.
	It is clear also from the evidence of Mr Shuh that after the aircraft was flown to Bunderburg, it was restored to `average' condition, that the features which distinguished the condition of the aircraft at that time as `average' related to the aircraft's weather‑beaten appearance, and that those features were all a consequence of the aircraft having been left exposed to the elements particularly over the wet season of 1983‑4.  Having regard to her Honour's findings as to the cause of the aircraft's deterioration, it follows that her Honour's conclusion that there was no evidence to support a conclusion that the aircraft was in above‑average condition cannot stand, as the proper inference to be drawn is to the contrary.  It is well established that this Court is in as good a position as the trial judge to draw inferences from the facts as found or from evidence accepted by the trial judge or not in contention:  see Warren v Coombs and Another (1979) 23 ALR 405.
	There is a further reason why her Honour arguably ought to have approached the question of the valuation of the aircraft on the basis that it was, at the relevant time, in good condition, rather than in average condition.  Because of the respondent's representations, her Honour found that the appellant at that time did nothing to retrieve the aircraft, and this was one of the causes of the appellant's loss.  The appellant was not in a position to call evidence as to its condition in May 1983 other than the evidence of Mr Shuh, and the evidence of Mr Cross, who last flew the aircraft, to the effect that the aircraft was in good condition at that time.  Due to a motor vehicle accident, the respondent was unable to give evidence at the trial, but there were officers of the company whom the respondent might have called to contradict the opinion of Mr Shuh.  It is arguable that in circumstances where a person in the position of the appellant is unable to call evidence as to the actual condition of the aircraft as at May 1983 due to the actions of the respondent, the appellant is entitled to rely upon an assumption that the aircraft was in the best condition which could reasonably be expected of an aircraft of that type having regard to its age and such evidence as there was:  see Armory v Delamirie [1722] 1 Strange 505.  That principle has been applied by single judges of this Court in similar situations:  see Cook v Saroukos and Another (1989) 97 FLR 33 (Angel J) and Poat v Australian Guarantee Corporation Limited (unreported, Martin CJ, 10 January 1996), where the relevant authorizes are usefully collected and discussed.  It may be thought that that principle applied equally to the circumstances of this case.  Although the point was raised by the Court during argument, the appellant did not seek to urge it upon us; therefore I do not think that we should decide the case on this basis.  
	Before leaving this topic I should refer briefly to the fact that there was evidence that the aircraft needed to have certain repairs and maintenance done on it, but these were minor and her Honour allowed for these items when calculating the actual cost of bringing the aircraft to average condition.  The cost of the major inspection and overhaul had been allowed for by Mr Shuh in estimating the value of the aircraft in good condition.
	The question then remains as to what figure ought to have been placed on the value of the aircraft, it being in good condition.  The appellant suggested a figure of $92,000, as fair, it being midway between the range of figures suggested by Mr Shuh.  On the other hand, Mr Shuh's valuation depended upon the aircraft being in the same condition as that of another aircraft (referred to as a T‑tail); but no evidence was given as to the actual condition of that aircraft and the assumption seems to have been made by counsel for the appellant (and presumably by the witness) that it was in `good' condition.  Another aircraft of the same type as the aircraft in question and in good condition sold, according to Mr Shuh, for $78,000, the difference between that aircraft and the one in question being the cosmetic differences, although Mr Shuh maintained that the appellant's aircraft was a better one to fly.
	Having regard to the unsatisfactory nature of this evidence and bearing in mind the observation of Angel J in Cook v Saroukos, supra, at 43, that the valuation is `largely a matter of estimation and essentially a jury question' I consider that the appropriate figure is $85,000.
	The other ground of appeal related to her Honour's failure to award interest.  In the Amended Statement of Claim the appellant claimed that it suffered loss by way of `additional interest' incurred on a loan facility which it was unable to fully discharge out of the proceeds of sale, basing its claim on Hungerfords and Another v Walker and Others (1990) 171 CLR 125.  Her Honour rejected that claim.  No appeal is made against that decision but the appellant contended that her Honour should have awarded interest pursuant to s84 of the Supreme Court Act, which her Honour did not consider at all.  The Amended Statement of Claim, which was amended on the first day of trial to include the Hungerfords v Walker claim, did not contain a specific prayer for statutory interest, and it is conceded by the appellant that no submissions were directed to the court below as to the appellant's entitlement to statutory interest.  Nevertheless the appellant submitted that the Amended Statement of Claim sought `interest' and that her Honour ought to have made an order for interest; alternatively it was put that even if the question of statutory interest had not been properly raised in the court below, this was an oversight which could be corrected on appeal.
	It has been held by single judges of this Court that a claim for interest under s84(1) of the Supreme Court Act does not have to be pleaded:  Lawrence v Mathison and Another (1981) 11 NTR 1 at 11, per Muirhead J; City Mutual General Insurance Ltd v Green, (unreported, 28 October 1985, per Kearney J at p4).
	The respondent did not seek to argue that these cases were wrongly decided.  In Simonius Vischer & Co v Hold and Thompson (1979) 2 NSWLR 322 Moffitt P, with whom the other members of the Court agreed, held that such a claim should be pleaded, although the failure to plead was not necessarily fatal to the claim.  At p328, his Honour said, in relation to a claim for statutory interest under s94(1) of the Supreme Court Act (NSW) which had not been pleaded: 

	"The claim under s94 was not made until September 1977 only two months before judgment was given and twelve or thirteen years after the cause of action accrued.  There had been ample opportunity to make an earlier claim, as senior counsel was engaged in the many intervening steps in the proceedings.  The actual hearing itself was in progress for some years before the claim now pressed was made.  The subject of interest was considered, and a decision was made to press a claim on a different basis which raised different considerations.  The failure to make the claim, or to plead it, is not fatal to the present application; but, in consequence, the Court must be persuaded to exercise an additional discretion, namely to make an award when the claim is not pleaded:  Bennett v Jones [1977] 2 NSWLR 355 at 361."

	In this case, there was a claim for `interest' pleaded, although the pleading did not identify s84(1) as the source of the claim, as it should have done:  see R13.02(1)(b).  Further, the appellant's argument before the court below focused on the Hungerfords v Walker claim, and no submissions were made in relation to a claim for statutory interest.  A claim for statutory interest is discretionary:  see City Mutual General Insurance Ltd v Green, supra; Simonius Vischer v Holt and Thompson, supra, at 338.  In this case, her Honour's failure to award statutory interest at all was not because she exercised her discretion not to, but because the issue had not been raised due to the inadvertence of the appellant's counsel.  The guiding principle in a case of this kind in whether the point now sought to be raised could possibly have been met by the calling of evidence in the Court below.  In Water Board v Moustakas (1988) 77 ALR 193 at 196, Mason CJ, Wilson, Brennan and Dawson JJ said:
	"More than once it has been held by this court that a point cannot be raised for the first time upon appeal when it could possibly have been met by calling evidence below.  Where all the facts have been established beyond controversy or where the point is one of construction or of law, then a court of appeal may find it expedient and in the interests of justice to entertain the point, but otherwise the rule is strictly applied:  see Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438; University of Wollongong v Metwally (No.2) (1985) 59 ALJR 481 at 483; 60 ALR 68 at 71; Coulton v Holcombe (1986) 162 CLR 1 at 78; 65 ALR 656; O'Brien v Komesaroff (1982) 150 CLR 310 at 319; 41 ALR 255."

	Counsel for the respondent, Mr Hiley Q.C., did not submit that the respondent could have arguably met the claim by the calling of evidence below, or that the facts had not been all found.  Although the granting of statutory interest calls for the exercise of a discretion by a trial judge, in practice interest is usually awarded in cases of this kind at commercial rates from the date of the loss until judgment.  As was observed by Moffitt P in Simonius Vischer & Co v Holt & Thompson at 338, the basic consideration is that the money has been outstanding, and the discretion is not one to be exercised punitively, e.g; to punish delay or the failure to observe court procedures.  Mr Hiley Q.C. submitted that in this case there had been extensive delay.  The cause of action arose, so he submitted, in August 1983 the date of the misrepresentation.  It is not necessary to decide that point, because the appellant seeks interest only from the date when the aircraft would have sold, say June 1984, had it been hangared or otherwise properly preserved.
	Mr Hiley submitted that the appellant ought not be awarded interest for the full period from June 1984 until the time of judgment in February 1995 because of inexcusable delay on the part of the appellant.  The considerations which delay may have in making a claim for interest and the potential for unfairness to a defendant were discussed by Moffitt P in Simonius Vischer v Holt and Thompson, supra, at 338‑9.  However, those considerations do not apply in this case as the Statement of Claim, before it was amended, included a claim for interest, and the respondent was therefore on notice.
	The evidence in this case, which was not challenged, was that the delay was caused by the appellant's former solicitors.  Counsel for the appellant submitted that that in these circumstances the appellant should not be deprived of the full period of the interest:  Osborne v Kelly and Another (1993) 61 SASR 308.  I accept this submission.
	The consequence of the change in valuation of the aircraft is that the appellant is entitled to damages being the difference between $85,000 and $56,300, the sale price of the aircraft, viz., $28,700.  The trial judge had awarded $3,700 under this head.  Accordingly the damages awarded must be increased by $25,000.  I would therefore set aside judgment for the appellant in the sum of $14,491.74 and substitute therefore the sum of $39,491.74.  In addition, I would award interest on that sum, pursuant to s84(1) of the Supreme Court Act at the rate of 10% per annum from June 1984 to February 1995, which amounts to $46,087.  By consent of the parties, the question of costs is reserved.

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