A S Properties Pty Ltd v Touche Ross Services Pty & Anor [1991] QSCFC 71

sD IN THE SUPREME COURT OF QUEENSLAND REVISED COPIES ISSUED^ Court Reporting Bursau Data: lOf 9/ 9/ \//Cai\ FULL COURT No. 2126 of 1985 0 BEFORE : Mr. Mr. Mr. Justice Justice Justice Demack.' Thomas Mackenzie BRISBANE, 28 JUNE 1991 10 (Copyright in this transcript is vested in the Crown. • Copies thereof must not be made or sold without the written authority of the Chief Court Reporter ,Court Reporting Bureau.) BETWEEN : 30 A. S. PROPERTIES PTY. LTD. Respondent (Plaintiff) -and- TOUCHE ROSS SERVICES PTY. Appellant (Defendant) -and- PETER GRENFELL WINDSOR Respondent (Third Party) JUDGMENT MR. JUSTICE DEMACK: In this appeal I have reduced my reasons to writing. In my opinion the appeal should be dismissed with costs . The cross appeal should be allowed with costs and the judgment varied so that the amount of the judgment is 20 30 •40 $225,472.87. I publish my reasons. MR. JUSTICE THOMAS : I agree with the orders proposed the reasons published. I agree that the appeal should MR. JUSTICE MACKENZIE: 60 [1991] QSCFC 71 -- 1 of 22 -- be dismissed with costs and the cross appeal allowed with costs. I agree with the order proposed by my brother Demack and with his reasons. 10 -50 50 i 60 2 60 -- 2 of 22 -- IN THE SUPREME COURT OF QUEENSLAND FULL COURT Writ No. 2126 of 1985 BETWEEN: AND: AND: A . S . PROPERTIES PTY. LTD. (Plaintiff) Respondent TOUCHE ROSS SERVICES PTY. (Defendant) Appellant PETER GRENFELL WINDSOR (Third Party) Respondent DEMACK J THOMAS J MACKENZIE J Reasons for judgment delivered by Demack J on 28th June, 1991. Thomas J and Mackenzie J both concurring with those reasons and with order proposed. "APPEAL DISMISSED WITH COSTS. CROSS APPEAL ALLOWED WITH COSTS AND THE JUDGMENT VARIED TO THE EXTENT OF INCREASING THE AMOUNT OF THE JUDGMENT TO $225,472.87 BUT OTHERWISE THE ORDERS BELOW ARE TO STAND. -- 3 of 22 -- 5^ -- 4 of 22 -- IN THE SUPREME COURT OF QUEENSLAND FULL COURT No. 2126 of 1985 Before the Full Court Mr. Justice Demack Mr. Justice Thomas Mr. Justice Mackenzie BETWEEN : A . S . PROPERTIES PTY. LTD. (Plaintiff) Respondent AND: TOUCHE ROSS SERVICES PTY. (Defendant) Appellant AND: PETER GRENFELL WINDSOR (Third Party) Respondent JUDGMENT - DEMACK J. Delivered the 28th day of June, 1991. CATCHWORDS: Contract - conditional on performance report on business - retainer of consultants to prepare report - scope of retainer - interest on damages. Counsel: Mr R. GOTTERSON QC with Mr B. O'DONNELL Mr R. DOUGLAS QC with Miss B. SPRINGER Solicitors: Morris Fletcher & Cross John M. O'Connor & Co. Hearing dates: 3rd and 4th June, 1991. for Appellant for Respondent for Appellant for Respondent -- 5 of 22 -- IN THE SUPREME COURT OF QUEENSLAND FULL COURT BETWEEN: AND: No. 2126 of 1985 A . S . PROPERTIES PTY. LTD. (Plaintiff) Respondent TOUCHE ROSS SERVICES PTY. (Defendant) Appellant AND: PETER GRENFELL WINDSOR (Third Party) Respondent JUDGMENT - DEMACK J. Delivered the 28th day of June, 1991. On 31st January, 1982 A.S. Properties Pty. Ltd. ("A.S.P.") entered into an agreement to purchase a business known as Payroll Deduction Services of Australia ("P.D.S.A."). The contract is somewhat complicated by the fact that a unit trust was involved- so that the sale was in respect of units in the trust, but, for the purposes of this appeal, the only significant provision in the agreement was cl. 4, which reads :- "That the purchase of the units is conditional upon a satisfactory 'Performance Report' being made by Touche Ross Services Pty. within fourteen days of the date hereof that the operations carried on by the Trust and known as 'net pay' and other services presently carried on together with softwear associated therewith do perform as described to clients and Principal Service Organisations using the services of the business conducted by the Trustee." -- 6 of 22 -- 2 (Throughout the judgment under appeal the words "net pay" are referred to as "nett pay" and this judgment will use that spelling. It will also use the spelling "software".) The business that P.D.S.A. had built up involved the development of a computerised programme that provided payroll deduction services to employers. Peter Grenfell Windsor ("Windsor") was the Managing Director of A.S.P. He approached Touche Ross Services Pty. ("Touche Ross") and was introduced to a Dr. Wolf ("Wolf"). Wolf was employed by Touche Ross as a Management Consultant. He was based in Sydney and Windsor lived in Brisbane. The business of P.D.S.A. was conducted in Melbourne. Windsor and Wolf travelled together in a plane from Sydney to Melbourne on 3rd February, 1982. In the course of that -flight Windsor gave Wolf instructions which constituted the retainer that Windsor entered into with Touche Ross on behalf of A.S.P. In Melbourne, Wolf and Windsor were involved in a conference with Brian James Delaney ("Delaney"), who was the Managing Director of P.D.S.A., and Andrew Donald Caswell ("Caswell"), who was the Manager of the computer department of Touche Ross in Sydney. On the 11th February, 1982 Touche Ross gave a favourable report on the business and Windsor went ahead with the contract. He discovered, as the year wore on, that P.D.S.A. did not perform as he had expected, and in September he withdrew from the contract. At that stage he had paid $101,000.00 of the purchase price. A.S.P. were involved in proceedings with Delaney and obtained a judgment against him that remains unsatisfied. These -- 7 of 22 -- 3 present proceedings against Touche Ross were commenced in 1985. The statement of claim alleges the retainer and employment of Touche Ross to assess and report on the operations of a business known as P.D.S.A. It refers in para. 6 to the terms of cl. 4 that I have quoted. It also refers to a conference in Melbourne to which I have made reference. It alleges that Delaney made representations to Windsor in the presence of Wolf and Caswell which included the representation "that an operation known as nett pay was ready for immediate introduction." It then pleads the report that I have referred to on 11th February and a further report from Touche Ross dated the 17th February, 1982. It then pleads particulars of negligence in the preparation of the report. Included among these particulars was "(e) failing to advise the plaintiff that an operation known as nett pay was not ready for immediate introduction." Then it proceeds to claim damages. The defendant joined issue with the terms of the retainer and with the allegations of negligence. The trial took six days. The evidence included a lengthy transcript of part of the conference in Melbourne between Wolf, Windsor, Caswell and Delaney, (ex. 4). The trial Judge, Mr. Justice Shepherdson, gave judgment for the plaintiff in a careful and lengthy judgment. He did not allow all of the plaintiff's claim for damages, but found damages in the sum of $101,000.00 together with interest. Touche Ross has appealed from this decision on a number of grounds, not all of which were argued before us. A.S.P. have also appealed in respect of the award of interest. It seems to me that the critical issues are, first of all, what is meant by -- 8 of 22 -- 4 cl. 4, because it is accepted that this clause was the one that led Windsor to seek the advice of Touche Ross and that it was shown to Wolf in the plane. The second significant issue is the actual terms of the retainer. CLAUSE 4 The words in Clause 4 which are contentious are "perform as described to clients and Principal Service Organisations using the services of the business conducted by the Trustee". To what parts of the clause do these words apply? Are there three distinct matters which must "perform as described to clients", namely, nett pay, other services and software? The clause may be read that way. Is that what the parties intended? "A court may admit evidence of surrounding circumstances in the form of 'mutually known facts' 'to identify the meaning of a descriptive term' and it may admit evidence of the 'genesis' and objectively the 'aim' of a transaction to show that the attribution of a strict legal meaning would 'make the transaction futile' [Prenn v. Simmonds (1971) 1 W.L.R. '1381, at p. 1384:(1971) 3 All E.R. 237, at p. 240]." f D.T.R. Nominees Ptv Ltd v. Mona Homes Ptv Ltd (1978) 138 C.L.R. 423, at p. 429]. In so far as clause 4 is concerned, it is found in the contract between A.S.P. and P.D.S.A., so that the mutually known facts are those known to Delaney and Windsor. These facts show that the concept of nett pay was still very much in the development stage. Although Delaney said that one client, Monsanto, was on the verge of taking up the option of nett pay, there were in fact no clients "using" that "operation". However,it would seem from what Delaney said, that the operation had been described, at least to Monsanto. How then can this clause be read to give meaning to its words? First, it seems to me, the phrase "operations carried on -- 9 of 22 -- 5 by the Trust and known as 1 nett pay '" must be taken to apply to the concept Delaney described to Windsor. I shall consider that concept in more detail subsequently. One of the meanings given in the Shorter Oxford Dictionary for "operation" is "the way in which anything works". If this definition is used, the way in which nett pay worked could be described by Delaney, although there was then no "particular form or kind of activity" known as nett pay. Those latter words are another definition of "operation" in the Shorter Oxford Dictionary. Secondly, "the other services presently carried on" can be readily identified as the payroll deduction services provided for several client companies. Through these services, payments were made to "Principal Service Organisations". That was, in fact, "the business conducted by the Trustee". Thirdly, software was used in the payroll deduction services and was essential to the concept of nett pay. The "mutually known facts", then, encourage the construction of the clause which relates software to both of these matters. Consequently, in my opinion, the Touche Ross performance report referred to in cl . 4 should indicate whether (1) nett pay (2) other services presently carried on, and (3) software perform as described to clients and Principal Service Organisations "using the services of the business conducted by the Trustee". The latter phrase can only refer to those who were then using such services. It does not suggest future clients or organisations. -- 10 of 22 -- 6 THE TERMS OF THE RETAINER So far as the retainer is concerned, the statement of claim does not allege any particular terms. Shepherdson J. made findings about this in the light of all the evidence. At p. 1215 of the appeal book he said:- "I find that these instructions which constituted the terms of the defendant's retainer were:- 1 . To do a stocktake of the software In Payroll Deduction Services i.e. to identify the software components . 2. To provide within 1 0 days a performance report to determine whether or not the business of P.D.S. did what their clients expected of it. 3. To check that ownership of the business was secure i.e. that P.D.S. had exclusive rights to the software and security in relation to its operations. 4. To check reliability -of processing money committed to the P.D.S. system i.e. that the money actually got to its destination." On p. 1216, he began a lengthy discussion about nett pay which begins with this passage "I find also that Windsor did tell Wolf during the plane trip what 'nett pay' meant namely that nett pay was a way of capturing the balance of an employee ' s pay after his other deductions had been processed and in effect that where people were apathetic they would not spend all their money and it would remain in that employee's account which might be with a particular building society." At the hearing of the appeal, A.S.P. contended that the findings 2 and 4 included the consideration of the concept of nett pay. The concept of nett pay is nowhere concisely described, either in His Honour's findings or in the evidence. In essence, it requires the client company to assess each of its employees ' pay for the relevant period and deduct from that any tax which is payable. It then transmits the balance of the -- 11 of 22 -- 7 employee's pay to the processing company. All of the deductions which the employee has authorised to such bodies as Medicare, Medical Benefits Fund, trade unions, and so on, are deducted by the processing company. Those payments are transmitted to the respective organisations to whom they are due, and the balance of the employee's pay is paid either directly in cash or into a bank or building society or credit union. It was clear enough that the computer system that P.D.S.A. had developed was able to calculate the amount of nett pay. There were two matters in respect of which a great deal of time was taken in evidence: first, the prompt reception of the necessary information from the client employer and, secondly, at the other end of the process, the ability to transmit the money to the bank, building society or credit union. Speed in the former process required the client employer to transmit the material on tape, and, at the other end, the material had to be transmitted by P.D.S.A. to the bank, building society or credit union also by tape. On appeal, Touche Ross contended that their retainer was limited to an examination of the existing software, and that they were not obliged to look at the expansion of the business into nett pay. A.S.P. contended that nett pay was included in the terms of the retainer. As I have indicated, the pleadings clearly assert that one issue in the trial was the immediate availability of nett pay to A.S.P. The relevant words in para. 8 of the statement of claim are "that an operation known as 'nett pay' was ready for immediate introduction." There is no doubt that His Honour found -- 12 of 22 -- 8 that nett pay was not available for immediate introduction. Included among his findings of negligence on p. 1233 are: "(a) Failing" to advise the plaintiff through Windsor that the operation known as 'nett pay' was not ready for immediate introduction, (b) Failing to advise the plaintiff that the business was not ready for and capable of immediate expansion with particular emphasis on the 'nett pay' facility of the P.D.S. computer, (c) Failing to advise the plaintiff that the business was labour intensive and would become more labour intensive with 'nett pay' and P.D.S. not being a Cemtex user." The "Cemtex" system involved the production of a tape which was then taken to a central point within the banking system. The information on the tape was then fed into the banking system thereby effecting transfers of funds from accounts very rapidly. In those circumstances it would be surprising if His Honour intended his findings about the scope of the retainer to exclude nett pay. The pleadings raised it and his findings on negligence concentrated on it. As I have already indicated in considering clause 4, the performance report required a consideration of nett pay. The contract was shown to Wolf, and it must have been plain to him that the report Windsor wanted was the one clause 4 required. I am satisfied that in the light of all these matters, the retainer did include the examination of nett pay, and that findings 2 and 4 on p. 1215 of the judgment should be read as including the concept of nett pay. GROUND 7 Turning then to the grounds of appeal argued for Touche Ross, the first of these was ground 7 which reads:- -- 13 of 22 -- 9 "The trial Judge ought to have concluded that no loss resulted to the plaintiff on the breach of retainer and negligence which he found because, in the event, the plaintiff would not have been able to avoid the contract of purchase pursuant to clause 4 thereof." The argument in support of this ground began with the fact that Touche Ross were asked for advice after the contract was entered into on 31st January, 1982. Thus, any loss arising from the contract can only be sheeted home to Touche Ross if in fact their report could have enabled A.S.P. to withdraw from the contract pursuant to cl. 4. It was contended that this issue was not addressed by the trial Judge. It seems to me that while there was no specific discussion in the judgment about this, the issue is implicit throughout the judgment. I have already discussed the question of nett pay which is a significant cl. 4 matter. The central submission by the appellant in respect of this ground concentrated upon the words in cl . 4 "performed as described to clients and Principal Service Organisations using the services of the business conducted by the trustee" . It was asserted that the matters found by the trial Judge to constitute breach of the retainer and negligence were all concerned with the future viability of the "nett pay" operation from an owner's point of view, not with the question whether it performed as described to clients. I have already indicated my views on clause 4. The construction contended for is too narrow. The fact is that Delaney's confidence in nett pay, which was communicated to Wolf in the Melbourne meeting (ex. 4), was misplaced. The report should have revealed that. If it had done, A.S.P. would have been able to withdraw from the contract. -- 14 of 22 -- 10 GROUND 6 The second ground that was argued was ground 6 which reads: "The trial Judge erred in finding that exhibit 2 referred to or should be understood to refer to nett pay when it said that the system performed the function described by Delaney." Exhibit 2 was the letter sent on the 11th February, 1982, by Touche Ross to Mr. Windsor. The text of the letter is as follows :- "Herewith is a brief summary of our investigations to date of the Payroll Deduction Services of Australia Pty Ltd's software. Attachment A details all modules of the system of which we are aware. This statement should form the basis of the commercial agreement between yourself and PDS . Mr A.D. Caswell spent the day of Wednesday 10 th February 1982 working with Brian Delaney and Ian Currie performing an extensive test of the major facilities offered by PDS. With one trivial exception (an extended printing feature not working exactly as specified) all programs worked faultlessly and performed their specified functions. Attachment B details the tests performed. We believe you can have the highest confidence in the system performing the functions described to you by Brian Delaney." The particular finding which is the subject of attack is on p. 1233: "d. Advising the plaintiff through Windsor that it could have the highest confidence in the system operated by the business performing the function described to Windsor by Delaney at the meeting on 3rd February, 1982 and particularly nett pay." It was submitted* that the annexures to the report show that it only dealt with the computer software. Certainly, in cross-examination, Windsor agreed that the letter only related to software, but that concession arose out of a close examination -- 15 of 22 -- 11 of the letter, years after he had acted on it. The last reference to the letter in cross-examination is found in the following passage "You agreed with me, didn't you, on Tuesday, that the letter of 11 February refers to computer functions and software functions and nothing else? — Yes, I did. I think I did agree with that. And you agreed also that the letter of 17 February added nothing to the one of 11 February? — It was substantially the same, but if I agreed with that I think it wasn't correct. So you got a letter - a report of February referring, as you appreciate, to nothing but computer functions and software functions. You got an invoice on about 25 February charging you only for an evaluation of E.D.P. facilities and you say you thought there had been a thorough investigation of the whole of the business. Is that what you're saying?— Yes, I am. That's what you're saying? That's what's your case here?— That's right." It is easy to see now that the letter related only to software, but in 1982, when the letter was sent, following the discussions with Delaney, the obvious meaning was that nett pay had been considered. I do not think it is necessary to hark back to the matters I have already referred to. As I have said consideration of nett pay was an essential part of the retainer. There is no substance in this ground. GROUND 8 Ground 8 reads "The trial judge was wrong in law or in fact in concluding that having undertaken a retainer for the plaintiff, the defendant came under a duty to explain to the plaintiff fully and properly all matters relevant to the Payroll Deduction Services' system including difficulties in bringing 'nett pay' into operation, in that the defendant's only duty was to do that which it had agreed to do." -- 16 of 22 -- 12 This ground raises the question whether the duty which Touche Ross owed to A.S.P. was other than that which arose from the terms of the retainer. Specifically it attacks a part of the judgment which begins "if I should be found to be wrong in my acceptance of Windsor's version of the retainer in preference to Wolf's, nevertheless, in my view, if Wolf's version of the retainer were acted on the same result in liability must be achieved. I say that because of Wolf's admitted knowledge of the various matters, which knowledge I have highlighted earlier in these reasons." As I have indicated that, in my opinion, the findings made about the terms of the retainer are correct and do include an obligation to consider nett pay. It is not necessary to consider this ground any further. GROUNDS 1 AND 2 Touche Ross contended at the trial that its retainer was only to examine software at P.D.S.A. It relied on Wolf's evidence about a meeting with Windsor on 5th February, 1982. Shepherdson J. did not accept Wolf's evidence that such a meeting took place. This finding was attacked. It seems to me that it was a finding open to His Honour. Wolf gave evidence about this alleged conversation beginning with the following "Can you tell us what happened at that meeting, please?^- Well, I said something to this effect: 'How much is the system costing or going to cost?' And he indicated in a sort of very casual way, 'millions'. And I said, 'Well, I don't think it's worth that.' He said, 'Look, I don't want you to focus on that at all .' I indicated - and I can remember ------- It is difficult, I know, but what did you say as far as you can recall?— In relationship to that? -- 17 of 22 -- 13 In relation to what I think you are going on to? — . I said, 'One of my partners has told me that similar software is available and operational in New ; Zealand.', and that didn't interest Mr. Windsor at all. • • • BY MR. CHESTERMAN: Did he say what he wanted you to do? — I said that in carrying out this exercise, we would create a number of, I call them, dummy companies with a number of transactions and put them through the computer, and he indicated that - he said, 'Yes, that's exactly what I want you to do." Wolf says he made notes of this meeting. Those notes became ex. 54. They do not contain anything that would suggest Wolf was told not to focus on the cost of the system, but to concentrate on running dummy company transactions through the computer. In the light of Delaney's talk of nett pay two days earlier, as recorded in ex. 4., it would be remarkable indeed if Wolf did not make a note of the change in Windsor's points of concern. His Honour found it "rather extraordinary", (p. 1217). As I have said, it seems to me that the rejection of Wolf's evidence about a meeting on 5th February 1982 was open to His Honour. Although this action became a complicated one, one central issue was always nett pay. This was clearly raised as an issue in cl. 4 in the contract, which was shown to Wolf. It was spoken of with some enthusiasm by Delaney in the presence of Wolf and Caswell, both of whom were employees of Touche Ross. The findings made at length were open to His Honour, and they show that the failure by Touche Ross to consider the situation relating to nett pay denied A.S.P. the opportunity to withdraw from the contract. This breach of duty, which resulted in damage, has been properly found by the learned trial judge. -- 18 of 22 -- 14 INTEREST The cross appeal, so far as the grounds were argued, seeks to vary the judgment in respect of the interest allowed on the damages. Damages were assessed at $101,000.00. The relevant part of the judgment reads "In the result the plaintiff has satisfied me that it is entitled to $101,000.00 for damages only. It is entitled to interest on $1,000.00 for eight years and seven months at 12 per cent. I calculate this interest at $1,030.00. As for interest on the $100,000.00, the evidence showed that this money was borrowed and not repaid finally until July, 1987. The evidence shows that on 13th July, 1984 the plaintiff paid Gallagher $40,000.00; that on 14th July, 1986 it paid $60,000.00 and 14th July, 1987 made a final payment of $86,442.87. The loan was made on 9th March, 1982 (Ex. 7). According to Gallagher's evidence it was at commercial interest rates - 15 per cent. There was some suggestion the interest may have been capitalised. I am not satisfied that this in fact occurred. I intend to act on Gallagher's evidence as a guide to the interest which I shall allow the plaintiff on the $100,000.00. In the result I allow the plaintiff interest on $100,000.00 at 15 per cent from 9th March, 1982 to 13th July, 1984 - $35,178.10. I allow interest on $60,000.00 at 15 per cent from 13th July, 1984 to 14th July, 1986 - $18,024.66. In the result I give judgment for the plaintiff against the defendant for $155,232.76 made up as follows Damages as above - $101,000.00 Total Interest as above - $ 54,232.76 Total $155.232.76 " It appears from this that interest on the sum of $100,000.00 was allowed only until 14th July, 1986. A.S.P. contends that either the full amount of interest paid on the $100,000.00 loan, namely, $86,442.87, should have been allowed, or interest should have been allowed under the Common -- 19 of 22 -- 15 Law Practice Act on the payments actually made. £ This would amount to $91,184.42. It calculated this sum as follows $40,000.00 paid 13th July, 1984 interest at 12 per cent for six years and 41 days $29,339.17 $60,000.00 paid 14th July, 1986 interest at 12 per cent for four years and 40 days $29,589.04 $86,442.87 (interest on loan paid 14th July, 1986) interest at 12 per cent for four years and 40 days $32,256.21 $91.184.42 It seems that Shepherdson J. took the view that interest should have been limited to the time when the loan from Gallagher was repaid. It is not clear to me why this is so, particularly as he allowed interest on the amount of $1,000.00 for the period of eight years and seven months. The High Court has recently considered the question of interest on pre-judgment loss in Haines v. Bendall (1991) 99 A.L.R. 385. The following passages from pp. 386 and 388, in the joint judgment of Mason C.J., Dawson, Toohey and Gaudron J.J. are instructive upon the issues here. "The settled principle governing the assessment of compensatory damages, whether in actions of tort or contract, is that the injured party should receive compensation in a sum which, so far as money can do, will put that party in the same position as he or she would have been in if the contract had been performed or the tort had not been committed: Butler v. Egg and Egg Pulp Marketing Board (1966) 114 C.L.R. 185 at 191; Todorovic v. Waller (1981) 150 C.L.R. 402 at 412; 37 A.L.R. 481; Redding v. Lee (1983) 151 C.L.R. 117 at 133; 47 A.L.R. 241; Johnson v. Perez (1988) 166 C.L.R. 351 at 355, 386; 82 A.L.R. 587; M.B.P. (S.A.) Ptv Ltd v. Gooic (1991 ) 65 A.L.J.R. 203; 98 A.L.R. 193; Livingstone v. Rawvards Coal Co (1880) 5 App. Cas. 25 at 39; British Transport Commission v. Gourlev [1956] A.C. 185 at 197, 212. Compensation is the cardinal concept. It is the 'one principle that -- 20 of 22 -- 16 is absolutely firm, and which must control all else': Skelton v. Collins (1966) 115 C.L.R. 94, per Windeyer J. at 128. Cognate with this concept is the rule, described by Lord Reid in Parry v. Cleaver [1970] A.C. 1 at 13, as universal, that a plaintiff cannot recover more than he or she has lost ." "An award of interest up to the date of judgment is an award of interest in the nature of damages: Fire and All Risks Insurance Co. Ltd v. Callinan (1978) 140 C.L.R. 427, at 431. This statement acknowledges that the award of interest is an integral element in the attainment of the object of damages, namely, to compensate a plaintiff for injury sustained. Hence the award of interest is compensatory in character. While 'interest should not be awarded as compensation for the damage done' ( Jefford v. Gee [1970] 2 Q.B. 130 at 146), the award of interest is nevertheless an essential element in the achievement of true compensation for that damage. In Thompson v. Faraonio (1979) 54 A.L.J.R. 231 at 233; 24 A.L.R. 1 at 7, the Privy Council stated that 'the reason for awarding interest is to compensate the plaintiff for having been kept out of money which theoretically was due to him at the date of his accident' . See also Batchelor v. Burke, per Gibbs C.J. (C.L.R.) at 455); M.B.P. ( S . A. ) Ptv Ltd v. Gogic (A.L.J.R. at 205; A.L.R. at 196); cf Ruby v. Marsh (1975) 6 A.L.R. 385; 132 C.L.R. 642, per Barwick C.J. at 652-3. The award of interest for the period of delay in payment between the date of accrual of the cause of action and judgment affords the fair legal measure of compensation: Pheenev v. Poolan [1977] 1 N.S.W.L.R. 601, per Reynolds J.A. at 613. Thus, it is the award of damages and, where-appropriate, interest awarded on deunages for the period up until the judgment takes effect which allows the plaintiff to be placed in or restored to the situation, as far as money can do, in which he or she would have been but for the defendant's negligence." It may be that the reason why Shepherdson J. distinguished between the interest he allowed on $1,000.00 and the interest he allowed on $100,000.00 was because the sum of $100,000.00 had been borrowed and repaid. The sum of $1,000.00 does not appear to have been repaid. It seems to me, with respect, that this has introduced an extraneous consideration into the matter. The sum of $101,000.00 was assessed as damages because that was the amount A.S.P. paid to P.D.S.A. under a contract from -- 21 of 22 -- 17 which it could have withdrawn if it had received adequate advice from Touche Ross. The fact that A.S.P. borrowed the money and repaid $100,000.00 of it did not mean that it recovered the sum from P.D.S.A.. There has been no challenge by either side to the propriety of awarding damages in the amount of $101,000.00. Interest should be awarded to achieve true compensation for that damage . To do this, it seems to me to be necessary to allow interest on the sum of $100,000.00 at the rate that was paid to Gallagher, for so long as that interest was being paid. After that, interest at 12 per cent, on the amount of $100,000.00 should be allowed. The interest allowed on $1,000.00, should not be altered. This would involve the following amounts On $1,000.00 for 8 7 / 12 years at 12 per cent $ 1,030.00 On $100,000.00 borrowed and repaid $ 86,442.87 On $100,000.00 from 14/7/1987 to 23/8/1990 i.e. 3 1 /i2 Y ears at 12 per cent $ 37,000.00 $ 124.472.87 In my opinion then the appeal should be dismissed with costs. This cross appeal should be allowed, with costs, and the judgment varied so that the amount of the judgment is $225,472.87. -- 22 of 22 --