Ahrkalimpa Pty Ltd v Schmidt

2 At the time the Quantum Judgment was delivered, the court did not have the benefit of submissions from the parties with respect to the basis upon which interest ought to have been awarded. As the parties were unable to agree upon this issue after considering the reasons delivered, they were ordered to file written submissions setting out their respective positions. A short hearing was held on 15 April 2019 to further identify and refine the issues.

3 For the reasons that follow, the defendants will be ordered to pay simple interest on the judgment sum of $2,774,803, to be calculated from the commencement of the proceeding on 16 December 2015, to the date of delivery of the Quantum Judgment, being 2 April 2019, at the statutory interest rate. The total amount of interest to be awarded is $899,606.34.

4 This proceeding concerned a joint venture for the export of livestock to Israel by companies associated with 3 individuals, Haim Bzezinski, Danny Ruschin and the first defendant, Alan Schmidt ("Schmidt"). The plaintiffs alleged that, following the collapse of the joint venture relationship, the defendants (being Schmidt and his associated company, the second defendant, Otway Livestock Exports Pty Ltd ("Otway Livestock")) misappropriated the business of the joint venture ("the Business") to themselves. The background of this proceeding has been extensively canvassed in both the Liability and Quantum Judgments.[3] For present purposes, it is unnecessary to go into any further detail about the relevant history.

5 In the Quantum Judgment, judgment in the amount of $2,774,803 was awarded in favour of the first plaintiff, AHRKalimpa Pty Ltd ("AHRKalimpa").[4] I also expressed the view that interest ought to be awarded on that amount from the commencement of the proceeding on 16 December 2015.[5] In that regard, the following was stated:[6]

As to the rate of interest that ought to be applied, it is not appropriate to make a determination at this point as the parties have not made submissions on this specific topic. The same position applies to whether simple interest should be awarded or whether it should be compounded. The parties will be invited to agree on an amount for interest, or, alternatively, submissions may be made and, presumably, the matter can be determined on the papers.

The remaining issue to determine is from when interest should accrue.

On 24 December 2013, a letter of demand was sent to Schmidt.[7] That letter demanded money with respect to Voyages 1 to 4 and that Schmidt and Otway Livestock cease to export cattle to Israel for a period of 2 years. Schmidt responded 3 days later, making it clear he had no intention to desist.[8] Further, after this time, the plaintiffs were aware that the Business continued.

The evidence discloses that, in December 2013, the plaintiffs substantially knew the material facts. However, they chose not to commence this proceeding until 16 December 2015. Whatever the motivation,[9] it would not be appropriate for the plaintiffs to receive interest for this period of delay. Whilst there is no suggestion that the defendants were relevantly prejudiced, it would be contrary to equitable principles to reward the plaintiffs with respect to delay that was entirely of their own making.

The power to award interest from the commencement of the proceeding is not only within the equitable jurisdiction of the court but is also found in statute.[10] However, nothing further will be said on this issue until the parties have had the opportunity to make submissions.

(Original footnotes.)

6 In short, the plaintiffs previously sought a ruling on interest as part of the quantum hearing, though not on the percentage to be applied. It was for that reason the matter was addressed in the manner that it was in the Quantum Judgment. Despite this, upon delivery of judgment, the defendants sought to re-agitate the date from when interest should accrue, as well as the rate of interest, if any, to be awarded. The plaintiffs did not take exception to this process. Thus, the parties were permitted to make further submissions on the rate and period of interest to be applied on the judgment sum up to the delivery of the Quantum Judgment.

7 The plaintiffs' primary position, based on the Quantum Judgment, is that they seek simple interest from the commencement of the proceeding pursuant to s 60 of the Supreme Court Act 1986 (Vic).

8 There are 2 separate and distinct bases upon which the court has the power to award interest. As referred to in the Quantum Judgment, interest may be awarded under the Supreme Court Act or pursuant to principles applicable to equitable compensation.

9 Section 60 of the Supreme Court Act provides, in part:

(1) The Court, on application in any proceeding for the recovery of debt or damages, must, unless good cause is shown to the contrary, give damages in the nature of interest at such rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 as it thinks fit from the commencement of the proceeding to the date of the judgment over and above the debt or damages awarded.

(a) authorises the granting of interest on interest;

(b) applies in relation to any sum on which interest is recoverable as of right by virtue of any agreement or otherwise;

(c) affects the damages recoverable for the dishonour of a negotiable instrument;

(d) authorises the allowance of any interest otherwise than by consent on any sum for which judgment is entered or given by consent;

(e) applies in relation to any sum on which interest might be awarded by virtue of section 58 or 59;[11] or

(f) limits the operation of any enactment or rule of law which, apart from this section, provides for the award of interest.

10 The purpose of awarding interest pursuant to s 60 is to compensate a plaintiff for being kept out of its money; not because it has lost the opportunity to invest it, but because it has been deprived of its use.[12] Interest is not awarded simply for the purpose of penalising the defendant for not having paid the plaintiff earlier, however, it has been acknowledged that an award of interest may have that effect.[13] That said, the broader objective of the award of interest is ensuring that: [14]

[R]ecalcitrant defendants, owing money or otherwise subject to an award of damages, do not withhold payments properly sought by plaintiffs upon the selfish basis that in the meantime they may without risk invest moneys so owed in a manner which will give them not merely sufficient to repay successful plaintiffs with interest under the Act but with an element of profit which might fairly be perceived as wrongfully obtained.

11 Further, the words "at such rate not exceeding" and "as [the court] thinks fit" contained in s 60(1) necessarily grant a discretion, for the court to exercise judicially, as to the precise amount of interest to be awarded.[15] However, there is no ability under this provision for the court to allow interest beyond the maximum interest rate prescribed.[16] Further, the discretion is not to be constrained by determinations of what must or must not be taken into account.[17]

12 As the words of s 60 make plain, it is "a prima facie rule" that the plaintiffs are entitled to an award of interest from the commencement of the proceeding to the date of the judgment, over and above the amount awarded in "damages",[18] unless the defendants can show good cause to the contrary.[19] If there is no good cause to the contrary, the court "must" give damages in the nature of interest.[20] Thus, the onus is on the defendants to show good cause,[21] but such onus does not include the burden of being required to adduce evidence themselves.[22]

13 In this context, "to the contrary" means "for not allowing it."[23] Further, in Clarke v Foodland Stores Pty Ltd,[24] it was stated that the phrase "good cause to the contrary" means "no more and no less than good reason, according to the justice of the case, for not allowing interest at all or, if interest is to be allowed, then for not allowing interest for the whole of the period marked out by the section".[25] Therefore, what may constitute a "good cause" depends on the facts and circumstances of the particular case.

14 When determining whether a "good cause" exists, the discretion is not "intended to be directed to penalising the plaintiff but to alleviating the defendant in a proper case".[26] Nor should it be seen as diminishing the culpability or wrongdoing of the defendant. Instead, it serves to relieve the defendant against any injustice.

15 A court may be asked to determine whether a "good cause" exists in instances where a plaintiff has delayed in bringing its case to trial. In Giller v Procopets (No 2),[27] the Court of Appeal determined that the failure of the plaintiff in complying with time limits and causing a delay of more than 4 years from the date of the commencement of the proceeding to the date of trial, constituted "good cause" for the purposes of s 60. However, it has also been held in other circumstances that delay did not constitute "good cause" and that the "protracted and unwarranted delay on the part of the plaintiff" showed nothing in the way of disadvantage to the defendant, beyond the defendant "being called upon to pay interest for a period of use of the plaintiff's money longer than the plaintiff needed to allow to continue".[28]

16 The examples in the previous paragraph demonstrate that each case must be assessed according to its particular facts.[29] Bearing this in mind, generally speaking, it appears that in practice, whilst delay may constitute a "good cause" and is a relevant factor to be taken into consideration,[30] some delay, of itself, does not ordinarily constitute "good cause" such that a lesser period or rate of interest should be applied.[31] A reason for this is because a defendant has still had the use of the money since the commencement of the proceeding.[32]

17 If "good cause" can be shown, the court is authorised to disallow interest entirely, or, allow interest for a lesser period than that specified in the statute.[33]

18 Section 2(1) of the Penalty Rates Act 1983 (Vic) provides:

The penalty interest rate is the interest rate expressed as a percentage fixed by the Attorney-General from time to time by notice published in the Government Gazette.

19 At the relevant times, the penalty interest rate was as follows:

20 In the circumstances of this case, the other basis on which interest may be awarded, independent of statute, is pursuant to equitable principles.[36] Again, if interest is awarded on this basis, it is not awarded as a punishment, but rather as recompense for the defendants, in the position as fiduciaries, misapplying funds for their own benefit.[37] Consistent with equitable principles, the court may take a commercial approach to awarding interest, including awarding compound interest, in an appropriate case.

21 The defendants submitted that no interest ought to be awarded under equitable principles because the defendants were not trustees.[38] Whilst it is correct to observe the defendants were not trustees, this submission fails to address the fact this proceeding is concerned with equitable compensation and loss arising out of a director's breach of fiduciary duty. In short, in an appropriate case, a court may gain assistance from the authorities concerning equitable compensation to be awarded for breach of trust when considering what interest, if any, ought to be paid by a director who has caused loss by her or his wrongful conduct.[39]

22 Next, the defendants submitted that the court had not found "a relevant loss" in the Quantum Judgment, referring to the approach in those reasons not to assess the net profit (or loss) of the Business in the years 2013 to 2018 (up to 31 January 2018).[40] It was submitted this meant that, in the absence of a quantifiable net profit figure, not only was there no principal amount from which to calculate interest, but basing interest on the value of the Business from 31 January 2018 was arbitrary.

23 There is a simple response to this point. Leaving aside the other reasons why it was decided not to engage in this exercise,[41] there was an inability of the court to assess the overall profitability of the Business because the defendants chose not to provide the results of Voyage 16 (which did not go ahead, but the livestock intended for that voyage were sold domestically).[42] In circumstances where a defendant withholds relevant information, that defendant cannot take advantage of that position for the purpose of any assessment of loss.[43] Further, and regardless of this particular circumstance, the purpose of valuing the Business proximate to the date of trial was to arrive at the appropriate value for something that was misappropriated in November 2013. It is the amount that was derived from this process that equates to "damages" in the introductory words to s 60(1).

24 In any event, the defendants submitted_,_ if interest were to be awarded, it should only run from the date of the valuation of the Business, namely 31 January 2018. This was put on the basis that:

(1) The value of the Business "increased significantly in value between [2013[44] or 2015[45]] and 31 January 2018".

(2) There were delays in the prosecution of the proceeding, caused by the delay in the plaintiffs providing security for costs in accordance with orders made on 21 March 2016, 16 December 2016 and 7 July 2017.

(3) There was delay in the plaintiffs providing particulars of loss and damage, which was originally ordered to be provided by 6 February 2017, and was extended to 26 April 2017, 25 May 2017 and ultimately 9 June 2017.

(4) There were significant delays in the filing of the plaintiffs' expert reports on loss.

(5) The separation of the trial on issues of liability and quantum was caused by the plaintiffs' failure to comply with orders for the filing of particulars of loss and expert reports.

(7) After the Liability Judgment was delivered, the plaintiffs failed to provide particulars of loss or expert evidence in accordance with orders made on 16 February 2018, 23 March 2018 and 25 May 2018.

25 With respect to the first of these matters, counsel for the defendants referred to Hosking v Ipex Software Services Pty Ltd (No 2)[46] in support of their contention that interest ought to be awarded from 31 January 2018.[47] In that case, the court found there was "good cause" to refuse an award of interest from the commencement of the proceeding, as the plaintiff had sought damages to be assessed at a later date (the valuation date), so that he could "benefit from the increase in value of his interest".[48]

26 This case does not advance the defendants' position. It is clearly distinguishable.

27 It was a case concerned with an assessment of common law damages for breach of contract.[49] The evidence was that, had the defendants not breached the agreement, the plaintiff would have received and held onto his 5 percent interest in the business at least until the date at which the valuation was carried out. Further, it was found that during this period he would not have derived any income from such a shareholding. Accordingly, it would have been unreasonable for the plaintiff to demand interest on money that would not have been available for use (at the time of the breach) unless he sold his 5 percent share.[50] In the present case, the defendants made a series of calculated steps to completely deprive the plaintiffs of the Business.[51] There was no evidence that the plaintiffs would not have derived benefits from the Business if the misappropriation had not occurred.

28 In addition, the opening and closing submissions of the plaintiff in that case explicitly stated that damages would be assessed at the later date with interest accruing from that date.[52] Here, the date of 31 January 2018 was agreed upon by the parties in the event that the court determined it was appropriate to calculate the plaintiffs' loss based on future maintainable earnings at the time of the trial.[53] There was nothing in this approach that suggested, implicitly or otherwise, that the plaintiffs were limiting their entitlement to claim interest before 31 January 2018. On the contrary, the plaintiffs sought equitable compensation, not only for the loss of the Business, but also for the exclusion from the Business from November 2013.[54] Moreover, the date of 31 January 2018 was chosen based on the authorities on equitable compensation which, generally, require the date of any valuation to be the date of the trial to restore a plaintiff to the position it would have been in had the breach not occurred.[55]

29 In summary, Hosking v Ipex Software Services Pty Ltd (No 2) does not provide any real assistance to the defendants' position.

30 Also with respect to paragraph 25(1) above, the defendants relied upon the approach taken in Talacko v Talacko,[56] a case concerning the valuation of real properties. There are 3 responses to this. First, the position in Talacko v Talacko was the agreed position of the parties, rather than a decision of the court. Secondly, as the defendants themselves previously contended,[57] different considerations may apply when dealing with the misappropriation of real property rather than a business. Thirdly, and in any event, the facts of this case concern an ongoing business where the plaintiffs were deprived of all the benefits that would have flowed from ownership in the Business but for the defendants' wrongful conduct. In the circumstances of this case,[58] the defendants have not shown good cause as to why the plaintiffs should be deprived of damages in the nature of interest (and thereby effectively receive nothing by way of compensation with respect to the loss of these benefits for the period from the commencement of the proceeding to the date of valuation).

31 Lastly, in oral submissions, it was submitted that the defendants made an offer of compromise.[59] This submission was made in response to a submission by senior counsel for the plaintiffs (which was subsequently withdrawn) that at least some of the delay could be attributable to the fact the defendants did not take steps to settle the dispute.

32 In order to consider any such offer, the court sought details of the terms, including the amount offered. Counsel for the defendants refused to provide them, submitting instead that the court need only be aware that an offer of compromise was made in order to rebut the plaintiffs' suggestion that the "defendants did nothing". When pressed, the defendants' counsel indicated he did not want the particulars of the offer to be disclosed to the court.

33 In circumstances where the details of the offer of compromise were withheld from the court,[60] it would be entirely inappropriate to place any weight on the existence of such an offer of compromise in determining whether, and if so on what terms, interest should be awarded.[61]

34 In conclusion, leaving aside the question of delay (to which I will return),[62] none of the matters raised by the defendants demonstrate that interest should not be awarded, whether by way of equitable compensation or under statute.

35 The plaintiffs' submissions addressed 3 main issues: the date interest ought to accrue, the rate of such interest and whether it ought to be simple or compound.

36 As to the start date for interest to accrue, the plaintiffs rejected the defendants' submissions that interest ought to accrue from 31 January 2018 on the basis that the Business "increased significantly in value" between 2013 or 2015 and 31 January 2018. The plaintiffs contended that such submissions ignored the fact that even if the court had adopted the "loss of opportunity" approach for the quantification of loss (for which the defendants had contended), the compensation awarded to the plaintiffs would still have been substantial.[63] Further, the plaintiffs referred to the benefit of the ownership of the Business which the defendants obtained, and maintain, from their misappropriation.[64]

37 As to the rate of interest, it was submitted that the maximum statutory rate prescribed from time to time by the Penalty Interest Rates Act ought to be awarded.[65] The plaintiffs relied on the following:

(1) There was limited evidence before the court as to mercantile rates, and in those circumstances, the court is entitled to use its own experience when determining an appropriate interest rate.[66]

(2) In addition to the control of the Business, the defendants enjoyed a number of specific benefits after they misappropriated the Business. This included Otway Livestock's substantial cash holdings and Schmidt's director's fees, interest-free loans in excess of $950,000 and use of motor vehicles.[67]

(3) The defendants were defaulting fiduciaries, having been found in the Liability Judgment to have breached their respective duties (as director on the part of Schmidt and as joint venturer on the part of Otway Livestock).[68]

(4) The defendants had the use of the money that they were ordered to pay as the judgment sum throughout the duration of the proceeding.[69]

38 As to whether interest should be compound or simple, the plaintiffs sought only simple interest, submitting that this was in spite of the substantial and continuing benefit the defendants will continue to enjoy from their ownership and control of the Business, a benefit they would not have obtained had they acted in accordance with their duties.[70] However, in the alternative, the plaintiffs contended that if the court was against them and fixed a rate of interest lower than the statutory maximum, as a matter of equity the justice of this case required an award of compounding interest.[71]

39 On the question of delay, the plaintiffs submitted that the defendants were not blameless for the delay in bringing the proceeding to trial. The plaintiffs submitted that during the course of the proceeding, the defendants failed to make adequate discovery, resulting in costs orders in favour of the plaintiffs in May and August 2016.

40 Further, the plaintiffs referred to the fact discovery was made difficult because the defendants imposed a confidentiality regime in respect of their discovered documents, whilst denying a corresponding confidentiality claim in respect of the plaintiffs' discovered documents.

41 Furthermore, despite the Liability Judgment, the defendants refused to compensate the plaintiffs, and instead, put them to the time and expense of the quantum trial.[72]

42 Moreover, the plaintiffs referred to an affidavit sworn by their former solicitor on 5 July 2017, which deposed to the significant financial burden imposed on the plaintiffs as a result of the payments required to be made in relation to security for costs.[73] That affidavit also referred to delay of a number of months caused by the time it took for a court-appointed expert to produce a report.

43 The upshot of the plaintiffs' contentions is that the defendants have failed to establish a "good cause" to depart from the plaintiffs' entitlement to interest from the date of commencement of the proceeding at the statutory rate. In these circumstances, they sought interest on this statutory basis rather than strictly by way of the application of equitable principles alone.

44 In the circumstances, I cannot be satisfied that a "good cause" has been shown for the purposes of s 60(1) of the Supreme Court Act. In light of the observations that have already been made,[74] the only substantive issue to consider further is the question of delay.

45 Whilst I accept that there were numerous instances of delay occasioned by the plaintiffs,[75] I do not consider that the delay was such that it ought to result in limiting the period or rate for which the plaintiffs are entitled to interest.

46 It is notable that the defendants did not point to any instance where the delay was the result of the plaintiffs' conduct which had been intended to frustrate or impede the prosecution of their case.[76] Nor did the defendants demonstrate any particular prejudice suffered by them in the delay. I accept the explanation by the plaintiffs that a reason for the delays at various times was the financial burden in having to pay $405,000 in security for costs.[77] Had those funds (or a substantial part of them) been available, it is likely the plaintiffs would have been able to maintain their solicitors, retain their expert witness in a timely manner and otherwise generally adhere to the timetable.

47 Put simply, the delay that has occurred, in the context of this particular piece of commercial litigation, is not sufficient to show good cause to the contrary.[78]

48 Accordingly, it is appropriate that interest be awarded in accordance with the Penalty Interest Rates Act from the date of the commencement of the proceeding. As only simple interest is sought pursuant to this provision, it is unnecessary to consider the mercantile rate that would have been appropriate if interest by way of equitable compensation had been awarded; and further whether any interest so awarded ought to have been compounded.[79]

49 Accordingly, AHRKalimpa will be awarded simple interest in the amount of $899,606.34, calculated as follows:[80]

50 To use a well-worn analogy, in awarding equitable compensation in the sum of $2,774,803, the plaintiffs received an amount representing their interest in the tree of the Business. However, to confine the plaintiffs' compensation to the tree would be to ignore the fruits of the tree that were enjoyed between the commencement of the proceeding (16 December 2015) and the delivery of the Quantum Judgment, being 2 April 2019. The defendants have enjoyed all those fruits during this time as part of their conduct in breach of their respective duties. The plaintiffs are entitled to be compensated in this regard.

51 For reasons stated in the Quantum Judgment,[81] it was decided based on equitable principles that an award of interest was the appropriate means to compensate the plaintiffs with respect to this aspect of the claim. The plaintiffs have sought interest pursuant to statute, rather than independent of statute based on equitable principles alone. Having done so, the plaintiffs are entitled to interest in accordance with s 60 of the Supreme Court Act, from the commencement of the proceeding to the date of judgment, the defendants having failed to show good cause to the contrary.

52 Accordingly, an order will be made awarding AHRKalimpa interest in the amount of $899,606.34. As before, the extent to which the second plaintiff, Kalimpa Pty Ltd, is entitled to the benefit of this further amount is a matter for the plaintiffs.[82]

[1] AHRKalimpa Pty Ltd v Schmidt [2017] VSC 701 ("Liability Judgment") and AHRKalimpa Pty Ltd v Schmidt (No 3) [2019] VSC 197 ("Quantum Judgment").

[3] For a complete account of the relevant facts, see Liability Judgment, [10]-[222] and Quantum Judgment, [9]-[12].

[4] Representing the plaintiffs' share of the capital value of the Business: Quantum Judgment, [151]. It is possible the second plaintiff, Kalimpa Pty Ltd, has a claim to part of the proceeds awarded in favour of AHRKalimpa, but this was unnecessary to determine: Liability Judgment, [166]. Accordingly, this judgment will refer to "the plaintiffs", as appropriate, with respect to the entitlement to interest rather than just AHRKalimpa.

[5] This approach was adopted in favour of ascertaining and apportioning the net profits of the Business up to 31 January 2018: Quantum Judgment, [152].

[9] The Business had suffered substantial losses as a result of the first 2 Voyages.

[10] Supreme Court Act 1986 (Vic), s 60.

[11] Neither provision applies: s 58 is concerned with a debt or sum certain being recovered; and s 59 deals with claims based on trover or trespass concerning goods and proceedings on any policies of insurance. See also Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520, 532 [26]-[27] (Gleeson CJ, Gummow, Hayne and Callinan JJ).

[12] See Clarke v Foodland Stores Pty Ltd [1993] VicRp 81; [1993] 2 VR 382, 396.6 (Fullagar, Marks and J D Phillips JJ), and the cases there cited. This case deals with s 58 of the Supreme Court Act, however, the principle also applies to s 60. See also Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520, 546 [69] (Kirby J).

[13] Clarke v Foodland Stores Pty Ltd [1993] VicRp 81; [1993] 2 VR 382, 396.10-397.1.

[14] Hartley Poynton Ltd v Ali [2005] VSCA 53; (2005) 11 VR 568, 618 [106] (Ormiston JA, with whom Buchanan and Eames JJA agreed).

[15] Clarke v Foodland Stores Pty Ltd [1993] VicRp 81; [1993] 2 VR 382, 389.7.

[18] Equitable compensation is a form of damages for the purposes of s 60: see Talacko v Talacko [2009] VSC 579, [9] (Kyrou J), and the cases there cited.

[19] Clarke v Foodland Stores Pty Ltd [1993] VicRp 81; [1993] 2 VR 382, 389.2 (Fullagar, Marks and JD Phillips JJ).

[20] Subject to the matters set out in s 60(2).

[21] Kalenik v Apostolidis (No 2) [2009] VSC 410, [12] (Hargrave J), citing Marsh v Ruby [1975] VicRp 20; [1975] VR 191, 193.4 (Gowans J).

[22] In this regard, the court is entitled to consider all the evidence before the court and not only that led by the defendants: Clarke v Foodland Stores Pty Ltd [1993] VicRp 81; [1993] 2 VR 382, 394.9. But see also fn 43 below.

[23] Marsh v Ruby [1975] VicRp 20; [1975] VR 191, 193.1.

[24] [1993] VicRp 81; [1993] 2 VR 382.

[26] Marsh v Ruby [1975] VicRp 20; [1975] VR 191, 193.4, referred to with approval in Clarke v Foodland Stores Pty Ltd [1993] VicRp 81; [1993] 2 VR 382, 393.6.

[27] [2009] VSCA 72; (2009) 24 VR 1, 127 [33]-[35] (Maxwell ACJ, Ashley and Neave JJA).

[28] Marsh v Ruby [1975] VicRp 20; [1975] VR 191, 194.3 (Gowans J), a decision with respect to s 79A of the Supreme Court Act 1958 (Vic). See also Kalenik v Apostolidis (No 2) [2009] VSC 410, [19] (Hargrave J) with respect to the authority of Marsh v Ruby.

[29] See comments in Kalenik v Apostolidis (No 2) [2009] VSC 410, [22].

[30] Clarke v Foodland Stores Pty Ltd [1993] VicRp 81; [1993] 2 VR 382, 398.5, 400.7 (Fullagar, Marks and J D Phillips JJ).

[31] Kalenik v Apostolidis (No 2) [2009] VSC 410, [12]-[23], and the cases there cited.

[32] Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 3) [2003] VSC 244, [51] (Gillard J). See also par 37(2) below.

[33] Clarke v Foodland Stores Pty Ltd [1993] VicRp 81; [1993] 2 VR 382, 393.1.

[34] Attorney-General (Vic), "Penalty Interest Rates Act 1983" in Victoria, Victoria Government Gazette, No G18, 7 May 2015, 931.

[35] Attorney-General (Vic), "Penalty Interest Rates Act 1983" in Victoria, Victoria Government Gazette, No G1, 5 January 2017, 9.

[36] Talacko v Talacko [2009] VSC 579, [10] (Kyrou J). See also Bullhead Pty Ltd v Brickmakers Place Pty Ltd (in liq) (No 2) [2019] VSCA 7, [53] (Kyrou, McLeish, Hargrave JJA); Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520, 531-532 [24] (Gleeson CJ, Gummow, Hayne and Callinan JJ); Hungerfords v Walker [1989] HCA 8; (1988) 171 CLR 125, 148.5 (Mason CJ and Wilson J), and the cases there cited; Wallersteiner v Moir (No 2) [1975] QB 373, 388A-F (Lord Denning MR), 397C-G (Buckley LJ), 406A-E (Scarman LJ).

[38] Therefore, the defendants contended that the principles enunciated in Hagan v Waterhouse (1991) 34 NSWLR 308, 391F-393E (Kearney J), Re Dawson (dec'd) [1966] 2 NSWR 211, 218 (Street J) and Heydon and Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016), 542 [22-07]-[22-08] did not directly apply.

[39] See Quantum Judgment, [16], referring to O'Halloran v RT Thomas & Family Pty Ltd [1998] NSWSC 596; (1998) 45 NSWLR 262, 277C (Spigelman CJ, with whom Priestley and Meagher JJA agreed). See also Wallersteiner v Moir (No 2) [1975] QB 373, 388C (Lord Denning MR), 397F (Buckley LJ).

[40] See Quantum Judgment, [152]-[155].

[42] Ibid, [70], [76]-[78], [155].

[43] Ibid, [33]-[34]; see also Ramsay v BigTinCan Pty Ltd [2014] NSWCA 324; (2014) 101 ACSR 415, 417 [5] (McColl JA, agreeing with Macfarlan JA), 437 [122] (Gleeson JA) and the cases there cited; Heydon, Leeming and Turner, Meagher, Gummow & Lehane's Equity Doctrines and Remedies (5th ed, 2015) 829 [23-275].

[44] When the joint venture ceased: Quantum Judgment, [9(7)].

[45] When the time period for any restraint period applying to Schmidt would have lapsed: Quantum Judgment, [9(2)], [25]-[26].

[46] [2004] VSC 343 (Habersberger J).

[47] For completeness, on 5 April 2019, the defendants made an open offer to pay interest on the judgment sum at the rate of 10 percent from 31 January 2018 in the amount of $324,613.94 (reserving the right to submit a lesser amount was payable if the offer was not accepted).

[49] Hosking v Ipex Software Services Pty Ltd [2004] VSC 299, [8]-[9], [61]-[70] (Habersberger J).

[50] Hosking v Ipex Software Services Pty Ltd (No 2) [2004] VSC 343, [18] (Habersberger J).

[52] Hosking v Ipex Software Services Pty Ltd (No 2) [2004] VSC 343, [20]-[21].

[53] Quantum Judgment, [59], [152].

[55] Ibid, [27]-[28], [48]-[53].

[56] [2009] VSC 579, [19] (Kyrou J).

[58] This case may be contrasted, for example, with the specific evidence before the court in Bullhead Pty Ltd v Brickmakers Place Pty Ltd (in liq) (No 2) [2019] VSCA 7, [43]-[44], [52], [56] which demonstrated the appropriate commercial rate that ought to be applied as a matter of equity to avoid the successful party in that proceeding receiving a windfall.

[59] See Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 26.02.

[60] There is no suggestion that this was improper, as it is a matter for the defendants as to whether they wish to rely on the terms of the offer of compromise.

[61] See, for example, Dean v Stockland Property Management Pty Ltd (No 2) [2010] NSWCA 141, [14] (Giles JA, Handley AJA and Whealy J), and the cases there cited. See also Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435, 441 [21] (Warren CJ, Maxwell P and Harper AJA), for a similar discussion on offers made without prejudice save as to costs.

[62] See pars 45-47 below.

[64] Quantum Judgment, [164]-[165].

[65] See pars 19 above and 49 below.

[66] The plaintiffs relied upon Australian Annuities Pty Ltd (in liq) v Rowley Super Fund Pty Ltd [2015] VSCA 9; (2015) 318 ALR 302, 374 [322] (Garde AJA).

[68] See Talacko v Talacko [2009] VSC 579, [30] (Kyrou J).

[69] Clarke v Foodland Stores Pty Ltd [1993] VicRp 81; [1993] 2 VR 382, 400 (Fullagar, Marks and JD Phillips JJ).

[71] See Bullhead Pty Ltd v Brickmakers Place Pty Ltd (in liq) (No 2) [2019] VSCA 7, [55]-[56] (Kyrou, McLeish and Hargrave JJA).

[72] The plaintiffs relied on the case of Watare Pty Ltd v Oddo (Unreported, Supreme Court of Victoria, 6 March 1998, Eames J). In this case, the delay by the plaintiffs did not constitute "good cause" as the defendants themselves had "let sleeping dogs lie" and took no steps to ensure the case was prosecuted efficiently.

[73] The plaintiffs were ordered to pay security for costs on 21 March 2016, 16 December 2016 and 7 July 2017, totalling $405,000. After the Liability Judgment was delivered, the defendants successfully resisted the plaintiffs' attempt to have the funds in relation to security for costs released: AHRKalimpa Pty Ltd v Schmidt (No 2) [2018] VSC 68. The inability to have access to these funds increased the financial difficulties the plaintiffs faced in pursuing this litigation to its conclusion.

[74] See pars 21-34 above.

[76] Cf Peet v Richmond (No 2) [2009] VSC 585, [44]-[62] (Hollingworth J).

[77] See fn 73 above. At the time the decision was made to determine issues of liability separately from quantum, the plaintiffs had already paid approximately $275,000 as security for costs and would, in approximately 6 months after that time, pay a further $130,000.

[78] See pars 15 and 16 above. See also Kalenik v Apostolidis (No 2) [2009] VSC 410, [26], [65] (Hargrave J).

[79] That said, whatever interest rate was chosen on this basis, it is highly likely the interest would have been compounded on yearly rests: see Bullhead Pty Ltd v Brickmakers Place Pty Ltd (in liq) (No 2) [2019] VSCA 7, [53(5)-(7)] (Kyrou, McLeish and Hargrave JJA); Wallersteiner v Moir (No 2) [1975] QB 373, 388A-G (Lord Denning MR).

[81] Quantum Judgment, [152]-[155].