This was a claim by the plaintiff, Mr Ball, arising out of a dispute between Mr Ball and the defendant, Brydens Lawyers Pty Ltd, in relation to legal costs. The defendant acted for the plaintiff in a claim for damages under the Motor Accidents Compensation Act 1999, in respect of injuries suffered by the plaintiff in a motor vehicle accident. The plaintiff's claim was settled for damages in the amount of $650,000 inclusive of costs. Subsequently there was a dispute about the bill for costs and disbursements, which had been issued by the defendant to the plaintiff. At the time of settlement the bill for costs and disbursements had been paid by the plaintiff from the settlement monies.
The bill was subject to assessment pursuant to the provisions of the Legal Profession Act 2004, on application by the plaintiff. As detailed below, the result of the assessment was that the amount to be paid by the plaintiff to the defendant, for costs and disbursements, was for a lesser amount.
The plaintiff's case is that the defendant had use of the disputed amount to the detriment of the plaintiff, and therefore the defendant should pay the plaintiff interest on the disputed amount from the date of the original Bill to the date of reimbursement of the disputed costs.
[3]
Agreed facts
The parties provided a statement of agreed facts as follows.
On 17 September 2015, the defendant issued a tax invoice to the plaintiff in the sum of $138,162.51 representing the defendant's claimed costs and disbursements for acting for the plaintiff in the claim for damages. Almost 12 months later, on or about 15 September 2016, by application number 2016/277042 the plaintiff applied for assessment of the defendant's claimed costs and disbursements.
On 30 November 2016, the plaintiff's cost assessment application was determined as follows - the defendant had not successfully contracted out of the Motor Accidents Compensation Regulation 2005 (NSW) ("MACR"); the defendant's costs and disbursements were consequently limited to the regulated costs pursuant to Schedule 1 MACR; the defendant's regulated costs were $23,541.65; the defendant was to repay the plaintiff the sum of $119,670.99 and was also to pay the costs of the cost assessment in the sum of $981.75.
On 18 November 2017 (it is noted this date is incorrect and the evidence detailed below indicates the date was 18 October 2017), following a review process undertaken on the defendant's application, the outcome of the cost assessment application was varied to the following effect: the defendant to repay the plaintiff the sum of $113,030.61; and the defendant to pay the costs of the review in the sum of $1,925.
On 3 November 2017, the defendant paid the plaintiff the sum of $113,030.61. On 17 November 2017, the plaintiff commenced the current proceedings. On 20 November 2017, the defendant paid the plaintiff the sum of $3,956.95 representing the costs of the cost assessment and review process, and the filing fees for the application for the cost assessment.
[4]
Procedural history
The plaintiff by Statement of Claim dated 17 November 2017 claimed $14,093.99 in damages for money had and received by the defendant to the plaintiff's use, together with interest, from the date the cause of action arose to the date of judgement, and costs. The pleadings and particulars were set out at paragraphs 1 through to 13 of the Statement of Claim. By Defence filed, the defendant admitted paragraphs 1 to 10 and 12 of the Statement of Claim, and noted that the amount of money referred to in paragraph 11 of the Statement of Claim had been paid by the defendant to the plaintiff on 20 November 2017. The defendant did not admit paragraph 13 of the Statement of Claim (by which the plaintiff sets out the claim for money had and received) and further states "the defendant says that there is no lawful basis upon which interest is recoverable by the plaintiff pursuant to a determination of a cost assessor or review panel".
As at the date of the defence call over no evidence had been exchanged by the parties. On 24 January 2018 at defence call over the matter was listed for hearing on 21 June 2018, and was listed for pre-trial review on 22 May 2018. On the review date the parties filed consent orders indicating that the position of both parties was that there was a point of law substantially in issue in the hearing, and submissions would be relied upon by the parties. At review on 12 June 2018, the hearing date of 21 June was confirmed, the court noted that there was to be legal argument only on the issue of payment of interest. On 21 June 2018 the matter was listed for hearing. Both parties had prepared written submissions but there was no statement of agreed facts before the court, and after discussion with the parties, the matter was adjourned for further hearing, part heard before me, with directions as to the filing of a statement of agreed facts, and any evidence, prior to the next hearing date, listed for 26 July 2018.
[5]
Submissions and/or evidence relied upon by the parties
The plaintiff relied upon written submissions and both the parties provided a Statement of Agreed Facts. The defendant also relied upon evidence being an affidavit of Wesley Ranson of 26 July 2018 with annexures. The evidence of the defendant went to the history of the cost assessment process.
This matter has been decided by me, as agreed with the parties, on the evidence filed by the defendant and the statement of agreed facts, and having regard to the detailed written and oral submissions provided by the parties. Those submissions referred to a number of authorities.
[6]
Findings of fact
In addition to the agreed facts set out above, I make the following factual determinations on the evidence:
A Certificate of Determination of Review Substitution was issued dated 18 October 2017, by which the Review Panel substituted a determination for the determination of the costs assessor. The Certificate states that the amount of costs assessed was $29,131.83, with $0.0 interest on costs to date. The total amount specified in the Certificate is $29,131.83. The Certificate also states:
"For the convenience of the parties but not forming part of this Certificate, we record the following. The amount I have treated as paid (for the purpose of calculating interest payable on the assessed costs) is $142,162.44. The total amount specified in this certificate exceeds that amount by $113,030.61".
The Statement of Reasons of the Review Panel, dated and issued with the Certificate of Determination of Review, states:
"The short issue in the costs assessment was whether or not the Review Applicant had been successful in contracting out of the Motor Accident Compensation Regulations 2005 (MACR) pursuant to clause 11(1)(c)… By letter of 19 October 2016 the Review Applicant conceded that it had made an administrative error in using the wrong precedent instead of the precedent contracting out letter which would have complied with clause 11. Notwithstanding the Review Applicant's submission to which the assessor referred… the assessor at 1.7 determined that the Review Applicant had not validly contracted out with the result that it was only entitled to regulated costs. He noted that, in particular, it was clear that the Review Applicant had not prior to entering into the costs agreement provided to the client the required advice in a separate written document…."
The Review Panel in its statement of reasons noted the submissions of the Review Applicant (being the defendant) that with respect to (a) and (b) of Rule 11(1) of the MACR, the Review Applicant did make the disclosure as required and the Costs Respondent had entered into a cost agreement as required, and that a failure to disclose under the 2004 Act should be dealt with by way of a proportionate reduction and the general principles of fairness and reasonableness set out in the common law still apply. In deciding whether the Assessor was correct in his conclusions that by failing to strictly comply with rule 11 of MACR the Review Applicant was confined to scale costs pursuant to the Regulation, the Review Panel found that the Assessor was correct in his statement of the law with respect to the obligation to comply with Rule 11, and that in the event of failure to successfully contract out, the practitioner is, in fact, confined to the costs set out in the Regulation. The Review Panel assessed the regulated costs, and the fair and reasonable costs and disbursements, and found that an amount was to be refunded to the Review Respondent (plaintiff) in the amount of $113,030.61
[7]
Parties' contentions
I will briefly refer to the main points of the parties' submissions. Detailed written submissions were provided by both parties and relevant authorities were cited in support of each position. I have carefully considered the written submissions provided.
In summary, the plaintiff claims that the defendant should pay damages for money had and received. The plaintiff states that this is not a claim for interest per se, but a claim for damages. In initial submissions, the plaintiff notes that the measure of the damages is the interest on the $113,030.61 overcharged, but that is not the same as a claim for interest per se. The plaintiff's claim for damages is the quantified as the interest earned by the defendant on the plaintiff's money, which the defendant held and from which the defendant derived a benefit to the expense of the plaintiff. The cause of action is the common law action based on monies had and received. The quantum of damages is the interest on the principal sum given that the defendant was enriched by the possession of the principal sum of money, which was the plaintiff's money, to the plaintiff's detriment. In the proceedings, the plaintiff maintained that this sum should be calculated pursuant to section 100 of the Civil Procedure Act 2005.
The plaintiff presented no evidence in the proceedings, but relied on the statement of Agreed Facts, referred to above, and detailed legal submissions. In further detailed submissions the plaintiff indicated that authorities supported the position that a claim for interest may be upheld when the principal claim has been repaid, on a restitutionary basis.
The plaintiff confirmed during the proceedings that there was no claim for breach of contract, nor for negligence. The plaintiff made clear that the claim was the common law claim for monies had and received, and damages were payable on a restitutionary basis. The plaintiff further submitted that the authorities support a conclusion that there is a standalone right to payment of interest where the principal sum has been repaid. A number of authorities were cited by the plaintiff in written submissions.
The defendant disputed that the plaintiff could proceed with a restitutionary claim as such must be specifically pleaded so that the defendant would be entitled to raise a change of position defence. The defendant further submitted that for interest up to judgment to be claimed, it must be specifically claimed pursuant to the Rules (Rule 6.12 UCPR and Local Court Rule Part 5, rules 1 and 2). The defendant maintains that because restitution has not been specifically pleaded the plaintiff would be required to amend the Statement of Claim and leave should be given to the defendant to amend the Defence to plead a change of position.
[8]
The issues
The issues to be determined are:
What is the cause of action?
Is there a right to claim interest as a freestanding cause of action?
Has the plaintiff established that the defendant was unjustly enriched?
[9]
The cause of action - the common law claim of money had and received by the defendant for the plaintiff's use
Whilst objections were taken in written submissions, by the defendant, to the pleadings in the Statement of Claim, it is the case in New South Wales that there may be short form pleading in relation to certain money claims made by a plaintiff - see rule 14.12 of the Uniform Civil Procedure Rules 2005 (UCPR). See also Mason and Carter's Restitution Law in Australia (3rd ed, 2016, LexisNexis) at [2924]. This short form pleading is subject to a defendant's right to require the plaintiff to plead the facts upon which it is based, or to require the plaintiff to provide particulars. In the present case the facts were set out in the Statement of Claim.
The learned authors of the text Mason and Carter's Restitution Law in Australia also detail the shift from implied contract to unjust enrichment as the conceptual basis of most restitutionary causes of action. They note at [2908] the need to identify the basis for the claim, such as an operative unjust factor, and the causal link between the payment provided by the plaintiff and the basis for the claim. The authors note some of the accepted categories for such claims include mistaken payments where the mistake caused an unjustness, money paid as a result of improper pressure, payment of another's debt, recovery of money previously paid under contracts where the ineffective nature of the contract must be identified such a failure of consideration or illegality.
In the case of Equuscorp Pty Ltd v Haxton; Equuscorp Pty Ltd v Bassat; Equuscorp Pty Ltd v Cunningham's Warehouse Sales Pty Ltd [2012] HCA 7; (2012) 246 CLR 498, the High Court provided significant guidance as to restitutionary relief on a claim for money had and received. It was stated per French CJ, Crennan and Kiefel JJ as follows (footnotes omitted):
1. Equuscorp Pty Ltd ("Equuscorp"), the appellant in these appeals, seeks the assistance of this Court to recover money advanced under loan agreements which were made in furtherance of an illegal purpose. They were an important part of a number of failed tax driven investment schemes in which members of the public were invited to invest in a blueberry farming enterprise ("the schemes"). The illegality that rendered the loan agreements unenforceable also deprived Rural of the right to claim for money had and received by way of advances under those agreements. The restitutionary rights, had they existed, would have been assignable but on the proper construction of the deed of assignment ("the Deed") were not assigned to Equuscorp. The appeals should be dismissed with costs.
…
Whether restitutionary relief was available
26. Equuscorp's restitutionary claims, as argued in this Court, depended entirely upon the unenforceability of the loan agreements. Had the agreements been enforceable, it is unlikely that the restitutionary claims could have been brought.
27. The loan agreements were unenforceable because they were made in furtherance of an illegal purpose. That conclusion was not challenged in the Court of Appeal nor in this Court. The policy considerations informing the common law, discussed earlier in these reasons, must be taken to have required that conclusion. The question that follows is how the common law would have affected Rural's right to pursue restitutionary relief.
28. Equuscorp based its claims for money had and received on what it said was a "total failure of consideration". It submitted that Rural had advanced money under the loan agreements on the basis that they were enforceable. That was a state of affairs, it was argued, which was always unsustainable. As a result, the respondents were unjustly enriched. The argument directs attention to the nature of the claim for money had and received and its interaction with the common law relating to illegal transactions.
29. The claim for money had and received was an offshoot of the old form of action of indebitatus assumpsit which, by the 17th century, had superseded the action of debt. The requirement of a promise to fit the claim within the old writs led to the creation of what Lord Atkin described as "fantastic resemblances of contracts ... in order to meet requirements of the law as to forms of action". So the action came to be thought of as resting upon an implied contract. The implied contract theory was rejected in Australia by this Court in Pavey & Matthews Pty Ltd v Paul as "but a reflection of the influence of discarded fictions". It was rejected in England in Westdeutsche Landesbank Girozentrale v Islington London Borough Council. It came to be displaced by the concept of unjust enrichment. Unjust enrichment was described by Deane J in Pavey & Matthews as:
"a unifying legal concept which explains why the law recognizes, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognize such an obligation in a new or developing category of case".
It is not a "definitive legal principle according to its own terms". Nor was it such when first propounded in legal scholarship. It was:
"an ex post facto explanation of decisions that had already been reached, an organisational category separate from contract. The substance of the law still had to be found in its concrete emanations".
30. In David Securities Pty Ltd v Commonwealth Bank of Australia, this Court explained the part played by unjust enrichment in a claim for money had and received (in that case for recovery of a payment made under mistake of law). That explanation may be expressed, at a fairly high level of abstraction, as an approach to determining such claims. In summary:
. recovery depends upon enrichment of the defendant by reason of one or more recognised classes of "qualifying or vitiating" factors;
. the category of case must involve a qualifying or vitiating factor such as mistake, duress, illegality or failure of consideration, by reason of which the enrichment of the defendant is treated by the law as unjust;
. unjust enrichment so identified gives rise to a prima facie obligation to make restitution;
. the prima facie liability can be displaced by circumstances which the law recognises would make an order for restitution unjust.
Unjust enrichment therefore has a taxonomical function referring to categories of cases in which the law allows recovery by one person of a benefit retained by another. In that aspect, it does not found or reflect any "all-embracing theory of restitutionary rights and remedies". It does not, however, exclude the emergence of novel occasions of unjust enrichment supporting claims for restitutionary relief. It has been said of Lord Mansfield's judgment in Moses v Macferlan that it was his view that "the grounds for obtaining relief in money had and received were not to be considered static and the remedy could be made available in any case in which money had been paid in circumstances where it was unjust for the defendant to retain it." Nor is the emergence of general principle precluded when "derived from judicial decisions upon particular instances". These appeals, however, focus upon the particular category of case involving "failure of consideration".
31. Failure of consideration is one of the factors that makes retention of a benefit prima facie unjust. It was recognised by Lord Mansfield as a ground for a claim for money had and received. It was a criterion of recoverability which survived the rejection in the United Kingdom and Australia of the implied contract theory.
[10]
Is there a right to claim interest as a free standing cause of action?
It is important to bear in mind that there are three general categories of interest awarded by courts - statutory, common law and equitable interest. There are statutory provisions which permit or require a court, on entering judgment for the plaintiff in proceedings for the recovery of money, to include an amount by way of interest. In New South Wales this is found in the Civil Procedure Act 2005 and other statutes.
The common law did not award interest to compensate for the delayed payment of contractual or tortious damages (see Mason and Carter's Restitution Law in Australia at [2811]) however, the common law has awarded restitution with interest with respect to monies paid under judgements later reversed or set aside. At page 1002, [2811] of the text other exceptions are expounded. At paragraph [2819] to [2824] the authors set out other circumstances where interest has been payable on common law claims, being claims for a principal sum where the award has included an amount for interest.
For example, in the decision, Woolworths Limited v Strong (No 2) [2011] NSWCA 72; (2011) 80 NSWLR 445 the following was stated per Campbell JA with whom Handley AJA and Harrison J agreed:
Restitution Following Successful Appeal of Judgment Debts Paid - Principles
25 There is ample authority that when a judgment that has been paid in whole or part is reversed on appeal, the appellant is entitled as of right to restitution of the sum paid, with interest: Commonwealth v McCormack (1984) 155 CLR 273 at 276; Production Spray Painting and Panel Beating Pty Ltd v Newnham [No 2] (1991) 27 NSWLR 659 at 661-662; Haig v Minister Administering the National Parks and Wildlife Act [No 3] (1996) 90 LGERA 408; TCN Channel 9 Pty Limited v Antoniadis [No 2] (1999) 48 NSWLR 381; Krishna v Loustos (No 2) [2001] NSWCA 99 at [4] per Spigelman CJ, Mason P and Handley JA; Heydon v NRMA (No 2) [2001] NSWCA 445; 53 NSWLR 600 at [12]-[23] per Mason P (Beazley JA and Ipp AJA agreeing); Ambulance Service of New South Wales v Worley (No. 2) [2006] NSWCA 236; 67 NSWLR 719 at [25]-[34] per Basten JA (Tobias and McColl JJA agreeing); Nationwide News Pty Ltd v Naidu (No 2) [2008] NSWCA 71 at [10] per Spigelman CJ, Beazley and Basten JJA; K Mason, J W Carter & G J Tolhurst, Restitution Law in Australia 2 nd ed (2008) Chapter 7.
[11]
Authorities - on the issue of a free standing claim of interest
I have conducted a thorough review of the authorities referred to by the parties. I agree with the defendant's submission that the current position is unclear. The High Court has expressed disapproval of the notion of a freestanding right to interest in restitutionary claims. However, the Court of Appeal of the Supreme Court of New South Wales has expressed a different view, per Mason P in Heydon v NRMA & Ors, Bateman & Ors v NRMA & Ors, Morgan & Ors v NRMA & Ors (No 2) [2001] NSWCA 445, with whom the other members of the court agreed:
15. … I venture to repeat what I wrote in National Australia Bank Ltd v Budget Stationary Supplies Pty Ltd (NSWCA 23 April 1997, unreported):
…
In State Bank of New South Wales Ltd v Federal Commissioner of Taxation (1995) 132 ALR 653 at 659-61, Wilcox J referred to some of these developments. He held that "in ordering a payment of money by way of restitution, a court has power to include something by way of interest, where this is necessary to do justice between the parties" (at 660). Indeed he went further and awarded interest with respect to a discrete sum that had been "retained" but repaid before proceedings were instituted (see at 656, 663). In SCI Operations Pty Ltd v Commonwealth (1996) 139 ALR 595, Beaumont and Einfeld JJ indicated concurrence with Wilcox J in State Bank. I would do likewise.
16. The Full Court decision in SCI Operations that I referred to was reversed by the High Court in The Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285. That decision turned upon a statutory abrogation of any right to interest in the Customs Act. I recognise that McHugh and Gummow JJ commented adversely (at 316-7) upon the notion that there is a "free-standing" right to recover interest in a common law restitutionary claim. In a joint judgment their Honours said that the existing state of authority did not favour acceptance of such a broad proposition. It is unclear both whether this portion of their judgment forms part of the essential reasoning and whether their Honours would reject every claim for interest auxiliary to a restitutionary claim. Since, however, this discussion does not form part of the reasoning of the other members of the High Court I have considered myself at liberty respectfully to maintain my position.
Justice Ward in Lahoud v Lahoud [2010] NSWSC 1297 provides a useful summary of the authorities. Justice Ward noted the divergence in authorities (refer [143] - [146]. She stated at [148]:
As is apparent from the above review of the relevant cases, there is certainly authority which supports a claim in restitution of the kind which has been brought by the Victor Lahoud interests. Relevantly, while I place weight on the seriously considered dicta of McHugh and Gummow JJ in SCI, in the absence of a definitive ruling by the High Court on this issue Mason P's decision in Heydon remains binding authority on me and supports the availability of a claim for interest on the basis of restitutionary principles notwithstanding that the claim brought is 'free-standing' in the sense referred to in SCI. (I refer in this regard to the guidance given in Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485, at 492; Gett v Tabet (2009) 254 ALR 504; [2009] NSWCA 76; Farah Constructions Pty Limited v Say-Dee Pty Limited (2007) 230 CLR 89, as to the precedential weight of appellate dicta, as discussed in Ying v Song [2009] NSWSC 1344, from [14].) 149 Therefore, had I otherwise been satisfied as to the factual foundation for the restitutionary claim made for interest by the Victor Lahoud interests, I would have followed the reasoning of Mason P in Heydon and that of Lord Walker in Sempra and allowed the claim for interest at the commercial interest rates claimed. However, it is not necessary for me to make any final finding of that kind, since I am not satisfied that the retention of the funds by Joseph Lahoud over the period from February 2001 at least up to a reasonable time for payment from the time of the audit in August 2010 amounts to an 'unjust' enrichment (though it clearly has been an enrichment).
[12]
Review of authorities as to restitution
It is useful to examine the approach of the High Court in recent cases to restitution to assist in a determination of whether the category of case the plaintiff contends, constitutes a case where unjust enrichment may be found and/or restitution may be ordered. An examination of the following High Court authorities indicates care needs to be exercised.
In Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89; (2007) 81 ALJR 1107, a decision on appeal from the NSW Court of Appeal, it was observed in a joint judgment by Gleeson CJ, Gummow, Callinan, Heydon, and Crennan JJ (footnotes omitted):
150. First, whether enrichment is unjust is not determined by reference to a subjective evaluation of what is unfair or unconscionable: recovery rather depends on the existence of a qualifying or vitiating factor falling into some particular category. In David Securities Pty Ltd v Commonwealth Bank of Australia, Mason CJ, Deane, Toohey, Gaudron and McHugh JJ gave as instances of a qualifying or vitiating factor mistake, duress or illegality. No such factor was identified in the present case by the Court of Appeal beyond what was identified as the breach of fiduciary duty by Mr Elias and by Farah. But Mrs Elias and her daughters owed no fiduciary duty to Say-Dee. Further, principles respecting fiduciary duty have been said to be foreign to unjust enrichment notions because the unjust factors are commonly concerned with vitiation or qualification of the intention of a claimant.
151. Unjust enrichment is not a "definitive legal principle according to its own terms". If it were not so, as Gummow J pointed out in Roxborough v Rothmans of Pall Mall Australia Ltd:
"[S]ubstance and dynamism may be restricted by dogma. In turn, the dogma will tend to generate new fictions in order to retain support for its thesis. It also may distort well settled principles in other fields, including those respecting equitable doctrines and remedies, so that they answer the newly mandated order of things. Then various theories will compete, each to deny the others. There is support in Australasian legal scholarship for considerable scepticism respecting any all-embracing theory in this field, with the treatment of the disparate as no more than species of the one newly discovered genus."
This prediction about the consequences of unjust enrichment for the distortion of equitable doctrines is illustrated by the Court of Appeal's approach in this case. The areas in which the concept of unjust enrichment applies are specific and usually long-established. Recipient liability for breach of trust or fiduciary duty has not been one of them.
152. Secondly, if any principle justifying the basing of recipient liability on unjust enrichment could be stated, one would expect it to be found in the writings of Birks, on whose opinion supporting that course both Hansen J and Lord Nicholls relied. Although the Court of Appeal did not cite any writings in which it was stated, it is notable that in 2002, well before the Court of Appeal's decision, Birks retracted his opinion that in lieu of the first limb of Barnes v Addy unjust enrichment should be recognised as a basis for recipient liability…… He said:
"It now seems right to abandon that analysis once and for all. It was a mistake to insist that 'knowing receipt' was simply a species of unjust enrichment which had been slow to understand itself and, in particular, slow to understand that liability in unjust enrichment is strict though subject to defences."
He did so because Nourse LJ criticised Lord Nicholls's advocacy of restitution-based recovery on the ground that it was "commercially unworkable". Birks' change of mind is a rather striking event, but it is not discussed by the Court of Appeal. Birks expressed a preference for the first limb to continue, but for a liability in unjust enrichment to exist alongside it. He claimed that Lord Nicholls supported that approach; that may be questioned, for Lord Nicholls appeared rather to favour a more general restructuring, which he described as "a radical step" to be carried out by "bold spirits". But whether or not Lord Nicholls supported that approach, the position finally adopted by Birks is not the position he took in earlier times, and it is not the position adopted by the Court of Appeal.
153. Thirdly, in a passage quoted by the Court of Appeal Lord Nicholls stated that he favoured a restitution basis for the first limb of Barnes v Addy. The only ground assigned for that position in that passage was that "equity should now follow the law". The problem is that in this field equity devised protections for the holders of equitable interests and those to whom fiduciary duties are owed which the common law had not: if it had, equitable intervention would have been unnecessary. For equity now to follow the law is to cut down on traditional equitable protection….. …
154. Fourthly, the restitution basis is unhistorical. There is no sign of it in clear terms in any but the most recent authorities. It is inherent in the Court of Appeal's conclusion that for many decades the courts have misunderstood the tests for satisfying the first limb of Barnes v Addy: that is improbable. It is inherent in the conclusion advocated by Say-Dee that for many decades the courts have failed to notice the existence of a form of liability co-existing with the first limb: that is equally improbable. The restitution basis reflects a mentality in which considerations of ideal taxonomy prevail over a pragmatic approach to legal development....
…. The restitution basis was imposed as a supposedly inevitable offshoot of an all-embracing theory. To do that was to bring about an abrupt and violent collision with received principles without any assigned justification.
[13]
Was there unjust enrichment?
Having regard to the guidance provided by the authorities, as discussed above, the following matters must be determined.
Was the defendant enriched (in particular by one or other of the recognised classes of 'qualifying or vitiating' factors);
Was any enrichment of the defendant due to a category of case (such as having a qualifying factor such as duress, mistake illegality or failure of consideration) by reason of which the enrichment is treated by the law as unjust.
If so, unjust enrichment so identified gives rise to a prima facie obligation to make restitution, but, the prima facie liability can be displaced by circumstances which the law recognises would make an order for restitution unjust.
In written submissions the plaintiff did not raise illegality, however in oral submissions stated that the plaintiff also raises illegality due to the failure of the defendant to contract out of MACR. This ground was not pleaded in the Statement of Claim nor in any written submissions filed, and therefore was not properly raised in the proceedings. Other than the assertion that the defendant had not successfully contracted out of MACR the illegality of the contract is not specified. The Costs Agreement between the parties was subject to Assessment by a Costs Assessor, and a Review Panel, under relevant legislation, and those assessment processes did not refer to any illegality by which the contract (the Costs Agreement) was illegal or unenforceable due to illegality. Rather the assessor and the Review Panel recognised that costs and disbursements were payable to the defendant for legal work undertaken on behalf of the plaintiff, pursuant to the costs agreement, however the costs were reduced to the scaled costs provided by the legislation. As such, on the evidence in this matter it is not established there is illegality which would found a remedy in restitution.
There is not identified by the plaintiff to be a category of case to which restitution may apply for unjust enrichment - there is not evidence of a judgment reversed on appeal, mistake, failure of consideration, duress etc. The evidence is that pursuant to a Cost Agreement there was a dispute about costs and until the dispute was resolved a sum of money paid pursuant to a Bill of Costs and Disbursements and Costs Agreement was retained by defendant, and a large part of it was subsequently paid back to the plaintiff after the assessment process concluded.
[14]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 23 July 2020
Following the determination of the Review Panel there was further correspondence between the parties and by letter dated 24 October 2017 the solicitor for the plaintiff indicated that the plaintiff was seeking interest in relation to the bill of costs from 17 September 2015 until payment of the principal sum, in the amount of $14,040.57. The defendant by correspondence of 25 October 2017 queried the legal basis, and the manner of calculation, of the interest claimed. The plaintiff's lawyers by correspondence dated 27 October 2017 responded that interest had been calculated from 17 September 2015, being the date of the defendant's invoice, until 31 October 2017 on the sum of $113,030.61, calculated at the rates prescribed from time to time under section 100 of the UCPR (it is considered that the reference was meant to be to the Civil Procedure Act 2005, this was certainly the argument of the plaintiff's representative in the court proceedings). In further correspondence dated 30 October 2017 the plaintiff's solicitors indicated that the claim interest is not based on statute but the common law count of money had and received to the plaintiff's use. The correspondence indicated that proceedings would be commenced claiming damages for the claimed amounts. By correspondence dated 3 November 2017 the defendant forwarded to the plaintiff's solicitors a cheque in the amount of $113,031.60.
The defendant states there is longstanding authority that interest was not payable at common law. In relation to the plaintiff's submission that a number of authorities support a standalone right to payment of interest where the principal sum has been repaid, the defendant submits that these authorities are beset with difficulties and are difficult to maintain a light of later High Court authority on the point. The defendant maintains that the plaintiff has not pointed to authority where there has been upheld to be a right to interest, in restitution, that is independent of a cause of action. Even where interest has been allowed in common law it has been held to be part of the damages to be assessed for the wrong. The defendant maintains that the plaintiff has pointed to no authority where the right contended for (being damages for monies had and received or interest on a claim for restitution independent of the sum being repaid and the claim being extinguished) has been confirmed within the Australian jurisdiction. The defendant submits that the claim bought brought by the plaintiff ignores High Court authority on the point, and submits the authorities make clear such a claim ought to fail.
In relation to quantum the defendant maintains that interest pursuant to section 100 of the Civil Procedure Act is not available on the present claim by reason of the repayment of the principal sum prior to the proceedings.
It is clear therefore that restitutionary relief on a common law claim for money had and received arises from unjust enrichment of the defendant. Whilst there are strong statements by the High Court to the effect that a qualifying category is required, it is also recognised that the legal concept of unjust enrichment does not exclude the emergence of novel occasions of unjust enrichment supporting claims for restitutionary relief; however it is not to be considered to found or reflect any "all-embracing theory of restitutionary rights and remedies".
Some of the recognised categories which will see recovery of money from a defendant, on the basis of unjust enrichment, include where payments are made due to a mistake, or where there is a total failure of consideration, or where money is paid under an illegal contract.
By contrast equity has awarded interest in a range of situations, and interest in equity can be compound interest.
A number of the authorities to which I was referred by the parties dealt with cases where equitable remedies were sought. The Local Court has no jurisdiction in equity, although there is some jurisdiction to consider equitable defences. Care must be exercised in a consideration of authorities for this reason.
I note and give weight to the well-considered view of Ward J that she was bound by the decision of the NSW Court of Appeal. I do note that the decision of the Court of Appeal in Heydon involved a restitutionary claim arising out of a judgement reversed on appeal - this is an accepted category for restitutionary relief. Whether the Court of Appeal's reasoning in that case would extend to the position in the current proceedings is by no means clear. In this context I note that Justice Ward was also considering a factual case where the claim in restitution was of a recognised category, and I note that the decision of Justice Ward in Lahoud was made before the decision of the High Court in Equuscorp. The current case is not a situation where the unjust enrichment is said to arise from a payment which is a recognised category such as a judgement reversed on appeal.
Justice Ward provides a most useful summary of the authorities. The decision of Hayden, by which Justice Ward considered herself bound, was decided in 2001. Justice Ward's decision is dated 2010. A number of the decisions of the High Court dealing with restitution are dated 2007 and 2009, and are discussed below. The decision in Equuscorp is dated 2012.
The authoritative text Mason and Carter's Restitution Law in Australia notes as follows:
It will be seen from the balance of this chapter that the current law of interest in Australia (trifurcated into statutory, common law and equitable sections) leaves significant gaps, enabling those who owe money (whether under restitutionary causes of action or otherwise) to be enriched at the expense of the person owed the principal sum. In Commonwealth v SCI Operations Pty Ltd McHugh and Gummow JJ said that the existing state of authority does not favour acceptance of so broad a proposition as a "freestanding" right to the recovery of interest where the defendant has had the use of the plaintiffs money in circumstances which indicate an unjust enrichment at the expense of the plaintiff.….Perhaps the key to their Honours reservation lies in what they understood by the words freestanding. There is, in our opinion, ample evidence of a general right to interest by way of perfecting substantive restitutionary claims, where delay has added to the defendant's unjust enrichment …. The right recognised in these cases is freestanding in the sense that it may be asserted despite payment of the principal sum and in relation to periods before the accrual of the relevant course of action…. We consider that the unjust enrichment concept itself supports a free standing cause of action to recover interest, recognising that at least some rights illustrating the concept are subject to 'equitable' principles that allow parties to advance reasons justifying a particular starting point for calculating interest or a particular measure of interest (simple or compound).…. Thus with direct restitutionary claims such as for the recovery of money paid on the mistake, or under a later reversed judgement, or as the result of improper pressure, the plaintiff's claim upon the defendant may be a direct restitutionary claim that is independent of fault….. Unless there is an independent right to restitution for interest, the defendant's enrichment through the opportunity to use or enjoy the benefit conferred by the plaintiff may be unjust, even though (in the case of money) the money belonged to the defendant from the date of payment; and even where the obligation to repay it only arose upon the later accrual of the substantive cause of action, whether in restitution or otherwise.
There are, however, certain developments which await judicial approval in this country before such a right may be said to incontrovertibly to exist. First, the High Court would need to confirm the rulings of several intermediate appellate courts that the freestanding right exists. Second, development should see the plaintiff's loss/defendant's gain valued according to the reality of modern financial conditions…. Thirdly, where there is evidence that the defendant's actual profit was greater than that arrived at by calculating interest at commercial compound rates, then the actual profit should be handed over to the plaintiff if that is necessary to strip the defendant of an unjust enrichment made at the plaintiff's expense. However, to recognise a general non-statutory right to strip the defendant of unjustly earned interest, the law would need to develop considerably, sloughing off the lingering ghosts of discarded forms of action. The Australian law would also have to focus out the confusing double vision of common law and equity, with its (sometimes) unprincipled distinctions in addressing the same facts situation. The freestanding right maybe overridden or excluded by statute.
I note from the comments extracted above (at [2807], pp 991 to 994) that the learned authors of the text do not state that Australian law has as yet developed where a 'freestanding' right to interest is recognised.
I also note that both Justice Ward and President Mason of the New South Wales Court of Appeal, in the cases of Lahoud and Heydon, placed some reliance upon the decision of Justice Wilcox in State Bank of New South Wales v Commissioner of Taxation for the Commonwealth of Australia [1995] FCA 1652. I have therefore provided some analysis of this decision in my reasons, and I also note that in written submissions the plaintiff relies also on this decision. In that case Wilcox J was satisfied that the Commonwealth was unjustly enriched (refer [42], [43]). The case involved a claim where the plaintiff bank sought interest upon sums of money that were paid into a Commonwealth Government Bank account pending determination of a dispute regarding liability for sales tax. There were two sums involved. Wilcox J found that there was not any injustice in the retention of funds by the Commonwealth from the period that the State Bank paid them into the Commonwealth's bank account (pending resolution of the sales tax dispute) until the date of the High Court decision which resolved the dispute. Wilcox J found the cause of action arose after the High Court's decision and retention of the sums by the Commonwealth after the decision represented unjust enrichment. The first sum was repaid a relatively short period of time after the High Court decision which indicated that the sums should be repaid, whilst the second sum of money was not returned to the applicant in the case (the State Bank) for a period of over three years. The second sum of money was paid after commencement of the proceedings and was included in the Statement of Claim, but was ultimately repaid prior to trial, which left the claim to interest as the remaining issue. In consideration of whether to make an order for payment of interest Wilcox J considered English authorities (including House of Lords decision Woolwich Equitable Building Society v Inland Revenue Commissioner [1993] AC 70 (see [13]), and a Victorian decision which declined to apply Woolwich in a case not involving tax payment (Esso Australia Resources Ltd v Gas and Fuel Corporation of Victoria [1993] VicRp 6 (at 24-25). Wilcox J noted however that Woolwich did not assist the applicant in the matter before him, noting that in Woolwich the court was satisfied that the capital sums claimed in the proceedings were recoverable at law, and the statute (s 35A) enabled interest on payment made before judgement. Wilcox J observed at [17], "Nothing was said in Woolwich to suggest that the restitution principle itself, as distinct from s35A [the statute providing for interest in that case], conferred an entitlement to interest".
At [36], Wilcox J observes that the statutory provision which allows the court to award interest (s 51A) is confined to interest on the "money" in respect of which the proceeding is brought. He note the Amended Statement of Claim included the amount of $148,068.35 which unpaid when proceedings commenced but which was ultimately paid before trial. Wilcox J considered that a claim to restitution was made out, that the proceedings were for recovery of money, and made an order for payment of interest pursuant to the statutory provisions of s 51A, finding the statutory basis was available in the circumstances of that case. It is noted that Wilcox J's decision refers to Pavey J's statements of the concept of unjust enrichment being a unifying legal concept was made before the recent High Court decisions which considered restitution, and in which the High Court made some comments about the limitations of restitution, as discussed below.
In Bofinger v Kingsway Group Limited [2009] HCA 44; (2009) 239 CLR 269 (a joint decision of Gummow, Hayne, Heydon, Kiefel And Bell JJ) the High Court stated (footnotes omitted):
Unjust enrichment and the English decisions
85. The appeal to this Court in Friend v Brooker, which concerned the equitable doctrine of contribution, was correctly conducted on the footing that the concept of unjust enrichment was not a principle supplying a sufficient premise for direct application in a particular case. The same is true of the equitable doctrine of subrogation. The oral submissions for the Solicitors correctly recognised this.
86. In a passage in their reasons in David Securities Pty Ltd v Commonwealth Bank of Australia, Mason CJ, Deane, Toohey, Gaudron and McHugh JJ rejected the submissions that in Australian law unjust enrichment was more than "just a concept" and that it was "a definitive legal principle according to its own terms". The use of the phrase "unifying legal concept" earlier in the joint reasons must be understood with what was said in that later passage. In the years which have followed the Court has reaffirmed this position and all other Australian courts are bound accordingly…..
88. The concept of unjust enrichment may provide a means for comparing and contrasting various categories of liability. Reference has been made to Cochrane v Cochrane and this provides an example. Subrogation may be seen as preventing the unjust enrichment of the principal debtor who otherwise might escape carriage of ultimate liability and contribution prevents one of equal obligors bearing more than its share of the burden. The two doctrines do not let matters lie where they would fall if the carriage of risk between the various actors involved were to be left entirely to be worked out within the limits of their contractual obligations. But as Cochrane shows, and as explained above, the two doctrines have different foundations in equity and operate with different results.
89. The concept of unjust enrichment also may assist in the determination by the ordinary processes of legal reasoning of the recognition of obligations in a new or developing category of case. An example is the conclusion reached in David Securities itself, that the vitiating factors which enliven the action for money had and received include mistakes of fact or law. But this appeal is not in that category. The principles of equity which govern the outcome are well developed and have the vitality to permit further development in an orthodox fashion.
90. Subrogation, like other equitable doctrines, is applicable to a variety of circumstances, as explained earlier in these reasons. One circumstance concerns sureties, another the paying off of an existing mortgage. But that is not to say that subrogation is a "tangled web" in need of the imposition of the "top-down" reasoning which is a characteristic of some all-embracing theories of unjust enrichment.
91. Such all-embracing theories may conflict in a fundamental way with well-settled equitable doctrines and remedies…..
92. Equity has been said to lack the necessary "exacting taxonomic mentality" when providing an appropriate remedy for unconscientious activity. The better view is said to be that liability in "unjust enrichment" is strict, subject to particular defences, while "[t]he unreliability of conscience" offends the precept that like cases must be decided alike and not by "a private and intuitive evaluation".
93. But the experience of the law does not suggest debilitation by absence of a sufficiently rigid taxonomy in the application of equitable doctrines and remedies. And legislatures have taken the same view in Australia, notably by calling upon equitable analogues in framing the remedial provisions laid out in Pt VI of the Trade Practices Act 1974 (Cth).
94. As these reasons have sought to show, the relevant principles of equity do not operate at large and in an idiosyncratic fashion. So it was that in Boscawen v Bajwa, Millett LJ, after denying that subrogation is a remedy which the court has a general discretion to impose whenever it thinks fit to do so, went on:
"The equity arises from the conduct of the parties on well settled principles and in defined circumstances which make it unconscionable for the defendant to deny the proprietary interest claimed by the plaintiff."
95. That was said in 1995. In England matters appear now to stand differently.
The High Court went on the examine the English authorities in the context of equitable remedies and reflected on the difficulties involved in application of restitution (see [97] and also [96])
In Friend v Brooker [2009] HCA 21; (2009) 239 CLR 129 (a joint decision of French CJ, Gummow, Hayne and Bell JJ) the High Court contrasted the equitable doctrine of contribution to the common law claim of money had and received (footnotes omitted):
The equitable doctrine of contribution
38. With a claim to contribution, as is the position generally with the intervention of equity to apply its doctrines or to afford its remedies, the plaintiff must show the presence of "an equity" founding the case for that intervention….
…
43. Equitable contribution thus is to be contrasted with contribution sought by a common law claim for money paid by the plaintiff to the use of the defendant, where the plaintiff incurs, partly to the benefit and at the request of the defendant, a liability to pay money. In the latter case, mutual relations of the parties are essential to obtain contribution.
44. There are significant distinctions between the bases of recovery in an equity suit and in an action at common law. The matter was explained by Vaughan Williams LJ in Bonner v Tottenham and Edmonton Permanent Investment Building Society as follows:
"There is a common law principle of liability, and also a principle of liability in equity, and these two principles differ. The common law principle requires a common liability to be sued for that which the plaintiff had to pay, and an interest of the defendant in the payment in the sense that he gets the benefit of the payment, either entirely, as in the case of the assignee of a lease, or pro tanto, as in the case of a surety who has paid, and has his action for contribution against his co-surety. The principle in equity seems wide enough to include cases in which there is community of interest in the subject-matter to which the burden is attached, which has been enforced against the plaintiff alone, coupled with benefit to the defendant, even though there is no common liability to be sued."
His Lordship explained the common law position by reference to the form of the action for money paid to the use of the defendant at his request, the defendant being under a personal liability to pay the money the plaintiff has paid for him.
The High Court has also stated, as discussed above, some concern about awards of interest independently of statute. In Commonwealth v SCI Operations Pty Limited; Commonwealth v ACI Operations Pty Limited [1998] HCA 20 (per McHugh and Gummow JJ, footnotes omitted):
Interest independently of statute
72. Independently of their reliance upon s 51A as the source of curial authority to award the interest they seek in these proceedings, SCI and ACI assert a "free-standing" right to the recovery of interest where the defendant has had the use of the plaintiff's money in circumstances which indicate an unjust enrichment at the expense of the plaintiff. The existing state of authority does not favour acceptance of such a broad proposition.
73. The present is not a case where the assertion is that the appellant's breach of contract or negligence has caused the respondents to pay away or the appellant to withhold money and as a result the respondents have been deprived of the use of the money so paid away or withheld. Nor do the respondents seek an award of damages representing compensation for a wrongfully caused loss of their money, which is assessed wholly or partly by reference to the interest which would have been earned by safe investment of the money.
74. It is true that in the administration of its remedies, equity followed a different path to the common law with respect to the award of interest. In cases of money obtained and retained by fraud and money withheld or misapplied by a trustee or fiduciary, the decree might require payment of compound interest. However, in Westdeutsche Bank v Islington London Borough Council, the House of Lords answered in the negative the question whether, where statutes, of which s 51A(2)(a) is a local example, provide for orders for payment of simple but not compound interest upon common law claims, equity, in its auxiliary jurisdiction, will supplement the statute by providing for an award of compound interest.
75. In other instances, equitable relief might involve the payment of simple interest. As an element in the relief administered upon rescission of a contract under which the plaintiff had paid over moneys to the defendant, the order might require the defendant to make the repayment with interest calculated from the date of the initial payment. Relief against forfeiture by a vendor of payments under an instalment or terms contract might require repayment with interest from the dates the respective instalments were paid. An account of profits would carry interest. Conversely, a party seeking equitable relief may be obliged to do equity by the payment or repayment of moneys with interest. A purchaser who, after the date fixed for completion, seeks specific performance will be treated in equity as having been in possession from the completion date and, in general, will be required to offer the vendor interest on the purchase price from that date. However, the present litigation does not involve the administration of any equitable relief and so call for consideration of the issue whether it was unconscientious of the appellant to make the refunds on 3 June 1994 without the addition of payments on account of interest.
76. Moreover, even if it be accepted, despite the present state of authority, that there be a principle of the width advanced by SCI and ACI, it could not apply in the present case. The collection of the duty in question in the period before the making of the CTCO was required by statute. Such entitlements as SCI and ACI enjoyed in respect of repayment were the product also of statute. The restitutionary considerations which are present in various areas of the law cannot "purport to override statute by claiming a superior sense of injustice to Parliament's". In his dissenting judgment in the Full Court, Sackville J said that the legislation did not evince an intention:
"to expose the Commonwealth to a liability to pay interest to each and every importer of goods under the concessional scheme. What was intended was that the making of the CTCO would create an entitlement of the importer of goods to recover any duty paid on those goods after the date of the application. The entitlement was not to arise unless and until a CTCO was made.
... I do not think it can be said that the Commonwealth was unjustly enriched at the [respondents'] expense by the fact that the duties were not repaid until the date the CTCO was made."
We agree.
It is noted the Gaudron J based her decision in SCI on the statutory right stating:
44. The right conferred by the refund provisions is a statutory right which has no counterpart in the general law. Being a right based wholly in statute, it can neither be cut down nor enlarged by resort to the general law or to restitutionary principles. More precisely, those principles cannot convert a statutory right to obtain a refund of money into a right to obtain a refund with interest. There is, thus, no substance in the claim that SCI and ACI were entitled to a judgment for interest by reason of restitutionary principles.
And per Kirby J:
99. … The reliance on the law of restitution depended upon the entitlement of the respondents to have the Commonwealth divested of what the Commonwealth was not entitled to retain. But on the analysis stated, the respondents were not kept out of their money because until the CTCO was made the money was properly received and retained by the Comptroller-General. Nor was there any injustice in the Comptroller-General's having, and using, that money. By statute he was so entitled.
For a restitutionary claim for damages had and received to succeed, the plaintiff must establish on the balance of probabilities that the defendant was unjustly enriched. There must be a finding that the enrichment was unjust.
On the evidence the plaintiff did not challenge the Bill of Costs issued by the defendant for a period of 12 months. During that 12 months it is difficult to see how it could be established that there was any quality of wrongness to the defendant's retention of the sum paid by the plaintiff, there was no notice to the defendant that the plaintiff made any challenge to the sum paid, and the sum was paid on the available evidence pursuant to a Costs Agreement and a Bill of Costs being issued.
Once the application for a costs assessment was filed some twelve months later, the defendant was on notice of a dispute. However, on the evidence before the court, the defendant maintained the position that the defendant had contracted out of MACR. This position was also argued on appeal to the Review Panel - the Statement of Reasons records the authorities relied upon by the defendant in its argument to the Review Panel, and also details the evidence placed before the Review Panel by the defendant. The defendant was ultimately unsuccessful, whilst the Review Panel noted the defendant's evidence of administrative error in sending the wrong precedent to the plaintiff, the Review Panel found that the defendant had not effectively contracted out and therefore was limited to the scaled costs pursuant to MACR. This is not a case where any finding was made of overcharging which may suggest an unjust quality to the Bill of Costs and its payment.
The plaintiff has not established any vitiating or qualifying category of case which makes any enrichment of the defendant an unjust enrichment - there is no evidence of payment due mistake, duress, illegality etc. The evidence is that there was payment of a sum of money by the plaintiff to the defendant in payment of a bill of costs which was reduced after assessment. There is no evidence before the court which indicates this payment was affected by some wrongness so that any enrichment was unjust.
The plaintiff has not established on the balance of probabilities that there was unjust enrichment of the defendant and therefore the claim in restitution for money had and received fails.
I consider that in the absence of a finding that there has been unjust enrichment, I do not need to determine with finality whether there is a right to claim freestanding interest where the principal debt has been repaid. As detailed above I do consider that the authorities do not support the existence of the freestanding right, in cases where the legal liability in respect of the principal sum is not established. I have found there is no unjust enrichment and therefore there is no basis for an award in the plaintiff's favour for the period where the principal sum was held by the defendant.
For completeness I further find there are difficulties in the plaintiff's reliance on section 100 of the Civil Procedure Act 2005 which provides:
100 Interest up to judgement
(1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit:
(a) on the whole or any part of the money, and
(b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect.
(2) In proceedings for the recovery of a debt or damages in which payment of the whole or a part of the debt or damages has been made after the proceedings commenced but before, or without, judgment being given, the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit:
(a) on the whole or any part of the money paid, and
(b) for the whole or any part of the period from the time the cause of action arose until the time the money was paid.
(3) This section:
(a) does not authorise the giving of interest on any interest awarded under this section, and
(b) does not authorise the giving of interest on a debt in respect of any period for which interest is payable as of right, whether by virtue of an agreement or otherwise, and
(c) does not authorise the giving of interest in any proceedings for the recovery of money in which the amount claimed is less than such amount as may be prescribed by the uniform rules, and
(d) does not affect the damages recoverable for the dishonour of a bill of exchange.
(4) In any proceedings for damages, the court may not order the payment of interest under this section in respect of the period from when an appropriate settlement sum was offered (or first offered) by the defendant unless the special circumstances of the case warrant the making of such an order.
(5) For the purposes of subsection (4), "appropriate settlement sum" means a sum offered in settlement of proceedings in which the amount for which judgment is given (including interest accrued up to and including the date of the offer) does not exceed the sum offered by more than 10 per cent.
The decision of the Court of Appeal in Lahoud & Anor v Lahoud & Ors [2011] NSWCA 405 confirms that interest is payable pursuant to s 100 CPA on proceedings for the recovery of money (proceedings for specific performance were held not to be proceedings for recovery of money). The interest is payable on the claim made for recovery of money (that is on the principal claim or debt). By way of illustration, if the plaintiff in the present case was successful in its claim for $14,093.99 then s 100 CPA would permit payment of interest on the amount. However that is not the current situation, in the present case the plaintiff argues that the quantum of its money claim should be calculated pursuant to s100 in the absence of any evidence.
In written submissions the plaintiff relies on a decision of Wilcox J in State Bank of New South Wales v Commissioner of Taxation for the Commonwealth of Australia [1995] FCA 1652. Wilcox J's comments at [36] are discussed at [43] above.
I do note that in the present case, a small amount of the plaintiff's claim was paid after commencement of the proceedings and prior to judgment - this was for the costs of the assessment and review process in the amount of $3,956.95 (as set out at [8] above). That amount was in a different category to the majority of the claim of the plaintiff, which was a claim for interest on the sum retained by the defendant pursuant to the Bill of Costs, on the basis of unjust enrichment. However it may be arguable, that there was a basis for payment of interest given that the claim for payment of money which was before the court in these proceedings, included a discrete amount which was outstanding at the time the proceedings commenced. It is noted that such an argument would be based on the decision of Justice Wilcox in State Bank of New South Wales v Commissioner of Taxation discussed above. However, given the finding I have made that there was no unjust enrichment in receipt of the principal sum, then this does not assist the plaintiff.
It is the case that the Wilcox J did not require proof of the actual amount of interest - citing complexity amongst other issues (see [44]) noting that the award for the amount of interest could be made on the case before him pursuant to s 51A(1). It is important to bear in mind that the basis of the award of an amount for interest was that there was a Statement of Claim seeking recovery of a principal amount, for which it was found there should be restitution.
Also I note comments on proof of the rate of interest in the following case: In Woolworths Limited v Strong (No 2) [2011] NSWCA 72; (2011) 80 NSWLR 445 the following was stated per Campbell JA with whom Handley AJA and Harrison J agreed, in relation to the rate of interest:
The Rate of Interest
26 The First Respondent does not dispute that she should repay the amount she received under the District Court judgment, with interest. The sole issue raised by the First Respondent concerns the rate of interest she should be required to pay. The Appellant had submitted that interest should be paid from 28 September 2009 at the various rates prescribed from time to time under the Civil Procedure Act 2005 and UCPR 36.7 for payment of interest on judgment debts. The First Respondent submits that she should only be required to pay interest at market rates, and that the appropriate measure of those market rates is the cash rate of the Reserve Bank of Australia ("RBA") from time to time.
30. ….The First Respondent accepts that she bears the onus of persuading the court that the rate should differ from the prescribed rate (cf Heydon (No 2) at [36]). She submits that the appropriate interest rate should be significantly lower than the prescribed rate
33 In other words, the focus of the granting of restitution to a successful appellant is that an act of the court, namely the granting of a judgment in the court below, has harmed the appellant when it obeyed the court's order and paid that judgment. The restitution that must be made is to the appellant. Interest is awarded because it is only if both the principal, and also interest, are paid to the appellant that the appellant can be put back in the situation in it would have been in, if the lower court had not incorrectly granted judgment against it…..
…
36 In Heydon (No 2) at [19] and [21] some reference was made to the restitution being to restore both parties to the situation they would have been in if the first instance judgment had not been given. I regret that I cannot see how those remarks are consistent with the statement of principle I have quoted at [31] from McCormack.
The court concluded the applicable rate of interest in the case was the rate pursuant to s 101 of the CPA - again this was a case where there was a basis in law for payment of restitution for the principal sum.
Given my finding that the plaintiff has not established that the defendant was unjustly enriched in relation to the principal sum, then there is no basis to make an award that the defendant pay the plaintiff interest on the principal sum (however calculated) as no basis for restitution for unjust enrichment is established for the reasons given.
Accordingly I order verdict for the defendant on the Statement of Claim.
Magistrate C Huntsman
Downing Centre Local Court
17 August 2018