Carmichael Fisher International Pty Limited v Hobday

Mr Hobday's position

1. Originally, Mr Hobday, who resides in the United Kingdom, had appeared by his solicitors, Maddocks Lawyers, but on 25 February 2022, Mr Hobday filed a notice of removal of solicitor. After that time, Mr Hobday appeared unrepresented and the matter was listed for hearing for four days commencing on 22 August 2022.
2. On 11 May 2022, a directions hearing was scheduled in this matter. Mr Hobday informed the Court that he was no longer able to pay for legal representation and an application for pro bono legal assistance was made. Johnson J refused that application on that day.
3. In about early June 2022, Mr Hobday suffered a heart attack and sought time to recover before further steps were taken in the proceedings. CF International and Mr Markiewicz did not agree to that course and they took further steps to prepare the matter for hearing, including preparing and sending to Mr Hobday a Court Book, a draft Joint Memorandum of Facts and Issues as well as giving all of the witnesses relied on by Mr Hobday notice to attend for cross examination on their affidavit evidence.
4. On 15 July 2022, a bankruptcy order was made in the United Kingdom against Mr Hobday, on his application, and an official receiver attached to the County Court was appointed trustee of his estate.
5. On 9 August 2022, CF International's solicitors sent an email to the official receiver who had been appointed trustee of Mr Hobday's estate informing her of these proceedings and briefly outlining the nature of the claim and cross-claim as well as indicating the future steps intended to be taken by CF International and Mr Markiewicz, including proceeding to judgment in this matter so that there would be "greater certainty" in relation to any proof of debt they might lodge in Mr Hobday's bankruptcy. Later that same day, Ms King, the officer receiver, responded confirming receipt of the "paperwork" and noting that it had been saved to the case file. No indication was given that the official receiver intended or wished to take any steps in relation to these proceedings.
6. On 19 August 2022, Mr Hobday sent an email to my Associate, copied to the solicitors for CF International and Mr Markiewicz, which reiterated his position concerning the hearing due to commence on 22 August 2022 as follows: "Whilst I would have wanted to defend the claim that has been brought against me and to have shown the unconscionable conduct that Mr Markiewicz applied to me to create the circumstances, it is no longer possible for me to so do (both for health and financial reasons). I await the outcome of the Court's decision."
7. Mr Hobday did not appear at the hearing of these proceedings on 22 and 23 August 2022, nor did the official receiver of his estate. As a consequence, no evidence was led, nor was any case put, in opposition to the evidence led and submissions made on behalf of CF International and Mr Markiewicz.

The relationship between CF International, Mr Markiewicz and Mr Hobday

1. It is sufficient for present purposes to note the background to the relationship between CF International, Mr Markiewicz and Mr Hobday as set out in the paragraphs which follow. This background was not generally in dispute, having regard to the admissions in the pleadings, and was supported by the evidence led by CF International, which I accepted.
2. In about 2002, Mr Markiewicz established a recruitment business known as "Carmichael Fisher", with the company Carmichael Fisher (NSW) Pty Ltd (CF NSW) operating effectively as the administrative head office of the business.
3. In mid-2006, with a view to Carmichael Fisher expanding into the United Kingdom, Carmichael Fisher Ltd (CF UK), an English company, was incorporated.
4. On 2 February 2008, CF UK made an offer of employment to Mr Hobday on the terms set out in the letter dated that day. That letter confirmed that Mr Hobday's permanent employment was taken to have commenced on 2 February 2008 with a remuneration package comprising a base gross salary of £200,000 per annum "all-inclusive". It was also provided that Mr Hobday was to be appointed a director of CF UK. It can be noted at this point that Mr Hobday executed the form of acceptance attached to the offer of employment on 19 September 2008.
5. On 9 May 2008 CF International was incorporated in Australia.
6. On 30 June 2008, CF International acquired all the shares in CF UK.
7. On 16 March 2009, Mr Hobday entered into a shareholders agreement with CF International, CF UK and Mr Markiewicz, which provided that the commencement date of the shareholders agreement was 4 February 2008. Other terms of the shareholders agreement included, without being exhaustive, that CF International should procure Mr Hobday's appointment as a director of CF UK, that funding should be provided in accordance with clause 7 and loan advances could be made in accordance with clause 8. Mr Hobday's employment with dealt with in clause 11 and the sale of shares, pre-emptive rights and similar matters were dealt with in clauses 12 to 16.
8. On 1 July 2009, a cooperation agreement was entered into between various Carmichael Fisher entities including CF NSW and CF UK. In broad terms, the cooperation agreement provided that: 1. where a Carmichael Fisher company incurred expenses in the course of carrying on business that were attributable, in whole or in part, to another Carmichael Fisher company, recovery of those expenses from the relevant company was by way of "Intercompany Recharges"; 2. each Carmichael Fisher company was required to pay all reasonable expenses incurred on its behalf by another Carmichael Fisher company, provided the first company approved the expense; 3. some Intercompany Recharges did not require pre-approval before the expenses were incurred including for example: shared communications or IT infrastructure and support; design and ongoing maintenance of the global website; marketing and branding; online website advertising for roles; external accounting and legal fees; internal bookkeeping, accounting and IT support; and, the salary of Mr Markiewicz; and 4. disputes raised as to a company's liability to pay any Intercompany Recharge would be determined with finality by Mr Markiewicz.
9. By 18 November 2009, the outstanding loan amount owed by CF UK was acknowledged by Mr Hobday to be £350,222 and there was said to be "a focus and a motivation to repay this as quickly as possible".
10. Between November 2009 and 6 October 2017, CF UK's operations were not successful, loan advances were not repaid and Intercompany Recharges were incurred but not paid, by CF UK. During this period, Mr Markiewicz expressed concerns about these non-payments and various proposals were considered to resolve the issues.
11. By an email dated 30 November 2016, Mr Hobday proposed that CF International should exit from CF UK leaving that company under the control of Mr Hobday and a number of his associates.
12. Between April and September 2017, drafts of a share sale agreement in respect of CF UK were exchanged between the parties, who were each receiving advice and assistance from solicitors in relation to the negotiation of such an agreement.

The Share Sale Agreement

1. On or about 6 October 2017, the Share Sale Agreement (the SSA) between Mr Hobday (referred to in the SSA as "Justin"), CF UK (the "Buyer") and CF International (the "Seller") was executed. The terms of the SSA were not in dispute and included, relevantly for present purposes, the following: "RECITALS A. The Seller agrees to sell and the Buyer agrees to buy the Sale Shares (to be cancelled or held in treasury) in accordance with the terms of this Agreement. B. The Parties agree to deal with the Seller's interests and debts in the Buyer as set out in this agreement. … OPERATIVE PROVISIONS 1. DEFINITIONS AND INTERPRETATION … 1.3 DEFINITIONS … (17) Completion Amount means £1.4 million (£1,400,000.00) plus Default Interest if applicable; (18) Completion Date means the earliest of: (i) the date on which all Completion Amount is fully paid to the Seller in accordance with this Agreement and to the Seller's satisfaction; or (ii) the last day of the Term; or (iii) such date as agreed in writing between the Parties. … (26) Debts means the amounts which the Buyer owes the Seller or its Related Entities, by way of loans and other amounts, paid by the Seller or its Related Entities to, or on behalf of, the Buyer; (27) Debt Amount means the amount the Buyer owes to the Seller or its Related Entities, on the basis of the Debts, which, as at the date of this Agreement equals approximately GBP £1.2 million (£1,200,000.00); … (29) Default Interest means fifteen percent (15%) per annum, calculated daily and payable monthly; … (35) Event of Default means any of the following: … (ii) a liquidator … is appointed to a Party … … (43) Material Default means any one or more of the following events: (i) any monies payable under this Agreement remain unpaid by the Buyer or Justin for ninety (90) days, in aggregate, after the date appointed for payment of the same; or (ii) the Buyer or Justin or both being declared bankrupt; or (iii) the Buyer or Justin or both cease to carry on the Business; or (iv) the Buyer or Justin or both become subject to an Event of Default; and (v) the Buyer materially fails to perform or observe any of its obligations under the Agreement and provided that the Seller has given written notice of such failure or breach and allowed the Buyer ninety (90) days, in aggregate, to rectify such default, and the breach, default or non-compliance is not remedied within that notice period; … (50) Payment Schedule means the schedule set out in Item 1 of Schedule 1; … (55) Purchase Price means an amount equal to the Completion Amount minus the Debt Amount; … (63) Sale Shares means all of the ordinary shares in the Buyer owned by the Seller and which form the basis of the sale set out in this Agreement; … (73) Term means the period commencing on the date of this Agreement and expiring on the earlier of: (i) termination of this Agreement; or (ii) the date on which the last payment, set out in the Payment Schedule, is made in cleared funds to the Seller, … 2. AGREEMENT 2.1 SALE SHARES The Seller agrees to sell the Sale Shares, and the Buyer agrees to buy back the Sale Shares, from the Seller: … (c) in consideration for the Purchase Price; (d) in accordance with this clause 2 and the Payment Schedule; and (e) otherwise on the terms of this Agreement. 2.2 PAYMENT SCHEDULE [(a) to (d) set out the share sales and payments effectively to be made in four tranches in accordance with the Payment Schedule.] (e) Notwithstanding any other provision of this Agreement, payments made to the Seller under this Agreement are non-refundable, irrespective of which Transfers have been made in accordance with clause 2.2 (a). … 2.4 DEBT AMOUNT Upon and with effect from the date of this Agreement, the Seller agrees to (and shall procure that each of its Related Entities agrees to) fully and irrevocably release and discharge the Buyer from any and all claims, demands, liabilities, or obligations which the Buyer has or may have to the Seller or its Related Entities on or before the date of this Agreement including without limitation the Debts other than the Debt Amount which shall be repaid and released in accordance as follows: The Seller agrees to extinguish the Debts strictly subject to payment, in cleared funds, of the Debt Amount, by the Buyer: (a) in accordance with the Payment Schedule; and (b) otherwise on the terms of this Agreement. 2.5 COMPLETION AMOUNT The Parties agree and acknowledge that: (a) if an amount is to be deducted from the Completion Amount, in accordance with this Agreement, such reduction is to be applied first to the last payment in the Payment Schedule, then to payments in the Payment Schedule, in reverse order from such payment; (b) all amounts paid by the Buyer towards the Completion Amount will first be allocated to the Debt Amount, until the Debt Amount is paid in full, in priority to allocation of such monies towards the Purchase Price or Default interest; (c) in the event that any portion of the Debt Amount is owed to a Related Entity of the Seller, the Seller agrees to procure a discharge of such amounts accordingly, subject to such payments being made to the Seller in accordance with this Agreement; (d) any payment made by the Buyer to the Seller in accordance with sub-clause (c) above shall be deemed to be an effective discharge and release of the Buyer's obligation to repay such portion of the Debt Amount that shall be attributable to a Related Entity; and (e) nothing in this Agreement is to be construed as operating to dilute, reduce, diminish or adversely vary the Completion Amount, irrespective of the Seller's legal or equitable interests in the Buyer. … 5. COMPLETION AMOUNT 5.1 PAYMENT (a) The Buyer must pay to the Seller the Completion Amount in accordance with this clause 5.1 and the Payment Schedule. … (c) Should the Buyer or Justin default in payment of any of its payments, Default Interest starts accruing from the date such payment becomes payable, which Default Interest is payable upon demand by the Seller. … 5.3 MATERIAL DEFAULT In the event that a Material Default has occurred then: (a) in any one or more of such events, the Seller at any time thereafter, without prejudice to any other rights of the Seller by notice in writing, request the Buyer and/or Justin to immediately pay to the Seller all outstanding Completion Amounts and claim the entire outstanding balance of the Completion Amount as liquidated damages which become payable immediately; … 8. WARRANTIES AND INDEMNITY … 8.3 INDEMNITY Justin and the Buyer hereby jointly and severally indemnify and will keep indemnified the Seller against all monies, Costs, expenses, suits, claims, actions, proceedings and cause of action of any kind or nature whatsoever (including without limitation all legal expenses on a solicitor-and-own-client basis and including any amount payable in respect of any taxation levied by any government or government authority) which arise in any way out of or which the Buyer or the Seller, either alone or with any other person, is or may be or becomes actually or contingently liable to pay to any third party on any account whatsoever under or in relation in any way to any acts or omissions by the Buyer or the Seller, or any liabilities of the Buyer, or the Seller, in relation to the Buyer, arising, prior to the Completion Date. … 8.10 LIMITATIONS ON LIABILITY (a) The Parties agree and acknowledge that the indemnity is under clause 8 are not intended to allow the Seller to recover a head of damage, with respect to a particular breach or claim under this Agreement, more than once. … 11. GUARANTEE (a) Justin (i) Justin unconditionally and irrevocably guarantees to the Seller the prompt performance of all obligations which apply to the Buyer under this Agreement, irrespective of whether the Seller has first sought to enforce such obligations against the Buyer. (ii) The Seller may recover monies, as a liquidated debt, from Justin which the Buyer owes to the Seller. (b) Continuing Liability The liability of Justin as guarantor of the Buyer's obligations, is not discharged, impaired or otherwise affected by any amendment, variation, waiver in relation to, breach, Event of Default or unenforceability of provisions of this Agreement. … 14.2 GOVERNING LAW (a) This Agreement shall be governed by and construed in accordance with the laws of New South Wales, Australia and of the applicable laws of the Commonwealth of Australia in force from time to time. (b) Any legal action or proceedings with respect to this Agreement may be brought in any of the courts of New South Wales and the parties hereby submit to the jurisdiction of such courts and of the courts of appeal therefrom. … 14.13 TIME OF THE ESSENCE Time is of the essence of this Agreement."
2. The Payment Schedule contained in Schedule 1 to the SSA was as follows:
3. In the Payment Schedule, the column headed "Outstanding balance sheet loan" referred to the amount of the outstanding loans owed by CF UK and the column headed "Loan repayments" indicated when and by what amounts the outstanding loans were to be repaid. The total amount of the loan repayments was £858,743.00.
4. The column headed "Creditor recharges" referred to the amount of the outstanding Intercompany Recharges owed by CF UK and the column headed "Creditor Repayments" indicated when and by what amounts the outstanding Intercompany Recharges were to be repaid. The total amount of the Intercompany Recharge repayments was £258,120.00.
5. The column headed "Nominal value of shares" included the nominal value of the shares to be transferred in four tranches of 118, 150, 150 and 132 shares, as indicated in the column headed "Shares transferred". In addition, that column also included, commencing at Month 36, when and by what amounts the "Purchase Price" was to be paid. The total amount of the Purchase Price was £283,137.00.
6. Thus, the Completion Amount of £1.4 million was made up of loan repayments of £858,743.00, Intercompany Recharge repayments of £258,120.00 and the Purchase Price of £283,137.00, and was to be paid over 48 months as set out in the Payment Schedule.

Repayments and default

1. It was also not in dispute that between October 2017 and November 2018, CF UK made payments generally in accordance with the Payment Schedule for the first 25 months totalling £860,902.00. As a result of these payments and in accordance with its obligations under the SSA and the Payments Schedule, CF International transferred the first three tranches of shares, consisting of 118, 150 and 150 shares in CF UK, which were recorded by Companies House as "purchased into treasury".
2. Nor was there any contest that, after 29 November 2019, no further payments have been made, leaving £539,098.00 of the Completion Amount unpaid.
3. On 18 December 2019, an extraordinary resolution to wind up CF UK was passed and a liquidator was appointed.

Demand

1. By letter dated 27 February 2020, CF International's solicitors made demand upon Mr Hobday for payment of £555,935.58 being: 1. £539,098.00 outstanding from the Completion Amount; plus 2. £16,837.58 by way of Default Interest for the period 12 December 2019 to 25 February 2020.

CF International's claim and Mr Hobday's defence and cross-claim

1. On 12 June 2020, CF International filed a statement of claim seeking the following relief against Mr Hobday: "(a) Damages. (b) Costs. (c) Interest. (d) Any other order that the Court deems fit."
2. In its statement of claim, CF International expressly relied on the guarantee given by Mr Hobday by cl 11 of the SSA and the indemnity given by him under cl 8.3 of the SSA, as bases for its claim, in the circumstances where it was alleged that CF UK had failed to pay the outstanding Completion Amount in accordance with the SSA and had gone into liquidation. Interest was claimed under cl 5.1(c) at the rate specified for Default Interest in the SSA. Furthermore, costs on a solicitor-and-own client basis were sought based upon cll 8.3 and 11 of the SSA.
3. Mr Hobday's defence to the statement of claim was filed on 3 November 2020. Most of the allegations in the statement of claim were admitted by Mr Hobday and the only substantive matter raised by way of defence was the contention that cll 8.3 and 11 of the SSA were not valid or enforceable because of the matters alleged in pars 14 to 28 of his cross-claim.
4. It followed that, if Mr Hobday did not establish the matters alleged in pars 14 to 28 of his cross-claim, there was in effect no defence to CF International's claims.
5. As noted above, in his cross-claim, Mr Hobday sought: 1. declarations that CF International had engaged in misleading and deceptive conduct and unconscionable conduct, that Mr Markiewicz was knowingly concerned in that conduct, that the SSA was unenforceable against Mr Hobday and that Mr Hobday "is discharged of its obligations" under cll 8.3 and 11 of the SSA; 2. an injunction to restrain CF International from enforcing cll 8.3 and 11 of the SSA; and 3. costs.
6. Paragraphs 14 to 28 of Mr Hobday's cross-claim involved a number of alleged bases for contending that cll 8.3 and 11 of the SSA were invalid and unenforceable. First, it was alleged that Mr Markiewicz made misleading or deceptive representations to Mr Hobday between "at least 2010 and 6 October 2017" to the effect that: "(a) either Hobday or [CF UK] was indebted to Markiewicz personally for the Intercompany Loans and the Intercompany Recharges; … (b) Hobday, in his personal capacity, owed Markiewicz, in his personal capacity, an amount of approximately $400,000; … (c) Markiewicz was personally funding Hobday's lifestyle including paying for the school fees of Hobday's children; … (d) Hobday had a personal obligation to repay unspecified outstanding amounts to Markiewicz; and … (e) Hobday was obliged repay the Intercompany Loans and the Intercompany Recharges to CF International and/or Markiewicz before Hobday received any earnings or salary from [CF UK], … (together, the Representations) ".
7. Secondly, it was alleged that Mr Markiewicz placed undue influence or pressure on Mr Hobday to agree to cll 8.3 and 11 of the SSA, referred to as "the Indemnity, Guarantee and Liquidated Debt" provisions: 1. "by repeatedly making the Representations to Hobday"; and 2. "by making the Representations … Markiewicz made the implied representation that if Hobday did not in agree to the Indemnity, Guarantee and Liquidated Debt provisions, Markiewicz would cause CF International to immediately call in the Outstanding Intercompany Amount", when Markiewicz was aware that CF UK would not have the ability to repay that amount and would be insolvent if it were called upon to pay it and Mr Hobday would suffer significant losses if CF UK became insolvent.
8. It was also alleged that cll 8.3 and 11 of the SSA went beyond what was required to protect CF International's legitimate interests, in the circumstances.
9. Based on these allegations, the cross-claim alleged that CF International and Mr Markiewicz engaged in conduct in contravention of s 18 of the Australian Consumer Law, as well as conduct that was unconscionable within the meaning of the unwritten law, that was in contravention of s 20 of the Australian Consumer Law and that was in contravention of s 12CB of the Australian Securities and Investments Commission Act.
10. It can be noted that the cross-claim did not contain express allegations that the alleged misrepresentations, undue influence or unconscionable conduct caused Mr Hobday to enter into the SSA or that he would not have done so but for those alleged misrepresentations or that alleged conduct.
11. CF International's and Mr Markiewicz's amended defence to the cross-claim did not contain any admissions that either of them engaged in any conduct in contravention of s 18 of the Australian Consumer Law or undue influence or unconscionable conduct, whether under the unwritten law, s 20 of the Australian Consumer Law or s 12CB of the Australian Securities and Investments Commission Act.
12. As has been noted, neither Mr Hobday nor the official receiver appeared at the hearing. No evidence that could be challenged by way of cross examination was adduced at the hearing in support of his cross-claim.
13. In the absence of any significant evidence to support the allegations relied upon by Mr Hobday and in the absence of any formal admissions by CF International and Mr Markiewicz on their pleadings, I could not find that there was any proper basis to conclude that cll 8.3 and 11 of the SSA were invalid or unenforceable. Mr Hobday's defence otherwise contained admissions that the SSA had been entered into and included the terms set out above. He also admitted that CF UK had not paid the outstanding balance of the Completion Amount, being £539,098.00.

Conclusions

1. In summary, I have concluded that: 1. the SSA was entered into by CF UK and Mr Hobday on or about 6 October 2017 and cll 8.3 and 11 of the SSA, along with all its other terms, are valid and enforceable; 2. between October 2017 and November 2018, CF UK made payments under the SSA totalling £860,902.00; 3. after 29 November 2018, no further payments have been made, leaving £539,098.00 of the Completion Amount outstanding; 4. under cll 8.3 and 11 of the SSA, CF International is entitled to recover from Mr Hobday, the amount of the outstanding Completion Amount, £539,098.00; 5. under cl 5.1 of the SSA, CF International is entitled to recover from Mr Hobday Default Interest on the outstanding Completion Amount; 6. under cl 8.3 and 11 of the SSA, CF International is entitled to recover from Mr Hobday its legal costs on a solicitor-and-own-client basis arising out of omissions by CF UK to pay the monies due under the SSA prior to the Completion Date; and 7. although CF International made a claim for damages in its statement of claim and not for payment of a liquidated sum, in so far as any order of the Court is for payment of a liquidated sum and not damages Mr Hobday was adequately made aware of the possibility of such relief being granted by CF International's prayer (d) in its statement of claim, "[a]ny other order that the Court deems fit".
2. It can be noted that CF International may have additional rights to terminate the SSA and recover the outstanding Completion Amount with Default Interest and costs under the SSA but it is not necessary to determine those issues, given my conclusions set out above. Furthermore, in light of these conclusions, it does not appear to me to be necessary for CF International to amend its statement of claim as sought during the hearing of the proceedings and, for the sake of completeness, I note that no leave to amend the statement of claim has been given.

Interest

1. As concluded above, CF International is entitled to recover Default Interest, as defined in cl 1.3(29) of the SSA, on the outstanding Completion Amount of £539,098.00. I am not, however, in a position to make that calculation.

Costs and other matters

1. CF International has been entirely successful in these proceedings and there is no reason, in my view, why costs should not follow the event. As noted above, under cl 8.3 of the SSA, CF International is entitled to recover from Mr Hobday its legal costs on a solicitor-and-own-client basis arising out of omissions by CF UK to pay the monies due under the SSA prior to the Completion Date. In these circumstances, in my view, this is an appropriate case in which to order that the costs be paid on an indemnity basis, as provided in s 98(1)(c) of the Civil Procedure Act 2005 (NSW), noting that this will permit the recovery of "all costs (other than those that appear to have been unreasonably incurred or appear to be of an unreasonable amount)" in accordance with r 42.5(b) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).
2. In addition, since the SSA provided for the transfer of the remaining 132 shares in CF UK on payment of the outstanding Completion Amount, for Default Interest and for termination of the SSA, it may possibly be necessary at some future time for orders to be made to effect or assist a transfer of the 132 shares, although the situation is complicated by the fact that CF UK is in liquidation. In order to accommodate that possibility or other steps that may need to be taken properly to finalise the relationship between the parties, it is appropriate to grant liberty to the parties to apply for those purposes.
3. In circumstances where these proceedings could be said to have been determined in the absence of Mr Hobday and the official receiver of his estate, it may be the case that an application can be made to set aside or vary any judgment or order made in these proceedings. If any relevant person wished to seek to do so, an application under r 36.16 of the UCPR may be appropriate.

Orders

1. To allow calculation of the amount of interest and consideration of the final form of the orders in this matter in light of these reasons for judgment, the Court directed on 10 October 2022 that: 1. the plaintiff is to file and serve proposed orders to give effect to these reasons for judgment on or before 14 October 2022; and 2. the matter is listed for consideration of the final form of the orders to be made at 9.30 am on Friday 21 October 2022.

Addendum

1. In accordance with the directions made on 10 October 2022, CF International filed and served proposed orders to give effect to the reasons for judgment and, in addition, provided a schedule of interest calculations.
2. The proposed orders were as follows: "The Court orders that: 1 there be judgment for the Plaintiff against the Defendant in the sum of £823,746.39 (pounds sterling), being: a. £539,098.00 in principal; and b. £284,648.39 in interest to 21 October 2022 2 the Cross Claim be dismissed; 3. the Defendant/Cross Claimant pay the Plaintiff/Cross Defendants' costs on the indemnity basis; and 4 there be liberty to apply for the purposes set out in paragraph 49 of the judgment of Wright J dated 10 October 2022."
3. The schedule of interest calculations was as follows:
4. The schedule included two interest calculations, one described as "compound interest" and one as "simple interest". The compound interest appears to have been calculated with monthly rests, which may have been intended to reflect the definition of "Default Interest" in the SSA which was that the expression meant "fifteen percent (15%) per annum, calculated daily and payable monthly".
5. The proposed orders have included in the judgment sum the amount of compound interest, not simple interest.
6. At the request of the Court, CF International provided submissions on the question of whether the interest component of the judgment should be simple or compound interest.
7. Whether the interest to be included should be compound or simple interest depends, in the present case where no issue of custom arises, on the interest to which CF International is entitled under the SSA which, in turn, depends on the proper construction of the SSA: Morton v Elgin-Stuczynski (2008) 19 VR 294; [2008] VSCA 25 (Morton) at [28] (Neave JA, Kellam JA and Cavanough AJA agreeing. Despite a number of first instance decisions that unless there is "clear agreement" to pay compound interest, simple interest is payable such as Bakker v Chanbri Pty Limited (1986) 4 BPR 9234 and Polaris Holding Co v Airservices Australia [1997] FCA 208, I consider that I should adopt what was said by the Victorian Court of Appeal in Morton at [28] that: "Whatever may have been the case historically, today there is no presumption that interest payable on a loan made by a private lender is to be calculated as either simple or compound interest."
8. The fundamental obligation to pay was found in cl 5.1 of the SSA which provided that: 1. CF UK "must pay to the Seller the Completion Amount in accordance with this clause 5.1 and the Payment Schedule": cl 5.1(a); and 2. should CF UK (or Mr Hobday) default in payment of "any of its payments, Default Interest starts accruing from the date such payment becomes payable, which Default Interest is payable upon demand by [CF International]": cl 5.1(c).
9. The obligation to pay Default Interest arises only when there is default in payment of "any of its payments". The clause does not expressly indicate on what sums that interest is to be calculated. Nonetheless, it appears natural to conclude that Default Interest is payable in respect of the unpaid payments identified as "its payments".
10. The expression "its payments" in cl 5.1(c) naturally refers to those payments which must be made by CF UK under cl 5.1(a), that is each of the payments referred to in the Payment Schedule. It does not naturally include any possible payments that may be required to be made otherwise, including for example payments by Mr Hobday by way of Default Interest.
11. On this construction, Default Interest accrues on the amounts unpaid in accordance with the Payments Schedule but not on amounts of Default Interest unpaid at the end of each month during the period when Default Interest is accruing.
12. Furthermore under cl 5.1(c), Default Interest is payable "on demand". This suggests that, before demand is made, Default Interest is not yet payable. It is somewhat difficult to reconcile this with the definition of Default Interest which includes that such interest is "payable monthly". It does not appear that demand was made at the end of each month when Default Interest was payable.
13. I also note that the rate of Default Interest is 15% per annum at a time when commercial interest rates in both Australia and the United Kingdom were at historically low levels, so that the rate would be understood by reasonable business persons in the position of the parties as accommodating to some extent the effect of compounding without compound interest, or interest on interest, being prescribed in the SSA.
14. While the construction of the SSA is not without considerable difficulty, I am of the view that on its proper construction, CF International is entitled only to simple interest on payments unpaid in accordance with the Payments Schedule but at the rate of 15%. Accordingly, in my view, the amount of interest that should be included in the judgment sum should be £229,965.91.
15. Accordingly, the orders of the Court are: 1. Judgment for the Plaintiff against the Defendant in the sum of £(GBP)769,063.91, being: 1. £539,098.00 in principal; and 2. £229,965.91 in interest to the date of judgment. 1. The Cross Claim is dismissed. 2. The Defendant/Cross Claimant is to pay the Plaintiff's and the First and Second Cross Defendants' costs of and incidental to these proceedings on the indemnity basis. 3. The parties have liberty to apply for the purposes of properly finalising the relationships between the parties arising out of the Share Sale Agreement and any steps that may need to be taken in that regard.

Amendments 24 October 2022 - Addendum to give reasons for final orders and minor amendments to [29] and [51]. 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: 24 October 2022