Chopsonion Pty Ltd (Controllers Appointed) v Watts Meat Machinery Pty Ltd

Golden West Refining Corp Ltd v Daly Laboratories Pty Ltd (unreported Federal Court of Australia, Carr J, 16 February 1995)

Roxborough v Rothmans of Pall Mall [2001] HCA 68; (2001) 208 CLR 516

Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507, [2015] HCA 28

Woodside Generation Corporation (t/as Verve energy) v Woodside Energy Limited [2014] HCA 7; (2014) 251 CLR 640

CHOPSONION PTY LTD ACN 142 890 971 (CONTROLLERS APPOINTED) (and others named in the Schedule)

WATTS MEAT MACHINERY ACN 111 528 771 (and another named in the Schedule)

1. Judgment for the first applicant in the amount of $2,939,618.53, inclusive of interest.
2. Judgment for the second applicant in the amount of $102,485.59, inclusive of interest.
3. Judgment for the third applicant in the amount of $51,191.37, inclusive of interest.
4. Judgment for the fourth applicant in the amount of $46,068.43, inclusive of interest.
5. Judgment for the fifth and sixth applicants in the amount of $25,664.92, inclusive of interest.
6. Judgment for the seventh applicant in the amount of $1,203,493.09, inclusive of interest.
7. Judgment for the second to seventh applicants collectively in the amount of $584,208.11, inclusive of interest.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

1. On 15 January 2025, I delivered Reasons (R) in this matter: Chopsonion Pty Ltd (Controllers Appointed) v Watts Meat Machinery Pty Ltd (No 2) [2025] FCA 4 in which I found for the applicants in proceedings SAD 109 of 2020, Chopsonion and Ors v Watts and Ors (Watts' proceedings) and reserved the question of interest and costs.
2. The Reasons also dealt with action no. SAD 76 of 2022, MEG Investments Pty Ltd and Ors v Rolton Pty Ltd and Ors (Rolton proceedings), which I had ordered be heard and determined at the same time, with evidence in one being evidence in the other. I dismissed the applicants' claims in the Rolton proceedings.
3. After the publication of my Reasons, I heard argument on the question of interest in relation to the Watts' proceedings.
4. These further reasons deal with the question of interest and should be read in conjunction with the Reasons. The same terms and abbreviations as used in the Reasons apply.
5. Once I have determined interest and entered judgment, I will consider the question of costs.

1. Consideration of the amount of interest which should be awarded varies as between the applicants, as follows:

(a) Chopsonion;

(b) The Lenders, excluding the seventh applicant Mr Rowley (Mr Rowley is in a different position to the remaining Lenders because he borrowed for the purposes of advancing funds to Chopsonion and then refinanced those borrowings);

(c) Mr Rowley; and

(d) The Lenders (including Mr Rowley).

(1) To what amount of principal is contractual interest to be applied and over what period? In particular, are amounts received in a settlement from FG Agri and distributed to the Lenders in proportion to the amounts they have advanced, to be applied against principal or interest?

(2) What is the applicable rate of contractual interest?

(3) What is the pre-judgment interest on other claims made by Chopsonion? and

(4) Over what period?

(1) To what amount of principal is pre-judgment interest to be applied?

(2) What is the applicable rate of interest? and

(3) Over what period?

(1) To what amount of principal is pre-judgment interest to be applied?

(2) What is the applicable rate of pre-judgment interest?

(3) What rate of interest is payable on Mr Rowley's refinancing and can Mr Rowley recover principal and interest? and

(4) Over what period?

(1) The avoidance of double recovery;

(2) What is the pre-judgment interest on other claims made by the Lenders? and

(3) Over what period?

(a) Chopsonion is entitled to judgment in the sum of $2,939,618.53, inclusive of interest;

(b) Each of the Lenders is entitled to judgment, inclusive of interest in the following amounts:

(i) MEG Investments: $102,485.59;

(ii) Red Dog: $51,191.37;

(iii) RJC Willson Nominees: $46,068.43;

(iv) Richard and Leigh Willson: $25,664.92; and

(v) Mr John Rowley: $1,203,493.09

(c) The Lenders (including Mr Rowley) are entitled to judgment for the "other claims" in the sum of $584,208.11, inclusive of interest.

1. Chopsonion's loss is as a result of entering into a Loan Agreement with the Lenders for the provision of Funding to it for the purchase of two abattoir chains (the Chains). The Lenders' loss arises out of entering into the transaction with Chopsonion which they would never have entered into but for the conduct of the respondents in the Watts' proceedings (Watts Parties).
2. Two preliminary matters arise.
3. The first is a contention raised by the Watts Parties on the interest argument, that I have found that Chopsonion is only entitled to interest on the principal remaining after payments were received by the Lenders, but not beforehand.
4. I do not accept that contention.
5. The Funding advanced pursuant to the Loan Agreement to Chopsonion was $1,175,000 for the purchase and removal costs for the Chains. To obtain that sum, Chopsonion approached PFM who, in turn, approached the Lenders for the required funds.
6. The Loan Agreement (exhibit A1 1/44/310 B) is comprised of a letter of offer dated 20 January 2015 sent by PFM on behalf of the Lenders and accepted by the Borrowers (which includes Chopsonion). It provides for an interest rate of 4.5% per month decreasing to 3% per month if paid on or before the due date each month, payable at discharge of the Loan.
7. On 21 January 2015, a Mortgage Management Agreement (exhibit A1 1/49/435) was entered into between PFM (as "Mortgage Manager"); the Lenders (as "Mortgagee"); Chopsonion in its own right and as a trustee; Mr Sharpe; and Jechbo in its own right and as a trustee (together "Borrower"). PFM acted as the Lenders' agent both in making the Loan Offer and subsequently as Mortgage Manager.
8. The Mortgage Management Agreement sets out the terms upon which PFM, as Mortgage Manager, is to manage the "Mortgage Loan".
9. The term of the Loan was for three months, and as I have noted in the Reasons, Chopsonion defaulted on payment.
10. The Lenders pursued and recovered $1.1m (including GST) from FG Agri. After payment of various creditors, $991,773.49 was distributed to the Lenders in proportion to the funds advanced by them to Chopsonion. The total amount of principal (after allowing for a minor deduction) which remained owing to the Lenders as a whole was $177,307.66: R [675]-[677].
11. I dealt with Chopsonion's loss as a result of entering into the Loan Agreement at: R [749]-[755]. In that passage, I deal with unpaid interest and a Management Fee outstanding under the Loan Agreement between PFM and Chopsonion.
12. I noted at R [755] that interest would need to be the subject of a further calculation.
13. The interest component claimed by Chopsonion was on the full Loan amount of $1,175,000.
14. There was no suggestion that Chopsonion was not entitled to recover the contractual interest it was obliged to pay the Lenders on the full amount of the Loan, as well as on the balance of the remaining principal after any reductions in that principal.
15. The sum of $177,307.66 upon which the Watts Parties rely in support of their contention is taken from a summary in the Reasons at [775] in which I set out the amounts which Chopsonion had established by way of loss. Interest is specifically excluded from that amount.
16. It follows that I have not found that Chopsonion is entitled only to interest on the sum of $177,307.66. In any event, to make the position perfectly clear, Chopsonion is entitled to recover contractual interest on the total amount of principal in the sum of $1,175,000, as well as the balance of principal remaining after reductions in that principal.
17. The second preliminary matter is a contention by the Watts Parties that the applicable interest rate on the Loan is 4.5% per annum and not 4.5% per month.
18. That contention derives from the Mortgage Management Agreement pursuant to which PFM managed what is described in that document as the Mortgage Loan.
19. Clause 1 of the Mortgage Management Agreement identifies the Mortgage Loan by reference to Schedule A to that Agreement.
20. Schedule A sets out terms of the Mortgage which are in the same terms as the Loan Agreement, save that the higher and lower interest rates are described as 4.5% per annum and 3% per annum respectively.
21. Clause 12 of the Mortgage Management Agreement provides:
    1. This Agreement shall apply notwithstanding anything to the contrary in the Letter of Offer or the Mortgage documentation or any other agreement or arrangement whatsoever as between the Borrower or Mortgagor and the Mortgagee except an agreement executed by all the parties hereto which is expressed to be supplemental to or in substitution hereof.
22. Relying on cl 12, the Watts Parties contend that the Mortgage Management Agreement supercedes the Loan Agreement, such that the interest rate is 4.5% per annum and 3% per annum respectively.
23. The applicants submit that the Mortgage Management Agreement does not contain any provision purporting to regulate the payment of interest by the Borrowers and that the reference to the interest rates in Schedule A to the Mortgage Management Agreement is only for the purpose of identifying the Mortgage Loan to be managed by PFM.
24. Chopsonion's submissions should be accepted. The Mortgage Management Agreement, insofar as it refers to the Mortgage Loan, does so for the purposes of identifying the Mortgage Loan that is being managed by PFM. To the extent there is an error in the Mortgage Management Agreement describing the interest rate as 4.5% per annum and 3% per annum respectively, that does not change the terms of the Loan Agreement.

Chopsonion - first issue - the amount of principal to which contractual interest is to be applied and over what period

1. This issue concerns the amount of principal to which interest is to be applied and over what periods. In particular, is part of the sum of $1.1m received in a settlement from FG Agri which was distributed to the Lenders, to be deducted from the principal owed by Chopsonion to the Lenders, or applied against interest?
2. The Loan Agreement provides that interest is payable at the higher rate of 4.5% per month until repaid. Based on a principal advanced of $1,175,000, the monthly interest payment at 4.5% is $52,875.
3. Chopsonion's interest calculation is set out in the table below, taken from its written submissions on the interest argument, which was heard on 11 March 2025:
   1. The applicants have calculated the amount owing under the Loan Agreement as at 11 March 2025 as $6,500,165.32. The calculation can be stated simply as follows, based on monthly interest of $52,875:

Interest to 22.2.25

(121 months from 22.1.15)

Interest 23.2.25 to 11.3.25

(16 days)

5. For reasons explained below, these calculations proceed on the basis that:

5.1 The applicable interest rate is 4.5% per month; and

5.2 Recoveries should be applied off of the outstanding balance as at the date of the recovery, or off interest rather than principal, the result of which is the same.

1. There is no doubt that Chopsonion is entitled to contractual interest on the sum of $1,175,000 from the date it was advanced, i.e. 21 January 2015, however the period over which it is entitled to claim interest on that sum is in issue.
2. The applicants submit that the Lenders treated payment of that part of the $1.1m received from FG Agri, which was paid to the Lenders in proportion to the amount advanced, as a reduction in the interest owing by Chopsonion at the time the money was received, and not as reducing the amount of principal owing.
3. They submit that the relevant question is what the parties agreed, or objectively, should be taken to have agreed, applying the usual objective approach to contractual construction: Woodside Generation Corporation (t/as Verve energy) v Woodside Energy Limited [2014] HCA 7; (2014) 251 CLR 640 at [35].
4. There is no issue between the parties as to the approach to contractual construction.
5. The applicants submit that Chopsonion and the Lenders expressly agreed the manner in which recoveries were to be applied under a General Security Agreement entered into between Chopsonion and the Lenders (exhibit A1 1/45/312, 345) which provides in cls 13.1 and 13.2 that any money received towards the satisfaction of the Secured Money is to be applied in the order specified in cl 13.1.
6. In the General Security Agreement, Chopsonion is defined as the "Grantor", the Lenders are defined as the "Secured Party", and the "Secured Money" is comprehensively defined so as to include the sum of $1,175,000 advanced pursuant to the Loan Agreement.
7. Clause 13.1(d) provides:

13.1 Application by Secured Party

To the extent permitted by law, money received towards satisfaction of the Secured Money is to be applied in the following order:

(a) ...

(d) towards satisfaction of the balance of the Secured Money in the manner and order in which the Secured Party, in its discretion, determines; ...

13.2 Principal and Interest

Without limiting in any way the Secured Party's discretion under clause 13.1 (d), the Secured Party may apply any money received towards satisfaction of the Secured Money:

(a) towards satisfaction of any debt of the Grantor or the Debtor or of the Grantor and the Debtor in the proportions the Secured Party thinks fit; and

(b) towards payment of principal or interest or principal and interest in the proportions and otherwise in the manner and of the order the Secured Party thinks fit,

and the Secured Party may so apply that money and determine those proportions either at the time of payment of the money or at any time after payment.

1. The applicants submit that the Lenders have chosen to apply the money recovered from FG Agri towards arrears of interest, and not towards reduction of the principal sum.
2. I do not accept that submission.
3. No evidence is referred to in support of the submission, and the evidence of Ms How in the second How affidavit (Exhibit A10) at [88] refers to the payments from FG Agri as being disbursed, "... by proportionate distribution of surplus funds of the Lenders having regard to their investment in the Funding".
4. Further, in the applicants' closing submissions, they identify in Appendix B, losses suffered by the Lenders. In [9.2] of those submissions, the applicants set out how the sum of $991,770.49 was distributed to the Lenders and identify at [9.3] the amounts of unrecovered principal after allowing for a proportionate payment from the money received from FG Agri, together with interest on the unrecovered principal.
5. That approach is inconsistent with the applicants' contention that the Lenders chose to apply the recoveries from FG Agri towards arrears of interest and not towards reduction of the principal.
6. Accordingly, the contractual interest Chopsonion is obliged to pay to the Lenders is to be calculated on the outstanding principal owing from time to time.

Chopsonion - second issue - the applicable rate of interest

1. In the alternative to the contention that the relevant interest rate is 4.5% per annum, the respondents submit that the applicable rate of contractual interest is 3.5% per month based on Special Condition 18 of the Loan Offer (exhibit A1 1/44A/ 310A at 310G) which provides:
   1. If the mortgage is not paid out in full, PFM will retain a maximum $100,000 interest in all security under this offer until such time as the funds are repaid within a maximum of 28 days. Funds must be paid out from the sale of "The Chains". Should it exceed 28 days, interest will be due at the rate of 3.5% per month in advance.
2. The applicants refer to cls 16 and 17, and submit cl 18 is irrelevant since there was never a sale of the Chains in the manner contemplated, but also because there was never a sale of both Chains.
3. Clause 16 does not advance the issue. Clause 17 provides:
   1. If the mortgage is paid out by way of sale of "The Chains", payment in the amount of approx. $1,450,000 is to be paid directly to PFM. This will release all security over related properties and includes all legal fees and charges associated with release.
4. I do not accept the applicants' submissions. Whereas cl 18 is not without its difficulties, on the issue of the relevant interest rate in the circumstance where the Mortgage is not paid out in full, on a proper construction of Special Condition cls 17 and 18, the rate is 3.5% per month.
5. The sale of both Chains is not a pre-requisite to the operation of cl 18, but simply provides that in that event occurring, a sum of $1,450,000 is to be paid directly to PFM. It does not operate to the exclusion of payment occurring by other than the sale of the Chains.
6. I find the applicable rate of interest payable by Chopsonion in circumstances where the mortgage is not paid out in full, is the contractual rate of 3.5% per month on the outstanding principal from time to time, after there has been part payment. Until that time, the applicable rate is 4.5% per month.

1. The period over which Chopsonion is obliged to pay the contractual rate of interest is for the period from 22 January 2015 to 7 May 2025.
2. Approaching the calculation of contractual interest on the basis of an obligation to pay interest on the outstanding principal from time to time and having identified the amount upon which contractual interest is payable, the rate and the period for which Chopsonion is entitled to recover interest, Chopsonion is entitled to interest in the sum of $2,440,422.44 calculated as follows:

(a) Interest payable at 4.5% per month on $1,175.000 = $52,875

(i) Period 22 January 2015 - 22 December 2017

(b) $441,773.49 was distributed to Lenders on 20 December 2017;

R [675], leaving a principal debt balance of $733,226.51

(i) Interest payable at 3.5% per month on $733,226.51 = $25,662.93

(ii) Period 23 December 2017 - 25 February 2018

(2 months, 3 days) = $51,325.86 + $2,531.14 = $53,857 $53,857

(c) $550,000 distributed to Lenders between 25 February 2018 and 15 March 2018,

leaving a principal sum balance of $177,307.66 (after a minor adjustment)

(i) Interest payable at 3.5% per month on $177,307.66 = $6,205.77

(ii) Period 26 February 2018 - 6 April 2025

(11 days @ $204.02/day) = $2,244.22 $2,244.22

TOTAL: ($1,850,625 + $53,857 + $533,696.22 + $2,244.22) = $2,440,422.44

Chopsonion - fourth issue - other claims - pre-judgment interest rate

1. Chopsonion has also succeeded in the claims for other heads of loss and for which it claims pre-judgment interest in accordance with s 51A of the Federal Court of Australia Act 1976 (Cth) at a rate being the relevant Reserve Bank of Australia cash rate (as at 1 January or 1 July of the relevant year) plus 4% (General Practice Note - GPN-INT, cl 2).

Chopsonion - fifth issue - other claims - period

1. Section 51A(1)(a) of the Act provides, in part, that "... unless good cause is shown to the contrary ..." in any proceedings for the recovery of any money, the Court or a judge may include interest on the whole or any part of sum for which judgment is given for the whole or any part of the period between the date the cause of action arises to the date as of which judgment is entered.
2. There is no challenge to the rate of pre-judgment interest, however the Watts Parties submit that they should not have to bear the burden of pre-judgment interest for the entire time from accrual of cause of action to judgment on the basis that Chopsonion and/or the Lenders caused delay during that period. They identify five scenarios which are directed to variously Chopsonion and the Lenders. I deal with those scenarios insofar as it they are directed to Chopsonion and/or the Lenders (including Mr Rowley).
3. The first scenario is a contention that the applicants delayed commencing their claim against the Watts Parties until 3 August 2020, despite commencing a claim against Mr Sharpe and Chopsonion in the District Court of South Australia in 2016.
4. The Watts Parties submit that they ought not be liable for interest payable to Chopsonion for the period from 12 October 2016 which is the date Chopsonion made a demand for payment from the Watts Parties to 3 August 2020. I assume that date is the date the originating application and statement of claim in this matter were served on the Watts Parties.
5. I do not accept that contention.
6. Default judgment was obtained in the District Court of South Australia against Chopsonion, Jechbo and Mr Sharpe on 14 June 2016: R [344], [345].
7. This was a matter where much was not known by Ms How or the Lenders until September 2016 at which time Mr Watts made various admissions to Ms How: R [170]-[180]. It was following that conversation that Charlton Rowley sent a draft statement of claim to Mr Watts on 12 October 2016.
8. Attempts to recover the balance of the principal sum outstanding and other costs through the realisation of Security continued after September 2016 and at R [343]-[362], I set out the attempts by Ms How of PFM to recover the funding through to August 2017.
9. Given the conduct I have found, it comes as no surprise that it took until late July/early August 2020 before proceedings could be instituted. Not only were there ongoing attempts to realise the remaining Security, the proceedings make extremely serious allegations which are not lightly made.
10. The second scenario is a contention that Chopsonion ought to have been able to bring its claim within seven months of making its demand for payment on 12 October 2016, such that the Watts Parties ought not be liable for interest payable to Chopsonion for the period from 13 May 2017 (being seven months after the demand was made) to 3 August 2020. The Watts Parties refer to Golden West Refining Corp Ltd v Daly Laboratories Pty Ltd (unreported Federal Court of Australia, Carr J, 16 February 1995).
11. I do not accept those contentions for the reasons I have set out in relation to the first scenario above. Further, Golden West was a matter which turned on its own facts and does not assist the Watts Parties in the circumstances of this matter.
12. The third scenario is a contention that the Lenders were not joined to the Watts proceedings until 26 September 2022, notwithstanding the draft statement of claim sent to Mr Watts under cover of a letter dated 12 October 2016, named them as parties. The Watts Parties submit they ought not be liable for interest payable to the Lenders for the period from 12 October 2016 to 26 September 2022.
13. I do not accept that contention.
14. The joinder of the Lenders occasioned no delay to the proceedings. They were already parties to Supreme Court proceedings (the Rolton proceedings) which were transferred to this Court from the Supreme Court of South Australia in May 2022 and the two matters proceeded together with evidence in one being evidence in the other.
15. The fourth scenario is a contention which proceeds on the same basis as for the second scenario, but this time directed to the Lenders. The Watts Parties contend that the Lenders ought to have been able to bring their claim within seven months of making their demand for payment on 12 October 2016: Golden West.
16. I do not accept that contention for the same reasons as set out above in relation to Chopsonion.
17. The fifth scenario is a contention that on 16 December 2022, the applicants caused the vacation of the listed hearing dates as a result of the "Sockburn" claim. The Watts Parties submit that that caused an unnecessary delay for which the Watts Parties ought not be liable to pay interest for the period from 17 December 2022 to 1 May 2023 (the day the hearing recommenced).
18. I do not accept that submission. Although ultimately unsuccessful, it cannot be said that the application to adjourn to investigate the "Sockburn claim" and obtain further discovery was unnecessary. The application was brought on proper grounds and arose in the course of a legitimate line of forensic inquiry that arose during the trial.
19. It is for these reasons that I do not consider that the Watts Parties have shown good cause to the contrary.

1. At R [744], I found that Chopsonion and/or the Lenders are entitled to recover $52,875 on account of Mortgage Management fees. The cause of action arose on 22 April 2015, which is when Chopsonion defaulted on the Loan.
2. Chopsonion and/or the Lenders are entitled to pre-judgment interest on this amount which is the subject of an interest calculation in the 12th affidavit of Luke John Charlton Rowley, sworn and filed 5 February 2025 (12th Rowley affidavit), in the sum of $29,807.70. Added to that amount is interest to today's date at the relevant pre-judgment interest rate, giving a total interest sum of $30,896.35.

1. At R [769], I found Chopsonion was entitled to recover its legal fees relating to a debt recovery action dealing with the storage and the sale of two abattoirs to Mr Farrell. The cause of action arose on the dates of the various invoices from Charlton Rowley.
2. Chopsonion is entitled to pre-judgment interest on this amount which is the subject of an interest calculation in the 12th Rowley affidavit to 5 February 2025 in the sum of $5,548.61. Added to that amount is interest to today's date at the relevant pre-judgment interest rate, giving a total interest sum of $5,946.53.

1. At R [775], I found that Chopsonion had established loss in the amount of $173,766.98 for storage charges. Pre-judgment interest arises from the date of invoices and from the total amount recorded as owing for storage in a statement dated 28 September 2022.
2. Chopsonion is entitled to pre-judgment interest on this amount which is the subject of an interest calculation in the 12th Rowley affidavit to 5 February 2025 in the sum of $32,489.04. Added to that amount is interest to today's date at the relevant pre-judgment interest rate, giving a total interest sum of $36,071.74.

1. Chopsonion is entitled to judgment for the initial principal, the contractual interest on the initial principal, the remaining principal and contractual interest on that remaining principal as set out above, together with other amounts and pre-judgment interest on those other amounts as follows:

Lenders (excluding Mr Rowley) - first issue - to what amount of principal is pre-judgment interest to be applied?

1. After allowing for repayments of principal, at R [676] I set out the remaining principal due to each of the Lenders in the following amounts:

(a) As at 26 February 2018, MEG Investments - $48,220.10;

(b) As at 25 February 2018, Red Dog - $24,110.05;

(c) As at 26 February 2018, RJC Willson Nominees - $21,690.13; and

(d) As at 25 February 2018, Richard Willson and Leigh Willson (atf Red Dog Super Fund) - $12,099.61.

Lenders - second issue - the applicable rate of interest

1. Each of the Lenders claims pre-judgment interest in accordance with s 51A of the Act, at the relevant Reserve Bank of Australia cash rate (as at 1 January or 1 July of the relevant year) plus 4%.
2. No issue arises as to the applicable rate.

1. The Watts Parties submit, as they did in relation to Chopsonion, that they should not bear the burden of pre-judgment interest for the entire period from the accrual of the cause of action to judgment. It is for the same reasons as I have set out above, that I do not accept that submission.
2. The period over which the Lenders are entitled to pre-judgment interest is from when the cause of action arises (in the case of the Lenders that is the date each of them advanced their respective funds on the basis that were it not for the conduct of the Watts Parties, the Lenders would not have advanced the funds), to the date of entry of judgment such that each of the Lenders is entitled to recover its initial principal plus interest on that amount, as well as the outstanding principal from time to time plus interest on that outstanding principal.
3. I pause to note that from each interest calculation, a deduction has to be made to reflect a deduction from the outstanding principal of $5,918.85: R [676]. An amount of interest has been deducted in proportion to the amount advanced by each of the second to seventh applicants that the amount of $5,918.35 bears.
4. The figures in the tables below are taken from Annexure LJCR-12 to the 12th Rowley affidavit at pp 9-22, updated to today's date.

(d) Richard and Leigh Willson (atf Red Dog Super Fund):

John Rowley - first, second and third issues - for pre-judgment interest at the Court rate

1. Mr Rowley's claim for pre-judgment interest on the principal sum advanced totalled $158,136.99. The figures below are taken from Annexure LJCR-12 to the 12th Rowley affidavit at pp 22-25, updated to today's date.

(a) Net loss of principal as at 9 March 2018: $77,106.62

John Rowley (Borg Loan) - third and fourth issues - rate and period

1. Mr Rowley had financed his part of the Loan to Chopsonion ($735,000) using private financiers: R [297]-[298].
2. On 31 March 2020, Mr Rowley drew down $624,000 by way of refinancing from Mr Frank Borg (Borg Loan) in order to repay Mr Rowley's original financiers their entitlement to principal and interest as well as associated costs: Exhibit A7 [27].
3. As at 16 September 2022, the principal and interest owing by Mr Rowley on the Borg Loan totalled $880,360: Exhibit A7 [29]. I note that in the judgment at R [683] I stated the principal and interest owing by Mr Rowley as at that date totalled $624,000. That is an error and is the subject of an erratum.
4. In addition to his claim for pre-judgment interest on the principal he advanced to Chopsonion, which I have set out above, Mr Rowley claims principal and interest on the amount drawn down to refinance his original loan totalling $1,028, 643.87. That is for the period from 1 April 2020 to 24 January 2024 which is the date the Borg Loan was cleared: 12th Rowley affidavit annexure LJCR-12, pp 4, 55.
5. The interest claim on the Borg Loan is based on the draw down of $624,000. The monthly interest payment of $8,840, reflects an interest rate of 17% per annum. The final interest payment made was a part monthly payment of $6,843.87.
6. At the time Mr Rowley refinanced his initial loan on 31 March 2020, he had received (in principle) his share of the payment from FG Agri. I say in principle because as I understand it, PFM directed Mr Rowley's share to his lenders.
7. At R [684], I found that there was no reason why Mr Rowley should not recover the principal plus interest on the Borg Loan. The Watts Parties' written submissions are silent on the point. In their oral submissions, the Watts Parties addressed Mr Rowley's entitlement to pre-judgment interest at the Court rate.
8. In order to advance $735,000 as part of his contribution to the $1,175,000 advanced to Chopsonion, Mr Rowley borrowed $540,000 from Swanport, $145,000 from Zwaans and, by deduction, $50,000 from the Grays: Exhibit A1, 1/40,41.
9. The Borg Loan comprised the payout to Swanport, Zwaans and the Grays as at 26 March 2020 as the two of the three private financiers of:

(a) Swanport - $282,543.99 in principal and $129,549.37 interest;

(b) Zwaans - $131,508.30 in principal and $10,841.33 interest: and

(c) Grays - $42,000: Exhibit A1, 1/82,83, 84.

1. On that basis, the total amount of principal and interest to discharge the initial loans totalled $596,442.99: Exhibit A1, 1/82, 83, 84.
2. The principal owing is different from that owing to Chopsonion because at the least, Swanport and Zwanns elected to apply some of the payments made to them as interest and some as principal. Nonetheless, it is a liability that Mr Rowley incurred because of the conduct of the Watts Parties.
3. The balance of the $624,000 advanced under the Borg Loan comprised costs incurred by Mr Rowley over and above the principal and interest owing. Mr Rowley deposed that he had incurred costs when refinancing as follows: Exhibit A7, [24]-[29]:

(a) Legal fees to Ouwens Lawyers, plus costs fees and charges required

to settle: $24,914.01

(b) Legal fees, discharge fees, valuation fees and other fees consequent upon the refinance of the Rowley loan: $2,643

1. No detail was provided of these amounts and the evidence is not sufficient to establish with any certainty the refinancing costs. Accordingly, I do not consider Mr Rowley has established these amounts.
2. Mr Rowley recovered part of his principal from the payment from FG Agri. However, that does not mean that if he also receives judgment against the Watts Parties which include an amount for principal under the Borg Loan he is recovering the principal twice. That is because the payments from FG Agri were credited against principal and interest owing to Swanport and Zwann and, I am prepared to infer, the Grays such that his liability to those parties was reduced. To that extent, there is no double recovery.
3. Mr Rowley is entitled to recover the contractual interest paid to Mr Borg on the amount of the principal advanced by Swanport and Zwann and interest contained within the $624,000 drawdown in order to compensate him for the loss sustained by reason of the Watts Parties conduct, with an appropriate deduction for the pre-judgment interest to which he is otherwise entitled.
4. No claim is made for the interest paid to Swanport, Zwanns or the Grays prior to 31 March 2020.
5. Accordingly, Mr Rowley is entitled to:

(a) Pre-judgment interest at the relevant rate until judgment is entered; and

(b) The additional interest he had to pay on $596,442.99 advanced as part of the Borg Loan from 1 April 2020 to 24 January 2024 at the Borg Loan rate (which was the same as the Swanport, Zwanns and Gray rate) of 17% per annum.

1. Over the period of the Borg Loan, from 1 April 2020 to 24 January 2024, Mr Rowley is entitled to receive $15,440.25 by way of pre-judgment interest at Court rates.
2. During the same period, Mr Rowley paid interest at the Borg Loan interest rate on the sum of $596,442.99 totalling $387,246.74.
3. Mr Rowley is thereby entitled to an additional sum of interest in the amount of $371,806.49.
4. To prevent double recovery, Mr Rowley will not be able to recover the pre-judgment interest on the amount of the principal loan to Chopsonion as well as the total of the interest payable on the Borg Loan without there being an accounting to prevent double recovery as I have set out above.
5. Accordingly, Mr Rowley is entitled to judgment for principal and interest in the sum of $1,134,224.16 comprising:

(a) Outstanding principal - $77,106.62;

(b) Pre-judgment interest in the principal advanced as set out above - $158,136.99;

(c) The principal and interest repaid to Swanport, Zwaan and the Grays when refinancing - $596,442.99; and

(d) The interest payable on the Borg Loan over and above pre-judgment interest totalling - $371,493.09.

Totalling $1,134,224.16.

Lenders (including Mr Rowley) - first issue - the avoidance of double recovery

1. So that the Lenders do not recover interest on two separate bases, the applicants submit, in accordance with Anderson v Cannacord Genuity Financial Ltd (No 2) [2024] NSWCA 161, that the principles which guard against double recovery operate at the point of enforcement of judgment not at the point of entry of judgment.
2. There is no dispute that the law abhors double recovery: see generally Baxter v Obacelo Pty Ltd [2001] HCA 66; (2001) 205 CLR 635, 659 [55]-[62] (Gummow and Hayne JJ); Roxborough v Rothmans of Pall Mall [2001] HCA 68; (2001) 208 CLR 516 at [99] (Gummow J); Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507, [2015] HCA 28 at [27].
3. To be clear, to the extent the Lenders (including Mr Rowley) recover either contractual interest or pre-judgment interest from Chopsonion or pre-judgment interest in their own right, they cannot recover the same amounts twice.

Lenders (including Mr Rowley) - first issue - Other claims - pre-judgment interest

Receivers' fees (including Charlton Rowley's fees) $220,698.31

1. At R [732], I found that the Lenders are entitled to recover the fees payable to the Receivers, including Charlton Rowley's legal fees on invoice 2513, associated with the receivership of Chopsonion and Jechbo in the sum of $220,698.31. The cause of action arose on the various dates of the Receivers' invoices and on the date of Charlton Rowley's invoice no. 2513.
2. The Lenders collectively are entitled to pre-judgment interest on this amount which is the subject of an interest calculation in the 12th Rowley affidavit to 5 February 2025 in the sum of $45,174. Added to that amount is interest to today's date at the relevant pre-judgment interest rate, giving a total interest sum of $49,717.96 and a total sum of $270,434.27, inclusive of interest.

Legal fees $177,654.71 (excluding litigation costs)

1. At R [748], I found that the Lenders are entitled to recover the fees incurred as a result of indemnifying PFM in pursuing recovery of the Loan. The causes of action arose on the date of the various invoices.
2. The Lenders are entitled to pre-judgment interest on this amount which is the subject of an interest calculation in the 12th Rowley affidavit to 5 February 2025 in the sum of $58,952.28. Added to that amount is interest to today's date at the relevant pre-judgment interest rate, giving a total interest sum of $62,337.78 and a total sum of $230,002.49, inclusive of interest.

1. At R [744], I found that Chopsonion and/or the Lenders are entitled to recover $52,875 on account of Mortgage Management fees.
2. As I have noted above, Chopsonion and/or the Lenders are entitled to pre-judgment interest on this amount giving a total interest sum of $30,896.35 and a total sum of $83,771.35, inclusive of interest.
3. Both Chopsonion and the Lenders are entitled to recover mortgage management fees totalling $83,771.35. For the avoidance of doubt, that amount is included in both the judgment in favour of Chopsonion, as well as the judgment in favour of the second to seventh applicants, however it cannot be recovered twice: Anderson.

1. There will be judgment entered for the amounts I have identified in these reasons which are inclusive of interest.

I certify that the preceding one hundred and twenty-five (125) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Sullivan.