Interest up to judgment
5 In Mr Condon's amended application, he claimed "interest" as well as "costs". Mr Condon agitated the question of costs in written submissions filed before the hearing of his application but no submissions were made in support of orders for interest up to judgment. The matter of interest up to judgment was not addressed in the judgment rendered on 21 June 2018.
6 Mr Condon claims interest of $64,889.64 under s 51A(1) of the Federal Court of Australia Act 1976 (Cth) in respect of the amount of $201,135.57 for the period from 12 March 2013 (the date of the transaction) to 21 June 2018. Mr Condon did not cite any authority in which orders were made under s 121 of the Bankruptcy Act for the selection of this period as the basis for the calculation. At [17] of the submissions sent to chambers on 6 July 2018, Mr Eardley, counsel for Mr Condon, made his only submission on the principles to be applied in this matter as follows:
A majority of the Full Federal Court (Beaumont and Einfeld JJ, Sackville J dissenting) held that interest should be awarded under s 51A(1): see SCI Operations Pty Ltd v Commonwealth (1996) 69 FCR 346. Beaumont and Einfeld JJ said at 365-366:
In our view, s 51A(1)(a) should be treated as picking up the date when, by the operation of the relevant legal processes, the cause of action, notionally, or in truth, arose. In other words, it is possible here, given the retrospective operation of s 269N, to construe s 51A(1)(a) as referring to a cause of action arising, retrospectively, in September 1987, rather than on 3 June 1994. A retrospective perspective for the purposes of s 51A(1)(a) would accord with the intent of the scheme of the customs legislation. That is to say, s 51A(1)(a) should be interpreted so as to refer to the date when the cause of action arose, or should be treated as having arisen. Such a minor gloss upon the provision is, we think, permissible as reflecting the intention of the legislation, given its remedial character. (emphasis added)
7 Alternatively, Mr Condon claims interest of $34,923.20, calculated from 11 June 2015, the date the sequestration order was made, to 21 June 2018.
8 The respondents oppose interest up to judgment being ordered on the basis that the judgment delivered on 21 June 2018 made no provision for it. They submit that:
(1) Although Vanessa Two was the recipient of $201,135.57 which Mr Gribble received from his mother's estate, there "is no question about the avoidability of that payment until such time as the Declaration was made by Her Honour and therefore [Vanessa Two] should not be penalised further";
(2) The judgment delivered on 21 June 2018 was a final judgment and nothing in r 39.05 of the Federal Court Rules 2011 (Cth) would authorise that judgment to be varied; and
(3) An order for pre-judgment interest cannot properly be characterised as an "ancillary or other order as be required to give effect" to the other orders made on 21 June 2018 so as to fall within the liberty granted in Order 6 made on that day.
9 The respondents made no submissions concerning the date from which interest up to judgment should be calculated if those submissions were not accepted, nor did they seek to cavil with the calculations set out in Mr Condon's submissions at [16].
10 Section 51A(1) of the Federal Court of Australia Act provides as follows:
51A Interest up to judgment
(1) In any proceedings for the recovery of any money (including any debt or damages or the value of any goods) in respect of a cause of action that arises after the commencement of this section, the Court or a Judge shall, upon application, unless good cause is shown to the contrary, either:
(a) order that there be included in the sum for which judgment is given interest at such rate as the Court or the Judge, as the case may be, thinks fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date as of which judgment is entered; or
(b) without proceeding to calculate interest in accordance with paragraph (a), order that there be included in the sum for which judgment is given a lump sum in lieu of any such interest.
11 I do not accept the respondents' submissions having regard to the Full Court's decision in Hanave Pty Ltd v LFOT Pty Ltd (2004) 136 FCR 566; [2004] FCAFC 180. At [36], Kiefel J (as Kiefel CJ of the High Court then was) found that s 51A does not require that interest up to judgment be claimed at a point prior to judgment, although circumstances in which such interest has not previously been claimed may be an important consideration in determining whether "good cause" is shown within the meaning of s 51A. Wilcox J and Allsop J (as Allsop CJ of this Court then was) agreed at [6]. Further, at [37], Kiefel J pointed out that an award of interest before judgment is compensatory and is made because an applicant has been kept out of the money to which they are entitled.
12 In this case, Mr Condon has elected to press the application for interest which was included in the amended application immediately following judgment being entered. I see no "good cause" or any offence to the finality of litigation arising from that circumstance which would disentitle Mr Condon to interest up to judgment, albeit that it would have been more efficient if the matter had been canvassed in submissions made at the hearing.
13 There then arises the question of how the interest should be calculated. When did the "cause of action" arise? Although Mr Condon's submissions did not say so explicitly, I take his reliance on the quoted passage from SCI Operations Pty Ltd v Commonwealth (1996) 69 FCR 346 at 365-366 to mean that the cause of action "notionally, or in truth, arose" on 12 March 2013, even though any such claim could not have been made until a sequestration order was made against Mr Gribble's estate on 11 June 2015 and a trustee in bankruptcy was appointed.
14 An appeal from the decision of the majority in SCI Operations Pty Ltd was allowed by the High Court: see Commonwealth of Australia v SCI Operations Pty Ltd (1998) 192 CLR 285; [1998] HCA 20. It is unfortunate that the High Court's decision was not addressed in Mr Condon's submissions.
15 SCI Operations Pty Ltd involved a claim by SCI Operations Pty Ltd for prejudgment interest in circumstances where, on 3 June 1994, the day it received a refund of customs duty which had been levied on the importation of PET resin from 1 September 1987, it commenced proceedings in which the claim for interest before judgment was made. The High Court found that the effect of s 269N of the Customs Act 1901 (Cth) was that the refund was payable upon the making of a Commercial Tariff Concession Order (a CTCO) for which application had to be made. Where certain conditions were satisfied, a CTCO order would be made which had the effect of reducing the rate of duty for the period from 1 September 1987 resulting in a refund.
16 McHugh and Gummow JJ in their joint judgment and Brennan CJ found that s 269N of the Customs Act did not render the CTCO retrospective. Rather, on 3 June 1994, when the CTCO was issued, there were brought into existence fresh rights or liabilities in respect of matters or transactions which had occurred on or after 1 September 1987 and therefore there was no entitlement to interest before judgment in respect of the period before 3 June 1994. The cause of action arose on 3 June 1994 and since the refunds were made on that day there was no occasion for interest before judgment.
17 The same analysis applies in relation to transactions which are void against a trustee under s 121(1). Unless and until a trustee is appointed, the transactions are not void against anyone, and the date on which the sequestration order was made and the trustee was appointed is the date on which the cause of action arose.
18 Accordingly, I will order that, in addition to the amount of $201,135.57, the respondents must pay interest before judgment of $34,923.20, calculated from 11 June 2015 to 21 June 2018.