Edmonds & Ors v Donovan & Ors [2005] VSCA 97

11 The appellants argue that on 29 October 2002 the net proceeds of the sale of the golf course ($3,490,848.60) were deposited into the joint trust account, and on 18 December 2002 the further sum of $107,000 was deposited by the appellants into that account pursuant to the order of this Court made on 16 December 2002. Accordingly they submit that the interest actually earned upon the portion of the fund attributable to the revised amount of compensation is an appropriate amount of interest to be awarded to the respondents (i.e. interest actually earned upon $2,855,412 from 6 December 2002). Alternatively, the appellants contend that if interest did carry under s.101 from 6 December 2002, any entitlement to penalty interest ceased when the appellants complied with this Court's order of 16 December 2002 (i.e. on 18 December 2002) and paid the further sum of $107,000 into the joint account. As a further alternative the appellants argue that s.101 confers on the Court a discretion to order a date other than 6 December 2002 as the date from which penalty interest should run and that in the circumstances of this case, the discretion should be exercised to order that penalty interest should be calculated to run only from 28 February 2005, the date on which this Court's orders were made. They submit that there is no evidence of any financial detriment occasioned to the respondents by reason of the moneys being held in the account and that the imposition of penalty interest may go beyond what is necessary to compensate a plaintiff. The moneys in the joint account earned interest at commercial rates.

12 The respondents submit that interest pursuant to s.101 is applicable from 6 December 2002, when the judgment of Warren, J. became effective, and that the judgment debt remained in existence and unsatisfied until 7 March 2005. Accordingly interest pursuant to s.101 accrued until the latter date. They argue that there is no basis for penalty interest to cease as at 18 December 2002 since the respondents were deprived of the fruits of their judgment for another two years and that the interest in the joint account was significantly lower than the penalty interest rate.

13 In Hartley Poynton Ltd. v. Ali (as Executor and Trustee of the Estate of Ali) Ormiston, J.A. said[5] that the right to a claim of interest under s.101 "is one which flows in favour of every judgment creditor and is not within the direct power of the Court to award or vary". We accept the respondents' submission that there is no basis for penalty interest to cease as at 18 December 2002, since the respondents were deprived of the fruits of their judgment for more than another two years following that date, and the interest in the joint account was significantly lower than the penalty interest rate. Penalty interest should therefore be fixed at the appropriate rate under the Penalty Interest Rates Act 1983.

14 In our view penalty interest only ceased to accrue when the judgment was satisfied on 7 March 2005. Under s.101, penalty interest accrues on every judgment debt from the time judgment is given, and for the duration of the debt. We do not accept that the Court has a discretion to vary the amount of interest, nor in the present case to set an alternative date from which the penalty interest accrues. Accordingly the date on which the entitlement to penalty interest rate calculated under s.101 ceased was 7 March 2005.

15 The questions raised by the second, third and fourth issues should therefore be answered -

16 The final issue submitted for the Court's consideration is, if the respondents are entitled to penalty interest upon the reduced sum awarded by this Court, whether the appellants also are entitled to penalty interest on the sum by which the amount ordered by Warren, J. was reduced on appeal. The appellants claim that the need to allow penalty interest in favour of both parties on different amounts is yet another factor to be weighed by the Court in the exercise of any discretion "to otherwise order".

17 We have concluded that the respondents are entitled to penalty interest under s.101 of the Supreme Court Act. Under that section penalty interest accrues on a judgment debt. The appellants have, in our view, never been entitled to a "judgment debt" as specified by the Act. Rather, by orders dated 28 February 2005 the judgment debt owed by the appellants to the respondents was reduced. It follows that the appellants are not entitled to penalty interest on the amount by which the judgment debt was reduced.

18 It follows that penalty interest should be payable to the respondents by the appellants on the reduced judgment debt of $2,793,000 for the period between 6 December 2002 to 7 March 2005.

19 A further question, raised by the respondents, is whether any sums remaining in the account after payments out as aforesaid should be paid to the appellants, or should remain in the account pending finalisation of the quantum of costs entitlements as between the parties. Having regard to the orders made by this Court on 28 February, there is in our view no sufficient reason to require the sums remaining in the account to be held pending finalisation of costs entitlements, and they should accordingly be paid out to the appellants.

At a glance

Court

Decision date

Before

Source

Judgment (8 paragraphs)

Parties