Grima v RFI

Supreme Court of NSW|2015-03-23|Before: Garling J, Harrison J

Judgment

On 8 March 2010, Mr Carmel Grima was badly injured whilst working for Allied Overnight Express Pty Ltd ("Allied") as a storeman.
He was engaged upon unloading a truck loaded with rolls of carpet, which had originally been loaded in Melbourne by RFI (Aust) Pty Ltd t/as Regenfoam ("RFI"). Mr Grima claimed that RFI had been negligent in, and about, the way in which the truck was loaded.
RFI cross-claimed against Allied, seeking contribution to any sum which it was obliged to pay to Mr Grima. Allied responded with a cross-claim of its own against RFI.

Judgment and Orders

On 2 September 2013, Harrison J delivered judgment after six days of hearing, which took place in July and August 2013.
Harrison J found a verdict for the plaintiff, Mr Grima. The parties had agreed during the hearing, that the plaintiff's damages, assessed at common law, were $5.75M. Harrison J held that on the cross-claims between RFI and Allied, each should bear 50% of the liability of RFI to the plaintiff. His Honour ordered the parties to bring in short minutes of order.
The matter returned before Harrison J on 18 September 2013, for further submissions. By that time, the parties had agreed that the sum for work injury damages had Mr Grima sued Allied, his employer, directly, would have been $330,000.
During the course of that hearing on 18 September 2013, an issue arose as to whether the Court ought make orders that day with effect from 2 September 2013, or whether it would be more appropriate for the Court to make the orders at some later point in time.
Senior counsel for RFI submitted to the Court that his instructions were that his client did not want orders made that day, particularly in light of a pending appeal. The following exchange then took place between senior counsel for RFI and Harrison J: "McCulloch: Yes, that is one of the concerns, your Honour. My instructions are that those instructing me do not wish to have the making of orders 1 and 2 without 3 and 4 being resolved for the reasons your Honour has indicated perhaps. His Honour: Mr Maybury [counsel for the plaintiff] will then tell me if that's the case, interest should run on the judgment sum from today or at least from perhaps the day the judgment was delivered. McCulloch: I think in due course in cases such as this, there couldn't be much said about your Honour backdating the running of interest from an earlier date, provided there was no conduct of the party that affected it. But subject to receiving instructions to make a contrary proposition in the future, what your Honour says makes perfect sense. … McCulloch: Having heard the argument between Mr Guihot [counsel for Allied], and your Honour, we submit your Honour should not make any of the orders or all of them. That means they should all wait, and the plaintiff can be compensated as to interest at a later date for any delay that obtains, but the risk of there being problems emerged by cutting and pasting now are too great, we submit."
On 31 January 2014, Harrison J delivered a second judgment: Grima v RFI (Aust) Pty Ltd [2014] NSWSC 14. His Honour determined four questions, which did not directly touch upon the issue of interest on the verdict sum. At the end of the judgment, he directed the parties to bring in orders to reflect his decision.
On 10 February 2014, in light of his Honour's judgment, the parties consented to a series of orders being made. Included in that series of orders were the following: "1. Verdict and judgment for the plaintiff against the defendant in the sum of $3,040,000 (judgment sum). 2. … 3. … 4. … 5. Verdict and judgment for Allied (second cross-claimant) on the second cross-claim against the defendant in the sum of $2,022,803.65 (recovery sum). 5. The defendant to pay Allied the sum of $312,443.43 being the interest accrued on the recovery sum. 6. … 7. … 8. Payment of the judgment and the recovery sum are payable within 28 days from the date these consent orders are entered, after which time interest on any outstanding amounts yet to be paid, will begin to accrue and calculated pursuant to s 101 of the Civil Procedure Act 2005 (NSW)." (sic)
The judgments of Harrison J were the subject of an appeal to the Court of Appeal by the plaintiff, Mr Grima. RFI filed a cross-appeal and also a Notice of Contention.
On 3 October 2014, the Court of Appeal upheld the judgment of Harrison J in all respects, except that the Court found that RFI was 75% responsible for the plaintiff's injuries and Allied was 25% responsible, rather than the equal sharing of responsibility as Harrison J had found. At the time of delivery of that judgment, the parties were ordered to bring in short minutes of order.
On 21 November 2014, the Court of Appeal made formal orders which included setting aside the orders made by Harrison J on 10 February 2014. The Court of Appeal's orders included these: "… 2. In lieu of those orders, Order: (a) judgment for Mr Grima against RFI in the sum of $4,395,000. … 3. Mr Grima's entitlement to interest (if any) against RFI is remitted for determination by a judge of the Common Law Division."
This judgment deals with that remitted question, namely, what sum, if any, is Mr Grima entitled to, by way of interest on his judgment against RFI.

Mr Grima's Submissions

The plaintiff submits that: 1. he is entitled to interest on the whole of the judgment sum of $4,395,000 less the recovery sum, which ought by allowed by way of a credit to RFI. The net sum is $2,291,093.38 ("the net judgment sum"). 2. the Court of Appeal's orders have the effect of dating the judgment as at 10 February 2014; 3. interest should in fact run from 2 September 2013, because of the concession by RFI's senior counsel in the transcript of the hearing on 18 September 2013, which meant that interest, if the plaintiff established an entitlement, should run from the date of the delivery of Harrison J's principal reasons, rather than the later February 2014 date when orders were made.
The plaintiff bases his claim for interest on the provisions of s 101 of the Civil Procedure Act 2005 (the "Act"). The plaintiff notes that the prescribed rate of interest referred to in s 101 of the Act is that fixed by r 36.7 of the Uniform Civil Procedure Rules 2005 ("UCPR"): relevantly 6% above the Reserve Bank of Australia's cash rate.
The plaintiff submits that the Court should make an order which accords with s 101 of the Act, at the rate fixed by r 36.7 of the UCPR, because there is no reason for the Court to "order otherwise" as s 101(1) of the Act allows.
The plaintiff further submits that, at all times, he has acted reasonably, and that, since no monies were actually paid until 19 December 2014, he is entitled to the full rate of interest until that point in time on the entirety of the net judgment sum.

Submissions of RFI

RFI accepted that any order for interest ought to commence from 2 September 2013.
In written submissions, RFI disputed the entitlement of the plaintiff to interest at the prescribed rate from 2 September 2013 until 19 December 2014. RFI submitted that the Court should "… order otherwise…" because it had tendered payment on 3 February 2014, of the whole of the judgment sum, then owing, which tender had been rejected by the plaintiff.
RFI accepted, in the circumstances, which I will more fully describe below, that the plaintiff had acted reasonably in rejecting the tender of the judgment sum, but submitted that the plaintiff's subjective conduct was not relevant in determining the basis for an order for interest.
RFI also submitted, in the circumstances described below, that the Court should find that there had been accord and satisfaction with respect to the payment of interest. It further submitted that it would be inequitable for a plaintiff to be awarded interest on a judgment "… if, as in the case here, the plaintiff specifically requested a defendant not to pay a judgment after an initial hearing pending an appeal and the defendant complies with that request".
RFI also put a submission, that a different rate of interest from that prescribed should be adopted, in whole or in part, for the period. It submitted that the alternative rate should be the Cash Rate published by the Reserve Bank of Australia at the relevant time.
The position of RFI was modified to some extent during the course of oral submissions.
First, the solicitor for RFI, Mr Hedges, accepted that he could not argue against an award of interest in accordance with s 101 of the Act, for the net judgment sum, insofar as it was in excess of the sum which was tendered on 3 February 2014. Secondly, he accepted that he could not resist an order for interest in accordance with s 101 of the Act on the sum of money which was tendered from 2 September 2013, until the date of tender, taken to be 3 February 2014.
Accordingly, the ultimate question which needs to be determined by this Court is whether it should make an award of interest under s 101 of the Act with respect to the period from 4 February 2014 to 19 December 2014, on the sum tendered, at the prescribed rate or alternatively at the Reserve Bank of Australia cash rate.
It is necessary to note here that, at all relevant times in respect of this claim, the defendant RFI was fully indemnified by an insurance company. The solicitors for RFI were instructed by the insurance company. The solicitor for RFI appearing in the proceedings accepted that the moneys to be paid to the plaintiff, would be, and ultimately were, paid by RFI's insurer. Thus, when speaking of the conduct of RFI, in fact, it is the conduct of RFI's insurer which is in question. But there is no reason to differentiate between the two companies.
Accordingly, in considering the position of the defendant with respect to the offer to pay the verdict moneys, and the use of the moneys in the absence of the plaintiff agreeing to accept the money, the Court is considering the position of the insurer and how it has used the funds.

Legislation

Section 101 of the Act is in the following form: "101 Interest after judgment (1) Unless the court orders otherwise, interest is payable on so much of the amount of a judgment (exclusive of any order for costs) as is from time to time unpaid. (2) Interest under subsection (1) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from: (a) the date on which the judgment takes effect, or (b) such later date as the court may order. (3) ... (7) In this section, a reference to the "prescribed rate" of interest is a reference to the rate of interest prescribed by the uniform rules for the purposes of this section."
Rule 36.7 of the UCPR is in the following form: "36.7 Payment of interest (1) The prescribed rate at which interest is payable under section 101 of the Civil Procedure Act 2005 is: (a) in respect of the period from 1 January to 30 June in any year-the rate that is 6% above the cash rate last published by the Reserve Bank of Australia before that period commenced, and (b) in respect of the period from 1 July to 31 December in any year-the rate that is 6% above the cash rate last published by the Reserve Bank of Australia before that period commenced. (2) ..."

Relevant Facts

As I have indicated above, Harrison J's principal reasons for judgment were delivered on 2 September 2013.
The parties accepted that the net sum owing by RFI to the plaintiff as a consequence of the principal judgment was $1,017,196.35 ("the tendered sum"). This sum was derived from the judgment sum entered by Harrison J of $3,040,000 less the recovery sum which RFI was ordered to pay to Allied on the cross‑claim, being $2,022,803.65.
The parties also accepted that, as a consequence of the decision of the Court of Appeal in October 2014, the judgment sum was amended so that the net judgment sum to which the plaintiff was entitled from RFI was $2,291,093.38.
On 31 January 2014, RFI's solicitors wrote to Mr Grima's solicitors, a letter which included the following: "… we confirm that those consent orders do not touch upon the payment of the primary judgment, and note that with the matter having now been finalised from the point of view of costs and interest, except for the filing of those consent orders, it is appropriate that the judgment be paid. In the circumstances, we have requested a cheque from our client in payment of the amount refundable to Allianz, and anticipate that we will receive that cheque and forward it to Allied's solicitors in the not too distant future. Insofar as the balance of the judgment is concerned, we note that absent your client holding a valid current Notice of Past Benefits, 10% of the judgment sum needs to be paid to Medicare. Accordingly, to enable us to arrange for the payment of the balance of the judgment sum, it would be appreciated if you could forward us a Notice of Judgment, and in the event that you hold a current Notice of Past Benefits, a copy of same."
By email of 3 February 2014, Mr Grima's solicitor responded in the following terms: "We are instructed to appeal, so please refrain from drawing any payment in the plaintiff's favour."
This elicited a response from RFI's solicitors later that day which said: "I understand that, however, as you would appreciate, my client wants to tender payment. If your client chooses not to accept same then obviously there are ramifications re interest claims in the event of an appeal. Accordingly, absent any current valid Notice of Past Benefits, my client will have no option other than to pay 10% of the judgment to Medicare and then send a cheque in payment of the balance of the judgment to you, drawn in favour of your client, after repayment of the workers compensation component in accordance with the verdict on the cross-claim. I guess your client will then simply send that back and say he hasn't received damages, and then will be left to argue what happens in the event that the appeal succeeds and he claims interest."
This was followed by a response from Mr Grima's solicitor in the following terms: "… Do you really think this ritualistic nonsense is necessary? I am specifically instructed to lodge an appeal, and that my client will not consider accepting any damages until the outcome of the appeal is known. Surely that is sufficient for your purposes?"
A response followed shortly in the following terms: "…, I am seriously not meaning to be difficult. I am only seeking to protect my client's interests. If your client is willing to provide us with something in writing via you that says that he accepts that my client is willing and ready to pay the balance of the judgment due and owing after the workers compensation payback, but that he is intending to appeal and will therefore not accept the payment, and that in that instance, should his appeal succeed, insofar as it affects my client, he will not seek interest on that amount, then I expect that my instructions will be not to make the payments other than to EML."
This was responded to on the following morning, in these terms: "How about we proceed on the basis that in relation to interest, the parties agree they are in the same position as if the money had been tendered and rejected within 28 days of the judgment (final orders)."
The solicitor for RFI responded promptly by saying this: "That sounds fine. I'll get some instructions, but 'without prejudice' advise that I will recommend that to the client."
A formal response was ultimately sent by RFI's solicitors by letter on 28 February 2014, it relevantly included the following: "We confirm that you have now advised that your client has now lodged an appeal against his Honour's decision in the matter, insofar as the apportionment of liability between our client and your client's employer is concerned. We further confirm that in those circumstances, you have requested that our client refrain from drawing a cheque in favour of your client in payment of the balance of the judgment sum, after our client has attended to payment of the workers compensation payback ($2,170,247.08), to your client's employer's workers compensation insurer (Allianz) in the amount of $1,017,197. It is further confirmed that we advise that whilst we understand the reason that your client made this request, from our client's point of view it wished to tender payment of the balance of the judgment because it did not want to be placed in a position whereby, at the conclusion of the appeal process, it was faced with an application being made by your client for interest on the balance of the unpaid judgment on the basis that the balance had not been paid. Also, we confirm that as a result of being informed of our client's position, you propose that the parties proceed on the basis in relation to interest that they agree to be in the same position as if the money had been tendered and rejected within 28 days of the final orders being made. We have now obtained instructions from our client that it agrees to that proposal. However, by way of this open letter, we wish to make it perfectly clear that, excepting for your client's decision to lodge an appeal, and subsequent request that in those circumstances he not be paid the balance of the judgment sum, our client would have paid that amount. Further, our client remains ready and willing to pay that amount to your client at any stage hereafter on receipt of a request being submitted by your client via your firm for payment of that amount."
It is clear that at all times, the solicitor for the defendant made plain the defendant's position that it would resist any claim for interest on the judgment sum in light of its tender of that sum, which was refused by Mr Grima.
At the hearing of the proceedings, an affidavit of the plaintiff, Mr Carmel Grima, was read. There was no cross-examination of the affidavit, and it was conceded that the Court should accept what Mr Grima said. In short, Mr Grima explained in his affidavit, that he found the process of claiming damages at common law, whilst at the same time having to have regard to the entitlements of the Workers Compensation Insurer to be repaid, complex. This is unsurprising. Most legal practitioners find the legislation and the process complex. He went on to say: "14. I am disappointed at the way the system works, given my serious injury and the total agreed damages of $5.75 million. It is hard for me to accept that because my employer was also at fault, it has the effect that my damages are dramatically reduced, but I accept that the government had to change the law to make the outcome for me."
Wisely, Mr Grima accepted the advice of his lawyers. Their advice was that he should not forego his workers compensation rights by accepting any verdict where the net value of that verdict to him was less them $2M.
The parties also agreed that it was lawfully open to Mr Grima, notwithstanding having received a monetary judgment as a consequence of the reasons of Harrison J, to decline to accept payment, thereby retaining his rights under workers compensation legislation. The parties agreed that the pathway which allowed for this approach to be lawful and appropriate, commenced with the proper interpretation of s 151Z(1)(b) of the Workers Compensation Act 1987, and concluded with the decision of the Court of Appeal in Abdulle v QBE Insurance (Australia) Ltd [2010] NSWCA 60, where the Court of Appeal held that "recovery" as used in the legislation means the actual receipt of moneys, rather than the recovery of a judgment for damages or an award of compensation. It further held that s 151Z(1)(b) envisages that a worker may "recover" both compensation and damages, and accordingly, in circumstances where the worker obtained the judgment, but did not actually receive any damages, s 151Z(1)(b) has no operation, and the worker retains his entitlements.
As the position existed immediately after the judgment of Harrison J, the plaintiff was entitled to a figure of a little over $1M. The plaintiff took the position, it is not said unreasonably, on the basis of his lawyer's advice, that this was significantly less than the future value of his workers compensation rights. Accordingly, he was not inclined to, and did not wish to, accept the payment being proffered by RFI.
It can be observed that the plaintiff, in declining to accept the offer of the defendant RFI to pay the sum for damages, was lawfully protecting his existing rights under the workers compensation legislation. As he was acting upon the advice of his lawyers in so doing, I am satisfied that his conduct was reasonable. The defendant does not now contend to the contrary.
RFI, leading up to 3 February 2014, was attempting to pay to Mr Grima the entirety of the judgment sum. It is unclear whether what was proposed to be paid included interest which had accumulated on that sum to date, in accordance with s 101 of the Act. However, senior counsel for Mr Grima did not take any point associated with this possible insufficiency of payment.
Senior counsel for Mr Grima accepted that RFI, in seeking to pay the entirety of the judgment sum, was itself acting reasonably. The solicitor for RFI submitted that the fact that his client did not actually pay the money which was owed, was entirely due to the plaintiff's refusal to accept it, and accordingly, his client had done all that was possible for it do. He said that it had acted reasonably. I accept that the tender of the payment demonstrated that RFI was acting reasonably.

Accord and Satisfaction

RFI submits that its tender of payment amounts to satisfaction of the judgment owed. RFI submits that, accordingly, interest is not payable between the date the payment was tendered and the date the net judgment sum was paid in full.
In Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd [1957] HCA 10; (1957) 98 CLR 93, at 113, Dixon CJ and Fullagar J said: "What was brought about by these letters was, in our opinion, no new contract - not even a varied contract - but a mere accord executory, and, when that accord was not executed, but was repudiated, the parties were relegated to their position under the original contracts, which became as they had been before the accord, the exclusive charter of their rights and duties. The rules of law relating to accord and satisfaction are explained by Dixon J as he then was in McDermott v Black (1940) 63 CLR 161 at 183 … The substance of the matter is thus stated by Dixon J in the earlier case: 'The essence of accord and satisfaction is the acceptance by the plaintiff of something in place of his cause of action. What he takes is a matter depending on his own consent or agreement. It may be a promise or contract or it may be the act or thing promised. But, whatever it is, until it is provided and accepted, the cause of action remains alive and unimpaired'."
It is interesting to note the further statement by Dixon J in McDermott v Black [1940] HCA 4; (1940) 63 CLR 161 in addition to the passage noted in Tallerman. At 184, Dixon J went on to say: "The accord is the agreement or consent to accept the satisfaction. Until the satisfaction is given, the accord remains executory and cannot bar the claim. The distinction between an accord executory and an accord and satisfaction, remains as valid and as important as ever. An accord executory neither extinguishes the old cause of action, nor affords a new one."
In my view, an analysis based upon accord and satisfaction is not established on the facts of this case, nor is it the appropriate defence to be applied here.
There is no doubt, and both parties accept, that RFI wished to pay the judgment in full in February 2014, and sought so to do. They were unable so to do because the plaintiff rejected the offer of tender of the amount.
Any agreement reached between the parties, which is not derogated from here, is that the offer made by correspondence, and the rejection of that offer, also sent by correspondence, were agreed to be sufficient steps upon which RFI could rely as the tender of the judgment moneys. In other words, RFI was excused from drawing a cheque and physically delivering the cheque. But, at all times, the plaintiff made it plain that he was not accepting, and not intending to accept, any payment in full satisfaction of the judgment debt.
There was no agreement between the parties that the offer to pay the money would be regarded as the equivalent to payment of the full judgment sum for the purpose of the argument about, and calculation of, interest. Indeed the correspondence to which reference has been made above, demonstrates that there was no such agreement.
I do not accept that there has been any agreement of a kind which would determine the plaintiff's entitlement to interest, and certainly not determine it on the basis that he was content not to receive any interest at all. At all times, the plaintiff maintained his entitlement to interest.
That does not meant that the offer to pay the entire verdict sum may not be relevant as a discretionary matter to whether the Court should make an order under s 101 of the Act for the payment of interest. But that is not the question here.
Here the proposition is that there was accord and satisfaction. I am not satisfied there was an accord. There was certainly no satisfaction.
On that basis, I reject this argument.

Discretionary Considerations

RFI submitted that, it having been ready to pay the outstanding judgment sum and that tender being rejected by the plaintiff, it should not have to pay interest on that judgment sum.
In order to analyse this argument, it is necessary to examine the nature of interest and the principles which govern its payment.
It is convenient to commence with various statements about pre-judgment interest.
Section 100 of the Act provides for interest up to judgment. It also prescribes a rate for such interest. Under s 100, interest, if allowed, is included in the amount for which judgment is given. It is calculated by reference, to the whole or any part of the money which would otherwise comprise the judgment, and for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect.
The High Court of Australia in Haines v Bendall [1991] HCA 15; (1991) 172 CLR 60 said, when dealing with pre-judgment interest under s 94 of the Supreme Court Act 1970, that an award of pre-judgment interest was an integral element in the attainment of the object of damages, namely, to fully compensate a plaintiff for injury sustained. It said that it was an essential element in the achievement of true compensation.
In Haines, the High Court expressly approved the judgment of Reynolds JA in Pheeney v Doolan (No 2) (1977) 1 NSWLR 601 at 613, where his Honour said that the award of interest for the period of delay in payment between the date of the accrual of the cause of action and the judgment, affords the fair legal means of compensation. His Honour said it is only by such an award that a plaintiff is truly placed in, or restored to, the position, as far as money can do, in which he would have been but for the negligence of the defendant.
In Hungerfords v Walker [1989] HCA 8; (1989) 171 CLR 125, Mason CJ and Wilson J, in a joint judgment, endorsed an argument by counsel in an early Admiralty case in the United Kingdom. At [29] their Honours said: "Authority provides scant instruction on the ambit of the principle that at common law compensation is not awarded for the late payment of damages. The notion, if not the principle, is perhaps best illustrated by the comments of Dr Lushington in The Amalia (1864) 5 New Rep. 164n. There the question arose whether the party who had negligently caused a maritime collision resulting in the total loss of a Belgian ship was liable in Admiralty to pay interest on the damages awarded. The report states that Dr Lushington, after pointing that restitution in integrum applied, as it did at common law, entitling the party aggrieved to a full indemnity, observed that: 'Interest was not given by reason of indemnification for the loss, for the loss was the damage which had accrued, but interest was given for this reason, namely, that the loss was not paid at the proper time. If a man is kept out of his money, it is a loss in the common sense of the word, but a loss of a totally different description and clearly to be distinguished from a loss which has occurred by damage done at the moment of a collision. The principle, therefore, which the Registrar and merchants had acted upon was that … just stated: viz., to give interest from the time when the loss ought to have been paid for. Thus, Lord Stowell expressly stated in the case of The Dundee (2 Hagg.), that he gave interest beyond the value of the damaged ship by reason of detention of payment and not by way of damages. To that principle His Lordship entirely acceded'."
The authorities provide that in accordance with s 100 of the Act, interest up to judgment should be included in an award of damages so that a plaintiff is put in the position that he would have been in but for the negligence of the defendant. But as Hungerfords recognises, interest can also be awarded due to "late payment" of the damages owed, or put another way, by reason of "detention of payment". It seems to me that when interest is awarded pursuant to s 101 of the Act on a judgment for damages for the period between the time when the judgment is entered and the payment is made, it can properly be regarded as being to compensate for the "late" payment of damages. This approach accords with the judgment of the Court of Appeal in Maestrale v Aspite (No.2) [2014] NSWCA 302 at [15]. See also Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (No.2) [2014] NSWCA 425 at [13]-[14].
A simple analysis suggests that there is a compelling reason for the plaintiff to be awarded interest. Mr Grima's judgment dated from 2 September 2013. He received the moneys, the subject of that judgment (after appeal), on 19 December 2014. It was at that later point when the defendant actually discharged the obligation created by the judgment. The plaintiff did not have his judgment moneys until that point in time, and the defendant had the money, and the use of the money, during that time. It would follow on that simple analysis that interest is due to be paid, and at the Court rate.
But RFI says that it acted entirely reasonably by offering to pay the judgment in February 2014, at least in the sum which had then been calculated. So much can be accepted. Mr Grima's senior counsel accepted that in making the offer, the defendant acted reasonably.
But the defendant went further. It submitted that there was nothing more which it could do in the face of the plaintiff's refusal to accept the sum proffered. By way of example, the defendant said it would not have been reasonable to have required it to draw the cheque and forward to the plaintiff, and then, in light of the plaintiff's rejection of the offer, to again forward it over and over again. Put a different way, the defendant said that it had done all that could possibly be done to discharge its liability to the plaintiff, and to avoid having to pay interest. It said it would be inequitable if it was now forced to pay interest.
Whilst in tendering the judgment sum RFI acted reasonably, I do not accept that the defendant has done all that it could do, so as preclude the plaintiff claiming interest, or to protect itself against such a claim. After all, it retained the money and used it for its own purposes.
In light of the plaintiff's refusal to accept the sum, it was open to the defendant to pay the moneys into Court. If it needed directions from the Court, or some form of authority, then it was open to it to make application by Notice of Motion. Alternatively, the defendant could have paid the money into a dedicated account with a financial institution so that the money could be invested pending the resolution of the proceedings by the appeal, and indicated to the plaintiff that if his appeal was successful, he would be entitled to the sum together with any interest earned upon it.
The defendant did neither of these things. Instead, it kept the money, slightly over $1M, and used it, I infer, as part of its general working capital for the purpose of its business.
Put slightly differently, the insurer, which had the obligation to pay the moneys on behalf of the defendant, has not actually paid the moneys over although it has, in the name of the defendant, offered to pay the money. Nor has the plaintiff had the use of the money.
So, the position ultimately is this: 1. both parties have acted reasonably; 2. the defendant through its insurer has offered to pay the first instance judgment sum in full; 3. the plaintiff has declined to accept that offer; 4. the defendant through its insurer has retained and had the use of that money until 19 December 2014, when it was paid over; 5. the plaintiff has not had the use of the money.
The provisions of s 101 of the Act presume that in the ordinary course, interest is to be paid on outstanding judgment sums. The Court has a discretion to otherwise order. That discretion must be judicially exercised.
With the exception of declining to accept the tendered sum, RFI does not point to any other "disentitling" conduct on the part of Mr Grima.
But there were good reasons, as I have earlier explained, for him to decline to accept the sum. In those circumstances, I am not satisfied that such conduct ordinarily comes within the concept of disqualifying conduct.

Period for Interest

I am satisfied that the defendant should pay interest on the full amount of the net judgment of $2,291,093.38 which was outstanding from 2 September 2013 to 19 December 2014.
Put another way, I am not satisfied that I should "… otherwise order …". Accordingly, the defendant should pay interest as required by s 101 of the Act.

Rate of Interest

The defendant further argues that it is not fair or equitable for it, having made the offer of paying the judgment, to be obliged to pay judgment at the prescribed rate of 8.75% and 8.5%, whereas in fact, at all relevant times, the Reserve Bank Cash Rate was 2.75% or 2.5%.
With respect to the solicitor for the defendant, this is not an argument which ought to be accepted.
I am of this view for a number of reasons: 1. there is no reason to regard the Cash Rate published by the Reserve Bank of Australia as being the only available touchstone of a proper return upon monies which are due and owing; 2. the defendant has not sought to establish by evidence, except for the tender of the Reserve Bank of Australia Cash Rate, what a reasonable rate of interest in the requisite period would be; 3. the defendant has not sought to disclose what the insurer's rate of return on working capital was. In other words, the defendant has not sought to show what benefit the insurer received from the retention of the moneys which were otherwise payable; 4. the Reserve Bank Cash Rate does not, as a matter of economic reality, necessarily reflect rates which are available readily in the market place for safe, or essentially safe, forms of investment.
The prescribed rate is the rate fixed which takes account of the Reserve Bank Cash Rate, and then determines a rate at a point along the spectrum of possible returns on investments, or other forms of cash deposits into which the moneys may have been invested by the plaintiff or, alternatively, the rate of return on the use to which the defendant's insurer put the money. The prescribed rate may have regard to matters of policy as well.
There is simply no reason to think, particularly in the absence of any specific evidence, that any rate other than the prescribed rate should be ordered. The rate of interest which the defendant is required to pay is the prescribed rate.

The Sum of Interest Payable

The plaintiff submitted that by applying the prescribed rate, the interest ought be $254,623. The defendant agreed with this calculation, except in one respect. The plaintiff's calculation for the period from 2 September 2013 to 31 December 2013, was calculated at the rate of 8.75%. The defendant submitted that this should be 8.5%. The basis of the defendant's submission was that the Cash Rate immediately before the commencement of 2 September 2013, was that fixed by the Reserve Bank on 7 August 2013, which was 2.5%. The defendant submitted the prescribed rate was 6% in addition to that Cash Rate - hence, 8.5%.
The defendant's submission does not correctly reflect the provisions of r 36.7 of the UCPR. That rule provides that a rate is determined for the first six months of the year by the Cash Rate fixed immediately before the commencement of the first six months of the year. The same calculation method applies for second half of the year.
Accordingly, in order to examine the correct rate for the second half of 2013, one has to look at the rate prevailing as at 30 June 2013. The cash rate at that period was 2.75%. The rule requires the addition of 6%. Accordingly, 8.75% is the correct rate, and the plaintiff's calculation is correct.

Costs

The plaintiff has been wholly successful. The defendant has been wholly unsuccessful. Costs should follow the event. The defendant should pay the plaintiff's costs.
I was informed in the course of submission that the plaintiff may wish to make an application, in the event that he was successful, for costs on some basis other than the usual basis.

Conclusion

The plaintiff is entitled to interest on the entirety of the judgment sum determined by the Court of Appeal for the whole of the period from 2 September 2013 to 19 December 2014, when the judgment sum was paid in full.
The appropriate rate at which interest ought be paid is the prescribed rate in accordance with the UCPR.

Orders

I make the following orders: 1. Pursuant to s 101 of the Civil Procedure Act 2005, order that the defendant pay the plaintiff interest in the sum of $254,623. 2. Order the defendant to pay the plaintiff's costs of the application for interest on a party/party basis. 3. If the plaintiff wishes to apply for an order for costs on any other basis, then such application, together with all evidence in support and submissions in support, ought be filed within 7 days of delivery of this judgment. 4. In the event that the plaintiff does make such application, the defendant is to file and serve all evidence upon which it wishes to rely to resist such an order, together with all submissions in support of its resistance to such order, within 7 days after the receipt of the plaintiff's application and evidence in support. 5. Unless the Court otherwise orders, the plaintiff's application will be dealt with on the papers.

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: 02 April 2015

At a glance

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Judgment (16 paragraphs)

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Legislation Cited (1)

Cases Cited (13)