HEYDON v NRMA & ORS, BATEMAN & ORS v NRMA & ORS, MORGAN & ORS v NRMA & ORS

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40587/99 CA 40647/99 CA 40655/99 MASON P BEAZLEY JA IPP AJA

John Dyson HEYDON v NRMA LIMITED & Ors (No 2) John Kerin MORGAN & Ors v NRMA LIMITED & Ors (No 2) Gregory Anthony Thomas BATEMAN & Ors v NRMA LIMITED & Ors (No 2)

1 MASON P: These appeals were decided in the appellants' favour on 21 December 2000. The Court, differently constituted, set aside the earlier judgment of Giles CJ Comm Div which had been in favour of the plaintiffs (hereafter NRMA) against three groups of defendants (Mr Heydon QC as he then was, Abbott Tout and Allen Allen & Hemsley). The High Court subsequently refused special leave to appeal. 2 Judgment had been entered at first instance on 4 August 1999. Each of Mr Heydon, Abbott Tout and Allen Allen & Hemsley were ordered to pay $32,068,910, such damages to be apportioned equally. The sum was calculated on the basis of a primary award of $21,193,828 plus interest to date of judgment calculated in accordance with Schedule J to the Supreme Court Rules. 3 Schedule J stipulates differing rates of interest for different periods commencing 1 July 1972. The Schedule serves several purposes, including that of stipulating the "prescribed rate" of interest on a judgment debt (Supreme Court Act s95; Supreme Court Rules Pt 40 r7) and other purposes under the Rules (see Pt 7 r4(2), Pt 29 r5(2), Pt 49 r8, Pt 76 r40). Practice Note No 92 stipulates that Schedule J is to be the basis for computing pre-judgment interest for the purposes of s94, "subject to any evidence adduced". There does not appear to have been any debate about the rate of interest awarded at first instance (see NRMA Ltd & Ors v Morgan & Ors (No 3) [1999] NSWSC 768). 4 One-third of the judgment sum was $10,689,636. Each defendant paid NRMA this amount at various dates between 6 and 13 August 1999, having by then filed or foreshadowed intention to appeal. In Mr Heydon's case payment was preceded by notification that the appellant would expect restitution with interest at Schedule J rates in the event of success in the Court of Appeal. 5 The appeals were heard in May 2000 and judgment was given on 21 December 2000. The Court upheld the appeals and set aside the judgment and orders announced by Giles J (see Heydon v NRMA Ltd & Ors; Bateman & Ors v NRMA Ltd & Ors; Morgan & Ors v NRMA Ltd & Ors (2000) 51 NSWLR 1). 6 In February-March 2001 the appeals were before me for various purposes, including the making of ancillary orders (ultimately by consent) consequent upon the upholding of the three appeals and the dismissal of NRMA's cross-appeal. These matters were resolved in a way that has no bearing on the present issue. 7 Exchanges between the solicitors in early March 2001 confirmed that NRMA was willing to repay the capital sums with interest. The appellants were seeking to have interest calculated at Schedule J rates. NRMA took the stance that interest should be calculated at a rate corresponding to what it had actually earned from its investment of the judgment moneys. 8 On 9 March 2001 I made amended final orders in the various appeals. I also gave procedural directions designed to bring to hearing the issue as to the appropriate interest rate on the restitution sum. 9 For a short period, matters were held in suspense because one of the appellants requested NRMA to defer repayment of any money. There was a perceived difficulty stemming from the fact that one of the appellant's insurers was a member of the HIH Insurance group. This issue was promptly resolved and no one has suggested that it has any bearing on the present dispute. 10 Ultimately NRMA paid all that it admitted was due to the respective appellants. On 15 March 2001 cheques in excess of $11,683,935 were paid to each of the three appellants. Each cheque calculated interest at various rates between 4.7% and 6.2% from the date in August 1999 when the particular appellant had paid NRMA the judgment sum down to 15 March 2001. In May 2001 there was a recalculation because NRMA disclosed that it had earned 11% on the moneys in the period between 1 February 2001 and 15 March 2001: this resulted in payments on 11 May 2001 of further cheques for $3,548 (Mr Heydon), $37,980 (Abbott Tout) and $72,550 (Allen Allen & Hemsley). 11 The period during which the judgment moneys were "held" by NRMA was thus between August 1999 and March 2001. Schedule J rates during this period were 9.5% to 29 February 2000, 10% between 1 March 2000 and 31 August 2000 and 11% from 1 September 2000. No question was raised as to the basis upon which the Rule Committee determined these rates. Nothing was put to the Court as to the conformity or disconformity between Schedule J rates and those payable or obtainable in the market or any particular sector of the market. If it had been, it is at least conceivable that NRMA might have been asked why it had sought and obtained Schedule J rates in calculating the s94 component of the judgments in its favour.

The basis of restitution with interest of moneys paid under a judgment later set aside 12 A party's right to restitution with respect to moneys paid under a judgment later set aside, together with interest thereon, is well established (see generally Mason and Carter, Restitution Law in Australia, ch 7. See also Supreme Court Rules Pt 51 r26). 13 There is however some uncertainty as to the juridical basis of the right to restitution of moneys paid under judgments later reversed or set aside, in particular the right (if any) to interest. In mentioning interest I am referring to interest upon the capital sum paid over by the ultimately successful party: such capital sum will usually involve a composite amount that includes the judgment debt (which in turn may have included interest pursuant to s94 of the Supreme Court Act or its equivalent) plus interest accruing thereon pursuant to s95 or its equivalent. Money paid in relation to a costs order may also be included. 14 Some have looked to statutes and rules as the source of the power to award restitution with interest. In my opinion, the right exists at common law and is not based upon some discretionary invocation of statutes or rules relating to appeals. It is based on the "unifying legal concept" of unjust enrichment identified by Deane J in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256-7. My views are developed in detail in Mason and Carter, Restitution Law in Australia 1995, especially chapters 7 (Judgments Reversed or Set Aside) and 28 (Interest). In brief, restitution is available regardless of the means whereby the judgment is discharged; and restitution with interest is the right of the ultimately successful party (see esp Rodger v Comptoir d'Escompte de Paris (1871) LR 3 PC 465, Commonwealth v McCormack (1984) 155 CLR 273 (McCormack), TCN Channel 9 Pty Ltd v Antoniadis (No 2) (1999) 48 NSWLR 381). 15 Notwithstanding statements by the highest courts that the common law does not allow interest on recovery of money in claims for debt or damages (see, eg Victorian Workcover Authority v Esso Australia Ltd [2001] HCA 53 at [23], [86] where such a statement appears with qualifications that are not presently relevant) there are many cases of undoubted authority where this has happened. I venture to repeat what I wrote in National Australia Bank Ltd v Budget Stationary Supplies Pty Ltd (NSWCA 23 April 1997, unreported): The common law's attitude to interest on debts is confused and largely negative. London, Chatham & Dover Railway Co v South Eastern Railway Co [1893] AC 429 is frequently cited as authority for the proposition that damages are not payable for late payment of a debt. (For present purposes, I include both contractual and restitutionary obligations to pay a money sum as falling within the concept of "debt".) It is generally stated that interest will only be added if there is express agreement, an implied agreement arising from a course of dealing between the parties, or clear custom (see eg Halsbury's Laws of England 4th ed; vol 32, "Money" para (108)). In London, Chatham, the House of Lords felt reluctantly constrained by what was recognised to be an unsatisfactory stream of earlier authority supporting these propositions. It cited earlier cases supporting such a view and offering as the rationale the difficulty of juries assessing interest as part of damages (see eg Page v Newman (1829) 9 B 378; 109 ER 140). The limited statutory redress obtained by Lord Tenterden's Act of 1833 ( Civil Procedure Act 1833 (UK) , s28. The Act required a written demand claiming interest. The New South Wales counterpart became s140 of the Common Law Procedure Act 1899 , which remained until the enactment of s94 of the Supreme Court Act 1970 ) was viewed as confirming the torpor of the common law. To this day, one may find many statements citing London, Chatham as fixing the common law and stating a universal proposition against the award of interest (by way of damages or otherwise), save in the exceptional situations to which I have already referred. (See, eg Bayne v Stephens (1908) 8 CLR 1 at 23; Marine Board of Launceston v Minister for the Navy (1945) 70 CLR 518 at 525, 529; Mathew v TM Sutton Ltd [1994] 1 WLR 1455. For a recent statement see Andjelic v Marsland (1996) 186 CLR 20 at 36 per McHugh and Gummow JJ. Contrast Hungerfords v Walker (1988) 171 CLR 125 at 138 where Mason CJ and Wilson J pointedly described London, Chatham as stating the common law "in England"). But there have always been streams of cases of undoubted authority which simply walked around any such general principle. Some involve restitutionary obligations, although this does not appear to be the basis upon which the "London, Chatham principle" was bypassed. Thus, interest at common law has been awarded for money had and received, where the facts would have supported an equitable claim for account ( Bayne v Stephens (1908) 8 CLR 1), where restitution follows the reversal on appeal of a previously satisfied judgment ( Rodger v The Comptoir d'Escompte de Paris (1871) LR 3 PC 465; Commonwealth v McCormack (1984) 155 CLR 273; National Australia Bank Ltd v Bond Brewing Holdings Ltd (1991) 1 VR 386 at 597….) where damages are awarded under the rule in Bain v Fothergill ((1874) LR 7 HL 158. See Day v Singleton [1899] 2 Ch 320; Ashok Trading Pty Ltd v Kintay Pty Ltd [1983] 1 Qd R 273); and where a contract has been discharged for breach, repudiation or in exercise of a contractual right (see eg Elder's Trustee and Executor Co Ltd v Commonwealth Homes and Investment Co Ltd (1941) 65 CLR 603; Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446 at 461-2). One might be pardoned for thinking that this litany of "exceptions" to the London, Chatham principle goes a long way towards eating up the general rule. In all of these cases, interest was awarded at common law and computed from the date of receipt of moneys ordered to be repaid, even where (in cases unlike the present) the restitutionary cause of action leading to the obligation to repay the "principal" may have arisen later. Thus, it is well established that where a contract is terminated for breach by the vendor, the purchaser will recover the deposit together with interest from the date of original payment, even though termination does not operate ab initio. (See eg Sandeman v Wilson (1880) 1 LR(NSW) Ex 1; Delbridge v Low [1990] 2 Qd R 317 at 335.)

Passing London, Chatham like ships in the night, these cases proceeded upon the obvious principle that, when A retains money owned by or owing to B over a period of time, A derives a benefit (at B's expense) usually measurable by what A would have had to pay in the market to borrow that sum for that period. Since this benefit is derived without justification and at the expense of the person to whom the principal sum was due, we should now recognise it as an unjust enrichment. It stands independently of, but appurtenant upon the obligation to pay, the "principal" sum. The independent nature of the restitutionary entitlement to interest is evidenced by historical recognition of a distinct indebitatus count for interest. (See Nordenstrom v Pitt (1845) 13 M&W 723, 153 ER 303; Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 38; South Australia v Commonwealth (1992) 174 CLR 235 at 253.) A nineteenth century authority on an unrelated topic pointed aptly to this conclusion in stating: "As interest may be considered as the 'mesne profits' of money in the same way as rent is of land, it is not, perhaps, too much to consider it amenable to the same rules as regulate the repayment of mesne profits of land" (W Clode, Law and Practice of Petition of Right , 1887, p96). The justice of the claim to interest was recognised in London, Chatham itself, where Lord Herschell LC acknowledged that "the party who is wrongfully withholding the money from the other ought not in justice to benefit by having the money in his possession and enjoying the use of it" ([1893] AC 429 at 437. See also Marine Board of Launceston at 525 per Latham CJ.) Unfortunately, the Lord Chancellor and the other Law Lords felt constrained in London, Chatham from giving effect to the injustice they recognised, citing Page v Newman (supra) and the negative implication deriving from the limited intervention of Parliament in Lord Tenterden's Act of 1833 (3 & 4 Wm 4, c42, s28.) The Lord Chancellor thus recognised the unjust enrichment, but felt practically powerless to remedy it. In my view we should not feel similar restraint in the light of developments stemming in Australia from Pavey & Matthews Pty Ltd v Paul (1992) 162 CLR 221. The particular categories of cases involving awards of interest at common law to which I have referred strongly support such a development. No longer are we troubled about juries being confused by having to compute interest in these matters. And the notion that the existence of a limited statutory remedy to award interest should restrain the incremental and principled development of the common law in this area (though still current in the United Kingdom) (see President of India v La Pintada Compania Nagivacion SA [1985] AC 104 at 130; Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 717, 718-9, 740-1) has been repudiated in Australia (see Hungerfords at 147-8). In State Bank of New South Wales Ltd v Federal Commissioner of Taxation (1995) 132 ALR 653 at 659-61, Wilcox J referred to some of these developments. He held that "in ordering a payment of money by way of restitution, a court has power to include something by way of interest, where this is necessary to do justice between the parties" (at 660). Indeed he went further and awarded interest with respect to a discrete sum that had been "retained" but repaid before proceedings were instituted (see at 656, 663). In SCI Operations Pty Ltd v Commonwealth (1996) 139 ALR 595, Beaumont and Einfeld JJ indicated concurrence with Wilcox J in State Bank . I would do likewise.

16 The Full Court decision in SCI Operations that I referred to was reversed by the High Court in The Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285. That decision turned upon a statutory abrogation of any right to interest in the Customs Act. I recognise that McHugh and Gummow JJ commented adversely (at 316-7) upon the notion that there is a "free-standing" right to recover interest in a common law restitutionary claim. In a joint judgment their Honours said that the existing state of authority did not favour acceptance of such a broad proposition. It is unclear both whether this portion of their judgment forms part of the essential reasoning and whether their Honours would reject every claim for interest auxiliary to a restitutionary claim. Since, however, this discussion does not form part of the reasoning of the other members of the High Court I have considered myself at liberty respectfully to maintain my position. 17 The present situation is one of the established categories where interest has been awarded at common law, apparently without question (see Rodger, McCormack). In National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 Brooking J said (at 597): … the principle on which the courts have for centuries acted is that when an erroneous judgment or order is overturned, whether by means of appeal or by any other procedure, the court will achieve a just result by requiring anything that has been taken from him by the other party by virtue of the wrong decision to be restored. Interest is for this purpose treated as the fruit of money and he who has had the use of money will not be heard to say that there were no fruits. The principle is, as it was in the reign of the first Elizabeth ( Eyre v Woodfine Cro Eliz 278; 78 ER 533), one of restitution or restoration. The court is seeking to restore to one party what it has wrongly taken from him and given to the other. It does not seek to restore the successful party to his former position by awarding damages to compensate him for loss flowing from the erroneous judgment or order. 18 It follows that I disagree with the reasoning in Government Insurance Office of New South Wales v Healey (No 2) (1991) 22 NSWLR 380 where Kirby P sourced the power to award restitution with interest in what strikes me (with respect) as a very forced combination of s95 of the Supreme Court Act and Part 40 r3(5) of the Supreme Court Rules. In my view, the right springs up upon the setting aside of the judgment under which money was previously paid, with interest calculated from the date of payment by the ultimately successful litigant. Orders to repay with interest recognise and give effect to that pre-existing right. 19 The purpose of an award of interest in these circumstances is restitutio in integrum (McCormack at 276), ie to put the parties in the position they should have been when the litigation was completed at first instance. A just restoration is the means whereby an attempt is made "to take care that the act of the Court does no injury to any of the Suitors" (Rodger at 475, cited in McCormack at 276. See also Heavener v Loomes (1924) 34 CLR 306 at 323-4). There is no aim of punishing or even coercing the ultimately unsuccessful litigant who, after all, cannot be at fault in having sought to obtain and retain the fruits of victory awarded by the Court at first instance. In this circumstance, the moral claims of the parties are somewhat different to those that prevail prior to the initial judgment when, ex hypothesi according to the law declared at first instance, the judgment debtor was wrongfully withholding payment of the damages or debt due to the plaintiff. 20 In Meerkin & Apel v Rosett Pty Ltd (No 2) [1999] 2 VR 31 Callaway JA (Charles JA and Batt JA concurring) said at 34: An appellate court is concerned to do justice to the parties, not solely to the appellant. The error was made by the court below, not by the respondent. There is no right to compensation as against the respondent but only to restitution. If interest measured by the appellant's loss is awarded, all that the court will do is to shift the injustice occasioned by the erroneous judgment from the appellant to the respondent.

21 This passage suggests a dichotomy between restitution and compensation that may be capable of being misunderstood. I agree that the court is not seeking to compensate the ultimately successful party for all indirect losses stemming from submission to the judgment later set aside on appeal (see National Australia Bank Ltd v Bond Brewing Holdings Ltd and Burger King Corporation v Hungry Jack's Pty Limited [2001] NSWCA 187 at [487]-[500] for instances where compensatory restitution was withheld). However, the present context (interest) is one where the court is seeking to achieve restitutio in integrum by seeking to restore the parties to the position they would have been when the litigation finished at first instance. In these circumstances, while the award of interest is restitutionary in intent as regards both parties, its effect is also broadly compensatory as regards the appellant. 22 It is however artificial to seek to calculate the interest actually lost (by the appellant) or the interest actually gained (by the respondent). For one thing, an exact correspondence would only occur by chance unless the parties had come to some agreement about the proper investment of the judgment moneys pending the appeal. This is one of several reasons why a common yardstick for determining the rate of interest is appropriate (see further below). 23 Once the goals of punishment and direct compensation for consequential loss are put aside, the appellant's notional loss of the fruits of the money and the respondent's notional gain of those fruits are two sides of the one coin. But that coin seeks to measure in a broadly just manner the value of the respondent's enrichment at the appellant's expense in consequence of having enjoyed the shortlived fruits of the erroneous judgment.

How is interest calculated? 24 In light of these principles, what considerations govern the determination of the rate of interest due upon restitution of moneys paid under a judgment that is later set aside? 25 There will be cases where the parties agree to invest the judgment sum in a particular fund pending the outcome of an appeal in such a manner as to treat the fruits of that investment as the fund available to the ultimate victor. This may be the condition of a stay or a sensible way of avoiding the type of dispute that has surfaced in this application. Leaving such cases aside, the present issue will usually present itself in a context where no particular loss is identifiable as regards the appellant and no particular gain is identifiable as regards the respondent. If a particular loss and a particular gain is identified the sums will not match, except by chance. 26 The respondent was entitled to demand and receive the sum ordered to be paid in the court below. It follows that the money was not held on trust for the appellant. The appellant's right to restitution following the reversal of the judgment below is personal, not proprietary (cf Foskett v McKeown [2001] 1 AC 102 at 129). This would suggest that an appellant would not necessarily be entitled to the respondent's windfall gain flowing from an extremely provident or speculative investment entered into without recourse to the appellant (cf Meerkin at 34-5). 27 Doing justice to both sides also means that a respondent cannot be made hostage to the appellant's particular susceptibility any more than the appellant can be made hostage to the respondent's particular caution or carelessness. This was the point being made by Fitzgerald P in the following passage in Idemitsu Queensland Pty Ltd v Agipcoal Australia Pty Ltd [1996] 1 Qd R 26 at 42-3: Nor is it necessary to characterize the amount to which a successful party is entitled as damages or to identify the infringement of some right at an earlier stage of the proceedings. The theory behind the relevant doctrine is one of compensation to adjust the position of the parties to achieve a just result. Further, while an erroneous money judgment that has been satisfied will commonly involve more than the repayment of the principal sum, the policy considerations underpinning the successful party's entitlement will limit what is recoverable from the unsuccessful party, just as remoteness of damage and the obligation to mitigate loss impose limitations on the damages which are recoverable in other areas of the law. This choice avoids the risk that a successful party may be disadvantaged by the unsuccessful party's poor business acumen or perhaps, even its failure to invest at all.

This passage was cited with approval by Beaumont and Einfeld JJ in SCI Operations Pty Ltd v Commonwealth of Australia (1996) 69 FCR 346 at 373-4. I too respectfully agree, subject only to my caution about using the word "compensation" in this context. 28 I would therefore reject one of the submissions advanced on behalf of Allen Allen & Hemsley, that a respondent can never avoid Schedule J rates unless able to prove that the loss actually suffered by the appellant was less than the sum which those rates would have produced (Tr p42). That is to confuse restoration/restitution with compensation. 29 For similar reasons, I must also reject one of NRMA's submissions that the actual benefit derived by a respondent from the (reasonable) use of the judgment moneys fixes the upper limit of any obligation to restore an appellant to the position that should have been obtained at first instance (Tr pp44,46,48). 30 It would be intolerably burdensome if a court required evidence and argument in every case as to what rate or rates of interest would do justice to the principles which I have endeavoured to summarise. The interests of the parties and of the court, including the interest of consistency as a component of justice, are served by taking a broad, standard approach whereby interest is calculated according to pre-determined rates that the parties can take into account in their dealings during the litigation and in their endeavour to avoid wasteful disputation concerning its outcome. 31 Similar principles may be gleaned from the case law discussing the circumstances when a court should exercise the discretion to depart from Schedule J rates in an award of pre-judgment interest pursuant to s94 of the Supreme Court Act. In Cullen v Trappell (1980) 146 CLR 1 at 21 Gibbs J said that "the award of interest must always be approached in a broad and practical way". Commercial reality and non-rigid uniformity have been cited as appropriate factors to be borne in mind (R W Miller & Co Pty Ltd v The Ship Patris [1975] 1 NSWLR 704 at 718; Smith v In Shoppe Pty Ltd [1976] 2 NSWLR 175 at 177). There is no reason to assume that Schedule J rates are fixed in disregard of commercial reality or that they embody a deterrent or punitive intent. The situation is quite different in Victoria where pre-judgment interest rates are set pursuant to the aptly named Penalty Interest Rates Act 1983 (Vic) (see generally Meerkin at 33). 32 In this Court the practice is to award restitutionary interest at the rates payable on judgments unless special circumstances exist (see National Australia Bank Limited; Woolworths Ltd v Kelly (No 2) NSWCA 29 August 1991; Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2) (1991) 27 NSWLR 659 at 663; Akron Securities Ltd v Iliffe (No 2) NSWCA 26 June 1997; Baulkham Hills Council v Pascoe [2000] NSWCA 322 and Seiko Australia Pty Ltd v Da Rin [2001] NSWCA 84). 33 There have been cases departing from the general practice, but the reasoning in them tends to reinforce the general rule as well as explicating its rationale. In Haig v Minister Administering the National Parks and Wildlife Act 1974 (No 3) (1996) 90 LGERA 408 the Court applied the statutory rates payable under the Public Works Act for the payment of interest on compensation as the rates applicable to interest on overpaid compensation ordered to be refunded. The Court was emphatic that restitution was a right, not the consequence of a favourable exercise of discretion. However, considerations of "justice and consistency" were seen to require the Court to apply the special statutory rates applicable to the payment of interest on compensation when awarding interest on overpaid compensation ordered to be refunded (see at 412). 34 Recently, in AMP General Insurance Ltd v Roads & Traffic Authority of NSW [2001] NSWCA 186 this Court ordered restitution when setting aside an award of damages for nervous shock paid by an employer to the widow of a deceased employee who had developed depression and taken his own life. The successful appellants sought interest, but it is unclear whether there was a live dispute as to the appropriate rate. Heydon JA said (at [167]) that the appellants' submissions: … do not make it clear whether the rate of interest is to be the rate established pursuant to rules of court, or whether it is to be the rate of interest actually earned on the moneys while in the hands of the Plaintiff. In all the circumstances (which include the circumstance that the case is in some ways a test case operating at the frontier of the law) the interest payable should only be the interest actually earned. No submission was advanced by either the Defendant or the Insurer to the contrary.

35 The present case does not involve an appellant seeking to prove that the respondent earned more fruits from the capital sum than would have been earned had the money been invested at Schedule J rates, or a respondent seeking to prove that the appellant lost a lesser sum. Such unusual situations can be left until they arise (see Meerkin at 34-5, Production Spray Painting at 663). Here the respondent seeks to prove that it earned less with the money temporarily at its disposal. The situation is quite different from the unexpected hardship of repayment that befell the widow in AMP v RTA. AMP v RTA does however remind the court that it has some leeway in determining what rate is the just measure of the particular respondent's enrichment. 36 It follows that a persuasive and evidentiary burden rests upon NRMA to take itself outside the general rule. It is persuasive in the sense that the whole purpose of having a general rule is to cast such burden upon the party who claims exemption from it. A fortiori, if the general rule has utility, fairness and commercial reality built into it. It is evidentiary in the sense that NRMA is best able to prove what it did with its own money during the critical period.

Did NRMA bring itself outside the general rule? 37 NRMA knew from the outset that restitution with interest would be sought if the appeals succeeded. And, unlike some litigants, it was not under pressing need to apply the judgment moneys in payment of medical bills or living expenses stemming from a catastrophic personal injury. The judgment moneys were its property to do with as it chose, but it could not in the circumstances be heard to say that there were no fruits of the large sum of money given over to its use under the judgment at first instance. 38 NRMA accepts all this. 39 Furthermore, NRMA has not sought to establish that Schedule J rates were unavailable in the market at the relevant time. 40 What NRMA has sought to prove is that its actual earnings from the use of the judgment moneys were less than what would have been earned at Schedule J rates. This raised a complex factual dispute. 41 Implicit, and occasionally explicit, in NRMA's case was the submission that NRMA had acted prudently in investing the verdict moneys in the way it claims it did. However no evidence was tendered to show this was the case. NRMA's primary approach was to challenge the appellants (and the insurers standing behind them) to prove either that they had incurred losses greater than NRMA's gains or that the rate of return derived by NRMA was in some way uncommercial or inadequate (NRMA's Outline of Submissions par 11). 42 NRMA relied principally upon affidavit evidence of Mr K R Lacey, the Senior Manager of Accounting Operations for NRMA Insurance Limited and Mr S W C Chan, the Chief Operating Officer of NRMA Asset Management Limited. 43 In resisting the appellants' claims for interest at Schedule J rates, NRMA sought to prove that the verdict moneys it received in August 1999 earned interest in its hands throughout most of the relevant period at 11.00AM Call rates varying between 4.7% and 6.2%. 44 It sought to do this in the following way: the cheques received in August 1999 were promptly banked at the National Australia Bank in the NRMA Insurance Limited General Operations account. This is part of a setoff group of accounts held by various NRMA companies with that Bank. From this description it may be inferred that on occasion amounts are transferred to other accounts so as to reduce or eliminate overdraft balances which would otherwise be accruing high interest rates. Very large volumes of money pass in and out of this account. None of it is earmarked. 45 Money in the General Operations account may be: (i) applied against general operational expenses; (ii) left for a period in the account; or (iii) transferred to NRMA Asset Management Limited for investment. 46 The operational account is generally in credit and earns credit interest in those circumstances. If it passes into debit, interest will be debited. Sometimes funds are transferred from NRMA Asset Management Limited to bring the account back into credit. 47 NRMA Asset Management Limited is the funds manager for the NRMA Insurance Group. Its funds (including those transferred from NRMA Insurance Limited) may be held in its operational portfolio or its investment portfolio. The operational portfolio holds units in NRMA Cash Management Trust (CMT), a Trust whose funds are invested in short-dated securities, mainly 11AM Call deposits. The investment portfolio invests in assets that include Australian equities, fixed interest investments and short-dated securities. Its returns were higher than the returns from the operational portfolio and were closer to Schedule J rates. 48 The brief cross-examination of Messrs Lacey and Chan confirmed that NRMA was not able to demonstrate what happened with the verdict moneys after they were banked in the operational account on the date of receipt. In reality, this flowed directly from the fact that the moneys were never earmarked or treated as held in trust or required to be invested in a particular way. NRMA could show no more than that the verdict moneys swelled the General Operations account of NRMA Insurance Limited. Even if "the moneys" went across to NRMA Management Limited (and this could not be proved) "they" could as well have swollen that company's investment portfolio as its operational portfolio. Of course, talk of particular moneys moving into a particular account or portfolio assumes an ability to trace. There was neither the occasion nor the basis for making such an assumption. 49 Nor did NRMA establish that it altered its financial position in any way as a consequence of the receipt of the money. 50 At the end of the day NRMA faced an additional problem as regards its attempt to treat the verdict moneys as having earned in its hands no more than what would have accrued had they been invested in 11.00AM deposit accounts. There was no explanation why such short term (and therefore lower interest) investments were appropriate given the inevitability that the appeals would take a considerable time to be determined. The appeals were heard with appropriate expedition. They were subjected to case management and judgment was brought down promptly having regard to the complexity of the issues. Nevertheless, the period that elapsed between payment of verdict moneys and judgment upholding the appeals was 16 months. No evidence was led to suggest that a shorter time might have been anticipated at the outset. NRMA could not and did not seek to establish that 11.00AM Call rates represented the highest return available to an investor seeking to place the verdict moneys in a prudent investment for 16 months. Indeed, it did not turn its mind to this matter (evidence of Mr Lacey at Tr p13). 51 No other special circumstances emerged to displace the general rule or indicate that "justice and consistency" suggested that NRMA should pay lesser rates of interest than those which it had used to calculate the original judgment in its favour.

Orders 52 Each appellant has propounded a declaration in similar terms, stating that interest is to be calculated on the several judgment sums in accordance with Schedule J rates from the dates they were paid in August 1999 to 15 March 2001. It is appropriate to make a broad declaration as to interest entitlement, with liberty to apply for further relief if it becomes necessary. It need not address starting and finishing dates because there are some complexities (see below), none of which appear to involve any dispute as to principle between the parties. 53 The appellants have calculated the sum due to each of them on 15 March 2001. That date is chosen because that was the day on which NRMA tendered cheques in excess of $11,683,935 representing the $10,689,636 paid by each appellant between 6 and 13 August 1999 plus interest calculated at the rates proffered by NRMA. For reasons already given, those calculations involve a substantial shortfall in the interest component. However, interest continued to accrue after 15 March and there are credits to be offset. Allowance will need to be made for the sums paid on 11 May 2001 stemming from NRMA's recalculations (par 10 above). 54 The accrual of interest at Schedule J rates after 13 March 2001 may perhaps also be affected by the impact of an agreement reached between the solicitors on 13 March 2001 (see letter from Blake Dawson Waldron of that date, annexure G to the affidavit of D S James sworn 10 April 2001 and Tr pp35-6). The matter remains somewhat unclear. If any party takes up the liberty to apply the outstanding issue will have to be addressed in written submissions exchanged according to a timetable fixed by the Registrar. 55 If it becomes necessary to enter judgment against NRMA it will be necessary to give it an effective date. Interest can thereafter accrue pursuant to s95 of the Supreme Court Act. 56 I propose the following orders:

1. Declare that the first respondents were obliged to pay interest calculated in accordance with the rates prescribed by Schedule J of the Supreme Court Rules from the several dates in August 1999 when the several appellants paid the judgment sum ordered to be paid by Giles CJ Comm Div.

3. Respondents to pay appellants' costs of the Motions. 57 BEAZLEY JA: I agree with Mason P. 58 IPP AJA: I agree with Mason P.

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