Joneli Properties Pty Ltd v Choueiri Agri Pty Ltd

"58 Interest to be allowed when debts or sums certain recovered

(1) If in a proceeding a debt or sum certain is recovered, the Court must on application, unless good cause is shown to the contrary, allow interest to the creditor on the debt or sum at a rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 or, in respect of any bill of exchange or promissory note, at 2% per annum more than that rate from the time when the debt or sum was payable (if payable by virtue of some written instrument and at a date or time certain) or, if payable otherwise, then from the time when demand of payment was made.

(2) Subsection (1) does not authorise the computation of interest on any bill of exchange or promissory note at a higher rate than the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 if there has been no defence pleaded.

(3) A debt or sum payable or a date or time is to be taken to be certain if it has become certain."

1. The judgment obtained by the plaintiff pertains to the recovery of moneys lent. It is accepted by both parties that the amount claimed and given in the judgment is properly characterised as a "debt or sum certain". The plaintiff claims interest on the $78,000 at the statutory rate plus 2 per cent per annum from the date of demand, nominated as 8 December 2017, until the date of judgment, said to be 23 April 2025. The order granting the judgment in favour of the plaintiff for $78,000 was authenticated on 2 May 2025. This would be the appropriate date, rather than 22 April, which was the date on which the parties agreed upon the orders which were authenticated on 2 May.
2. The plaintiff's submissions divide the period for which they claim interest, both pre commencement of the proceeding and for the period after commencement, until judgment. Should the plaintiff's application for interest under s58 be successful, and subject of course to any contentions by the defendant, the judgment or order should be for interest from the "demand" until the entry or authentication of the order or judgment for interest. There is no warrant in s58 for the suggested subdivision.
3. The date nominated in the plaintiff's submission as the date of the demand is 8 December 2017. The plaintiff dispatched a demand letter dated 29 November 2017 to the defendant and Mr El Choueiri (Court Book ("CB") 108). The status of this as an effective demand is called into question by the fact that Mr El Choueiri denied receipt or knowledge of this correspondence (see [2025] VCC 392 [30]), and I made no finding as to the correctness or otherwise as to Mr El Choueiri's denial. In those circumstances, I propose, for the purposes of the interest claim, to treat the relevant demand for repayment as having been made on 9 June 2020, being the date of the statutory demand, which clearly was received by the defendant company and which led to its application to the Supreme Court to have that demand set aside. ([2025] VCC 392 [31])
4. Mr Miller, on behalf of the defendant, contends that interest under s58 ought not to be awarded because there was "good cause" for the award to be refused as provided for in the section; the "good cause" being what he said was "undue delay in beginning or prosecuting" the proceeding (Submissions, paragraph 27). He referred to a number of authorities, including Clarke v Foodland Stores Pty Ltd [1993] VicRp 81; [1993] 2 VR 382. This was a decision of the old Full Court of the Supreme Court (Fullager, Marks and J D Phillips JJ). Unsurprisingly, the Court held, according to paragraph 4 of the headnote ([1993] 2 VR 382) that whether "good cause ... to the contrary" is shown "will depend upon the facts and circumstances of the particular case".
5. In the Foodland case, the liquidator of the company had recovered a preferential payment from Foodland Stores Pty Ltd. A letter of demand was sent on behalf of the liquidator to Foodland dated 24 December 1986 alleging preferential payments received by Foodland in October 1984 ([1993] 2 VR 382, 385). The proceeding seeking recovery of the preferential payments was not filed until 19 May 1989. The liquidator made a series of demands, in some cases for lesser amounts than were ultimately recovered. The trial judge ordered payment of interest under s58 at "the average interest rate from time to time of s2 of the Penalty Interest Rates Act 1983 for the period from 24 December 1986 to 14 May 1991 [viz, the date when his Honour determined that the preferential payments ought to be repaid by Foodland]". The liquidator's appeal against that determination as to interest was dismissed by the Full Court. The Court said:

"If, as we have said, interest is to be awarded, not to punish the defendant, but to compensate the plaintiff for being deprived of his money and the discretion arising out of the words "unless good cause is shown to the contrary" is to be seen as existing in order to relieve against injustice to the defendant, the question will be whether the plaintiff's delay, such as it is in a given case, is seen as working such injustice, were the plaintiff to be allowed interest for the whole of the period available under s58. On that issue, each case must turn upon its own facts and circumstances." ([1993] 2 VR 382, 400)

1. The facts in the present dispute were very particular and quite complex, as my principal reasons demonstrate. Whatever justification there might be for the receiver of a preferential payment from a company that subsequently collapsed into insolvency awaiting a determination on the subject of whether the payment should be regarded as voidable by a court of competent jurisdiction, there was really no ground for this defendant to await the court's determination. The only defence advanced was not that there was no debt, but that it had been repaid. That defence was unsuccessful. Whatever delay was entailed in this matter was occasioned solely by the defendant's failure to "pay up". In my view, interest under s58 ought to be allowed on and from the date of the statutory demand until the authentication of the judgment or order for the payment of interest.
2. The next question is at what rate should interest be awarded? Mr Miller contended that the rate provided for in s58 should be reduced "to an extent - say by 2%." He referred to Lai v Gong (1997) 8 BPR 15,837.
3. Once again I am unpersuaded that, in circumstances where the primary responsibility for resolving this issue lay with the defendant in simply making payment, it is appropriate to mitigate the liability for interest which would otherwise lie upon the defendant by reason of delay. Lai v Gong was an unusual case. The debt in question arose under a mortgage. The terms of the mortgage did not appear to impose an obligation on the mortgagor to pay interest contained in the mortgage. Young J (as he then was) considered a number of texts and a number of authorities, and concluded that the statutory rate [viz, the equivalent of s58 in Victoria]:

"is not always the rate to be adopted in this sort of case, though it is a very good general guide. ... In a case where the parties were not in a commercial context, but were former friends who were doing each other a favour (or at least were both beneficiaries of Mr Davis' beneficence), the commercial rate will usually be inappropriate."

1. His Honour adopted a rate 2 per cent below the statutory rate.
2. In this case, in one sense, these transactions took place between "friends", or at any rate commercial associates. It would be going too far to say that these transactions took place "not in a commercial context". I am not persuaded that Lai v Gong justifies a reduction in the statutory interest rate.
3. If I were wrong in the view that s58 of the Supreme Court Act 1986 authorises an award of interest in the present circumstances from the date of demand to the date of entry of judgment and covers only the period from the date of demand to the commencement of the proceeding, as defendant's counsel Mr Miller concedes, s60 of the Supreme Court Act would provide authority to award interest from the commencement of the proceeding until the entry of judgment.

1. The plaintiff seeks the following orders as to costs:

(i) before 11.00am on 13 July 2022, fixed according to scale G in Appendix A of the Magistrates' Court General Civil Procedure Rules 2020 (Mag Rules);

(ii) after 11:00am on 13 July 2022 until 18 May 2023, fixed according to scale G in Appendix A of the Mag Rules, as if the costs prescribed by that scale were increased by 25%; and

(iii) on and after 19 May 2023, on an indemnity basis,

to be assessed in default of agreement." (Plaintiff's Submissions Regarding Interest and Costs, paragraph 2(c))

1. It is common ground that whilst the matter was pending in the Magistrates' Court the document styled "Offer of Compromise" dated 11 July 2022 was served on behalf of the plaintiff, offering to resolve the proceeding for "the sum of $57,000 (Settlement Sum) inclusive of costs and interest, in full and final settlement of the proceedings". The offer was said to be outstanding for 14 days. That offer was not accepted.
2. Mr Ounapuu, for the plaintiff, conceded that with the matter uplifted to this Court the issue of costs is to be resolved in accordance with the County Court Act 1958 and the Court's rules, and:

"in a literal sense, reference in the County Court Rules to an 'offer of compromise' means an offer under those rules, not an offer under the Mag Rules." (Ibid, paragraph 15)

1. He said however that the Court's discretion as to costs was absolute and unfettered, and:

"It would be nonsensical, and contrary to the evident legislative purpose of O 26 in both sets of rules, if an offer of compromise made prior to the transfer of proceedings ceased to have any effect once proceedings were transferred." (Ibid)

1. Mr Miller, on behalf of the defendant, seemed to accept this proposition, contending (Defendant's Outline of Submissions on Costs and Interest, paragraph 11):

"Notwithstanding the effect of Order 26, and the service of the Offer of Compromise on 11 July 2022, it is submitted that the Court should "otherwise order" that the Plaintiff is not entitled to its costs on an indemnity basis from that date ..."

1. He said the offer was served "at a very early stage of the Proceeding", before the pleadings had closed and discovery had been given.
2. Secondly, he said:

"it was a feature of the Plaintiff's claim that it sought a proprietary interest of 10% in the Sheep Grazing Farm. The Plaintiff failed in that claim. The determination of the Plaintiff's proprietary claim occupied some time during the Proceeding ..."

1. And thirdly, a contention by the defendant that certain text messages were not genuine. He continued (paragraph 15):

"the Plaintiff's conduct in discovering a fabricated text message, destroying the phone on which the text message was purportedly contained, and proceeding at trial on the basis that the text message was genuine, is, in all the circumstances, an extraordinary dereliction of the Plaintiff's overarching obligations ..."

1. He said this would disentitle the plaintiff from indemnity costs.
2. As to these matters, whatever may be the case in proceedings which are legally complex, in which a party might be acting reasonably in declining to seek to settle before full pleadings and discovery, the claim which succeeded at trial was of the most straightforward kind. It would have been in the interests of all parties if the offer of compromise had been accepted. The plaintiff's claim to a proprietary interest in the sheep grazing property added little or nothing to the cost or length which the proceeding took to resolve, as my reasons demonstrate. The commercial transactions between plaintiff, defendant, and third party Mr Lee, were complex and perplexing. I was unable uncritically to accept the narrative advanced by any of the three principals. This was what made the present proceeding, which should have been straightforward, so difficult and perplexing. The complexity and time taken owed nothing to the involvement of the plaintiff's proprietary claim.
3. Finally, the complaint about what I found to be a bogus text has an element of the pot calling the kettle black. I had to make my determination despite being placed in:

"the unhappy situation where I [found] myself ... [unable] uncritically to believe any of the three principals". ([2025] VCC 392 [81])

1. It follows from what I have said that I do not accept Mr Miller's contention based on Rule 63A.04(1) that I should reduce the costs which would otherwise be payable to the plaintiff by reference to its failure in making a proprietary claim.
2. The costs orders sought by the plaintiff should be made.

I certify that these 9 pages are a true copy of the judgment of his Honour Judge Macnamara delivered on 1 July 2025.