Tuesday 14 December 2010
KATION PTY LTD v LAMRU PTY LTD;
LEWIS v NORTEX PTY LTD (In liq) (No 5)
Judgment
1 THE COURT: On 12 June 2009 the Court proposed that various orders be made, although orders were not at that time entered: Kation Pty Ltd v Lamru Pty Ltd [2009] NSWCA 145. The relevant orders were directed to be entered by a second judgment delivered on 21 December 2009: Kation Pty Ltd v Lamru Pty Ltd (No 2) [2009] NSWCA 428.
Interest rate issue
2 The orders made by the trial judge (Hamilton J) included an obligation to pay interest on various amounts, identified in the following terms:
"…together with interest at the rates payable under Schedule 5 of the Uniform Civil Procedure Rules 2005".
3 With effect from 1 July 2010, Schedule 5 was repealed. The prescribed rate at which interest is payable under s 101 of the Civil Procedure Act 2005 (NSW) is now identified in r 36.7 of the Uniform Civil Procedure Rules 2005 (NSW) ("the UCPR").
4 On 7 September 2010, Lamru Pty Ltd filed a notice of motion, purportedly in the proceedings in this Court, seeking a variation of the relevant orders so as to replace the words quoted above with the words "prescribed for the purposes of s 101 of the Civil Procedure Act 2005".
5 The Registry routinely made the matter returnable before the Court on 13 September 2010. The parties were given an opportunity to provide brief written submissions in relation to the issues raised. It is doubtful that s 46 of the Supreme Court Act 1970 (NSW) authorises a judge of the Court to vary an order of the Court, or dispose of an application to vary an order. Accordingly, this judgment is a judgment of the Court as originally constituted.
6 The applicant on the motion needed to identify the power to entertain the motion. The orders of this Court having apparently been entered in December 2009 and the power to set aside or vary the judgment or order pursuant to r 36.16 having long since passed, it is doubtful whether the Court would have power to vary the order. In the meantime, an application for special leave in relation to the orders of the Court has been considered by the High Court and rejected. This was not a case in which the orders sought to be varied were made by mistake, whether clerical or otherwise, or did not accord with the orders anticipated by the parties, or that had consequences not intended by the Court. Accordingly, there was no basis for the operation of the so-called "slip rule", as now found in UCPR, r 36.17.
7 In addition to varying the orders of this Court, Lamru sought to vary orders made by the trial judge which had been set aside by this Court, but which had identified the interest payable in the same way. Neither the power to make such an order, nor its purpose, was addressed. Each order identified the date from which interest was to be calculated, the rate at which it was to run, and the date upon which it ceased to run, namely "payment". The effect of an order in that form was to fix the pre-judgment interest rate according to the rates prescribed for post-judgment interest.
8 Questions of power aside, the application is misconceived because it is unnecessary. The order in this Court was made in accordance with s 101 of the Civil Procedure Act. Pursuant to s 101(1), interest is payable on the amount of a judgment which is from time to time unpaid, unless the Court otherwise orders. The Court did not otherwise order for the purposes of this provision. Further, interest payable under sub-s (1) is to be calculated "at the prescribed rate or at such other rate as the court may order": s 101(2). The order made by the Court was for payment at the prescribed rate, according to the terms of the prescription then in force, namely Schedule 5 of the UCPR. The Court did not order that interest be calculated at any other rate.
9 The rate prescribed in Schedule 5 was ambulatory in effect and varied from time to time. An order of the Court which identified that as the means of calculation, was effective to allow for variations in the rate, from time to time. From 1 July of this year, the prescribed rate was no longer found in Schedule 5, but in r 36.7. That change could not alter the purpose or effect of the Court's order. To suggest that an order which simply referred to "the prescribed rate", to use the language of s 101, had some different effect from an order which identified where the rate so prescribed was then to be found, is to import into the construction of court orders an element of literalism, without regard to the purpose of the order, which should be rejected.
10 The trigger for the application, as appears from an affidavit filed in support of the motion, was a claim by solicitors for Mr Lewis, in response to a bankruptcy notice dated 11 August 2010, that no interest accrued on the amount outstanding from 1 July 2010 because there was no prescribed rate of interest under Schedule 5 of the UCPR from that date. The reasoning set out above contradicts that assertion. The omission of Schedule 5 by Amendment 32 of 2010 to the UCPR does not mean that interest ceased to run in respect of judgment debts where the interest rate was identified in the judgment as that prescribed in Schedule 5. At least in the present matter, the judgment should be understood as set out above.
11 In the result, Lamru is correct on the underlying point of law, namely the effect of the judgment. Its motion, however, should be dismissed because the amendment of the judgment sought is not required. Further, no amendment would have been appropriate in any event: the issue in dispute was properly one to be resolved in the bankruptcy proceedings and not by this Court. There should be no order as to the costs of the application.