LA Concrete Pty Ltd v Sywak

District Court of NSW|2011-08-24|Before: Mr J

REASONS FOR Judgment 1The plaintiffs sue the defendant for a principal sum of $467,000.00 lent to the defendant, who was their accountant, plus interest. 2The loan was made to the defendant in eight separate advances over the period from 5 September 2002 to 29 September 2005, as follows:

3The defendant does not dispute that he borrowed $467,000.00 but he contends that he should not have to repay the money. 4The defendant says the advances were made to him by the second defendant, Mr Luigi Canal, and not by LA Concrete Pty Limited, the company. He contends that in respect of the first to sixth advances the proceedings commenced by Mr Canal are out of time such that Mr Canal is statute barred from recovering those amounts. As to the seventh and eighth advances, the defendant contends that by reason of the course of dealings between the parties, any requirement to repay those advances must be triggered by a demand, and no such demand has yet been made by Mr Canal. Thus, the defendant says, the claim in respect of the seventh and eighth advances is premature. 5To understand the defendant's case it is necessary to make reference to the history of these proceedings, which were originally commenced by the first plaintiff only. LA Concrete Pty Ltd filed the Statement of Claim on 11 September 2009. Mr Luigi Canal was only joined as the second plaintiff on 2 December 2010, that is more than six years after the first six advances made to the defendant. 6The plaintiffs say that the advances were made to the defendant by the first plaintiff, LA Concrete Pty Limited and that the involvement of Mr Canal in effecting the advances was as agent for the company. 7If the lender was in fact LA Concrete Pty Limited, the defendant raises no defence to the plaintiffs' claim. 8The substantive issues for determination are:

Factual background 12The factual background is largely undisputed. The defendant gave no evidence, and the evidence of Mr Canal, upon which the plaintiffs relied, went unchallenged. 13From 1984 the defendant was engaged by Mr Canal as his accountant, to provide accounting services for him personally, for his wife and for various companies of which he was a director or in which he had an involvement. One such company was the first plaintiff, LA Concrete Pty Ltd. The shareholders of LA Concrete Pty Ltd were Mr Canal and his wife, and they were its directors. Mr Canal was the secretary and signatory on the bank accounts. 14LA Concrete Pty Ltd operated a business whose principal activity was the construction of residential concrete slabs. LA Concrete Pty Ltd also acted as the corporate trustee of Mr Canal's self-managed superannuation fund, the LA Concrete Superannuation Fund. 15LA Concrete Pty Ltd operated separate bank accounts with the Commonwealth Bank at Smithfield in respect of its construction business and the superannuation fund. The LA Concrete Pty Ltd business account was Account No 10022312. The LA Concrete Superannuation Fund accounts were Account No's 10042911 and 10032756. 16On 5 September 2002, in a telephone conversation, Mr Sywak told Mr Canal he needed to borrow some funds and asked for a loan. Mr Canal asked how much Mr Sywak needed and he said $7,000.00, and that he would pay it back as soon as possible. Mr Canal drew a cheque for $7,000.00 from the LA Concrete Pty Ltd cheque account (10022312) in favour of Parlamatu Pty Ltd, the payee nominated by Mr Sywak. It is not disputed that the $7,000.00 was advanced by way of loan to Mr Sywak (the First Advance). 17On 7 March 2003, in a meeting at Mr Sywak's office in Homebush, Mr Sywak asked Mr Canal for a further advance by way of a loan, in an amount of $50,000, which he said he needed for a business deal. Mr Canal drew a cheque for $50,000.00 from the LA Concrete Pty Ltd cheque account (10022312) in favour of Sywak and Associates, the payee nominated by Mr Sywak. It is not disputed that the $50,000.00 was advanced by way of loan to Mr Sywak (the Second Advance). 18On 24 July 2003, in a meeting at Mr Sywak's office in Homebush, Mr Sywak asked Mr Canal for a further advance by way of a loan, in an amount of $100,000.00, which he said he needed for a business deal. He told Mr Canal he would give a personal guarantee. Mr Canal said that would be fine and drew a cheque for $100,000.00 from the LA Concrete Superannuation Fund cheque account (10042911) in favour of Sywak Super Fund, the payee nominated by Mr Sywak. It is not disputed that the $100,000.00 was advanced by way of loan to Mr Sywak (the Third Advance). Mr Sywak prepared a document that was signed by him and Mr Canal, in the following terms (Annexure 'D'): "I Peter Sywak hereby acknowledge that I am in debt to Luigi Canal for the amount of $157,000.00 (one Hundred and Fifty Seven Thousand Dollars), to be repaid within 12 months from 24 th July 2003. I further acknowledge that I personally guarantee the amount of $157,000.00 and an interest charge of 8% per year." 19Following a request for a further advance of $60,000.00 by way of a loan in a meeting at Mr Sywak's office in Homebush, on 29 August 2003 Mr Canal drew a cheque for $60,000.00 from the LA Concrete Superannuation Fund cheque account (10042911) in favour of Sywak Super Fund, the payee nominated by Mr Sywak. It is not disputed that the $60,000.00 was advanced by way of loan to Mr Sywak (the Fourth Advance). 20Following a request for a further advance of $70,000.00 by way of a loan in a meeting at Mr Sywak's office in Homebush, on 26 September 2003 Mr Canal drew a cheque for $70,000.00 from the LA Concrete Superannuation Fund cheque account (10042911) in favour of Sywak Super Fund, the payee nominated by Mr Sywak. It is not disputed that the $70,000.00 was advanced by way of loan to Mr Sywak (the Fifth Advance). 21Following a request for a further advance of $70,000.00 by way of a loan in a meeting at Mr Sywak's office in Homebush, on 15 December 2003 Mr Canal drew a cheque for $70,000.00 from the LA Concrete Superannuation Fund cheque account (10042911) in favour of Sywak Super Fund, the payee nominated by Mr Sywak. It is not disputed that the $70,000.00 was advanced by way of loan to Mr Sywak (the Sixth Advance). 22Following a request for a further advance of $70,000.00 by way of a loan in a meeting at Mr Sywak's office in Homebush, on 28 April 2005 Mr Canal drew a cheque for $70,000.00 from the LA Concrete Superannuation Fund cheque account (10032756) in favour of Sywak & Associates, the payee nominated by Mr Sywak. It is not disputed that the $70,000.00 was advanced by way of loan to Mr Sywak (the Seventh Advance). 23Following a request for a further advance of $40,000.00 by way of a loan in a meeting at Mr Sywak's office in Homebush, on 28 September 2005 Mr Canal drew a cheque for $40,000.00 from the LA Concrete Superannuation Fund cheque account (10042911) in favour of Sywak & Associates, the payee nominated by Mr Sywak. It is not disputed that the $40,000.00 was advanced by way of loan to Mr Sywak (the Eighth Advance). 24Thus, by 28 September 2005, a total of $467,000.00 had been lent to the accountant, Mr Sywak. 25It seems that little, if anything, transpired so far as the loan was concerned, for the next 3 years, until January 2009. Then, on 27 January 2009 there was a meeting at Mr Sywak's office, when Mr Canal gave him a handwritten note (Annexure 'K'), and a conversation to the following effect occurred: Canal: "I've made up a bit of a list here with regards to the money owed." Sywak: "How did you work out this figure?" Canal: "This is compound interest from the first loan to the end of 2008." Sywak: "Alright. I haven't got any money to give you at the moment until the property is sold and the liquidator makes the distributions. There is a factory I own at Wetherill Park which sold for $1 million by the liquidator. But until the liquidator distributed the funds I have no funds to give you. It shouldn't be too long for the liquidator to settle." 26The handwritten note that Mr Canal handed to Mr Sywak, read as follows: Loans to Sywak to 2008 5/09/2002 $7,000 compound int 8% $ 11,108 13/03/2003 $50,000 to 09 $ 79,343 25/07/2003 $100,000 $ 146,343 29/08/2003 $60,000 $ 88,160 26/09/2003 $70,000 $ 102,853 15/12/2003 $70,000 $ 102,853 28-4-03 (sic) $70,000 to 09 $ 95,234 29/09/2005 $40,000 $ 50,388 $ 676,872.00

27Mr Sywak then wrote the following at the bottom of the note: "Capital is compounded at original loan time to present.Total principal $467,000" 28On 18 February 2009 Mr Canal met with Mr Sywak in his office when Mr Sywak told him: Sywak: "If the liquidator releases the money from the sale of the factory at Wetherill Park then I will pay you $200,000 of the interest from the loan you gave me." 29A year later, on 3 February 2010, the two men had a conversation to the following effect: Sywak: "If the sale of the Cobbitty property does not go through I will not be able to pay the loan but I am keen to settle the matter. If the sale does not go through I can give you a share in Adellos as repayment worth approximately $550,000.00" Canal: "I don't think that it's possible given Adellos is in liquidation. Besides, this won't even cover the interest on the monies loaned." 30There was a further conversation on 11 March 2010: Sywak: "I want to sell you a share in Adellos for $530,000.00 in repayment of the loan. That way we both benefit." Canal: "How does that work?" Sywak: "You will save $150,000.00 on tax." Canal: "The loan is like a gentleman's agreement. There is no dispute on the loan." Sywak: "We should talk to Visnik and get an agreement between the three of us. Take the property out of Jones' hands and wait for Valad to fast track their development application. You will then get a share in Adellos as repayment of the loan. Canal: "I'm not keen on a further share on Adellos." 31The defendant has made no repayments in respect of the loan.

Who was the lender? 32The defendant contends that the lender was Mr Canal, personally. It was submitted on his behalf that the evidence supports that contention. 33Counsel for the defendant pointed first to Mr Canal's affidavits and to his unequivocal use of the first person, and referred to various paragraphs of Mr Canal's affidavit of 9 June 2011: 5, 6, 7, 9, 10, 12, 15, 16, 17, 18, 19, 20, and so on. 34For example: In paragraph 5, Mr Canal says: "I have loaned the following amounts to the Defendant..." In Paragraph 11 Mr Canal says: "Annexed and marked 'D' is a copy of the loan agreement dated 24 July 2003 between the defendant and I." In Paragraph 19 Mr Canal says: "I did not have a written agreement for the loans made to the defendant." 35Secondly, counsel for the defendant pointed to the document signed by Mr Sywak and Mr Canal on 24 July 2003 (Annexure 'D'). There is nothing in that document, which Mr Canal described as 'the loan agreement' to indicate that Mr Canal signed it other than in his personal capacity. And the document itself acknowledges that Mr Sywak is in debt to Mr Canal. There is no mention of the company. 36Thirdly, counsel for the defendant submitted that the records of the company and the superannuation funds do not support the proposition that the lender was LA Concrete Pty Ltd. As regards the first and second advances, the company accounts of LA Concrete Pty Ltd do not specify a loan from the company to the defendant. As to the third, fourth, fifth, sixth, seventh and eighth advances, there is no record in the records of the superannuation fund of any loans, let alone the advances it is alleged were made by the company, as trustee for the fund, to the defendant. 37The plaintiffs contend that the lender was the company, LA Concrete Pty Ltd. The first two advances were made by the company from its bank account, and the subsequent advances were made by the company as trustee for the Canal superannuation fund, from the LA Concrete Superannuation Fund bank accounts. 38The use of the first person by Mr Canal when discussing the advances in his affidavit, and in the note signed by him on 24 July 2003 (Annexure 'D'), is not probative of the proposition that he personally was the lender. Furthermore, that document was prepared by Mr Sywak, not Mr Canal, which undercuts the defendant's reliance on it. The submissions point out that Mr Canal is not a professional person, and that his conversations were at all times conducted in his capacity as a director of the company: "Corporations have no capacity to act other than by human agents, and there is a frequent failure by lay people to distinguish between the actions of a corporation with which they are connected and their own actions." 39So far as the records are concerned, the accounts of LA Concrete Pty Ltd show loans in the exact amounts as the advances claimed, the inference being that the loans were the advances to Mr Sywak. There was no evidence from Mr Sywak, who prepared the accounts, to the contrary. Similarly, the fact that the subsequent advances do not appear in the accounts of the superannuation fund has to be viewed in the light of the fact that Mr Sywak prepared those accounts, and there must be a serious question as to their accuracy. 40In the plaintiffs' written submissions, counsel argues that the source of the funds advanced, namely the company bank accounts, is powerful evidence that the company was the lender. The defendant, as the company's accountant, would have to have known this was the case, but he did not give any evidence to the contrary. The reference in the company accounts for the year ending 30 June 2004 to the first and second advances was described as evidence of the utmost potency: "There could be no clearer indication of the fact that the loans were from the first plaintiff. It follows that from the outset of the advances the identity of the lender was acknowledged by the defendant as the first plaintiff." 41Counsel for the plaintiffs then made a series of submissions highlighting the inherent improbability of the defendant's contention: "Fourthly, it is important to reflect upon the position of (a) the defendant and the duties he owed the first and second plaintiff's, and (b) the duties the second defendant owed the corporate first plaintiff, if the defendant's contention about the identity of the lender is correct. The second plaintiff owed the first plaintiff director's duties and fiduciary duties. This was the case whether the first plaintiff acted in its own capacity or as trustee of the super fund. It would have been a breach of such duties for the second plaintiff to have caused the first plaintiff to simply hand over money it owned to Mr Canal or the defendant. It would have been a breach of such duties for the second plaintiff to have caused the first plaintiff to hand over money it held as trustee of the super fund. Mr Canal was simply not entitled to take money from the first plaintiff's accounts as he wished, nor, as a beneficiary of the super fund, could he simply access moneys himself. If the arrangement was as the defendant contends, then the first plaintiff would have an action against Mr Canal for causing it to lose $57,000.00 for no financial advantage. Similarly, the defendant would have caused the first plaintiff as trustee of the self-managed super fund to lose $410,000.00 without the security of recovery for any financial advantage. It is inconceivable that the first and second plaintiff's accountant would have permitted such an arrangement to have existed. Apart from permitting such flagrant breaches of the basic duties owed, the defendant himself would have been at the very least in breach of the duty of care owed to each to ensure that their affairs were conducted with legitimacy. The defendant's case is incoherent in that it effectively asserts that as the accountant to the plaintiffs, the defendant would have permitted an arrangement akin to theft when no reason is advanced as to why this could possibly have been the intention of the parties."

The relevant legal principles 42The objective theory of contract is now clearly established in Australian contract law: Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407 at 322. 43The rights and liabilities of parties to a contract are to be determined according to the principle of objectivity: Pacific Carriers Limited v BNP Paribas [2004] HCA 35 at [22]. 44In Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52 at [40] the High Court said: "It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party, by words and conduct, would have led a reasonable person in the position of the other party, to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties and the purpose and object of the transaction". 45This principle of objectivity extends to include the identification of the parties to the contract: Air Tahiti Nui Pty Limited v Mackenzie [2009] NSWCA 429 at [28]. Thus, the identity of the parties must be determined objectively from the surrounding circumstances, in the context of what was said or done at the time of contracting: Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407 at 322. 46In DSE (Holdings) Pty Limited v Intertan Inc [2004] FCA 1159, Justice Allsop, as he then was in the Federal Court, cited with approval the following passage in First Energy (UK) Limited v Hungarian International Bank Limited [1993] 2 Lloyd's Rep 194 at 196, per Steyn LJ: "The theme that runs through our law of contract is that the reasonable expectations of honest (persons) must be protected. It is not a rule or principle of law. It is the objective which has been and still is the principal moulding force of our law of contract. It affords no licence to a judge to depart from binding precedents. On the other hand, if the prima facie solution to a problem runs counter to reasonable expectations of honest (persons), this criteria sometimes requires re-examination of the problem to ascertain whether the law does indeed compel demonstrable unfairness."

Findings and conclusions on the identity of the lender 47It is manifestly evident that the lender of the advances to the defendant was the company, LA Concrete Pty Ltd, and not the individual, Mr Canal. The fact that the monies lent were sourced from the company is, in the absence of any credible evidence to the contrary, conclusive. The only objective contra-indicator to the proposition is the language used by Mr Canal in his affidavit, but as the plaintiffs' counsel submitted, that is the language of a lay person in 2011, and does not, in my view, provide much by way of probative assistance in determining the objective intention of the parties in 2003 to 2005, when the monies were advanced. 48These considerations, combined with the evidence in the company accounts that it was the lender, accounts prepared by the defendant, and the inherent improbability of Mr Canal having been the lender in his own right, for the reasons articulated by counsel for the plaintiffs, put the matter beyond doubt. 49I therefore find that the lender was LA Concrete Pty Ltd, as the plaintiffs have contended all along.

The plaintiffs' alternative case 50If indeed the lender had been Mr Canal personally, then the defendant contends that time for the recovery of the loan began to run from the date of each advance. 51The relevant legal principle, relied upon by the defendant to defeat the plaintiffs' alternative claim in the present case, is that a simple loan is repayable at once, without the need for any demand. Thus, the limitation period commences on the date when the loan was made: Young v Queensland Trusties Limited (1965) 99 CLR 560 at 566. In Woodward v McGregor 2003 NSWSC 672, Associate Justice McLaughlin at [83] to [86] articulated the consequences of this principle in the following way: " It is settled law that a simple loan expressed to be repayable on demand is repayable at once, without the need for any demand. Further, that a demand is thus not a condition precedent to a right to commence an action for recovery of the debt. Accordingly, the limitation period commences on the date when the loan was made. In Young v Queensland Trustees Limited (1965) 99 CLR 560 the High Court of Australia (in the joint judgment of Dixon CJ, McTiernan and Taylor JJ) said, at 566, A loan of money payable on request creates an immediate debt. Speaking of a promissory note payable on demand Parke B in Norton v Ellam (1837) 2 M&W 463 [150 ER 839] said: "It is the same as the case of money lent payable upon request, with interest, where no demand is necessary before bringing the action. There is no obligation in law to give any notice at all; if you choose to make it part of the contract that notice shall be given, you may do so. The debt which constitutes the cause of action arises instantly on the loan. Where money is lent, simply, it is not denied that the statute begins to run from the time of lending" (at 464 [at 840]). This was settled at the end of the seventeenth century, as appears from the report of Collins v Benning (1700) 12 Mod 444 [88 ER 1440]. (See, also, for example, Rumble v Ball (1712) 10 Mod 39; Garden v Bruce (1868) LR 3 CP 300; Re Brown's Estate [1893] 2 Ch 300 at 305; Bradford Old Bank v Sutcliffe [1918] 2 KB 833; Tate v Crowdson [1938] Ch 869 at 881; Lloyd's Bank v Margolis [1954] 1 WLR 644 at 648.) It follows, therefore, that in New South Wales a person who claims repayment of a loan, payable upon demand, which loan is not the subject of a deed, has only six years from the date of the loan in which to bring proceedings for recovery." 52I am not required to decide whether recovery of some of the advances made to the defendant would have been statute barred, but for my part I would have held that they were not. It is clear that in the meeting on 27 January 2009, when Mr Canal presented Mr Sywak with the handwritten note (Annexure 'K') and Mr Sywak wrote on it, the various advances were consolidated into one composite debt, and it was agreed that interest would accrue on that debt. In my view, the time for repayment was re-set by that agreement and it follows that recovery of the loan would not be statute barred, even if the lender had been Mr Canal. That the time for repayment had changed is patent from the subsequent conversations between the two men on 18 February 2009, 3 February 2010 and 11 March 2010 set out above. 53Nor do I need to determine the validity of the final submission made on the defendant's behalf, to the effect that the second plaintiff's claim in respect of the seventh and eighth advances is premature, because he has made no formal demand for repayment. It was contended that the course of dealings between the second plaintiff and the defendant required that a formal demand be made for repayment before those advances became repayable. I'm not sure I understand the principle upon which the defendant relies to advance this proposition, but whatever it might be, at the very least, the commencement of proceedings by the second plaintiff would act as a demand. 54But I will content myself with not deciding this point, such that the second plaintiff could, if events were so to fall out, make the demand and commence fresh proceedings for the recovery of those advances.

Interest 55The plaintiffs claim interest on the loan at 8% compounded annually. It relies upon the events and conversations in the meeting of 27 January 2009 between Mr Canal and Mr Sywak. The contention is that interest became payable on a compound basis on each advance from the date it was made. 56The defendant's contention is that no interest was agreed. The defendant submitted, alternatively, that if having regard to the conversation on 24 July 2003 and the document prepared by Mr Sywak and signed by him and Mr Canal (Annexure 'D'), and the conversation on 27 January 2009 and the document prepared by Mr Canal on which Mr Sywak wrote (Annexure 'K'), interest were to be found to be a term on the contract, the objective evidence shows: "(a) no interest applies on the first three advances until 24 July 2003; thereafter, simple interest of 8% applies (assuming such loans are not now statute barred) until 27 January 2009; thereafter, from 28 January 2009 to date when any compound interest, should it be found, could be said to apply. (b) For the loans 4 - 8, a simple interest rate of 8% would apply from the date of the loan until 27 January 2009 (as they were categorised as further loans which would mean along the same terms as the original loans) and thereafter from 28 January 2009 to date would any compound interest apply." 57In my view it is indisputably clear that it was the objective intention of the parties, in the agreement they reached on 27 January 2009, that the defendant was to be liable for interest at 8% compounded annually from the date of each respective advance making up the consolidated, composite debt of $467,000.00 until repayment of all or any part of it. 58I have been provided by the parties with interest calculations from which it emerges that the amount owed by the defendant, when compound interest is added to the principal sum of $467,000.00, exceeds $750,000.00, being the jurisdictional limit of the District Court. 59The question arises, therefore, whether the first plaintiff is entitled to judgment for an amount in excess of that jurisdictional limit.

The jurisdictional limit of the District Court 60The District Court has jurisdiction to hear and dispose of actions up to the jurisdictional limit of the Court: s 44(1)(a)(ii) of the District Court Act 1973 . The jurisdictional limit is defined as $750,000: s 4. By s 44(2) interest pursuant to s 100(1) of the Civil Procedure Act 2005 is not included in any such calculation. 61Counsel for the plaintiffs conceded that the claim for interest is a contractual claim forming part of the action before the court, such that the amount of interest is to be used when calculating whether or not the claim exceeds the jurisdictional limit of the court: Degman Pty Ltd v. Wright (1983) 2 NSWLR 348 at 352. The effect of this concession is that those claims are to be used when calculating whether or not the claim exceeds the jurisdictional limit of the Court. 62The question of recovery beyond the court's jurisdiction depends, therefore, on whether the first plaintiff can enliven the extended jurisdiction provided for in s 51 of the District Court Act 1973 . That section provides that the Court may exercise jurisdiction to hear and dispose of an action where the amount claimed exceeds the jurisdictional limit, if no objection to the Court's jurisdiction has been raised by any of the parties prior to 3 months before the trial of the action commences. In that event, the maximum amount for which judgment may be given is an amount equivalent to 50 per cent above the jurisdictional limit of the Court as at the time the action was commenced. 63The relevant portions of s 51 read as follows: " 51 Consent jurisdiction (1) This section applies to an action or cross-claim that, but for this section, the Court would not have jurisdiction to hear and dispose of by reason only of the fact that the amount claimed exceeds the jurisdictional limit of the Court as at the time the action was commenced. (2) The Court has, and may exercise, jurisdiction to hear and dispose of an action or cross-claim to which this section applies: (a) if a party to the action or cross-claim files a memorandum of consent in respect of the action or cross-claim, or (b) if no objection to the Court's jurisdiction has been raised by any of the parties prior to 3 months before the trial of the action commences. (4) The maximum amount for which judgment may be given in relation to an action or cross-claim that is dealt with pursuant to subsection (2) (b) is an amount equivalent to 50 per cent above the jurisdictional limit of the Court as at the time the action was commenced." 64In the present proceedings, no memorandum of consent was filed. But nor was any objection to the Court's jurisdiction raised by the defendant more than three months before the commencement of the trial or, in fact, at all. Accordingly, if the first plaintiff's claim as it stood 3 months prior to the trial exceeded $750,000.00, the extended jurisdiction is enlivened. 65Whether, in a particular case, an adequate identification of the amount claimed has been made is a question of fact: Richards v Cornford [2010] NSWCA 99 at [40]. 66The defendant submitted: "... the Amended Statement of Claim was only amended on the first day of hearing to include a claim for compound interest and no opportunity was given for the Defendant to either consent or object to the changing of the jurisdictional limit. The Statement of Claim and Amended Statement of Claim each claimed amounts underneath the jurisdictional limit; indeed the Statement of Claim was higher than the Amended Statement of Claim in the amount claimed, being $729,317.55 as opposed to $720,283.35. The issue of consent or otherwise never arose, hence the lack of consent or objection cannot be held against the Defendant, as per section 51(2) of the District Court Act 1973. If there were any doubt, the Defendant objects to any increase in the jurisdictional limit." 67The plaintiffs submitted: " The plaintiffs' case as it stood 3 months prior to the trial, namely as at 24 May 2011, did not include any claim for compounding interest and did not include the last annexure to Mr Canal's affidavit of 9 June 2011, including the claim for compounding interest. The claim as it stood included a claim for simple interest at 8% which as at 7 October 2010 was said to be the amount of $250,892.05 and continuing at $102.36 per day, a figure which is the total of the daily simple interest rates provided in the attached schedule. The Amended Statement of Claim was provided to the defendant in December 2010. It follows that any amount of simple interest in excess of the jurisdictional limit is recoverable by either plaintiff in consequence of the fact that the defendant has not filed any objection to the jurisdictional limit as required by s 51(2)(b)." 68In Richards v Cornford [2010] NSWCA 99 the Court of Appeal examined the necessary or permissible mechanisms by which a defendant was to be put on notice that the claimed amount exceeded the jurisdictional limit. The court examined the particulars provided to the defendant and said, at [40]: " For present purposes, the question is whether the statement of particulars was adequate to put the defendant on notice, in the absence of an express statement to this effect, that the plaintiff was claiming an amount in excess of the jurisdictional limit of the Court. In the circumstances of this case, it may be accepted that the defendants' advisors would have known the jurisdictional limit, would have been able to calculate readily the upper limit of the claim for economic loss and would have reached the figure noted above. They would also have noted the claims for non-economic loss and domestic assistance which, although unquantified, would have put beyond doubt the fact that the total amount of damages sought was well in excess of $750,000." 69In the present case, t he Amended Statement of Claim, filed on 2 December 2010 and provided to the defendant's solicitors, sought the following relief:

Judgment in the sum of $467,000.00.
Interest at 8% per annum which at 7 October 2010 was the sum of $250,892.05 and continues to accrue at $102.36 per day. 70There was no express claim for a judgment in excess of the jurisdiction, but as in Richards v Cornford it may be assumed that the defendant's advisors would have known the jurisdictional limit and would have been able to calculate readily the amount claimed having regard to the anticipated date of hearing, and seen that if successful, the plaintiffs' claim was in excess of $750,000.00. 71Viewing the plaintiffs' claim 3 months prior to the trial, it was readily ascertainable that at trial, the plaintiffs' claim would exceed $750,000.00: Principal $ 467,000.00 Interest to 7 October 2010 $ 250,892.05 Interest from 8 October 2010 to trial $ 32,755.20 (320 days x $102.36) $ 750,647.25

72For these reasons, I find that an adequate identification of the amount claimed was made to the defendant, who made no objection to the Court's jurisdiction. Accordingly, the first plaintiff is entitled to judgment in the amount claimed, even though it exceeds the jurisdictional limit. 73The amount claimed, however, is calculable by reference to the claim actually made as at a date 3 months prior to the trial, namely a claim for simple interest, accruing at $102.36 a day. 74As at the date of judgment, the amount of the claim notified in accordance with s 51(1) of the District Court Act 1973 , was as follows: Principal $ 467,000.00 Interest to 7 October 2010 $ 250,892.05 Interest from 8 October 2010 to trial $ 32,755.20 (320 days x $102.36) Interest from 25 August to 7 September 2011 $ 1,330.68 (13 days x $102.36) $ 751,977.93

Disposition 75For the reasons given, I direct the entry of judgment for the first plaintiff against the defendant for an amount of $751,977.93.

Costs 76As presently advised, there is no basis for a departure from the usual order that costs follow the event. 77In the present case, having regard to the defendant's pleading, it was necessary for the second plaintiff to be joined in order that the plaintiffs' alternative case could be presented, in the event that their primary case was unsuccessful. 78In my view a proper exercise of the discretion conferred by s 98 of the Civil Procedure Act 2005 requires that the defendant should pay the costs of both plaintiffs. 79I therefore order the defendant to pay the costs of both plaintiffs. However, in case any party considers that some other order is more appropriate, I give the parties leave to apply for some other order in respect of costs, provided the application is made in writing to the other parties and notified to the court within 14 days. 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: 08 September 2011

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