Supreme Court Act 1935 (WA), s 31, s 32

CIV 1501 of 2001 - Interest on $517,900 at 6% from 30 June 1994 until judgment on 18 May 2009 producing a total judgment of $980,266.

CIV 1974 of 2001 - Interest on $420,000 at 6% from 1 May 1997 until judgment on 18 May 2009 producing a total judgment of $830,386.

Gill v Australian Wheat Board [1980] 2 NSWLR 795

Grincelis v House [2000] HCA 42; (2000) 201 CLR 321

Hungerfords v Walker [1989] HCA 8; (1989) 171 CLR 125

MBP (SA) Pty Ltd v Gogic [1991] HCA 3; (1991) 171 CLR 657

Pilmer v The Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165; 75 ALJR 1067

Ruby v Marsh [1975] HCA 32; (1975) 132 CLR 642

Tipper v Williams (NSW Court of Appeal, 12 May 1993, BC9301903)

Walter Construction Group Ltd v Walker Corporation Ltd [2001] NSWSC 283

Whitaker v Federal Commissioner of Taxation [1998] FCA 262; (1998) 82 FCR 261; (1998) 153 ALR 334

1 EM HEENAN J: Following the delivery of my reasons for decision in these two actions on 18 May 2009, I ordered that judgment be entered for the plaintiff in the first action in the sum of $517,900 and that the plaintiff should also recover interest to be calculated on that sum or so much of the sum as was outstanding at various times at 8% per annum pursuant to s 32 of the Supreme Court Act 1935 (WA) from 1 July 1994, to date but as there might be some issues arising about the calculation of the interest, written submissions from the parties were sought upon the extent of the interest in the hope that this might be agreed, but that failing agreement, I would entertain further submissions in relation to the calculation and quantification of interest.

2 Similarly, I ordered that judgment be entered in the second action for the plaintiff in the amount of $482,000 plus interest to be calculated on so much of that sum as was outstanding from time to time at 8% per annum pursuant to s 32 of the Supreme Court Act but that, again, I would allow the parties an opportunity to confer in the hope of reaching agreement about the calculation of interest and failing agreement, to make submissions as to the calculation and quantification of interest.

3 As a result of those orders the solicitors for the plaintiff filed a draft of a judgment to be entered in formal terms making provision for the payment of the principal sums plus interest and for other incidental orders. This draft made provision for interest to be calculated from specific dates and was initially approved and entered on the assumption, later established to have been mistaken, that the solicitors for the defendants had agreed to all those terms. Once the solicitors for the defendants established that agreement to all those terms had not been reached, the terms of the judgment were corrected accordingly and, although the amended judgment has not been extracted, the terms which I approved were:

1. The defendant do pay to the plaintiff in action CIV 1501 of 2001 the sum of $517,900 plus interest at 8% in accordance with s 32 of the Supreme Court Act in an amount yet to be calculated.
2. The defendant in action CIV 1974 of 2001 do pay to the plaintiff the sum of $482,000 plus interest at 8% in accordance with s 32 of the Supreme Court Act in an amount yet to be calculated.
3. The amounts of $517,900 and $482,000 in the two actions respectively each be payable from the date when judgment was pronounced on 18 May 2009.
4. The matter of interest in both judgments be adjourned for further hearing on a date to be fixed and the parties both make written submissions concerning the calculation of interest prior to that further hearing.
5. The defendant in each action pay the plaintiff's costs to be taxed including all reserved costs except that each defendant shall have liberty to object to some or all of the reserved costs within 14 days.
6. Each defendant produce a minute within 14 days advancing the nature of the orders sought in relation to costs and the plaintiff have seven days after the receipt of such notice to respond.
7. There be liberty to apply.

4 On 21 June 2009 both matters were relisted for hearing before me in chambers to determine the outstanding issues relating to the calculation of the interest claimed and ordered under the judgments.

5 Essentially the issues as to the calculation of interest which remain in dispute concern:

• when, in each of the two cases, the calculation of interest should commence to run;
• whether the calculation of interest should be upon the whole of the amount of the judgment for the entire period from the date when it is decided that any calculation of interest should commence;
• whether there is in fact any entitlement to interest under s 32 of the Supreme Court Act in the view of the alleged effect of s 31 of that Act;
• whether the amount of interest to be calculated should be reduced or the rate of interest reduced having regard to the prospect that, if the debts in respect of which the judgments have been entered had been paid at the due dates, or earlier than judgment, then the plaintiff would probably have been liable to pay taxation on income associated with the recovery of the judgment debt, whether in the shape of interest earned from the use of that money or other income derived from its use;
• that to award interest in the second action would partially defeat the limitation defence raised by the defendant in that action.

6 The primary position of the plaintiff in both actions is that his entitlement to interest has already been concluded by the determination of the claims resulting in the judgment which has been entered, save only for the mathematical calculation of interest over an ascertainable period. It is therefore necessary to explain, in more detail, why the matter of interest was left for agreement or determination and what is the effect of the pronouncement of orders for judgment, which were made.

7 In the first action the plaintiff established that the defendant was indebted to him in the amount of $652,900 as at 30 June 1994 and that this debt had been reduced by a payment, appropriated by the plaintiff to that liability, of $135,000 in June 1996, leaving the balance of principal outstanding from then on as $517,900 which was the amount of the judgment. There was, therefore, potentially some question of whether or not interest on the judgment should only be calculated as from June 1996 on the reduced principal of $517,900 or whether interest should be calculated from the earlier date of 30 June 1994 and, in that case, whether it should be calculated on the higher amount of $652,900 until June 1996, and from that date upon the reduced principal still outstanding of $517,900. It was to cater for any possible issues of that kind among others that the question of interest in the first action was left for further submissions.

8 In the second action the judgment sum of $482,000 represented the aggregate of unpaid fees which had accrued due to the plaintiff for services provided by him between 1 July 1994 and about 15 April 1997 when he ceased providing services to WRS Pacific Pty Ltd (WRS). Accordingly, because the total liability had accrued progressively over time, there was scope for some issue whether interest to be awarded should be calculated upon the whole or part of the indebtedness, during the period when it continued to accrue or whether interest should only be allowed upon the whole of the amount from the time after it had all finally accrued due or whether there should be some, and if so what, adjustment for the fact that during those intervening years the liability had been accumulating.

9 The plaintiff contended that interest should be calculated from the dates when invoices for the respective services were submitted in each of the claims, notwithstanding that, in my reasons, I had concluded that I could not be satisfied exactly when those various invoices were received by the defendants. Consequently, after some further submissions, the plaintiff adopted the position that, in the first action, he should be entitled to interest on the judgment sum as from 30 June 1994. The accounts of WRS at that date acknowledged an indebtedness in that amount to the plaintiff, before they were later amended by the removal of that liability as a consequence of the defendant, Mr P Briggs, agreeing to be personally responsible for it instead. Accordingly, the evidence at the trial which I accepted established that the whole of the money had been owing from 30 June 1994 and that, therefore, there was a basis for the entitlement of interest to commence at that date.

10 When it came to the question of whether or not interest on the liability as it then existed of $652,900 should be calculated until it was reduced by the appropriated payment in June 1996 of $135,000, a number of difficulties for the plaintiff appeared. First, in the pleadings interest had only ever been claimed on the sum of $517,900 alleged to be outstanding at the date of the issue of the writ. Second, there was no sufficient basis in the evidence to establish when the $135,000 appropriated payment had been made or credited. Accordingly, for these reasons, even though they involve shortcomings in the manner in which the plaintiff advanced his claim and supported it by evidence at trial in the first action, I concluded that, although it may involve a result less favourable to the plaintiff than that to which he may have been entitled had he conducted his case differently, all that could be justified in the circumstances was for interest to be calculated on the judgment sum of $517,900 as from 30 June 1994 to the date when judgment was pronounced.

11 Similar difficulties arose for the plaintiff in the second action because, as already stated, the total liability of $482,000 was the product of the accrual of successive accounts for service fees at a date after 1 July 2004 which could not be precisely determined on the evidence. The most which I consider is justified upon the evidence which I have accepted at the trial is that that sum of $482,000 had fully accrued due, at the latest, by 1 May 1997 and it is that date which should be selected as the commencement for the calculation of interest on the whole of the amount until judgment.

12 There were objections to the interest as claimed, even upon such modified bases, by the defendants.

13 The plaintiff in the first action maintained that the various components of the service fees claimed accrued due seven days after the delivery of the respective invoices. However, as I observed in [136] of my earlier reasons for decision, I do not consider that any conclusions can satisfactorily be drawn from the evidence of either Mr Lunt or Mr Briggs about the dates of delivery of those respective invoices. Rather, I considered that the most reliable finding which could be made on the evidence was that the aggregate of the invoices, namely $652,900, had accrued due and was acknowledged by WRS to have accrued due by 30 June 1994. That, therefore, is the starting date for the calculation of any interest in relation to the debt established in the first action.

14 However, the defendant submits that in the statement of claim in that action, interest was only ever claimed from 9 March 2001 and that, accordingly, on the pleadings, no interest should be awarded for any earlier period. In the statement of claim in that first action the plaintiff alleged that he had made written demand of Mr Briggs for the payment of the whole of the moneys due, $517,900, on 23 February 2001 requiring payment to be made on or by 9 March 2001. The pleading then proceeded to allege that the demand for payment had not been satisfied and that accordingly, the debt was recoverable with interest from then on.

15 But this was not the way in which the trial was conducted. At the trial the issues between the parties were whether or not WRS was ever indebted to Mr Lunt in the amount claimed or at all, an issue which itself depended upon whether or not there had ever been a consultancy agreement between Mr Lunt and the company. The trial was also conducted on an issue of whether or not Mr Briggs had ever agreed to be answerable for the alleged debt, as the plaintiff asserted in reliance on the Coco's letter, in return for the liability being removed from the balance sheet of WRS. There was no suggestion in the evidence, nor in the submissions at trial, that the alleged debt of WRS to Mr Lunt was only ever payable upon demand or that, upon Mr Briggs agreeing to be answerable for that debt, his liability only arose on or after a demand for payment. The case was conducted and determined on the footing that the issues were whether or not WRS, and then Mr Briggs, were ever indebted for the outstanding balance of the service fees. The contest was conducted on the footing that if there were any such liability it accrued due, either seven days after the service of the various invoices or, as I have already described, from the date of unequivocal admission that the debt was owing - as contained in the 30 June 1994 balance sheet of WRS.

16 There was, accordingly, no scope for any suggestion that the defendant, Mr Briggs, would be prejudiced in the way his defence was conducted at trial if an amendment was sought and allowed to the pleadings in the first action seeking interest for the period or periods during which the debt was found to have accrued due. This is subject to any potential limitation defence but, later, I address and reject submissions relating to limitation issues. Consequently, I granted leave for Mr Lunt to amend in the first action to seek interest from 30 June 1994 and treated that amendment as having been made. The defendant did not suggest that he desired to put in any amended defence, nor did his counsel submit that any material prejudice would be suffered by the amendment.

17 In allowing the amendment to the date on which interest was claimed in the first action, I expressly reserved for consideration the question whether interest could or should be allowed as claimed and, if so, in what amount. Those reserved issues are, of course, part of the subject of these present reasons.

18 This brings me to the question of whether or not interest could be calculated on the whole of the $652,900 from 30 June 1994 until that balance was reduced to $517,900 by the appropriation of the payment said to have been made by Mr Lunt in June 1996. The first thing to observe about the potentiality is that neither in the original statement of claim nor in the statement of claim as amended did the plaintiff ever seek interest on a sum greater than $517,900. The second observation to make is that, as explained in my reasons at [200] and [201], Mr Briggs had denied that Mr Lunt was ever entitled to appropriate the sum of $135,000, or any other sum, in reduction of what he asserted was a non-existent liability and he refused to give any recognition or credit to that alleged reduction. The circumstances of how and exactly when the payment was appropriated in reduction of the original debt were complicated and did not require a final determination. As the plaintiff was prepared to give credit for that reduction, that result could only be advantageous to the defendant Mr Briggs and I therefore proceeded on the footing that the credit should be given. Consequently, I consider that the approach to adopt in relation to the amount of the liability upon which interest, if any, should be calculated and the starting date for that calculation is to take the reduced sum of $517,900 as the principal outstanding and to compute interest from 30 June 1994 being the balance sheet date when the liability (before reduction) was acknowledged.

19 Somewhat similar but not identical controversies arise in relation to the plaintiff's claim for interest on the amount of $482,000 in the second action. In this case the liability for service fees began to accrue in respect of services provided on and after 1 July 1994. The controversy is in determining when that sum, or any component of it, first accrued due. The plaintiff's approach is to maintain his claim that the various components of the service fees accrued due and payable seven days after service of each of the invoices for the particular components. A schedule of accounts rendered with their dates forms part of the statement of claim in the second action. Had I been persuaded that each of those invoices had been served on or about the dates they bear, I would have concluded that the amount of each invoice therefore accrued due seven days later. Again, however, as explained in my earlier reasons at [137] - [144], I was not satisfied that a finding could be made, essentially on Mr Lunt's evidence, that each of the invoices had been served upon the company on or about the dates they respectively bore, although it was obvious that many had been served at different times and that negotiations about compromise of the amount outstanding were attempted.

20 Rather, because of my reservations about the reliability of the evidence of the plaintiff, I approached the claim in the second action on the footing that the plaintiff had established an agreement to pay service fees at the rate of $1,000 per day and that 482 days' service over an extended period had been established by Mr Lunt. The uncertainty was over when that total sum had finally accrued due. It was submitted before me in this recent hearing that the whole of the fees had accrued due by the time Mr Lunt finally ceased working for WRS, namely on or about 15 April 1997. Accordingly, allowing an additional seven days being the period in the consultancy agreement after the delivery of an invoice before which the amount of the invoice became payable, and allowing some extra time for the preparation and service of the invoice, it was possible to infer that all the moneys for the service fees, including the last component, had accrued due not later than 1 May 1997. This date is some two years or more before the dates of the early invoices relied upon by the plaintiff and would result in significantly less interest being allowed than claimed, but this seems to me to be the inevitable consequence of the dubious reliability of the evidence of Mr Lunt about exactly when the invoices were served. I am satisfied that they were served well before that date and that its choice provides a foundation for the calculation of the interest without risk of prejudice to the defendant. It is therefore the date which I have selected should be the commencing point for the calculation of interest, if any, in the second action.

21 The next major point raised by counsel for the defendants was that if interest were to be allowed at all, it could not, or should not, be allowed at any rate greater than 6% per annum on the amounts claimed for all or any of the periods during which interest was claimed. The immediate response of counsel for the plaintiff was that no such submission was open in view of the conclusion in my earlier reasons that interest should be allowed at 8% in each case because that conclusion had been carried into the form of judgment which had been entered up in the action. Before embarking on the question of whether or not the rate of interest is open for reconsideration, it is necessary to identify the basis for the defendants' submissions than no more than 6% per annum could be awarded as interest in these circumstances.

22 Counsel for the defendants submitted, and I accept, that none of the terms of the consultancy agreement, nor the agreement by Mr Briggs that he would be personally answerable for the liability of WRS as evidenced in the Coco's letter, contained any agreement for the payment of interest on service fees in the event of delayed payment or otherwise. Counsel also submitted that there was no implied term nor any statutory provision to render the unpaid balance of service fees payable with interest and I also accept that submission. Counsel then submitted that these claims for interest did not rely, and could not rely, on any basis on which interest might be allowed in equity against a defaulting fiduciary or trustee, nor did they constitute claims for interest in the nature of damages at common law so as to be eligible for the application of the doctrine and principles described in Hungerfords v Walker [1989] HCA 8; (1989) 171 CLR 125.

23 The only basis for any award of interest, according to these submissions, was s 32 of the Supreme Court Act 1935 (WA) which, also, was the only basis upon which the plaintiff's pleadings relied for the claims for interest. Again, I accept those submissions. Counsel then submitted that while, in a claim for contract, it was open for the parties, subject to the provisions of the Credit Act and the Consumer Credit Act, to agree upon any rate of interest which may be payable, and that in claims for damages otherwise than under a contract the amount of interest which a court could award under s 32 was at the court's discretion (subject to established principles), the maximum amount of interest which could be granted in a contractual claim, where there was no specific identification of the amount of interest payable, is 6% per annum because of s 31 of the Supreme Court Act, which provides:

1. Interest payable under contract and otherwise

(1) Subject to the provisions of the Credit Act 1984, the Consumer Credit (Western Australia) Act 1996 and the Consumer Credit (Western Australia) Code, there shall be no limit to the amount of interest which any person may lawfully contract to pay.

(2) In all cases where interest for the loan of money, or upon any other contract, may be lawfully recovered or allowed in any action, suit, or other proceeding in the Supreme Court, or any other court of law or equity, but where the rate of such interest has not been previously agreed upon by or between the parties, it shall not be lawful for the party entitled to interest to recover or be allowed in any such action, suit, or other proceedings above the rate of $6 for interest or forbearance of $100 for a year, and so after that rate for a greater or lesser sum or for a longer or shorter time.

24 Although s 31 has been amended in several respects in recent years, the maximum rate of interest at 6% has been fixed at that amount since 1935 at the latest. The section, which appears to have attracted surprisingly little judicial attention, is noted by Dr J Edelman and Mr D I Cassidy QC in their work Interest Awards in Australia (2003) [11.22], where the learned authors observed of this section:

First, it provides that subject to limits imposed by some consumer protection statutes there is no limit on the amount of interest that a person may agree to pay. It goes on to provide that contractual interest may be recovered in any court of law or equity but imposes a limit at 6% in the absence of an antecedent agreement as to the rate. It is submitted that, up to this maximum, the rate to be allowed is within the discretion of the court.

25 Accordingly, I accept the submission by counsel for the defendants that the maximum rate of interest which could or should be awarded is therefore 6%. This leaves the question of whether or not my reference to an entitlement to interest at 8% per annum in my previous reasons for decision and in the judgment which has since been entered allows this conclusion to be accommodated otherwise than on appeal.

26 At this point I interpose to observe that no submissions were made nor any evidence led at the trial of these actions about the rate of interest which could or should be awarded. There was no attempt by the plaintiff to lead evidence about the commercial rates of interest which applied from time to time during the periods when these moneys were outstanding which could or might be applied by analogy. The question of the rate of interest never got any further than the claim of 8% in the two statements of claim which I have already mentioned and it was, therefore, that situation which led to my reference to that figure in the reasons for decision.

27 Nevertheless, both in the reasons for decision and in the formal judgment which was entered subsequently, and then amended, there was no final determination of the amount of interest due in addition to the principal sum in each judgment. In fact, the quantification of the interest was expressly left open for further submissions in the recognition that its determination might give rise to controversy which would then, if not agreed, require further determination. Accordingly, the reasons for decision and the judgment entered do not contain any final, conclusive or binding pronouncement specifying the amounts of interest due or any final declaration which could lead to the amounts of interest being capable of calculation. Accordingly, I do not consider that there has been any final judgment or determination yet made concerning the nature or extent of the entitlement of the plaintiff in each action to interest and that it is, therefore, open to me to reconsider the choice of the rate of interest in the light of the argument on this point which I have now helpfully received.

28 Accordingly, this is not an occasion for the application of the slip rule (RSC O 21 r 10) although, having regard to the circumstances and the fact that no final determination of the amount of interest recoverable has been made, I consider that it would be open to me to apply that rule and, in case it may be thought necessary, to place reliance as a further basis to support my conclusion to reconsider the choice of the rate of interest. It seems to be extremely undesirable that the defendants should be forced into an appeal over a matter of the choice of a rate of interest when that was not previously addressed and when no final determination of the amount of interest had been made. I therefore will reconsider the choice of the rate of interest and, in the light of these submissions, I am satisfied that no greater rate than 6% can be awarded but that in all the circumstances that is an appropriate rate and should be chosen. In this regard I proceed by analogy with the rates of interest allowed by the court on judgments under the repealed s 142 of the Supreme Court Act 1935 and now under s 8 of the Civil Judgments Enforcement Act 2004 which, while not determinative of the question of interest which might be allowed under s 32, are often treated as a guide.

29 In further opposition to the claims for interest, as originally framed and as amended, counsel for the defendants submitted that awarding interest from 30 June 1994 in the first claim or even from 1 May 1997 in the second claim, would result in the recovery of an entitlement which was time barred by the provisions of the Limitation Act and without regard to the limitation defences pleaded in [15] - [18] of the defence in the second action.

30 However, I consider that so far as any limitation issue is concerned, the question of the entitlement to interest is dependent upon and derivative from the entitlement to principal relief. If, as I have held, the plaintiff is entitled to recover the debts claimed in both actions then, subject to the issues here being examined, he is also eligible for an award of interest under s 32 without involving any different or other issues concerning limitation.

31 The pleadings in the second action do raise a series of defences based on the alleged expiration of time under the Limitation Act. In the reply filed by the plaintiff in that action, there were a series of responses to the limitation defences alleging estoppel and, in effect, alleging acknowledgements of the claimed indebtedness and/or the alleged obligation to pay consultancy fees, including a plea that part of the accruing liability had been acknowledged by WRS in the management accounts for the company for the year ended 30 June 1995. That gave rise to a rejoinder denying the alleged estoppels or any acknowledgements of the existing or accruing liability.

32 At the trial, there was no attention given by either party to these limitation issues nor was I invited to consider whether or not any relevant limitation period had expired or whether there was any estoppel which could be raised against a reliance upon a limitation defence nor any acknowledgement of the debts or accruing liability which would result in any applicable limitation period becoming extended. Neither of the parties referred to the limitation periods at all and there were no submissions made to me, orally or in writing, inviting attention to the limitation issues on the pleadings. Accordingly, I proceeded to determine the case on the basis that the only issues requiring decision were those which had been raised in the course of the trial. Had counsel for the defendants referred specifically to any limitation issues then, of course, it would have been necessary to give attention to the associated issues of alleged estoppel and acknowledgement, but as these had not been pursued in any way in the evidence, I saw no reason to embark upon them. The limitation issues do not purport to have any different application to the claims for interest than they do to the claims for principal relief and, therefore, I see no reason to refuse or reduce the claims for interest on that basis.

Reducing the interest claimed on account of taxation

33 The next point advanced for the defendants in relation to the claims for interest is that, not only are the probabilities that the proceeds of these judgments, including any components for interest, will represent income in the hands of the plaintiff assessable to taxation, but that if the defendants had voluntarily satisfied the debts with interest without resort to litigation, then the amounts of the service fees and any interest paid upon them would represent income in the hands of the plaintiff and also be assessable to taxation. The point of these submissions was to suggest that, at least insofar as applies to interest, the interest recoverable by the plaintiff would not have been fully retained by him because of his obligation to pay income tax and the additional compulsory Medicare levy on those moneys as part of his assessable income. Accordingly, so the submissions went, the amount of interest should be adjusted so as to ensure that the plaintiff is only compensated for his loss, after tax, in the same way he would have been had interest been paid voluntarily. In other words, the award of interest should be reduced so as to remove so much of the interest as would have been payable in taxation and Medicare levy had the interest been paid voluntarily by the defendants without resort to legal action. No authority was cited in support of these submissions although elaborate calculations of interest to be calculated and then reduced to take into account the impact of taxation and the Medicare levy, were set out in the written submissions for the defendants. I have examined those submissions and calculations but for the following reasons I do not consider that it is necessary to resort to them or to embark upon any critical examination of the mathematical approaches taken in the course of propounding the reductions in the calculation of interest contended for.

34 Any question of the liability of a successful claimant to pay income tax, capital gains tax (CGT) or other taxation when all or any part of the proceeds of a judgment recovered involves a series of factors and will often depend upon the nature and extent of the claimant's other assessable income, or other liability for taxation, within the period in which it is suggested that some or all of the proceeds of the judgment may be assessable. Even assuming that the whole of the proceeds of a judgment, when recovered, are assessable to taxation, the amount of the tax will depend upon the nature of the taxation liability, whether for income tax, CGT or GST or some other impost, the amount of any other assessable income which the plaintiff may have for the period or periods concerned, how long the asset may have been held in the case of CGT, and the existence, if any, of deductible expenses. This is not an exhaustive list of factors which may affect the extent of the liability to taxation but it is enough to show that a court cannot assume that all of the proceeds of the judgment alleged to be assessable will actually result in a liability for taxation or, if it does, what the extent of that liability may be. Unless these factors were to be examined it would not be possible to conclude, with any degree of reliability, what the net benefit to the successful claimant would be from the judgment received after accounting for any taxation liability.

35 There are certainly occasions when liability for taxation is taken into account, for example, in the assessment of damages for claims for personal injury for loss of income or profits from a business. In those cases damages are calculated on the basis of the net wages or profits which would be received and retained by the claimants after meeting their taxation liabilities and the resulting allowance is treated as capital, being part of an indifferentiated aggregate of damages, none of which is assessable to income tax: Whitaker v Federal Commissioner of Taxation [1998] FCA 262; (1998) 82 FCR 261; (1998) 153 ALR 334. However, it is only in an action for damages for personal injuries in which any loss of income component is protected from taxation under the rule in Whitaker. In other cases where the claim is for a business loss, the loss of income component and any interest element upon it will normally be taxable in the hands of the plaintiff: Gill v Australian Wheat Board [1980] 2 NSWLR 795. Different considerations may apply in relation to whether or not the payment of a judgment debt gives rise to a liability under the GST legislation: Walter Construction Group Ltd v Walker Corporation Ltd [2001] NSWSC 283 per Hunter J, but it seems that this particular area may still be the subject of controversy - see Edelman & Cassidy Interest Awards in Australia [12.3]. It is not necessary to embark upon this arcane controversy in the present case as there is no suggestion that any adjustment should be made on the basis of a potential GST liability.

36 In certain litigation the proceeds of the judgment in the hands of the claimant may be assessable to taxation, including for income tax, as where, in the present case, the claim is for a debt or debts which are part of a taxpayer's income so that any interest component on that claim would normally be of the same character. Even then it may depend upon whether or not the claimant's income had already been returned and had been subject to assessment as could be expected to be the case where a taxpayer kept his accounts on an 'accrual' basis rather than on a 'cash' or 'receipts' basis.

37 It would be unusual for the entitlement to interest to be reduced on the basis of an actual or probable liability to taxation. The reason for this is that if the proceeds of a judgment, or the interest component of a judgment, are taxable then the tax will be deducted and paid by the taxpayer to the Deputy Commissioner of Taxation and there will be no excessive recovery amounting to unjust enrichment. Nor would the defendant judgment debtor be deprived of any reduction in his liability which might otherwise have occurred because, had the obligation been discharged without resort to litigation, the interest component for late payment, if paid at all, would also attract a liability to taxation in the hands of the recipient. Occasionally, there may be claims of a special nature, such as claims for professional negligence in which, because of timing issues, some reduction in any interest component of the successful claimant's award will be necessary to allow for differences in taxation consequences - see Tipper v Williams (NSW Court of Appeal, 12 May 1993, BC9301903) and Edelman & Cassidy [12.2] but nothing of that type of issue arises in this present case.

38 A more complete answer to the defendants' submission that claims for interest should be reduced on account of a potential taxation liability is provided by an appreciation of the role of statutory interest under provisions such as s 32 of the Supreme Court Act. I have previously observed that this statutory claim is distinct from claims for interest at law upon the Hungerfords v Walker principle or in equity and there is authority to the effect that such allowances do not aim to perfect any compensatory entitlement (see Edelman & Cassidy [intro .23]. It is apparent from Hungerfords v Walker; MBP (SA) Pty Ltd v Gogic [1991] HCA 3; (1991) 171 CLR 657; Grincelis v House [2000] HCA 42; (2000) 201 CLR 321 and Ruby v Marsh [1975] HCA 32; (1975) 132 CLR 642 that the award of interest under legislative provisions corresponding to s 32 is aimed at broad compensation to the plaintiff for being kept out of the use of his money during the relevant period. A court will not stop to enquire what the plaintiff might have done with the money had it been paid on time and so refuse to award statutory interest unless it be shown that the money would have been invested in some way and have achieved a return which the award of interest is intended to match. There are a variety of purposes which the award of interest under s 32 may also serve to achieve such as the purpose of encouraging the early resolution of litigation - Grincelis v House (329), with the result that statutory interest can be available even where the plaintiff has suffered no loss of the use of money - see Pilmer v The Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165; 75 ALJR 1067 and Edelman & Cassidy [intro .24] so that a claim for statutory interest may be an alternative to a claim for interest under the doctrine in Hungerfords v Walker or otherwise, and vice versa.

39 That being the case, there is simply no reason to stop to examine what the plaintiff in this case might have done with the principal of these debts had they been paid when they were due, or some time later with interest but without the resort to litigation. It is enough to establish that there is an entitlement to interest under s 32 and to award that interest as an allowance for the plaintiff being kept out of his money. If this means that, later, in the plaintiff's hands some or all of that interest may be assessable to taxation and a taxation liability may be imposed on the plaintiff, that is no reason to reduce the defendants' liability to pay interest.

40 Accordingly, and for these reasons, I consider that in the first action the plaintiff is entitled to simple interest on the judgment sum of $517,900 calculated from 30 June 1994 to the date of judgment and that that interest should be added to and form part of the judgment entered in favour of the plaintiff pursuant to the orders made on 18 May 2009. That is interest for 14 years and 321 days which amounts to $462,366.

41 This makes the total judgment in the first action $980,266.

42 Also, for these reasons, I consider that in the second action the plaintiff is entitled to simple interest on the judgment sum of $482,000 calculated at 6% per annum from 1 May 1997 to the date of judgment on 18 May 2009 and the interest so calculated should be added to and form part of the sum for which judgment is entered as from that date. That is interest for 12 years and 17 days which amounts to $348,386.

43 This makes the total judgment in the second action $830,386.