Norsemeter Holdings AS v Pieter Boele

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

Wednesday 1 May 2002 ex tempore Revised 10 May 2002

50173/01 Norsemeter Holdings AS v Pieter Boele [No. 3] JUDGMENT 1 In proceedings number 50173/01, an ex tempore judgment was delivered on 19 April 2002 and that judgment granted certain leave to the plaintiff to attend to the adducing of further evidence in relation to the formal proving of the terms of s 49 of the Norwegian Civil Procedure Act 1915. The parties were granted leave to address certain submissions in relation to that matter and those submissions were addressed and are dealt with in a further ex tempore judgment delivered on 24 April 2002. The further ex tempore judgment further granted leave to the plaintiff to adduce further evidence in relation to regulations made under the Norwegian legislation generally dealing with matters concerning interest and granted both parties an opportunity to address submissions on questions of principle as to whether the judgment should be entered in Australian currency or otherwise, and as to the question of the time from which interest is to run and how it is to be calculated. 2 Following the ex tempore judgment of 24 April 2002, written submissions were received from both parties and the Court has heard from both parties in relation to that matter. In that regard the plaintiff was granted leave to read the affidavit of Mr Damien Sturzaker of 30 April 2002. 3 In the summons, the plaintiff sought judgment in the amount of 7,000 Swedish Kroner (SEK), and in the amount of 1,848,687 Norwegian Kroner (NOK), along with interest at the rate accruing under Norwegian law from 12 June 1998 until judgment. 4 The House of Lords decision in Miliangos v George Frank (Textiles) Ltd [1976] AC 443 established that a local judgment could be expressed in a foreign currency. The House of Lords confirmed that this applied to claims in contract in The Despina R [1979] AC 685. The date of currency conversion is then the date of payment on the local judgment debt (ie a date after the date of judgment): see discussion in Miliangos at 468G-469D per Lord Wilberforce (with whom the majority agreed - see at 498C, 501F, also 491B). I accept that making such orders ensures the claimants are not subject to the risk of currency fluctuations. They are simply awarded such an amount, and only such an amount as is necessary to compensate them for the wrong they have suffered. 5 The following form of order suggested by Lord Denning MR, was approved in Miliangos at 463A by Lord Wilberforce: "It is adjudged...that the defendant do pay to the plaintiff [the sum in foreign currency] or the sterling equivalent at the time of payment." 6 The principle that a court can express an order in a foreign currency has been accepted in NSW: Mitsui OSK Lines Ltd v The Ship Minesal Transporter [1983] 2 NSWLR 564 at 569 per Yeldham J; Maschinenfabrick v Altikar [1984] 3 NSWLR 152 at 153C per Rogers J; Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (1989) 15 NSWLR 448 at 463-4 per Kirby P, 471-2 per Hope JA, McHugh JA agreeing at 472; State Bank of NSW v Swiss Bank Corporation (1995) 39 NSWLR 350 at 360-1 per Priestley, Handley and Sheller JJA. 7 The governing principle is that a judgment should be expressed in foreign currency if such an order is sought by the claimant, and that currency is the currency in which the claimant's loss was felt or which most truly expresses its loss: eg The Despina R at 701B per Lord Wilberforce, Mitsui OSK Lines at 569D per Yeldham J; Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co at 464B per Kirby P. 8 In this case the loss was not sustained in Australia, or in Australian currency. The subject of the Norwegian cause of action had no connection to Australia, except that the defendant (being one of a number of parties to the transaction) happened to reside here. 9 The plaintiff is incorporated in Norway. The subject matter of the dispute related to an agreement for the sale of shares in a Swedish company. Pursuant to that agreement the defendant paid SEK 7,000,000 on 12 June 1998. In relation to the significance of the currency of the transaction which is the subject of the dispute, see for example Mitsui at 569D per Yeldham; Westpac Banking Corporation v Mv "Stone Gemini" [1999] FCA 917 at paragraph 2 per Tamberlin J. In those circumstances I accept as of substance the plaintiff's submission that it cannot be said that the currency in which the plaintiff felt its loss was Australian Dollars. The principal loss was felt in the Swedish currency. 10 The costs of pursuing and defending the court proceedings in the Norwegian courts was, I accept, self evidently incurred in Norwegian currency. Further clause 12 of the sales agreement provided both that it was to be governed by Norwegian law and the parties agreed to the Oslo City Court as the choice of legal venue. 11 In these circumstances the proper inference is that the losses were not sustained in Australian currency but in, respectively, Swedish currency (as regards the principal sum) and Norwegian currency (as regards the costs). 12 That this is so is confirmed by the fact that the judgment of the Bogarting Court of Appeal expressed its order in those currencies. 13 In relation to interest the plaintiff seeks payments of the following amounts: SEK 3,265,643.70. This is calculated at the rate of 12 per cent on the principal sum of SEK 7,000,000 from 12 June 1998 up to and including 30 April 2002. NOK 177,503.76. This is calculated at the rate of 12 per cent on the four costs orders made by the Bogarting Court of Appeal on 26 June 2001, which together add up to NOK 1,842,687. The calculation covers the periods 12 July 2001 up to 30 April 2002. The former date is the date on which the obligation to start paying interest commenced under the terms of the order of the Bogarting Court of Appeal. NOK 288. This is calculated at the rate of 12 per cent on the costs order of NOK 6000 made by the Norwegian Supreme Court, on the period 6 December 2001 to 30 April 2002. 14 The 12 per cent rate has been proven to be the applicable rate under Norwegian law. 15 In my view the plaintiff's right to both pre judgment and post judgment interest on the principal sum arises simply as a component of the order of the Bogarting Court of Appeal. The Court ordered the respondents to that action to pay SEK 7,000,000 "plus interest pursuant to the first item of the first subsection 3 of section 3 of the Act relating to Interest on Overdue Payments which accrues with the effect from 12 June 1998, until payment is made." 16 The plaintiff's right to interest on the costs award similarly follows from the terms of the judgment. 17 For a foreign judgment to be enforced within this country, it must be for a definite amount but a judgment is sufficiently definite if the actual amount payable is calculated by application of the mere arithmetic formula: Beatty v Beatty [1924] 1 KB 807 at 816, 818. 18 I accept as of substance the plaintiff's submission that if the plaintiff was denied interest up to the judgment of the Bogarting Court of Appeal as the defendant has submitted, it would be deprived of the full benefit of the foreign judgment. What would be enforced would then self evidently be less than the foreign judgment. The defendant would not, I accept, properly be compensated for the detriment that it has suffered. The defendant's loss having occurred on 12 June 1998, it is entitled to interest to compensate for being kept out of its money since this time. 19 Moreover, and in any, under s 94 of the Supreme Court Act 1970 (NSW), the Court I accept, has a discretion to award pre judgment interest at such rate as it thinks fit. The guiding principle is that the purpose of an award of interest is, "to compensate the plaintiff for the detriment that he has suffered by being kept out of his money and not to punish the defendant for having being dilatory in settling the plaintiff's claim": Batchelor v Burke (1981) 148 CLR 448 at 455 per Gibbs CJ. 20 Applying this principle, it has been held that generally and prima facie if a judgment is made in a foreign currency, then interest rates obtaining in the context of that currency should be applied: Maschinenfabrick at 153 and 154 per Rogers J; Swiss Bank Corporation v State of NSW (1993) 33 NSWLR 63 at 64-5 and 67 per Giles J approved on appeal at (1995) 39 NSWLR 350 at 360-1; Vlasons Shipping v Neuchatel (No 2) [1998] VSC 135 at paras 14-16 per Byrne J; Westpac Banking Corporation v MV "Stone Gemini" [1999] FCA 917 at paras 5,18-22 per Tamberlin J. 21 The plaintiff has submitted that the only contest between the parties is as to the application of Australian or Norwegian rates and that if the Court does express its judgment in terms of foreign currency, as the plaintiff submits it should, then there is nothing before the Court to rebut the prima facie position, which amounts to a presumption that Norwegian interest rates should apply. 22 The plaintiff further submits that in any event, the rates set out in the NSW Supreme Court Rules at Schedule J are the rates applicable under section 95 of the Supreme Court Act relating to amounts outstanding following judgments of this Court and that no doubt those rates will apply after the Court has given judgment but that there is no sufficient reason to apply those rates to the defendant's liability before the judgment of the Court is pronounced. 23 The orders therefore sought by the plaintiff by way of the defendant's liability are as follows: SEK 7,000,000 - being the principal sum said to be payable from 12 June 1998. SEK 3,265,643.70 - being interest on the principal sum from 12 June 1998 up to 30 April 2002. NOK 1,842,687 - being the total of the costs orders made by the Bogarting Court of Appeal. NOK 177,503.76 - being interest on the costs orders by the Court of Appeal at 12 per cent from 12 July 2001 NOK 6000 - being the costs orders of the Norwegian Supreme Court in the judgment served on 22 November 2001. NOK 288 - being the interest on the costs order by the Norwegian Supreme Court - from 6 December 2001 up to 30 April 2002. 24 Adding these items together, the total liability of the defendant I accept is SEK 10,265,643.70 and NOK 2,026,478.76. 25 The submissions of the defendant in relation to the questions of interest are not of substance and are rejected. In particular, I reject the submission that there can only be one monetary judgment entered under section 91 and that multiple foreign currency judgments are contrary to the principle of one single monetary judgment. I reject the submission that the nature of the case does not require multiple foreign currency judgments as judgment can readily be entered in a single currency. I reject the submission that it is contrary to section 9(1) of the Currency Act 1965 to create a liability to pay money in the currency of more than one country other than Australia. Clearly enough the circumstances before the Court included a circumstance in which the judgment of the Bogarting Court of Appeal itself included orders for payment in certain amounts of SEK and in other amounts of NOK. The orders of the Court are consistent with that approach and are consistent with the whole of the matrix and bases upon which the plaintiff has brought these proceedings as generally reflected in the judgments earlier given. 26 The orders of the Court are as follows: 1. orders in terms of paragraphs 1 and 2 of the minute of judgment which I initial and date 1 May 2002. 2. order that the Court's orders of today be stayed until a period of twenty-eight days after service upon the defendant or the defendant's present legal advisers, namely Hogan Geikie and Poole lawyers, of the revised form of each of the judgments delivered by the Court ex tempore in these proceedings on 19 April 2002, 24 April 2002 and 1 May 2002.

I certify that paragraphs 1 - 26 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 1 May 2002 ex tempore and revised on 10 May 2002

      Susan Piggott
      Associate

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