Calculation of Damage
30As already stated, I do not consider that the damages are to be reduced on account of proportionate liability. There is a degree of unfairness in that approach.
31The reality is that the major damage was caused by the conduct of the first defendant. The first defendant not only perpetrated a fraud on Yes Home Loans, on the fourth to sixth defendants and on the plaintiff, but the fraud on the fourth to sixth defendants was the fundamental cause of the breach of warranty of authority for which they are now liable. Moreover, the loans were for the benefit of the first defendant.
32The plaintiff settled proceedings against the first to third defendants. It did so on a basis that was significantly less than the damage it suffered and significantly less than could reasonably have been estimated was a proportionate liability for the damage suffered.
33Again, I do not make the foregoing comments for any reason of criticism of the plaintiff. No doubt the compromise was reached in the terms that it was for good reason. Perhaps, no doubt most likely, that reason was the inability of the first defendant (and possibly the second and third defendants) to meet any greater contribution to the damage.
34However, the effect of that compromise, on the plaintiff's submission in the Court, is to increase the liability of the fourth to sixth defendants. While I have held, as a matter of statutory construction, that proportionate liability does not run to the claim for breach of warranty of authority, the inequity associated with such an arrangement is that which the legislature sought to overcome with provisions such as those in Part 4 of the Civil Liability Act. There is an obvious unfairness in the effect of that course of events.
35Nevertheless, on the basis of the principles of law otherwise applied, the fourth to sixth defendants are liable in damages for the loss they have caused, less any amount otherwise received for the same loss.
36The plaintiff submits that, once one deducts any amount received during the course of the loan that reduced the principal debt from the amount of the original loan, the remainder (an amount of $645,654.18) is payable by the fourth to sixth defendants. That takes no account of any amount payable in accordance with the settlement reached with the first to third defendants. The plaintiff submits that no account should be taken of that because no monies had, at least at the time of the post judgment submissions, been received: Paragraph 4 of the affidavit of Michael Brain Wirth of 4 June 2014.
37In my view, the failure or inability, thus far, to enforce the settlement agreement is not a basis upon which the plaintiff should be entitled to double counting the damages. Enforcement of the settlement agreement is within the capacity of the plaintiff, and only the plaintiff. There is no evidence that any attempt has been made to enforce the settlement.
38The award of damage payable by the fourth to sixth defendants will be reduced by the amount (not including interest) payable under the settlement, namely, $300,000: see Exhibit F in the proceedings.
39Next I deal with the question of pre and post judgment interest. The plaintiff seeks (and sought in its initiating process) payment of interest up to judgment and after judgment. Interest is compensatory and is intended to compensate a plaintiff for the fact that the amount of judgment has not been available to it for pre-judgment interest under s 100 of the Civil Procedure Act 2005 from the time that the cause of action arose until the date of judgment, and, in relation to interest after judgment, in accordance with s 101 of the Civil Procedure Act.
40I make no order that would interfere with interest accruing under s 101 of the Civil Procedure Act and interest will run in accordance with s 101 and the provisions of the Uniform Civil Procedure Rules 2005. I deal with the rate of interest below.
41As to interest under s 100, slightly different issues arise. For the reasons previously stated and to which reference is made in the liability judgment, the loss occasioned by the fourth to sixth defendants was on account of a warranty as to the disbursement of the funds. Interest and capital were paid, in accordance with the loan agreements, for some period of time.
42The non-payment of the loans was not a matter for which the fourth to sixth defendants are directly liable. Nevertheless, the monies would not have been disbursed but for the authority given by the fourth to sixth defendants. It seems, given that the awarding of interest is a matter of compensation not punishment, that the plaintiff should be reimbursed for the loss or detriment suffered by being kept out of its funds for the relevant period. It should not, however, be compensated for the loss of profit associated with the period during which it is kept out of its funds.
43For that reason, while it is appropriate to award pre-judgment interest under s 100 of the Civil Procedure Act and for interest to run in accordance with s 101 of the Civil Procedure Act, in each case interest will run at the Reserve Bank rate applicable from time to time plus 1% and not at the prescribed rate.