On 14 April 2016, I delivered my judgment in the above matter, setting out my reasons for finding that there would be a verdict and judgment for the plaintiff against the defendant in the sum of $248,940.00, plus interest to be calculated in accordance with the judgment. I deferred entering final judgment, subject to the parties bringing in a Consent Order as to interest.
In the absence of any agreement, I made directions for the parties to file and serve written submissions in respect of the following:
1. Pre-judgment interest.
2. The costs of the defendant's Notice of Motion filed on 3 February 2016, and heard by Judge Letherbarrow on 25 February 2016, together with costs thrown away, if any, by the plaintiff's non-reliance on certain parts of Mr Fairley's affidavit evidence.
3. The defendant's application for a stay on the judgment for 28 days.
I deal with each of those matters seriatim.
[2]
Pre-judgment interest
The defendant does not dispute that the plaintiff is entitled to interest pursuant to s 100 of the Civil Procedure Act 2005 ("CPA"). It has calculated that interest at simple interest rates provided for in Practice Note DC (Civil) 15. The defendant's calculation of pre-judgment interest is $66,832.57.
The defendant identifies the issue between the parties as the plaintiff seeking both ordinary interest, together with an interest on interest calculation, as performed by Mr Mullins in his report dated 28 November 2014, for the period prior to 21 June 2013, when the plaintiff paid out the bank's loan.
The defendant contends that such an approach leads to double counting, but acknowledges that the plaintiff claimed interest by way of damages to 21 June 2013. Therefore, it has submitted that the award of interest ought to be as follows:
1. Interest by way of damages to 21 June 2013 - $29,773.11, and
2. Interest under s 100 of the CPA from 21 June 2013 on the claim amount (being $278,713.00), of $50,305.79, to 14 April 2016, and $45.82 per day thereafter.
The plaintiff agrees that the sum of $29,773.11 represents its loss to 21 June 2013 and characterises that loss as "the interest and penalty interest paid by the plaintiff on the penalty interest charges" to that date. It refers to that sum as "Facility Interest" and submits that sum should therefore be repaid by the defendant to the plaintiff. The plaintiff claims that that sum is not claimed as damages, but rather, is repayment of money that the plaintiff wrongfully paid to the defendant. The plaintiff is entitled to pre‑judgment interest, both on the penalty interest charges, and that sum, pursuant to s 100 of the CPA.
The plaintiff has calculated pre-judgment interest on the judgment sum of $248,940.00, as $66,850.27, up to 14 April 2016. The plaintiff has made an additional calculation for interest on that sum from 15 April 2016 to 13 May 2016 in the sum of $1,224.30. The total pre-judgment interest claimed by the plaintiff is therefore $68,075.57.
The plaintiff claims a further amount of pre-judgment interest on the facility interest from 22 June 2013 to 13 May 2016 in the sum of $5,513.98.
[3]
Determination as to pre-judgement interest
Section 100 of the CPA provides as follows:
"100 Interest after judgment
(1) In proceedings for the recovery of money (including any debt or damages, or the value of any goods), the court may include interest in the amount for which the judgment is given, the interest to be calculated at such rate as the court thinks fit;
(a) On the whole or any part of the money, and
(b) For the whole or any part of the period from the time the cause of action arose, until the time the judgment takes effect.
(2) In proceedings for the recovery of a debt or damages in which the payment of the whole or part of the debt or damages has been made after the proceedings commenced, but before, or without, judgment being given, the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit:
(a) On the whole or any part of the money paid, and
(b) On the whole or any part of the period from the time the cause of action arose, until the time the money was paid.
(3) This section:
(a) Does not authorise the giving of interest on any interest award under this section, and
(b) Does not authorise the giving of interest on a debt in respect of any period for which interest is payable as of right, whether by virtue of an agreement or otherwise, and,
(c) Does not authorise the giving of interest in any proceedings for the recovery of money in which the amount claimed is less than such amount as may be proscribed by the Uniform Rules, and,
(d) Does not affect the damages recoverable for the dishonour of a bill of exchange.
(4) In any proceedings for damages, the court may not order the payment of interest under this section in respect of the period from when an appropriate settlement sum was offered (or first offered) by the defendant, unless the special circumstances of the case warrant the making of such an order.
(5) For the purposes of ss (4), appropriate settlement sum means a sum of any settlement of proceedings in which the amount for which judgment is given (including interest accrued, up to and including the date of the offer) does not accede the sum offered by more than 10 per cent."
In Hexiva Pty Ltd v Lederer (No 2) [2007] NSWSC 49, Brereton J said at [8]:
"[8] Accordingly, in this case, an award of interest can be supported either by reference to s 100(2), or as damages. At least where the principal sum is for a debt as distinct from for damages, there is no conceptual difference between a claim for interest as damages, and a claim for statutory pre‑judgment interest; the purpose of interest as damages and statutory pre‑judgment interest is the same. Like interest as damages for late payment, statutory pre-judgment interest is also compensation for being kept out of the monies recovered. … The basis for an award of statutory pre‑judgment interest is the defendant has had the benefit of not paying the money and the plaintiff the detriment of not having it, in a case of debt which was quantified and which the defendant ought to have paid, as distinct from an unascertained liability for liquidated damages. … As the defendant, rather than the plaintiff, obtains the time value of the money, unless an award of interest is made, and to fail to make an award of interest would confer an unwarranted enrichment on the defendant, by permitting it to retain the benefit of its having failed to pay when it ought to have done so."
His Honour went on to say at [23]:
"[23] Although s 100 does not authorise the award of interest on interest, it does authorise the award of interest on damages (including where those damages are calculated as interest). The prohibition in s 100(3)(a) against awarding interest on interest, does not apply where the judgment is really an award of damages, even though the amount is calculated by reference to interest that the plaintiff's may have paid or foregone, so that where there is an award of interest as damages, and the plaintiff has been kept out of those damages pending trial, statutory interest may be awarded (Bushwall Properties Ltd v Vortex Properties Ltd [1975] 2 All ER 214; [1975] 1 WLR 1649, 1660; Harvey v Rogers (1983) 32 SASR 247."
In Maestrale v Aspite [2014] NSWCA 182, the Court held that an award for pre‑judgment interest pursuant to s 100 of the CPA, was to compensate a plaintiff for the loss which he or she had suffered by being "kept out of his or her money during the relevant period". The Court referred to the Supreme Court's Practice Note 16 (dated 16 June 2010) which is in identical terms to the District Court Practice Note 15 (dated 22 June 2010). The Court approved the remarks of Brereton J in Hexiva, supra at [18] concerning the practice of calling evidence to demonstrate what is the appropriate rate for both pre and post-judgment interest pursuant to s 101(2) of the CPA.
Here, the claim by the plaintiff for the interest paid to 21 June 2013, in an agreed amount of $29,773.11, is properly characterised as a claim by way of damages. The prohibition in s 100(3)(a) of the CPA against awarding interest on interest does not apply to that sum, as the defendant has had the benefit of not paying the money, and the plaintiff the detriment of not having it. I therefore accept the plaintiff's claim for interest as outlined in its submission, and judgment will be entered in the sum of $353,526.00, made up as follows:
Penalty interest charges $248,940.00
Pre-judgment interest on penalty interest charges to 13 May 2016 $68,075.00
Interest paid by plaintiff on penalty interest charges $29,773.00
Pre-judgment interest on those charges $5,514.00
Total $352,302.00
[4]
Costs of the defendant's Notice of Motion dated 3 February 2016
On 3 February 2016, the defendant filed a Notice of Motion which sought inter alia, that the affidavit of John Fairley, sworn 23 November 2015, be struck out, disallowed or rejected. The motion was listed before Letherbarrow DCJ on 25 February 2016, and rather than determine the motion, his Honour made directions for the filing of outlines of each of the parties' cases. The motion was listed for hearing on 11 March 2016, but by agreement between the parties, was stood over to the hearing.
At the hearing, the plaintiff abandoned reliance on pages 29 to 46 of Mr Fairley's first report, and Mr Fairley's second report in its entirety. The need to determine the defendant's Notice of Motion therefore fell away. The plaintiff has submitted that, in those circumstances, costs of the motion should be those of the plaintiff, or in the alternative, costs in the cause. It submits that the defendant could never have succeeded on its motion, that the motion was misconceived, and that the appropriate course for the defendant was to object to the relevant parts of Mr Fairley's affidavit at trial. That would have alleviated the need for the parties to incur all the costs associated with the defendant's motion.
I do not accept those submissions. Given the substantial matters covered in the area of Mr Fairley's evidence referred to above, which went beyond the case pleaded on behalf of the plaintiff, and which the defendant was required to meet, and incur costs in meeting that material, it is within the proper exercise of the court's discretion as to costs to make an allowance in respect of that material. That accords with the objects set out in s 56(1) of the CPA to achieve the "just, quick and cheap resolution of the real issues in the proceedings".
It is therefore appropriate to make an order that the plaintiff pay the defendant's costs of the defendant's Notice of Motion, up to and including the hearing before Letherbarrow DCJ on 25 February 2016, together with the costs thrown away by the defendant as a consequence of the service of that part of Mr Fairley's evidence that was not relied on by the plaintiff.
It is true that the plaintiff's decision not to read those parts of Mr Fairley's affidavits shortened the length of the hearing, which in turn, saved both parties costs. In the exercise of my discretion, however, I intend to order that the defendant pay 90 per cent of the plaintiff's costs on an ordinary basis, to make allowance for both the Notice of Motion and the costs thrown away.
[5]
Defendant's application for a stay of judgment
The defendant seeks a stay of the judgment to allow it time to consider the bringing of an Appeal, and, if so, to make an application to the Court of Appeal for a further stay pending the Appeal. The plaintiff opposes that application, however, it has not relied on any evidence to establish it could repay the judgment sum and costs in the event any appeal was successful. I intend to grant a stay of the judgment for 28 days for that purpose.
[6]
Conclusion
I will therefore make the following orders in the principal proceedings:
1. Judgment for the plaintiff against the defendant in the sum of $352,302.00.
2. The defendant is to pay 90 per cent of the plaintiff's costs of the proceedings on an ordinary basis, such order having made allowance for the defendant's Notice of Motion dated 3 February 2016.
3. Order a stay of execution on the judgment entered for 28 days.
[7]
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Decision last updated: 13 May 2016