Short v Crawley

LEGISLATION CITED : Civil Procedure Act 2005 (NSW)

CASES CITED : Re Jackson; Conway v Conway [2000] FCA 1530 Short v Crawley (No. 38) [2008] NSWSC 917

Roslyn Short as executrix of the estate of the Late Warwick Gordon Short & Anor PARTIES : v Christopher Crawley & 9 Ors (No. 39)

COUNSEL : Plaintiff: A P Coleman Defendants: M Green

SOLICITORS : Plaintiff: Kemp Strang Defendants: Bruce Stewart Dimarco

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2824/98 Roslyn Short as executrix of the estate of the Late Warwick Gordon Short & Anor v Christopher Crawley & 9 Ors (No. 39) JUDGMENT 1 HIS HONOUR: An issue has arisen as to the proper construction of orders 4 and 6 made on 26 November 2008. Orders 1, 2 and 3 made on 26 November 2008 provided for the payment by Mr Crawley to Nabatu of the sum of $11,443,134 plus interest from 1 August 2008 up to the date of payments. The orders also provide for the handing over of share transfers and bank guarantees. 2 Because the parties agreed upon the provision of bank guarantees, orders were made by consent for the stay of various of the orders made on 19 December 2007 until further order. Order 4 provides that at the time payment for the shares is made: " ... Mr Crawley provide to Nabatu an irrevocable bank guarantee in favour of the Principal Registrar of the Supreme Court of New South Wales to secure the payment by Marsico and Mr Crawley to Christopher John Palmer as receiver of the Australian Youth Hotel Partnership (' the Receiver ') of the amounts ordered to be paid pursuant to Order 16(c) and Order 31 of the orders dated 19 December 2007 (being the sum of $2,638,379.01 plus interest at rates prescribed under Schedule 5 of the Uniform Civil Procedure Rules 2005 (NSW) (' the UCPR ') from 19 December 2007 up to the date of payment (' the Receiver Bank Guarantee ')), which guarantee can be called upon by the Principal Registrar to pay any amounts which Marsico and Mr Crawley are ordered to pay the Receiver at the conclusion of any and all appeals. "

3 Order 6 provides that at the time payment is made for the shares: " ... Mr Crawley provide to Nabatu an irrevocable bank guarantee in favour of the Principal Registrar of the Supreme Court of New South Wales in the sum of $2,949,552.62 to secure the payment by Mr Crawley, Vensel and Marsico to Nabatu of the amounts ordered to be paid pursuant to Order 16(d), 17(c), 18 (in relation to 17(c)), 19(c), 21 (in relation to 19(c)), 33 and 34 of the orders dated 19 December 2007 plus interest at rates prescribed in Schedule 5 of the UCPR from 19 December 2008 up to the date of payment (' the Nabatu Bank Guarantee '), which can be called upon by the Principal Registrar to pay to Nabatu the amounts which Mr Crawley, Vensel and Marsico are ordered to pay Nabatu at the conclusion of any and all appeals. "

4 The issue concerns the amount upon which interest at the rates prescribed under schedule 5 of the Uniform Civil Procedure Rules should be calculated. The sum of $2,638,379.01 referred to in order 4 is the sum arrived at by adding amounts for which judgment was entered against Mr Crawley in favour of the receiver pursuant to order 16(c) and 31 made on 19 December 2007.

5 Order 16(c) provided: " Judgment be entered against Mr Crawley ... (c) in favour of Christopher John Palmer in his capacity as receiver of the Australian Youth Hotel partnership ... in the amount of $150,675.92 . "

6 Order 31 provided: " Order that Marsico pay to the receiver appointed in accordance with order 30 above the sum of $2,487,703.09 (being $1,242,762 with interest at the prescribed rates from 4 July 1997 to 18 December 2007). "

7 Counsel for the first to ninth defendants submits that on the proper construction of order 4, consistently with what he contends is the proper construction of s 101 of the Civil Procedure Act 2005 (NSW), interest from 19 December 2007 to the date of payment, should be calculated not on the sum of $2,638,379.01, but rather on principal amounts which form part of the judgments of 19 December 2007, namely, $150,675.92 and $1,242,762. To do otherwise is to award interest on interest which counsel submitted was unfair and unauthorised. 8 Section 100 of the Civil Procedure Act provides: " 100 Interest up to 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 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 payment of the whole or a 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) for 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 awarded under this section, ... "

9 The amount for which judgment was entered pursuant to order 31 included pre-judgment interest. It did not include as a component of the judgment sum interest on interest. 10 Section 101 of the Civil Procedure Act provides: " 101 Interest after judgment

(1) Unless the court orders otherwise, interest is payable on so much of the amount of a judgment (exclusive of any order for costs) as is from time to time unpaid. (2) Interest under subsection (1) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from: (a) the date on which the judgment takes effect, or (b) such later date as the court may order. (3) Despite subsection (1), interest is not payable on the amount of a judgment if the amount is paid in full within 28 days after the date on which the judgment takes effect, unless the court orders to the contrary. (4) The court may order that interest is to be paid on any amount payable under an order for the payment of costs. (5) Interest under subsection (4) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from: (a) the date or dates on which the costs concerned were paid, or (b) such later date as the court may order. (6) This section does not authorise the giving of interest on any interest payable under this section. (7) In this section, a reference to the prescribed rate of interest is a reference to the rate of interest prescribed by the uniform rules for the purposes of this section. "

11 A "judgment" is defined by s 3 to include any order for the payment of money. 12 Dealing with order 31, the amount of the judgment encompassed by that order is the sum of $2,487,703.09. Pursuant to s 101(1), unless the Court otherwise orders, interest is payable on that sum; not on a component of that sum being the principal amount of $1,242,762. 13 Subsection 101(6) does not prohibit the giving of interest on a judgment sum to the extent to which the judgment sum includes pre-judgment interest. The prohibition in s 100(6) is confined to the giving of interest on interest "payable under this section". The orders of 26 November 2008 do not provide for the giving of interest on post-judgment interest payable pursuant to s 101. 14 No order has been made otherwise than that interest be payable on so much of the judgment as is from time to time unpaid. 15 This appears to me to be the plain meaning of ss 100 and 101. I do not accept that that construction involves any unfairness to a judgment debtor. The remedy for a judgment debtor liable for a judgment debt which includes a component of interest, who wishes to avoid paying interest on interest, is to pay the judgment debt within 28 days. 16 This construction of s 101 accords with the observations of Branson J in Re Jackson; Conway v Conway [2000] FCA 1530 at [11] and [12]. 17 This issue arose in the course of the valuation hearing. The context in which the issue then arose was as to the amount of the liabilities to be taken up in the balance sheet of Marsico and J & J O'Brien to reflect their liabilities under the judgments entered against them. 18 Mr Carter, who provided expert evidence read by the first to ninth defendants, differed from Ms Cartwright, who gave evidence for the plaintiffs, as to how that liability should be recorded, and whether it should include interest on the whole of the judgment sums or only on that part of the judgment sums which reflected a principal obligation. 19 During the course of argument it was accepted by counsel then appearing for the first to ninth defendants, that on the proper construction of s 101, interest under that section was payable on the whole of the amount of the judgment unless the Court otherwise ordered; and there has been no such contrary order. 20 In paragraph [139] of my reasons in Short v Crawley (No. 38) [2008] NSWSC 917, I noted that: " Ultimately, there was no dispute that interest under s 101 of the Civil Procedure Act 2 005 (NSW), that is, interest after judgment, is payable on the amount for which judgment was entered even though that amount includes pre-judgment interest pursuant to s 100. "

21 There is an ambiguity in order 4 made on 26 November 2008, although the same ambiguity does not exist in paragraph 6. A second bracket appears after "('the Receiver Bank Guarantee')". That bracket should have been after the words "the sum of $2,638,379.01" and I direct that order 4 be corrected accordingly to make perfectly apparent what I think, in any event, is the clear intention of the orders. 22 The same reasoning applies in relation to order 6 concerning the interest payable on the sums payable to Nabatu. 23 Accordingly, I decline to make a declaration as sought by the defendants to the effect that the orders of 26 November 2008 do not authorise the giving of interest on that part of the judgment which includes a component of pre-judgment interest. 24 I order that the first to ninth defendants pay the plaintiffs' costs of and incidental to the application dealt with in these reasons for judgment on the ordinary basis.

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