The Applicant claims interest on the amount awarded. The claim is made pursuant to Clause N15 of the contract and Item 22 of Schedule 1 of the building contract or alternatively, it is sought pursuant to statute.
By Clause N15.01, each party must pay interest on any money that it or she owes to the other but fails to pay on time. In the case of the Respondent, this includes any delay caused by the failure of her architect to issue a progress certificate on time. The interest rate shown in Item 22 of the Schedule is 10% per annum. Interest compounds monthly.
Whereas the right to interest under Clause N 15.01 is contractual, the power to award interest under s.53 is discretionary Mr Hellyer referred me to a number of authorities concerning the award of interest. Generally, damages in the nature of interest are in compensation for the loss suffered because the successful party has been deprived of the use of the money.
Mr Hellyer referred to various findings I made concerning the merits of the matter. In general, I was dissatisfied with the failure of the Respondent to pay the amounts that she owed to the Applicant. It appeared that she interfered with the role of the architect in regard to the assessment of Progress Claim 13 and also the Final Claim. The Applicant was also induced to carry out further work by promises of payment that never materialised. It has been deprived of the use of a substantial amount of money from the times when those amounts should have been paid until the date of this order. It was contemplated by the contract that, in the event of late payment, the aggrieved party should receive interest. For all these reasons I think that it is appropriate to award interest on the amount that I have found to be due, quite apart from the contractual entitlement.
[2]
Under the Contract, money did not become due until such time as the architect issued a certificate which was then presented to the Respondent together with a tax invoice for payment. The Respondent was then required to pay the amount of the certificate within the period specified in Item 4 of Schedule one, which was seven calendar days.
In the present case, since no certificate was ever issued the basis of a claim for interest under Clause N15 can only be the failure of the architect to issue a certificate "on time".
There were three iterations of Progress Claim 13 and the architect failed to assess any of them. The first two iterations were withdrawn and since the amounts claimed by them were progressively reduced and they were ultimately withdrawn, no interest should be awarded on either of them. However I think it could fairly be said that any delay in assessing Progress Claim 13C would be caught by Clause N15 and interest should be allowed for the period commencing seven days from the date upon which it ought to have been assessed.
Since Progress Claim 13C was submitted on 14 December 2012, it should have been assessed within 10 working days. That period contains three public holidays as well as two weekends, making 17 days. That would have expired on 1 January 2013 which was a public holiday. I accept Mr Hellyer's submission that it ought to have been assessed by 2 January 2013. Allowing seven calendar days for payment would bring the due date of payment to 9 January 2013. The amount of Progress Claim 13C was $163,390.43 and the period up to the date of final order is three years and 43 days at 10% interest. That amounts to $50,942.01.
The Final Claim was similarly not assessed but the claim for interest here is much more difficult.
The balance of the award beyond Progress Claim 13C is $42,691.48. Of this, $36,231 is in the retention account, earning interest for the Applicant. That leaves a balance of $6,460.48 that ought to have been paid as the final payment.
However the assessment of the final payment is not a simple matter and it is impossible for me to find when the architect ought to have finally reconciled the figures. However I think the Applicant ought to have interest on the small balance and since I cannot make any finding as to the contractual entitlement to interest on it, I will allow interest pursuant to s.53 of the Domestic Building Contracts Act1995 from the date of commencement of these proceedings until the date of this order. That amounts to $1,377.14. Adding the two figures the total interest to be allowed to the Applicant on both bases is $52,319.15.
[3]
I am informed that the retention sum of $36,231.03 is still held in the Macquarie Bank in a joint account in the names of the parties. Since the final amount of the award includes that sum of the order shall be partially satisfied by the release of it to the Applicant.
Parties
Applicant/Plaintiff:
TCM Building Group Pty Ltd
Respondent/Defendant:
Mercuri
Cases Cited (3)
TCM Building Group Pty Ltd v Mercuri (Building and Property) [2016] VCAT 205 (17 February 2016)
The extent of the jurisdiction conferred by this rule is extensively discussed in "Williams Civil Procedure Victoria" I. 36.07.55. A reading of the authorities gathered in that reference shows that the operation of the rule is very wide indeed. The learned authors refer to the case of R. -v.- Cripps ex parte Muldoon[1984] QB 686 at p. 695 where Donaldson MR said (citations omitted):-
I am still of the opinion that that is how the section ought to be applied. Mr Hellyer also referred me to Batagoll and McGill v. Monk and the City of Port Phillip [2000] VSC 48.