University of Sydney v Raine & Horne Commercial

2. The proceeding before me is part of writ number 2347 of 1989. That proceeding was commenced by writ on 17 June 1989 and by it the plaintiff, the University of Sydney, sued two guarantors of the performance of the university's tenant's obligation arising under a lease commencing on 1 February 1988 to terminate on 31 December 1990 between the plaintiff and M & A Professional Services Pty Ltd in respect of suite 103 in Bosch Chambers, 114 Castlereagh Street, Sydney. The guarantors, R.J. McNab (the first defendant) and Walter James Archer (the second defendant) were the directors of the tenant company and some associated companies. I will return to the details of the lease later.

5. The tenant fell into arrears of rent and outgoings, briefly recovered for a time, but declined again into arrears. Ultimately the plaintiff landlord gave notice to quit. The tenant vacated on 27 February 1989. At the time of the commencement of this proceeding there was about $36,000 owing for arrears of rent and outgoings and that was the amount sued for. Notwithstanding known increases in the claimed arrears and notwithstanding various amendments to the plaintiff's statement of claim including adding a defendant, the sum claimed in the proceeding was never sought to be amended by application prior to the hearing commencing before me last week.

8. After the proceeding had been commenced in 1989 the first and second defendants filed defences but the substance of that was that the plaintiff's agent had approached them with a proposal that the tenant go sooner rather than later and that the tenant company, of which they were directors, agreed to surrender the lease on the basis that its relocation costs would be offset against arrears of rent and outgoings. There was then no significant dispute about the breaches and arrears, and indeed that is, in an evidentiary sense, still the case.

11. The defendants joined as a third party Raine & Horne Commercial New South Wales Pty Ltd, the agent, as a third party. This led to the plaintiff, which denied authorising any such approach or arrangement, joining Raine & Horne as the third defendant, obviously to protect itself in the event of the defendants' assertions proving to be true or acceptable to the court. Raine & Horne denied that any agreement of that kind was ever made. This ultimately led to amendments being made to effect these claims on 19 October of 1990 with consequential amendments and defences.

14. I will have to refer to the circumstances of the movement of the case towards trial at a later stage. Its glacier-like movement was accompanied by sporadic legal activity and then long periods of virtual total inactivity, at some stages in excess of nearly three years and others about 18 months. The plaintiff did not interrogate any defendant until 1996, nearly seven years after the commencement of the proceeding. The first and second defendants answered interrogatories and amended their defences in 1998. In the case of the first defendant, much of the proposed amended defence was bound to have been struck out on any application. The second defendant sought to have the proceedings struck out for want of prosecution in 1997 but failed. The case was ultimately fixed to be heard this month and came on for hearing before me.

17. Mr McNab had apparently been difficult to serve. He had been a solicitor but no longer held a practising certificate and orders for service on him were made to permit service by filing of the documents in the Office of the Prothonotary. The second defendant, Mr Archer, a solicitor, but not now in active practice, had solicitors, Messrs Ebsworth & Ebsworth, acting for him in relevant periods but no longer by late 1998 and in 1999.

20. When the case was called on for hearing neither the first or second defendant appeared, although called both within and without the court. This was apparently not wholly unexpected. The third defendant appeared, Mr Caleo of counsel appearing for him.

23. Ms McLeod, who appeared for the plaintiff, informed the court that the plaintiff had in effect just discovered that the first defendant had been declared bankrupt on his own petition on the day before and a trustee appointed. There were tendered documents, naturally enough in view of the short period of time that had elapsed, in faxed form, that indicated that had occurred and that McNab had been declared bankrupt on his own petition on 8 April and a trustee appointed. In those circumstances on the application of the plaintiff, I made orders granting an adjournment of that part of the proceeding against the first defendant to enable the plaintiff to seek leave from the Federal Court to continue this proceeding and to enable the trustee to take such steps as he may deem to be advisable.

26. However, the case against the second defendant Archer was pressed and, in a very limited way, the case against the third defendant. The plaintiff had no evidence of the arrangement mentioned in the first and second defendants' defences, that is the surrender agreement, and led none. As I have indicated, it clearly joined the third defendant only out of caution, if there were evidence that satisfied the court that there had been a surrender agreement as claimed in the defences of the first and second defendant.

29. It became clear that if the plaintiff succeeded against the second defendant, the plaintiff would not press its claim against the third defendant. Indeed, a statement to that effect was made by Ms McLeod in open court. This led to the third defendant continuing to be represented but not taking any effective part in the hearing before me. However, the plaintiff, sought judgment against the second defendant, called oral evidence and tendered documents as part of its case. There were two court books of documents and I was informed that the court books had been prepared in consultation with the defendants who had agreed on the documents and the index.

32. Problems arose in the course of the plaintiff's case and in dealing with the plaintiff's submissions, that is, was it entitled to recover sums that included compounded interest on arrears, arising out of the terms of the lease, and its claims in respect to interest due on those arrears claimed in the proceeding, arising under the Penalty Interest Rate Act. These difficulties derived from the fact that the plaintiff was, arguably, seeking relief not pleaded or if pleaded, not articulated with sufficient clarity and was in fact at one point of time seeking massive sums by way of interest on the arrears claimed as rent, it being put (although subsequently abandoned, correctly in my view) that it was entitled to interest compounded monthly at 20 per cent for the whole period since the expiration of the term until April of 1999. This had never been sufficiently pleaded and involved a claim of $600,000 for "rent" arising out of the lease's terms, although its basis was the lease's provision in respect of interest, which I will hereinafter call lease interest.

35. Ultimately the plaintiff withdrew that claim so it becomes unnecessary for me to consider whether or not an amended statement of claim to allow it to be specified and claimed claim would be granted. I think it would be fair to say that it is most unlikely that I would have allowed that amendment in the absence of the second defendant, notwithstanding the service on him or his solicitors of documents that addressed that issue.

38. It is necessary briefly to refer to the lease and the guarantee which appear in court book 222 to 257 and are exhibit B. These were in the same agreement, that is the guarantees given by the first and second defendants relied on, were incorporated into the lease document. They were admitted on the pleadings and the defendant Archer in his answer to the tenth interrogatory of the plaintiff (exhibit D) admitted that he executed the guarantee and in a further exhibit tendered this day, admitted the document. The guarantee was a joint and several guarantee of the performance by the tenant of its obligations pursuant to the lease and it continued after the termination or expiration of the term.

41. Essentially the lease provided that the lessee would pay rent and outgoings of $3,442 monthly. There was provision for rent review to CPI or market. This led to an increase at one point in the term of the rent and outgoings due to be paid. The schedule of the amounts due to be paid, including after rent review, and the amounts unpaid and outstanding form exhibit A and were proved in the evidence of Grant Fulton, the properties and investment manager of the plaintiff since 1983 to 1984. This amount, $106,428.96, assumes liability for all unpaid rent until the determination of the lease by effluxion of time on 31 December 1990.

44. The suite remained unlet, so I was told, until December of 1991 apparently because of the economic downturn. The possible sale and development of the site referred to did not eventuate, at least not in that period. Because the witness Mr Fulton did not specifically address the matters referred in opening about the inability of the plaintiff, notwithstanding attempts to do so, to secure a suitable tenant during the balance of the term, I have permitted, since the witness has returned to Sydney, that gap in the evidence, although it was arguably overcomeable by a reference to clauses in the lease, to be supplemented by the filing of an affidavit by Mr Fulton addressing that matter.

47. It was a further provision of the lease that the lessee would pay to the lessor interest compounded on monthly rates at a rate of 20 per cent per annum on any moneys due but unpaid for 14 days to the lessor, such interest to be computed from the due date for payment until payment of the outstanding money in full and to be recoverable in like manner as rent in arrears (see clause 19.1(c). The evidence before me this morning of the plaintiff's solicitor handling the matter, Ms Hogg, verifying schedules to a proposed further amended statement of claim, establishes that interest in that respect to 31 December 1990 amounts to $30,397.31.

50. Demands for payment of rent and outgoings in arrears were made on the second defendant by the plaintiff's solicitors, Minters, in February and June of 1989 (including notification of unpaid rental still continuing to accrue) prior to the commencement of the proceeding (see court book 326, 336 and 337, part of exhibit C).

53. The reference schedule to the lease described McNab and Archer as the guarantors and by clause 26 they both guaranteed the due and punctual payment of rental and other moneys due and payable by the lessee and its performance of the covenants, terms and conditions of the lease. The clause is in conventional form and clearly picks up the obligation to indemnify the lessor against all losses, damages and expenses and costs incurred by the tenant's failure to pay or perform the covenants. Further, the guarantee is a continuing guarantee, unaffected by any forbearance by the lessor. The guarantors' liability is joint and several on each of them.

56. When the proceeding was first commenced against the first and second defendants the arrears were $35,947.29. The amount claimed has never been sought to be amended until this hearing. The writ also claimed "interest pursuant to statute" but it did not specifically claim interest arising under clause 19.1(c) of the lease. Arguably any claim for arrears of rent might include lease interest. However, the statement of claim did not so claim in clear terms. The September 1989 amendments made no alteration with respect to the claim against the first and second defendants other than to seek a declaration as well.

59. The statement of claim did assert the first and second defendants were bound to pay the further rent and outgoings and the plaintiff claimed that that took in lease interest. However, this could not be said to have been clearly stated in the statement of claim. It was this omission which led to my questioning the basis of the claim for lease interest in addition to penalty interest possibly arising under section 58 of the Supreme Court Act.

62. As I have indicated, the plaintiff initially formulated, as an alternative claim in submissions to me, interest calculated on the arrears in accordance with the lease's provisions as to interest up until the date of the hearing, a sum of in excess of $700,000. This having been abandoned, the case for the plaintiff in respect of the sum sought to be recovered has been put in three ways, if the plaintiff has otherwise established liability in the tenant and thereby, consequentially, the guarantors. I am satisfied on the evidence that the plaintiff has established that liability through the documents and Mr Fulton's evidence.

65. The plaintiff has made application to amend its statement of claim to set out the three bases of its claim and for the purposes of these reasons I identify and have nominated the proposed amended statement of claim as exhibit G. The plaintiff now claims the sum of $106,428.46 as the total sum of unpaid arrears of rent and outgoings up until December 31st 1990, the conclusion of the term.

68. As to interest, it raised its case in three ways:

(i) That it should obtain lease interest pursuant to clause 19.1(c) up until 31st of December 1990, which as I have already indicated, amounts to $30,397.31 as set out in appendix A to the proposed amended statement of claim. That has been verified by the evidence of Ms Hogg this morning.

(ii) Interest pursuant to statute, that is in effect pursuant to section 58 of the Supreme Court Act which draws in the Penalty Interest Rates Act 1983, from 1 January 1991 on that sum of $136,826.27 until judgment, (that being the total actual arrears including lease interest until 31 December 1990) (appendix B). Interest calculated in accordance with the Act to 12 April 1999 is, according to the schedules, $150,770.55.

(iii) Alternatively, there was raised a claim under the Supreme Court Act from 1 March 1988 (the month of the first breach) until 12 April 1999 at the penalty interest rates prevailing from time to time. This, according to the schedule, totalled the sum of $140,322.88.

74. The first matter to be considered is whether I should allow the amendments. This involves a consideration of some events that have occurred. The proceeding lay relatively dormant until unearthed by this Court as part of its process of investigating and dealing with sleeping actions, managed by a judge of this court through the Litigation Support Group. A number of orders were made by Teague J of this court, one of which obliged the plaintiff to give further and better particulars of its amended statement of claim. (Master Wheeler, September 1990) (exhibit E).

77. These particulars were given and I am satisfied that they were served in accordance with the relevant order on the defendants. Those particulars set out the claim that the lessee had failed to pay (a), rent from March 1988 to 20 December 1990; (b), outgoings and charges from March 1988 to 20 December of 1990; and significantly, (c), "interest upon those amounts pursuant to the lease". The further and better particulars calculated the arrears, without any interest component, as $103,458. This was an error but it was corrected by a letter from the plaintiff's solicitors, Minters, to Ebsworth & Ebsworth, the solicitor acting for Mr Archer, the correct amount for arrears being stated as $106,428.96, the amount now articulated in the proposed further amended statement of claim and set out in the document, with the calculations being exhibit A in this proceeding. Mr Archer was also personally served with the further and better particulars on 1 May 1998. It was shortly after this letter that Archer commenced his unsuccessful application to have the proceeding dismissed for want of prosecution.

80. On 1 April 1999 Mr Archer was notified by Minters by facsimile letter of the plaintiff's intention to seek a trial for interest pursuant to the lease at 20 per cent compounded monthly, or alternatively at the penalty interest rate. The annexures to that notification set out again the $106,428.96 arrears and calculations to this effect:

(a) Lease interest, that is 20 per cent compounded monthly, amounting to $599,758.64, the total amount being $706,187.60;

(b) Penalty rate interest "as per schedule" (which did not appear to be attached) $140,179.42.

It would appear the interest schedules had been sent the day before, on 31 March 1999.

87. The message confirmation to Archer's facsimile machine shows receipt of that communication. As I have earlier indicated, (a) has been abandoned. (b) is the third way in which the money is claimed and now sought to be formulated.

90. In the light of these facts, including that McNab and Archer were experienced solicitors and would have well understood the terms of the lease and guarantee, and the exposure to interest on the arrears, I am of the view the amendment should be allowed and I do allow it. Thus, the statement of claim and its schedules will be in the form of exhibit H. I should state that the affidavit of Nicole Wendy Hogg of the plaintiff's solicitors filed on 9 April 1999, presumably to address the matters of concern which I had raised, was mostly concerned with setting out the sequence of events to show that the second defendant was made aware of the claim for interest. Most of this was unexceptionable but the affidavit went beyond appropriate limits, referring to matters which were connected with mediation and settlement discussions. I have ignored paragraphs 8 to 14 of that affidavit insofar as they are connected to those matters. However, it is relevant and admissible that the second defendant's solicitors were served with interest schedules, both lease interest and penalty interest schedules, in May of 1998.

93. The issues for me therefore are ones of liability and damage. The defendant Archer has not appeared at the hearing, has not given evidence and has made no submissions. The first issue is whether or not the plaintiff has proved a breach of the covenants by the tenants so as to attract the relevant clauses of the guarantee. I have already indicated briefly that I am so satisfied. Most of the facts are either admitted or uncontested. Those included the terms of the lease between the plaintiff and the tenant and thereby the terms of the guarantee executed by the first and second defendant guarantors. It has been established that the lessee went into occupation and the rental period commenced in February of 1988.

96. Breaches by the lessee, firstly by a shortfall of rental due in March 1998 and then a subsequent complete non-payment of rent and outgoings from the month of August 1988 until the end of the lease in December 1990, have been proved by the evidence of Fulton. I am also satisfied as to the following: service of the notice to quit within 28 days on 4 January 1988 (part of exhibit C), demands upon the lessee and the guarantors previously referred to (also part of exhibit C) including the writ of 27 June 1989; the quitting by the lessee on 27 July 1989 of its occupation of the premises (see exhibit F), and the amended defences of the first and second defendants and the interrogatory 13 and the answer thereto admitted as an exhibit this morning; the plaintiff's solicitor's demand for outstanding sums including advice of the ongoing accumulation of rent and outgoings debt (also part of exhibit C) (see tab 64 and 65).

99. It is sufficient for the present purpose to point out that clauses in the lease and guarantee describe and set out the obligations of both lessor and lessee in respect of rent, rent review, outgoings and charges. That also included the events and consequences of default and right of entry (see clause 19, compound interest, (clause 19.1(c) already referred to), essentiality of terms (clause 20) and the substance of the guarantees in clause 26 already described by me. Clause 19 of the lease provided for the right to re-enter without a release of liability, production of the lease being conclusive evidence of that right.

102. The established breach by the tenant to pay rent and outgoings and the vacation by the tenant of the premises in February 1989 enabled and entitled the plaintiff either to sue for rent owing in respect of the whole of the term of the lease or until a new lessee commenced in occupation of the premises (see clause 19.2), an event which did not occur, or to accept non-payment as repudiation and sue for damages. It would appear from the pleadings that the plaintiff elected the former course and it was entitled to do so.

105. I have already referred to the fact that the lease specifically provided that the guarantee would continue, notwithstanding the lease came to an end and indeed the law so provided (see the decision of the Appeal Division of this court, as it then was, Nangus Pty Ltd v. Charles Donovan Pty Ltd [1989] VicRp 17; (1989) 1 V.R. 184.

108. The next issue is whether the second defendant, (and although I am not troubled with the case against McNab at this moment, the first defendant also) was liable as joint and several guarantor for the losses thereby sustained and I conclude that he is for the reasons to which I have already referred. The issue then becomes, what is the loss sustained and proved?

111. First, the evidence satisfies me that the lost rent and outgoings amount to $106,428.96. The premises were not relet, although attempts were made. No case has been sought to be made that the plaintiff did not take reasonable steps to mitigate this loss. This was a matter to be raised by the defendant in the first instance and has not been done before me.

114. Secondly, what interest may be lawfully claimed at what rate and in respect of what period or periods? As I have indicated the plaintiff has abandoned any claim for lease interest that is compounded monthly at 20 per cent beyond the termination of the date of the lease so the real issue now is, should interest include interest at the lease rate from the time of the breaches until 31 December 1990 or should interest be awarded pursuant to section 58 of the Supreme Court Act and if so, in respect of what period?

117. I have reached the conclusion the plaintiff is entitled to interest as provided for in clause 19.1(c) for that period subsequent to breach until the lease period effluxed. Whatever might have been the case if evidence had been given and accepted concerning the so-called surrender agreement, this was either, as I have already indicated, on the evidence, a case of repudiation by the lessee or fundamental breach, the ordinary principles entitling the lessor to claim lost rent and outgoings.

120. It is clear that the ordinary principles of contract apply to this situation (see Progressive Mailing House Pty Ltd v. Tabali Pty Ltd [1985] HCA 14; (1984-5) 157 CLR 17). Thus, the plaintiffs would have been entitled to claim damages for loss of the bargain, which bargain included a right to interest as provided as though it were rent. The plaintiff in its submissions to me has sought to obtain lost rent and interest under clause 19.1(c) until the termination of the lease (or reletting of the premises to another tenant) entitled to be claimed as though it were rent.

123. I propose to therefore give judgment for the loss of rent and outgoings and lease interest to 31 December 1990. This amounts to a total sum of $136,826.27. The plaintiff also makes application for interest pursuant to section 58 of the Supreme Court Act. It asked for this in its original statement of claim. It is necessary for me to refer briefly to the Supreme Court Act and some authority. Section 58 provides as follows, subsection (1):

"If in a proceeding a debt or a sum certain is recovered, the Court must on application, unless good cause is shown to the contrary, allow interest to the creditor on the debt or sum at a rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983... at 2 per cent per annum more than that rate from the time when the debt or sum was payable (if payable by virtue of some written instrument and at a date or time certain) or, if payable otherwise, then from the time when demand of payment was made."

Thus the section obliges the court (and in many cases it would be the case that interest became payable at the time when the demand was made) in a claim for a debt of this kind, one within section 58, to allow interest. There is self-evidently a wide discretion invested in the court not to allow interest prior to the date of issue of the writ (see David Leahey (Aust) Pty Ltd v. McPhersons Ltd [1991] VicRp 77; (1991) 2 VR 367), and a similarly wide discretion as to post-writ interest (see Clarke v. Foodland Stores Pty Ltd [1993] VicRp 81; (1993) 2 VR 382.

128. I have concluded that I will not allow interest under section 58, that is interest at the rates provided for from time to time under the Penalty Interest Rates Act 1983, for any period prior to 31 December 1990, that is both before and after the writ to that date. This is because the plaintiff has the benefit of lease interest for that period, calculated in accordance with the lease and applying to the arrears as they grew throughout the period.

131. In Clarke v. Foodland Stores to which I have referred, the court made a number of statements which I propose to cite in the course of these reasons, commencing at page 388 and I cite from 388 commencing at line 30:

"In cases within its ambit s. 58(1) addresses two things - the rate of interest and the period over which it is to be allowed. Omitting all reference to a bill of exchange or promissory note, the rate is described in this way: 'at a rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983', and the period as: 'from the time when the debt or sum payable (if payable by virtue of some written instrument and at a date or time certain) or, if payable otherwise, then from the time when demand of payment was made.' It is that rate and for that period that 'the Court must on application, unless good cause be shown to the contrary, allow interest to then creditor on the debt or sum [recovered]'.

Once the section is broken up in this way, it becomes apparent to what the phrase 'good cause...to the contrary' is directed. The sub-section is to be read as requiring the court to allow interest according to its terms, unless good cause is shown for not doing so ... i.e., for not allowing interest to the creditor 'at a rate not exceeding the rate for the time being fixed under s.2' of the Rates Act over the period from the time when the debt or sum was payable or from the time of demand (as the case may be). As will be seen, this accords, at least in part, with the view of Gowans J. in Marsh v. Ruby [1975] VicRp 20; [1975] VR 191, especially at pp. 192-3, where the legislative precursors to ss. 58 to 60 were under consideration."

"It is true that the direction in s. 58(1) that the court allow interest is in mandatory terms: 'the Court must on application...allow interest to the creditor on the debt or sum' recovered. But that is immediately qualified by the clause 'unless good cause is shown to the contrary' and so, notwithstanding that the basic injunction is mandatory, it is correct, in our opinion, to describe the section as providing a prima facie rule that the plaintiff is entitles to interest. The entitlement to interest, which is prescribed by the section, may be overturned by good cause being shown to the contrary."

The appeal division went on to say at 392, referring to the statement of Gowans J in Marsh v. Ruby:

"In our opinion if that is what his Honour meant, it is a reading of the section that should be rejected. Just as, in the absence of good cause to the contrary, interest is required to be awarded according to the terms of the section. Of course that means that, should "good cause to the contrary" be shown, the court may, in a proper case, refuse to allow any interest at all under the section; but, in our opinion it also admits of the possibility that the court may allow interest, but interest otherwise than strictly in accordance with the express requirements of the section."

"This does not mean, however, that the court is then wholly at large; for the court cannot by virtue of s.58 allow interest on terms more onerous to the defendant then those spelled out in the section. Although logically that course might be thought to be open once good cause against allowing interest according to its terms had been shown, that is not how the section has thus far been interpreted in practice; nor do we think that it should be. Such discretion as is conferred upon the court once good cause has been shown has been regarded (and, we think, rightly regarded) as empowering the court to relieve against injustice to the defendant."

"Thus, when good cause is shown the court may refuse to award interest at all or may, if it sees fit, award interest on terms which are less, but not more, onerous than those laid down by the section. As the court always has a discretion as to the rate (subject only to the maximum imposed by s. 58), this means, in effect, that once good cause is shown, the court may allow interest to the plaintiff for a lesser period than that marked out by the section - as, indeed, was done in David Leahey's Case. And it follows, we think, that "good cause to the contrary" means no more and no less than good reason, according to the justice of the case, for notallowing interest at all or, if interest is to be allowed, then for not allowing interest for the whole of the period marked out by the section.

What is 'good cause' in any given case will therefore depend upon the particular facts and circumstances."

145. Finally, I refer to Willetts v. Dimos & Anor (unreported 27 February 1998), a case in which Justice Smith of this court diminished penalty rate interest because of the plaintiff's delays in pressing forward with the proceeding.

148. In this case the plaintiff's schedules show the working of the rates through the period 1991-1999. I do not take the view there is any reason why the rates there shown should not apply. The difficulty is the lengthy period of delay, and whether it would be unjust to the second defendant in the circumstances to allow interest from the start of 1991 for the whole of the period to this date. In my view it would be manifestly unjust to do so in these circumstances. It would be virtually a case in itself to seek to traverse in detail such evidence as there is, and it is by no means complete, in an attempt to unravel cause and consequence to account for the passing of more than eight years since the tenancy expired. It is in fact nearly 10 years since the writ was issued.

151. There are affidavits to be considered and I have considered them. First, that of the second defendant, exhibit F, sworn in support of his summons to strike out for want of prosecution, with it appended chronology. Secondly, the further affidavit of Nicole Hogg of 8 April 1999 dealing with these aspects. The plaintiff throughout had the carriage of this case. There were no counterclaims. There were two major periods of virtual inactivity by the plaintiff, March of 1991 to May of 1995, such events as occurring being not of significance, and March of 1996 to 30 June 1997. Even then it was the order of Teague J that breathed life back into the proceeding, although I acknowledge the plaintiff became active then in pushing the matter to trial.

154. Doubtless there were difficulties in locating McNab but Master Evans' order permitted service by filing with the Prothonotary's office. An examination of Nicole Hogg's affidavit of 8 April 1999 concerning this aspect does little to dispel my impression that there has been very great delay caused by the plaintiff and very little delay caused by the second defendant.

157. I am entitled to approach the exercise of my discretion on a broad basis and I do so. I am of the view that good cause not to allow interest on the sum over the whole of the period has been made manifest. If the case against the second defendant Archer had been pressed with vigour and despatch throughout the period, it would seem quite likely it may have been heard in the early 1990s. The third defendant was offering no obstruction to the bringing on of the case. In my judgment, it would be just to both the plaintiff and the second defendant to allow to the plaintiff one-third of the statutory interest claimed and I so decide. Based upon the calculations in the schedule annexed to the amended statement of claim, one-third of the interest at the penalty interest rates under section 58 will be $50,260.

160. Subject to hearing anything further from counsel for the plaintiff, there will be judgment for the plaintiff against the second defendant in the sum of $136,826.27 plus interest pursuant to section 58 of the Supreme Court Act for the period of 1 January 1991 to 12 April 1999 in the sum of $50,260, subject to the filing of the additional affidavit of Grant Fulton referred to in the course of my reasons. Subject to hearing counsel I order the second defendant pay the plaintiff's costs of the proceeding against the second defendant.