Wane v Benwest Investment Services Pty Limited

Background

1. In 1996, the plaintiff, Louis Wane, a French national who resides in Tahiti, invested US$2,500,000 ("the principal amount") with the first defendant, Benwest Investment Services Pty Limited, which is a company incorporated in Australia. The second defendant, Anthony Bennett, is the sole director of the first defendant.
2. The principal amount was lost as a result of the actions of the defendants. By letter dated 4 October 1996, the defendants agreed to repay the plaintiff the principal amount ("the 1996 Agreement"). The 1996 Agreement has since been lost.
3. Between November 1997 and December 1998, the defendants paid the plaintiff US$151,515.56 by way of five instalments. It is unclear whether the instalments were made in accordance with the 1996 Agreement. In any event, the defendants did not comply with its terms by failing to repay the principal amount in full.

The First Deed

1. On 29 September 1999, the plaintiff and the defendants signed a Deed of Settlement ("the First Deed") in which the defendants agreed to pay the plaintiff the balance of the principal amount owing, referred to as the "Balance of the Settlement Sum", being US$2,348,484.44, in the following five prescribed instalments set out at Schedule 4: SCHEDULE 4 Amount payable (US dollars) Date Due $xxx,xxx** 31 December 1999 $550,000 31 July 2000 $550,000 31 July 2001 $550,000 31 July 2002 $570,000 31 July 2003 $2,500,000.00 ** = being $280,000 less the Amounts Already Paid converted to US dollars as at the date of execution of this Deed

1. Clause 5 of the First Deed provided that, if the defendants defaulted on any of the instalments by the due dates provided for in Schedule 4, "the Balance of the Settlement Sum shall immediately become due and payable" and the plaintiff shall be at liberty to: "(a) commence proceedings for the Balance of the Settlement Sum against [the defendants]; (b) enter judgment for the Balance of the Settlement Sum against [the defendants]; and (c) recover the Balance of the Settlement Sum from [the defendants] without further notice."
2. Pursuant to cl 9 of the First Deed, the plaintiff was entitled, at his discretion, to: "… charge interest on any instalment which is not paid by the due dates as provided for in Schedule 4 … at the rate equivalent to the United Stated [sic] prime bank rate prevailing at that time, until full payment of the Settlement Sum has been made."
3. Clause 11 provided as follows: "Upon payment by [the defendants] of 50% of the Settlement Sum, being US$1,250,000, the Parties agree to release each other, and hereby release each other, from all Claims which they may now have or which but for this Deed could, would or might at any time hereafter have or have had against each other relating to, or arising from, the Investments Made including the 1996 Agreement."

The initial proceedings

1. The defendants defaulted on the second instalment payment listed in Schedule 4 by failing to make a payment of US$550,000 on 31 July 2000 and remained in default over all of the subsequent scheduled payments. In accordance with cll 5 and 9 of the First Deed, the plaintiff filed a statement of claim in this Court on 25 July 2012 seeking the outstanding balance of the principal amount of US$2,042,773.94, plus interest of US$2,277,818.26 and costs ("the initial proceedings").
2. The plaintiff pleaded in the statement of claim that the amount that had been paid by the defendants at the time of the First Deed, when converted into United States currency at the rate applicable as at the date of the First Deed, was the equivalent of US$151,515.56, so that the first instalment pursuant to Schedule 4 of the First Deed should have been US$128,484.44.
3. The particulars to the statement of claim noted that additional amounts had been paid by the defendants by the date the statement of claim was filed, being the equivalent of US$305,710.50 in 21 ad hoc instalments beginning on 24 December 1999 and ending on 12 July 2012. As only the first of those payments complied with Schedule 4, being a payment of US$128,740 on 24 December 1999, the plaintiff pleaded that the debt fell due in full on 1 August 2000, the day after the second instalment payment was due, together with interest calculated from that date, in accordance with cl 9 of the First Deed.
4. The plaintiff's solicitor wrote to the defendants' solicitor on 21 May 2014, stating that he had been instructed to apply for default judgment against the defendants.
5. By letter dated 2 June 2014, the defendants' solicitor provided the plaintiff with an affidavit setting out the defendants' assets and liabilities. In that letter, the defendants' solicitor stated that he: "… would be grateful for the opportunity to discuss [the defendants'] capacity to make significant payments in the event … [the plaintiff] agrees not to enter judgment at this time".
6. Between June and October 2014, the defendants proposed repayment schedules with a view to an agreed schedule being formalised in a second deed. A proposed repayment schedule was subject to further amendments in August and September 2014 at the request of the defendants' solicitor to "ensure payments could be made".

The Second Deed

1. On 30 October 2014, the parties signed a second Deed of Settlement ("the Second Deed") in which the defendants agreed to pay an amount which, as a matter of construction of the deed, is in dispute, in 11 irregularly-spaced instalments commencing on or before 7 November 2014, with the last instalment falling due on or before 31 July 2017.
2. The plaintiff contended that a correct construction of the Second Deed discloses that the amount to be paid was the outstanding balance of the principal amount at the date the Second Deed was signed, being US$1,881,074.44, plus interest calculated from the date of default of the First Deed, being 1 August 2000, pursuant to the terms of the First Deed. In addition, interest would be payable on any late payments of the instalments set out in the Second Deed.
3. The defendants submitted that the amount to be paid by the instalments was US$1,915,850.94, which comprised both the outstanding balance of the principal and an agreed portion of the interest accrued from the default of the First Deed, in full satisfaction of the debt.
4. The recitals of the Second Deed were as follows: "Recitals A. On 29 September 1999 [the plaintiff] entered into [the First Deed] with [the defendants] to document the settlement of a dispute between [the plaintiff] and [the defendants] ... B. [The First Deed] provided, inter alia, that: (a) the Defendants would pay [the plaintiff] the sum of USD$2,500,000.00, less certain amounts already paid to [the plaintiff] at the date of [the First Deed], according to a repayment schedule; and (b) if the Defendants defaulted in payment of any of the instalments by the due dates provided for in [the First Deed], the balance of the amount owing under [the First Deed] would immediately become due and payable to [the plaintiff] together with interest on the full amount of the debt from 1 August 2000. C. The Defendants paid [the plaintiff] total amounts of: (a) USD$151,515.56 before entry into [the First Deed]; and (b) USD$354,259 after entry into [the First Deed] but before commencement of the Proceedings (as defined below). D. The Defendants defaulted in their obligations under [the First Deed]. E. On 31 July 2012, [the plaintiff] commenced Proceedings … in the Supreme Court of New South Wales (the Proceedings) against the Defendants. F. Since the Proceedings were commenced the Defendants have paid [the plaintiff] the amount of USD$113,151.00. G. As at the date of this deed, the Defendants owe [the plaintiff] the sum of USD$1,881,074.44 plus the interest payable pursuant to [the First Deed] (the Settlement Payment). H. The Defendants have agreed to repay the Settlement Payment by instalments. (as recorded in this Deed). I. [The plaintiff] has agreed to a stay of the Proceedings while the instalment payments are made on time."
5. The payments were itemised in cl 2.1, as follows: "2.1 Payment by the Defendants to [the Plaintiff] (a) The Defendants will pay [the plaintiff] the amount of USD$1,915,850.94 plus the interest payable at the rate specified in [the First Deed] (the Settlement Payment). (b) The Defendants acknowledge that they are jointly and severally liable to pay the Settlement Payment. (c) The Settlement Payment will be paid by the following instalments (the Instalments): (i) Payment of $200,000 on or before 7 November 2014; (ii) Payment of $300,000 on or before 31 December 2014; (iii) Payment of $200,000 on or before 28 February 2015; (iv) Payment of $300,000 on or before 30 April 2015; (v) Payment of $300,000 on or before 31 July 2015; (vi) Payment of $300,000 on or before 31 October 2015; (vii) Payment of $300,000 on or before 31 January 2015; (viii) Payment of $300,000 on or before 30 April 2016; (ix) Payment of $300,000 on or before 31 July 2016; (x) Payment of $300,000 on or before 31 October 2016; (xi) Payment of $300,000 plus the remaining balance of the Settlement Payment on or before 31 July 2017. (d) The Defendants may make additional instalment payments at any time. For the avoidance of doubt, any additional instalment payment will not remove the obligations on the Defendants to make payments in the sums and on the dates set out in clause 2.1(c) of this deed. (e) All payments made by the Defendants to [the plaintiff] are to be applied firstly in reduction of the principal sum of USD$1,881,074.40 then, after the sum of USD$1,881,074.40 has been paid in full, in reduction of the interest. (f) The Settlement Payment will be made by electronic funds transfer to a bank account nominated by [the plaintiff]."
6. In their written submissions, the parties agreed that, although not stated, the instalments set out at cl 2.1(c) were expressed in Australian currency. On that basis, the instalments totalled AU$3,100,000.
7. Clause 2.2 provided that if the defendants failed to "pay any amount payable by them at or before the due date specified in the Instalments set out in clause 2.1(c)", an "Event of Default" would arise and, pursuant to cl 2.3(a), the total outstanding amount would become "immediately due and payable" and the plaintiff would then be entitled to exercise his rights under cl 3.2(c). Clause 3 relevantly provided: "3. Stay and Disposal of the Proceedings 3.1 Consent Orders (a) As soon as is practicable after they have entered into this deed, [the plaintiff] and the Defendants will jointly apply to the Court to make the orders set out in Annexure A (Consent Orders). (b) the Defendants will execute any minutes of order or other documents required for the purposes of any application for the making of the Consent Orders. 3.2 Further Conduct of the Proceedings (a) It is the intention of the parties acknowledge that the Proceedings be stayed pending payment of the Settlement Payment. … (c) If an Event of Default occurs: (i) [the plaintiff] may, at his option and notwithstanding any delay or previous waiver of the right to exercise that option, make an application for summary judgment and/or default judgment in the Proceedings; and (ii) the Defendants will consent to any such application."
8. Clause 14 of the Second Deed provided: "14. Entire Agreement This deed constitutes the entire agreement between the parties and supersedes all previous representations, warranties, covenants and agreements, not contained and recorded in this deed. This deed shall not be varied, amended or supplemented except by a writing signed by an authorized representative of the parties. However, nothing in this deed shall affect the operation of [the First Deed]."
9. In accordance with cl 3.1 and in the terms set out at Annexure A of the Second Deed, the parties filed consent orders in this Court on 5 November 2014 ("the Consent Orders"), which relevantly provided as follows: "1 Note the agreement of the parties that: a. that [the defendants] will pay the Plaintiff in accordance with a Deed made between the parties and dated 29 September 1999 (the First Deed) and a Deed dated 30 October 2014 (the Second Deed): b. that, if an Event of Default as that expression is defined in the Second Deed occurs: (i) the total amount outstanding under the First Deed becomes immediately due and payable; and (ii) the Plaintiff may apply for default judgment in these proceedings and [the defendants] consent to that default judgment being entered; c. provided the full amount payable under the First Deed has been paid to the Plaintiff, he will as soon as is practicable, do all things necessary to discontinue these proceedings. …"
10. The plaintiff contended that the defendants defaulted on the first instalment payment set out at cl 2.1(c)(i) of the Second Deed. By letter dated 18 November 2014, the plaintiff's solicitor notified the defendants' solicitor of the alleged default, stating that the plaintiff reserved his rights under cll 2.3 and 3.2(c) of the Second Deed to enter summary judgment against the defendants.
11. The plaintiff calculated that the defendants made 21 ad hoc instalments totalling US$2,325,467.52 between 30 October 2014 and 2 November 2017. The plaintiff's case was that the first 19 instalments were made towards the principal amount, which was finally paid on 10 February 2017, and that the final two instalments were made towards the interest that had accrued on the principal amount. No further payments were made after 2 November 2017.
12. By letter dated 9 August 2018, the plaintiff's solicitor informed the defendants' solicitor that the defendants' failure to pay "the outstanding balance" of US$868,634 on or before 31 July 2017 constituted an Event of Default "under the terms of [the Second Deed]". Further, if it was not paid by 24 August 2018, the plaintiff would apply to this Court for default judgment pursuant to order 1(b)(ii) of the Consent Orders.
13. In his response to the plaintiff's solicitor, by letter dated 14 August 2018, the defendants' solicitor attached a schedule of 18 payments made by the defendants to the plaintiffs between 7 November 2014 and 24 August 2017 that came to a total of AU$2,590,256, being the equivalent of US$1,995,118.99. The letter continued as follows: "We note that the [Second Deed] provided for a Settlement Payment of $1,915,850.94, and it would therefore appear that our clients' payments to date in total exceed the Settlement Payment. Our clients therefore are somewhat at a loss to understand the claim contained within your correspondence of alleged arrears of USD$868,634, and we invite you to provide full particulars of such a claim."
14. The plaintiff's solicitor replied by letter dated 30 August 2018, informing the defendants' solicitor that the defendants had made more payments than they had included in their schedule and that some of the payments that were included were understated. I note that a comparison between the figures in the schedule attached to the defendants' solicitor's letter and figures provided in an affidavit of the plaintiff read at the hearing demonstrates that the plaintiff concedes that the defendants had made an additional payment in the period covered by the schedule and two further payments after the last table entry. Further, four of the United States currency equivalent amounts of payments included in the table were understated.
15. As to the substantive issue, the plaintiff's solicitor explained in the letter as follows: "As you and your clients are no doubt aware, the Settlement Amount is not comprised solely of the amount of USD$1,915,850.94. The balance of the Settlement Amount owing to our client also includes interest payable under both [the Second Deed] and [the First Deed]. This is clearly reflected in the terms of the Second Deed (see clauses 2.1(a), 2.1(c)(xi), 2.1(e) and Recital G). It is also clearly reflected in [the Consent Orders]. Your clients are not entitled to simply ignore interest that has accrued on the amounts owing. Both the First and Second Deed provided for interest to accrue if any repayments were not made on time. As your clients would be aware, all scheduled repayments, bar one, were not made on time, and accrued interest. … The balance of the Settlement Amount owing to our client therefore includes: 1. interest accrued under the First Deed in the amount of USD$1,252,078; and 2. interest accrued during the Second Deed in the amount of USD$63,777."
16. The plaintiff's solicitor wrote to the defendants' solicitor on 11 July 2019 asserting that the defendants owed the plaintiff the sum of US$871,503 ("the disputed amount"). The letter stated: "In response to your clients' defaults, on 30 October 2014 our respective clients entered into the Second Deed. The central purpose of the Second Deed was to reschedule your client's payments of the outstanding principal and accrued interest. The Second Deed referred to 'the sum of USD$1,881,074.44 plus the interest payable pursuant to the Deed' as the 'Settlement Payment' (Recital G, Second Deed). USD$1,881,074 represented the outstanding balance of the Initial Sum as at 30 October 2014 (the 'principal component') and accrued interest on the Initial Sum as at that date was USD$1,252,319.50 (the 'accrued interest component')."
17. Further, they said: "The principal component of the Settlement Payment was paid in full by 13 February 2017 (the Principal Satisfaction Date). As at that date, your client owed our client USD$1,315,896.11 in respect of the accrued interest component, being the USD$1,252,319.50 accrued interest component accrued under the First Deed as at 30 October 2014 plus USD$63,576.61 which had accrued following Events of Default under the Second Deed between 7 November 2014 and 13 February 2017 … Between 13 February 207 and 2 November 2017 your clients paid our client USD$444,400.18. In accordance with clause 2.1(e) of the Second Deed, our client applied those amounts against the amounts outstanding, leaving a balance of USD$871,503."

The plaintiff's written submissions

1. The plaintiff submitted that, pursuant to the terms of the First and Second Deeds and consent orders, and making an appropriate allowance for the quantum and timing of payments made by the defendants since the signing of the Second Deed, the defendants owe accrued interest in the sum of US$871,503.
2. The plaintiff submitted that the question of whether the disputed amount has accrued in the plaintiff's favour under the First and Second Deeds can be divided into the following four sub-issues. Those sub-issues are reproduced below together with the plaintiff's submissions on each.

(1) Did cl 9 of the First Deed entitle the plaintiff to charge interest on any instalment of the principal amount that was not paid in accordance with that Deed?

1. The defendants defaulted on the second instalment under the First Deed on 1 August 2000 and over the following three years, on the remaining three instalments. Pursuant to cl 9 of the First Deed, the plaintiff was entitled to charge interest on the unpaid amounts of those instalments and interest would not stop accruing "until full payment of the Settlement Sum has been made".
2. Interest was calculated by the plaintiff on the basis that payments were applied first in reduction of principal, which the defendant accepted as an appropriate basis. As to the calculation of the disputed amount, the plaintiff relied upon an affidavit affirmed on 15 October 2019 by Daniel Heywood, a Chartered Accountant and Forensic Accounting Specialist, and read at the hearing ("Mr Heywood's affidavit"), although I note that the figure he calculated was US$30 more than the amount sought by the plaintiff pursuant to this notice of motion, being US$871,533.56. Exchange rates utilised by Mr Heywood for the calculation of interest were the United States prime rates as recorded in The Wall Street Journal and, for the United States currency equivalent of payments made by defendants in Australian currency, the Reserve Bank of Australia's historical listing of exchange rates of the Australian currency to the United States currency. A second affidavit affirmed by Mr Heywood on 21 January 2020 outlined his compliance with the "Expert witness code of conduct" set out at Sch 7 of the UCPR, which was not challenged.

(2) Does the definition of "Settlement Payment" under the Second Deed include the interest that accrued on the Settlement Sum under the First Deed?

1. The plaintiff relied upon the definition of the term "Settlement Payment" at Recital G of the Second Deed, submitting that it included interest that had accrued pursuant to cl 9 of the First Deed, up until 30 October 2014.
2. In relation to the reference to "Settlement Payment" in cl 2.1(a) of the Second Deed, the plaintiff submitted: "It appears that clause 2.1(a) erroneously re-defines the term 'Settlement Payment'. While the substantive concepts contained in the definition are the same, the figure of the outstanding principal, not including interest (USD$1,915,850.94) is larger. [The plaintiff] accepts that the principal amount outstanding as at the date of the Second Deed was in fact the lower figure of USD$1,881,074.40, as is clear from clause 2.1(e)."
3. The plaintiff noted that the United States currency equivalent of AU$3,100,000 as at the exchange rate prevailing in October 2014 was US$2,703,851. If the Settlement Payment was not intended to include accrued interest amounts under the First Deed, the rescheduled amounts would have totalled US$1,881,074.44.

(3) Does the interest regime under the First Deed apply to any defaults in repayment of instalments of the Settlement Payment under the Second Deed?

1. Clause 14 of the Second Deed expressly preserved the operation of the First Deed. The Second Deed did not contain a provision as to how interest is to be charged or calculated. The terms of the Consent Orders required the defendants to pay the plaintiff "in accordance with both the First and Second Deeds". It is apparent from the Recitals to the Second Deed that its purpose was only to "reschedule" the payment dates of the balance of the Principal Amount and accrued interest payable under the First Deed as recorded in the Second Deed, being quarterly payments which were set out at cl 2.1(c): "It follows that because the parties were simply rescheduling the existing debt and that the First Deed remained on foot between them, then objectively ascertained it is most likely that the parties intended for the interest provisions in the First Deed to continue to apply to the rescheduled debt."
2. Consistently with this interpretation, the last payment was unascertainable as at the date of the signing of the Second Deed, since interest would continue to accrue on the balance of the principal outstanding. In addition, it would be "an affront to common sense" that the plaintiff would agree to the defendants having until 2017 to repay the remainder of the amount owed which had been outstanding since 1996 without requiring that they pay interest if they defaulted on the agreed repayments.

(4) How much interest accrued on defaulted instalments of the Settlement Sum under the First Deed and Settlement Payment under the Settlement Deed?

1. The Principal Sum was not repaid until 10 February 2017. Simple interest on the amounts unpaid from 1 August 2000 until 13 February 2017 were calculated by Mr Heywood, relying on records provided by the defendants together with certain bank statements. The calculations were set out in annexures to his affidavit.
2. The plaintiff submitted that the resolution of issues (1) to (3) above turn on the contractual construction of the First and Second Deeds.

The defendants' written submissions

1. The defendants submitted that cl 11 of the First Deed was preserved in the Second Deed by cl 14, so that they were required to only repay the sum of US$1,250,000 and that they paid well in excess of that amount.
2. Alternatively, the defendants contended that they were obliged by the Second Deed to pay a sum of combined unrepaid principal and accumulated interest of US$1,915,850.94, which is the amount specified in cl 2.1(a) of the Second Deed, but had in fact paid US$2,132,859.67, which was an overpayment of US$217,008.73.
3. The defendants further submitted that the plaintiff has elected to hold the defendants to the terms of the Second Deed. Additionally, or alternatively, the plaintiff waived reliance on the First Deed or is estopped from reliance on it in these proceedings.

The hearing

1. The plaintiff read the affidavit of Mr Heywood and the affidavits sworn by the plaintiff, subject to certain agreed deletions and one paragraph that I ruled to be inadmissible. The defendants read the affidavit of the second defendant, subject to certain parts being limited pursuant to s 136 of the Evidence Act 1995 (NSW), so that they were admitted as submissions, rather than as evidence of what was stated.
2. The plaintiff submitted that the figure of US$1,915,850.94 in cl 2.1(a) was an error. To the extent that the meaning of this aspect of the Second Deed was unclear, since the figure was unexplained and at odds with the figure at recital G and cl 2.1(e) of US$1,881,074.44, the plaintiff relied upon extrinsic material in the form of an email from the defendants' solicitor to the plaintiff's solicitor, dated 17 October 2014, on the subject of negotiations concerning the drafting of terms of the Second Deed ("the 17 October 2014 email"), to demonstrate that the figure in recital G was the correct amount. In that email, the defendants' solicitor stated that: "1. … 2. On my client's calculations, the amount paid after entry into the Deed but before commencement of the proceedings, was the sum of USD$354,259.00. 3. My client calculates the amount paid to your client since proceedings were commenced is the amount of USD$131,151.00. 4. Accordingly the settlement payment should be the sum of USD$1,881,074.44. …"
3. I note the figure of US$1,881,074.44 was arrived at by deducting the two amounts in paras (2) and (3) of the email, together with the total of the amounts that the defendants had paid to the plaintiff by the time the First Deed was signed, namely, US$151,515.56.
4. On the same basis, the plaintiff referred to an email exchange between the parties' solicitors in June and August 2014 concerning the proposed schedule of instalments, in order to demonstrate that both parties understood that interest would continue to accrue on the unrepaid principal and that the scheduled instalments in cl 2.1(c) were intended to be an approximation of the combined unrepaid principal and interest owing as at the date that the Second Deed was signed.
5. In an email dated 13 June 2014, the defendants' solicitor requested a proposed repayment schedule.
6. The plaintiff's solicitor responded on 25 June 2014, noting that the defendants owed, at that time, the balance of principal of US$2,005,329.44 and US$1,394,790.18 of "total interest", being a total of US$3,400,119.62. The plaintiff's solicitor continued: "Accordingly, we propose the following schedule for repayment of the balance (some $2,800,119.62 plus the interest accruing during that period)". They proposed a series of 12 remaining payments of amounts varying between $50,000 and $400,119.62, the latter figure being the last payment to be made, "plus the remaining accrued interest by 30 September 2015". The defendants' solicitor replied on 15 August 2014, with a proposal that there be 14 remaining payments, the last being "The payment of $300,000 plus the remaining balance and accrued interest by 31 July 2017".
7. The defendants reiterated at the hearing their written submission that cl 11 of the First Deed should be interpreted to mean that once the defendants had paid half of the principal amount, being US$1,250,000, they were to be released from the debt. Further, cl 14 of the Second Deed, by preserving the First Deed, had the effect of maintaining that provision, so that the defendants had in fact grossly overpaid their debt to the plaintiff.
8. Counsel for the defendants conceded that subsequent correspondence between the parties, leading up to the finalisation of the terms of the Second Deed, did not disclose any change to the interest calculation, or to the concept of there being the "remaining accrued interest" that appears in the email of 25 June 2014.
9. The defendants submitted that the 17 October 2014 email supported their case, since the figure of US$1,915,850.94 at cl 2.1(a) of the Second Deed was included despite the defendants' solicitor having drawn the plaintiff's solicitor's attention to the sum of US$1,881,074.44 as the correct balance of the principal amount. Accordingly, the amount at cl 2.1(a) could not have been an oversight. This supports the defendants' submission that it must represent the balance of the principal amount, being US$1,881,074.44, plus an amount of interest.
10. However, the defendants did not suggest that they knew how the amount of US$1,915,850.94 was arrived at, accepting that it could not reflect what the defendants owed by way of the balance of the principal amount and interest at that stage, and there was no evidence of it having been the subject of communications between the parties in the negotiating phase of the Second Deed.
11. The defendants acknowledged that the aggregation of the instalments at cl 2.1(c) of the Second Deed significantly exceeded the amount specified in cl 2.1(a), but then submitted that the AU$3,100,000 was also apparently intended by the parties at the time as an agreed amount comprising the unrepaid principal and the accrued interest pursuant to the First Deed up to 30 October 2014. This represented a shift from the defendants' earlier position that the figure in cl 2.1(a) was the agreed debt of a combination of the unrepaid principal and interest that had accrued until 30 October 2014.
12. I note that the parties accepted that the US currency equivalent of AU$3,100,000 as at the time the Second Deed was signed was US$2,703,851. This submission had two consequences: the figure of US$1,915,850.94 in cl 2.1(a) was without any apparent purpose or explanation and, since the parties accepted that the US currency equivalent of AU$3,100,000 as at the time the Second Deed was signed was US$2,703,851, the second defendant's calculation that the defendants had overpaid their debt was no longer viable.
13. Accordingly, the defendants withdrew their submission that they had overpaid the plaintiff. Their modified position was that the defendants had paid AU$3,019,981.15 since 30 October 2014, being AU$80,018.85 short of the total of the instalments at cl 2.1(c) of AU$3,100,000. The defendants said that interest arising from the late payment of the instalments, calculated to the date of the second day of the hearing, being 21 April 2020, was AU$43,007.37, yielding a total liability by the defendants to the plaintiff of AU$123,025.85.
14. On the second day of the hearing, the plaintiff moved from his earlier position that had coincided with the defendants' position, that the figures in cl 2.1(c) were meant to be in Australian currency. The plaintiff submitted that, in light of the June and August 2014 correspondence between the parties' solicitors, it appeared that it was understood by them at the time that the Second Deed was signed that the figures in cl 2.1(c) were in US currency.
15. In addition, a letter from the plaintiff's solicitor to the defendants' solicitor dated 24 October 2014 had attached to it a draft of the Second Deed, setting out cl 2.1(c) the instalments in identical terms to the final version, except that the date for payment of the first instalment was a week earlier than in the final version. In the covering letter, the writer said: "We are instructed to enter default judgment for all sums owing unless [the Second Deed] is entered into before 31 October 2014, and the first payment of USD$200,000 is made on or before 31 October 2014."
16. The plaintiff submitted that it was therefore open to the Court to find on the evidence that the amounts in cl 2.1(c) of the Second Deed were expressed in either Australian or United States currency. Counsel for the plaintiff submitted that if the Court found that the amounts were in United States currency, the recalculated amount owed by the defendants to the plaintiff was US$838,109.09, being US$33,393.91 less than the amount sought in his notice of motion. The defendants submitted that, although it opposed the plaintiff's application to amend the notice of motion to include the alternative amount, it was not disadvantaged by the late notice of the change in the plaintiff's position.
17. I granted leave to the plaintiff to amend order 1 sought in the notice of motion to read: "Judgment for the Plaintiff in the amount of USD$871,503. Alternatively, USD$838,109.09."
18. Counsel conceded that, in correspondence following the defendants' default on the first instalment pursuant to the Second Deed, the plaintiff's solicitor referred to the relevant amounts as being in Australian currency. However, counsel submitted that post-contractual conduct was not relevant to the interpretation of the Second Deed: Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57 at [35].
19. The plaintiff submitted that it was open to the Court to reject the interpretations of cl 2.1 offered by both parties and, pursuant to ss 73 and 90 of the Civil Procedure Act, arrive at the Court's "preferred construction".
20. The defendant maintained its position that the figures in cl 2.1(c) were in Australian currency.

The relevant law and legal principles

1. The principles to be applied in consideration of a motion for summary judgment are not in dispute. Rule 13.1 of the UCPR relevantly provides: "13.1 Summary judgment (1) If, on application by the plaintiff in relation to the plaintiff's claim for relief or any part of the plaintiff's claim for relief - (a) there is evidence of the facts on which the claim or part of the claim is based, and (b) there is evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed, the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires. (2) Without limiting subrule (1), the court may give judgment for the plaintiff for damages to be assessed. …"
2. In Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87; [1983] HCA 25, the Court said, at 93: "The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried."
3. In Charub Pty Ltd v Triandafyllou [2019] NSWSC 487 at [13], Davies J said: "The principles in respect of summary judgment are well established and are well known. In terms of what has been said in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129, Spencer v The Commonwealth of Australia (2010) 241 CLR 118; [2010] HCA 28 at [20]-[25] it would have to be shown that the defences were so obviously untenable that they could not possibly succeed, that they were manifestly groundless or that their prospects of success were only fanciful. It is further accepted that the power to enter summary judgment should be exercised with great care and an order should only be made where it is clear that there is no real question to be tried."
4. The plaintiff also relied on s 90 of the Civil Procedure Act and r 36.1 of the UCPR to give judgment in the case generally, in light of the evidence of the terms of the First and Second Deeds and the defendants' default in payment of the money owed. As noted, the plaintiff submitted that it was open to the Court to interpret the Deeds in a manner that neither party has advanced, pursuant to s 73 of the Civil Procedure Act, which provides as follows: "73 Power of court to determine questions about compromises and settlements (1) In any proceedings, the court - (a) has and may exercise jurisdiction to determine any question in dispute between the parties to the proceedings as to whether, and on what terms, the proceedings have been compromised or settled between them, and (b) may make such orders as it considers appropriate to give effect to any such determination. (2) This section does not limit the jurisdiction that the court may otherwise have in relation to the determination of any such question."
5. As to the principles applicable to the interpretation of certain clauses of the Deeds which are in contention, I have had regard to the following statements of principle that, in my view, have relevance.
6. In Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337; [1982] HCA 24 Mason J observed, at 352, in relation to the use of extraneous material as an aid to the interpretation of a contract: "The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed. It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification. Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract."
7. In Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7, French CJ, Hayne, Crennan and Kiefel JJ said, at [35]: "… this Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption 'that the parties ... intended to produce a commercial result'. A commercial contract is to be construed so as to avoid it 'making commercial nonsense or working commercial inconvenience'. (citations omitted)
8. See also Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407 in which Allsop P said, at [14]: "The construction and interpretation of written contracts is to be undertaken by an examination of the text of the document in the context of the surrounding circumstances known to the parties, including the purpose and object of the transaction and by assessing how a reasonable person would have understood the language in that context."
9. I also note that in Agricultural and Rural Finance Pty Ltd v Gardiner Gummow, Hayne and Kiefel JJ reiterated, at [35]: "… the general principle that 'it is not legitimate to use as an aid in the construction of [a] contract anything which the parties said or did after it was made'."

Consideration

1. As noted, the Consent Orders provided that if an "Event of Default" occurred, as that expression was defined at cl 2.2(a) of the Second Deed, the total amount outstanding under the First Deed became immediately due and payable, so that the plaintiff could apply for default judgment, and the defendants would consent to it being entered: cl 1(b). The terms of the Consent Orders were consistent with cl 3.2(c) of the Second Deed, which also provided that the plaintiff may make an application for summary judgment and/or default judgment if there was an Event of Default.
2. The defendants advanced a submission which, if accepted, would mean that there had not been an Event of Default. They submitted that, pursuant to cl 11 of the First Deed, the only obligation upon them was to repay half of the principal amount, being US$1,250,000, which would then relieve them of responsibility for further repayment pursuant to either Deed. An insurmountable impediment to this interpretation, however, is the phrase "but for this Deed" in cl 11. The defendants submitted that the phrase "enforce[s] the primary obligations set out in the first two lines of that clause", those lines referring to the agreement of the parties to mutually release each other upon payment of half of the principal amount. However, as a matter of grammatical construction, although inelegantly expressed, the phrase has the effect of relieving them of all obligations relating to, or arising from, their relationship other than those obligations arising under the First Deed.
3. I am fortified in that view by the observation that, taking the document as a whole, there would have been no point otherwise to its provisions that required the defendants to repay the whole of the principal amount and to subject the defendants to interest payments if they did not comply with that obligation according to the timetable set out at Schedule 4 of the First Deed.
4. That submission aside, the defendants thus do not resist the proposition that there was an Event of Default, so that the only remaining matter in dispute is the quantum of the debt. That being so, and in view of the defendants not having filed a defence to the statement of claim and having signed consent orders which they had agreed to being filed upon an Event of Default, I am satisfied that the high bar that is set for summary judgment by Fancourt v Mercantile Credits and General Steel Industries is met.
5. The dispute between the parties as to quantum arises from their competing constructions of the two deeds. The plaintiff submitted that the Second Deed is a re-scheduling of the instalment payments of the debt that was the subject of the First Deed and otherwise expressly preserves its terms, pursuant to cl 14 of the Second Deed, so that interest continued to accrue on it in the same fashion as it did under the First Deed, until the principal amount of US$2,500,000 was fully repaid.
6. The plaintiff's calculation of the debt was set out in the affidavit of Mr Heywood. It was based on a calculation of simple interest at the prevailing US prime bank rate, pursuant to cl 9 of the First Deed, from the date of the first default on 1 August 2000 until the principal amount was paid in full on 10 February 2017, which was US$1,315,896. The sub-totals of interest that accrued up to 30 October 2014 was US$1,252,320 and from then until 10 February 2017 was US$63,577. Payments made by the defendants after 10 February 2017 reduced that interest bill to US$871,503, which is the sum sought in the plaintiff's notice of motion, as filed.
7. The defendants submitted that the Second Deed consolidated the balance of the principal that was owed and the accumulated interest as at 30 October 2014, so that references in the Second Deed to the payment of interest referred only to interest that may accrue on any late payments of the instalments itemised at cl 2.1(c). As noted, during the course of the hearing, the defendants calculated their indebtedness on this basis as AU$123,025.85, being the shortfall on the total payments that were due pursuant to cl 2.1(c) of AU$3,100,00 (AU$80,018.85) and interest for late payment of some of those instalments (AU$43,007).
8. The plaintiff submitted that the amount specified in cl 2.1(a) was an error and should have been US$1,881,074.44, being the outstanding principal amount. I am of the opinion that the amount specified in cl 2.1(a) was included by way of an error, and that the intended quantum was the amount specified in recital G, which is US$1,881,074.44. I am persuaded to that conclusion by the following combination of factors. (a) I note the similar wording in recital G and cl 2.1(a), which were respectively as follows: "… the Defendants owe [the plaintiff] the sum of USD$1,881,074.44 plus the interest payable pursuant to the Deed (the Settlement Payment)" (recital G) "The Defendants will pay [the plaintiff] the amount of US$1,915,850.94 plus the interest payable at the rate specified in the Deed (the Settlement Payment)" (cl 2.1(a)) This similarity in structure supports the proposition that one or both of the specified amounts was an error. The fact that the figure in recital G also appeared in cl 2.1(e) suggests that the figure in cl 2.1(a) is the odd one out. (b) In both recital G and cl 2.1(a), having regard to the words immediately following the amount, it logically represented the unrepaid principal absent interest. The amount of US$1,881,074.44 corresponds to the evidence of what payments the defendants had made prior to 30 October 2014, and that calculation is reproduced in the recital to the Second Deed which was signed by the defendants. The defendants concede that the amount of US$1,915,850.94 does not correspond to any apparent calculation of what was owed at the time the Second Deed was signed or, indeed, any context whatsoever and, if it is a calculation, who made it. (c) If it was an agreed amount deliberately intended to represent the balance of the principal amount and interest, it would represent an unlikely quantity for interest owed, given that accumulated interest as of 30 October 2014 was US$1,252,320 whereas the amount at cl 2.1(a) exceeded the unrepaid principal by US$34,776.50. (d) The terms of cl 2.1(e) presume that the instalments will be applied to a debt that includes a component of actively-accruing interest. If the outstanding interest had been combined in the sum of US$1,915,850.94, there would have been no need to apply the funds in the sequence that was proposed; that is, initially towards the outstanding principal amount and subsequently towards accrued interest. (e) The fact that the tally of the instalments in cl 2.1(c) so significantly exceeds the figure in cl 2.1(a), regardless of whether it is Australian or United States currency, is completely inconsistent with the interpretation proposed by the defendants.
9. Accordingly, I find that the figure in cl 2.1(a) was intended to be US$1,881,074.44 and that the meaning of the clause is that the defendants were liable to repay that amount together with the accrued interest on the unrepaid principal.
10. I am of the opinion that the Second Deed provided that interest would continue to accrue until the principal amount of US$2,500,000 was fully repaid, for the following reasons. (a) The terms of recital G obliged the defendants to repay the outstanding principal "plus the interest payable pursuant to the [First Deed]" which, pursuant to cl 9 of the First Deed, may be charged until full payment of the principal was paid. (b) Clause 2.1(a) stated that the defendants "will pay [the plaintiff the outstanding principal] plus the interest payable at the rate specified in the [First Deed]". If the remaining principal and accrued interest had been combined and interest would no longer accrue, there would have been no need to specify the interest rate. The terms of the clause implied that interest would continue to accrue. (c) The terms of cll 2.1(c)(xi) and 2.1(e) denoted an expectation that the final amount of interest was unascertainable until the principal was fully repaid; otherwise, there was no need to prioritise the repayment of the principal and accept that the quantum of the last instalment was unknown until the time for that payment.
11. In my opinion, the relevance of the currency of the instalments in cl 2.1(c) is only to the quantum of the outstanding balance of the defendants' debt, in terms of the accrued interest calculation; it is of no consequence to the defendants' liability. I conclude that, at the time the Second Deed was signed, the parties understood that the instalments were in US currency, for the following reasons. (a) The total figure of 3,100,000 coincides with the approximate sum of the unrepaid principal and accrued interest owed by the defendants on 30 October 2014 in United States currency, which was US$3,133,394. (b) The fact that the ultimate sum of interest to be paid was unknown to the parties as at 30 October 2014, because it was the US prime bank rate which was amenable to change and because the terms of the Second Deed permitted the defendants to make payments earlier than they fell due, is consistent with the last instalment to be calculated at the time it was due, on 31 July 2017. (c) The instalment payments in cl 2.1(c) were the only payments in the deed that were not expressed to be in United States currency and were not expressly stated to be in Australian currency.
12. During the hearing, the plaintiff recalculated the defendants' judgment debt in the event that the Court finds that the instalment payments were understood to be in United States currency. Leave was granted to the plaintiff to amend the notice of motion to reflect this alternative figure, which is US$838,109.09. I am surprised that this figure is less than that which would apply if the instalments expressed in cl 2.1(c) were in Australian currency. However, on the basis that the calculation was advanced by the plaintiffs, that it was not contested by the defendants and that it is less than the amount in the notice of motion as filed, I accept it as the appropriate quantum of the amount owing, as a consequence of the finding that the instalments were expressed in Australian currency.
13. My findings of fact have been made without recourse to the extraneous material, being the correspondence between the parties which pre- and post-dated the signing of the Second Deed. I consider that the correspondence that post-dated the signing of the Second Deed cannot assist in the interpretation of the Deed: Agricultural and Rural Finance Pty Ltd v Gardiner at [35]. As to the preceding correspondence that occurred in the context of the negotiating of the Second Deed, it is difficult to discern what statements reflect "objective background facts which were known to both parties", as opposed to "actual intentions and expectations", which are not receivable for the purposes of interpretation: Codelfa Construction v State Rail Authority at 352. However, if I am wrong in that regard and recourse could have been had to the parties' correspondence between June and October 2014, it is material that supports my conclusions, in any event.
14. An order for interest pursuant to s 100 of the Civil Procedure Act is appropriate. The commencement date of that order will be the day after the date of the last payment by the defendants, which was on 2 November 2017.
15. I make the following orders: 1. Judgment for the plaintiff in the amount of US$838,109.09; 2. Pursuant to s 100 of the Civil Procedure Act 2005 (NSW), interest on the amount of the judgment be paid by the defendants to the plaintiff at the maximum rate that is prescribed, from 3 November 2017 up to and including today's date; 3. The parties to provide, by email to chambers, short minutes calculating the amount in order (2) within a period of 14 days of the date of these orders. In default, direct each party to prepare a one-page calculation of the relevant amount, within a period of 14 days of the date of these orders; 4. The defendants to pay the costs of the proceedings.

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