Zhang v Zhang

Supreme Court of NSW|2022-07-15|Before: Meek J, French J

Solicitors: JC Legal Practice (Plaintiff) Novolaw (First Defendant) File Number(s): 2020/332753

Judgment

HIS HONOUR: On 12 July 2022 I delivered reasons for judgment in relation to a dispute regarding terms of repayment of a loan in which I found for the plaintiff (Ran) on her claim: Zhang v Zhang [2022] NSWSC 924 (principal judgment).
These reasons assume a familiarity with the principal judgment and will adopt its abbreviations.

Interest

In the principal judgment I accepted that a rate of 3.95% was agreed between the parties. However, there was an issue regarding the duration of the application of the interest rate: principal judgment at [524].
Mr Reynolds on behalf of Ran in submissions dated 14 July 2022 has submitted that Ran does not seek to further agitate the proposition that the UCPR rate of interest should apply after the conclusion of the loan term. Nor, as I understand it, does he seek to argue that the UCPR rate applies from the date of the sale of the property.
Mr Reynolds has prepared a calculation of interest on the loan at the contractual rate of 3.95% per annum applicable from 31 August 2018 to 22 July 2022.
The interest calculation is $35,734.75 and has been incorporated into draft short minutes of order proposed by Ran.
Jing in an email to my Associate dated 15 July 2022 setting out her submission indicates that she does not know what she can say about interest rates.
Mr Gao on behalf of Jian jian provided submissions on 15 July 2022 and has indicated that he makes no submissions as to the interest payable, however agrees to the form of calculation provided for in Ran's written submissions.
The issue of doubt regarding interest was the duration of application of the rate of 3.95%.
There is a question as to what date the interest is calculated from and what date it is calculated to.
The answer to that question (dates from and to) depends upon the particular circumstances of each case and the answer differs depending upon whether statutory provisions apply or general law provisions apply.
It was said by the House of Lords (the judgment of their Lordships was delivered by Lord Devlin) in distinguishing discount (being a deduction from the price fixed once and for all at the time of payment) from interest stated that "Interest postulates the making of a loan and then it runs from day to day until repayment of the loan, its total depending on the length of the loan": Hong v Choong Fah Rubber Manufactory [1962] AC 209 at 217.
There are some statements regarding interest on loans which present a clear picture.
In Re James; Ex parte Carter Holt Harvey Roofing (Aust) Pty Ltd (1993) 46 FCR 183 at 187-188 Hill J made particular observations regarding the timing from which interest is calculated. His Honour observed as follows: "It is clear that interest accrues from day to day. So much was decided as early as 1755 in Wilson v Harman (1755) 2 Ves Sen 672; 28 ER 428; and see also Re Rogers' Trusts (1860) 1 Dr & SM 338; 62 ER 408; Hong v Choong Fah Rubber Manufactory [1962] AC 209 at 217 and Mr Fisher and Mr Lightwood's Law of Mortgage (10th ed, 1988), p 649. But that does not mean that a whole day must pass before the entitlement to interest arises. To the contrary, it means that for each whole day, not including the day of the loan or, as in the present case, the date of the judgment, there is an entitlement to interest. That this is so appears from what was said by the Vice Chancellor in Wilson v Harman, where his Lordship said (at 673; 429): "… interest is supposed to grow due from day to day to be sure; and the person entitled to the produce is entitled to it to the last hour of the day." Thus, for example, in calculating an apportionment of interest due to the estate of a life tenant, or a remainderman, the rule is that in calculating the number of days from the time when interest became due and payable to the date of death of the life tenant, the first day is not counted but the last day is. See for example, R P Meagher and W Gummow, Jacobs' Law of Trusts in Australia (5th ed, 1986), par 1927. Thus the common law, against which the Common Law Practice Act 1867 (Qld) must be construed, did not require that a whole day pass before interest became due, but rather that the interest accrue due from the beginning of the day, in that the judgment creditor was entitled to the whole day's interest."
However, the position at common law whilst in a number of legal texts and judgments is asserted to be clear is not always regarded as clear. Mason P observed in Heydon v NRMA (No 2) (2001) 53 NSWLR 600; [2001] NSWCA 445 at [13] "Notwithstanding statements by the highest courts that the common law does not allow interest on recovery of money in claims for debt or damages … there are many cases of undoubted authority where this has happened". His Honour referred to his decision in National Australia Bank Ltd v Budget Stationery Supplies Pty Ltd (NSW Court of Appeal, 23 April 1997, unrep) to the effect that "The common law's attitude to interest on debts is confused and largely negative".
Commercial life generally addresses the issue specifically and does not leave the answer to guesswork.
Thus, loan agreements commonly provide whether the interest calculation includes the date of advance: Hollister Developments Pty Ltd v Custom Credit Corporation (Federal Court, French J, 16 November 1994, unrep) BC9406596 at 22 (interest included both the date of advance and date of repayment); Capital Securities XV Pty Ltd (in liquidation) v Calleja [2020] NSWSC 301 at [44] (interest included the date of advance but excluded date of repayment).
In this case, I note that the funding provided by BC Securities was on printed terms that the Honeymoon Margin would apply commencing on settlement date: Ex D2.
Statutory provisions provide a flexible approach as to the dates of computation. In relation to pre-judgment interest, Civil Procedure Act 2005 (NSW), s 100(1) provides that: "In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit-- (a) on the whole or any part of the money, and (b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect."
If there are no agreed terms as to interest payable the Court will ordinarily make an order for payment of interest on money lent: see Falkner v Bourke (1990) 19 NSWLR 574 at 576A-B.
The Court of Appeal has observed that the time at which the cause of action arises will often provide an appropriate date from which interest should run, as it is on that date that the successful party is taken to have had a legal entitlement to the judgment sum and is therefore kept out of their money in the relevant sense: Maestrale v Aspite (No 2) [2014] NSWCA 302 at [8].
In the present case, the date of running of interest was not expressly addressed. However, it is clear that the interest rate was discussed by reference to the arrangements that Ran had with the ANZ. In particular I note that Ran stated that the rate of 4% was used as the funds she planned to loan to the defendants was the amount then currently deposited in her home loan offset account with ANZ, offsetting the interest she was then paying to ANZ at the rate of 3.95%: principal judgment at [294].
The critical conversation giving rise to the arrangement was as follows (principal judgment at [295]): "Jing YANG: We are overseas buyers so the banks will only lend us $300,000. Can you lend us $250,000 to pay the shortfall? Otherwise we won't have enough money to settle. Jianjian ZHANG: I know you have some money after refinancing the loan for your property. If you lend us the money, we can repay you after a year. We can also pay you interest. I am your brother, so don't charge me too much… can we just pay your current loan interest rate? Me: OK. I'm right now paying 3.95%. But this is also my husband's money, please make sure you will repay it. Jing YANG: Don't worry, we are going to sell our property in China next year. After we sell that property, we can pay you back. If you are worried, both the China property and this property will be security. Me: OK. That sounds good. Jianjian ZHANG: Good, thank you. Do not worry."
The funds were advanced by Ran on 31 August 2018 by causing a bank cheque to be issued from ANZ from the funds held in her ANZ account, which cheque Ran delivered to Amy Cheng of GJ Fong & Co, solicitors acting for the defendants on the purchase to enable completion of the purchase of the property that day: principal judgment at [306]-[307].
I indicated in the principal judgment that I had the impression that the proper construction of the interest term is that interest was to be repayable at the particular rate identified until the loan was repaid: principal judgment at [562].
As noted, the conversation did not expressly address the issue of whether interest would commence on the day of the advancement of funds. Nonetheless, given that Ran was being charged interest, to my mind it was implied that interest would be charged commencing on and from the date of advancement of the funds.
If I am wrong about that and there is no agreement about when interest would be paid as distinct from the rate of interest, and accordingly no right to interest, then pursuant to s 100(1) Civil Procedure Act, I accept the submission of Mr Reynolds and permit interest, at the agreed rate, payable from and including the date of advancement of the funds.
In those circumstances, I accept the submission of Mr Reynolds on behalf of Ran and his calculation of pre-judgment interest rate (which includes up to and including today) will be incorporated into the orders for judgment.
Where interest is allowed up to and including the date of judgment, the charging order in relation to the post-judgment interest on the sum of $264,530.25 held by Jing in the National Australia Bank account in her name will carry interest accruing from and including the day after judgment, namely 23 July 2022, pursuant to s 101 of the Civil Procedure Act.

Costs

Ran seeks an order that Jing pay Ran's costs of the proceedings as agreed or assessed, calculated on the ordinary basis.
Mr Gao on behalf of Jian jian seeks an order that Jing pay Jian jian's costs of the proceedings as agreed or assessed, calculated on an ordinary basis.

Costs principles

I addressed the principles regarding costs in In the matter of Black Tie Holdings Pty Ltd (No 2) [2022] NSWSC 856 (Black Tie Holdings Pty Ltd (No 2)).
In Black Tie Holdings Pty Ltd (No 2) I stated at [44]-[49], [51]: "44 Costs are in the discretion of the Court, subject to the Civil Procedure Act 2005 (NSW) (CPA), rules of Court and any other Act: s 98(1)(a) CPA. 45 The Court has full power to determine by whom, to whom and to what extent costs are to be paid: s 98(1)(b) CPA. 46 The Court may order that costs are to be awarded on the ordinary basis or on an indemnity basis: s 98(1)(c) CPA. 47 An order for costs may be made by the Court at any stage of the proceedings or after the conclusion of the proceedings: s 98(3) CPA. 48 The general position is that if the Court makes any order as to costs, the Court is to order that the costs follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs: r 42.1 UCPR. 49 If the Court makes an order for dismissal of the proceedings then generally speaking, unless the Court orders otherwise, the plaintiff must pay the defendant's costs of the proceedings to the extent to which they have been dismissed: r 42.20(1) UCPR. .. 51 Generally costs payable to a party under an order of the Court are to be assessed on the ordinary basis: r 42.2 UCPR."

Ran's costs

Mr Reynolds submits that Ran has in a practical sense achieved a success in relation to the relevant event (being her claim) noting that the Court found in favour of Ran in relation to three key aspects of her claim, namely the principal sum advanced, the interest and a charge.
He submits that the general rule that costs followed the event ought to apply.
In relation to interpretation costs, Ms Reynold notes that the reasons of the Court at [84]-[173] address the issue of those costs in the first instance.
He submits that no special costs order regarding the costs of interpretation are sought by Ran. Rather, he states that Ran bore all of the costs of the interpreter in the first instance in the proceedings and, having been successful in the event, relies upon the general order to recover those costs on the ordinary basis.
Jing in her written submission does not expressly address the question of costs.
Rather, she has made some submissions in relation to some findings I made in relation to the dispute in the proceedings in respect of a conversation said to have taken place on 29 August 2019.
In particular Jing referred to my findings in the reasons for judgment at [533] and at [534].
She submits that if the Court accepted her evidence, it can be proved that Ran's affidavit is false.
My findings in relation to the disputed conversation in the principal judgment did not doubt Ran's evidence that a conversation had taken place, rather the doubt was as to the dating of that conversation.
In this respect, I stated at [527]-[531]: "527 Thus, even accepting Jing's evidence and submissions that she and Jian jian were not together on 29 August 2019, it does not to my mind cast doubt on all aspects of Ran's evidence in respect of this. 528 It seems to me possible that Ran was mistaken that the discussion took place exactly on 29 August 2019. That is so because as I have noted Ran (in cross-examination) nominated that the loan was due in about "January" before correcting herself and saying "September 2019" and says she asked "them" (the defendants) and her brother promised that they were going to sell the "Sydney property" and repay her money: T52 529 Given that the timing of end of August was a year on from the date of the lending, it seems to me inherently likely that Ran would have called the defendants to speak with them about repayment. 530 Whilst I accept that a conversation might not have occurred specifically on 29 August 2019, I reject Jing's assertion that no such discussion occurred at or around that time and prior to 20 November 2020. 531 I accept Ran's evidence that a conversation did take place it between herself and the defendants. I find that more probably it occurred on a date after but nonetheless proximate to 29 August 2019, perhaps the Monday or Tuesday of the following week which would have been 2 or 3 September 2019 - which is consistent to the "September 2019" date Ran nominated in cross-examination as being when the loan was due: T52."
The above findings do not give a reason to depart from the general costs order.
In relation to the interpretation costs, Mr Reynolds' submissions correctly identifies that my comments regarding the bearing of interpretation costs were principally directed to the bearing of those costs in the first instance, rather than the ultimate liability for such costs.
In the circumstances of this case, I see no reason to depart from the general position that the interpretation costs also ought to follow the event such that Jing will be responsible to bear those costs and the costs of the proceedings in respect of Ran's claim on the ordinary basis.
In the circumstances, I propose to make the costs order as sought by Mr Reynolds.

Costs as between Jian jian and Jing

In support of the claim by Mr Gao that Jing pay Jian jian's cost of the proceedings, Mr Gao's submissions were as follows: "2.2 From 9 September 2021, judgment was entered into by consent for the Plaintiff against the first Defendant. 2.3 It was clear that the Second Defendant would not be successful against the Plaintiff in these proceedings and the First Defendant was obliged to incur significant additional legal costs which it did not have to incur had the Second Defendant consented to the Plaintiff's case, from the date of judgment. In that sense, the First Defendant says that the Second Defendant unnecessarily increased the costs of the First Defendant. 2.4 In that sense, the Second Defendant was responsible for the litigation continuing when it did not have to continue, and was responsible and caused the First Defendant being further pulled in to the continuation of those proceedings and therefore caused the First Defendant to incur additional costs for resisting the Plaintiff's claim. 2.5 The Second Defendant was further, especially vexatious in her conduct, putting forward material to the courts which was irrelevant and further communicating with chambers, seeking legal advice from the courts, despite specific communications from the First Defendant indicating it was not appropriate, consented to, nor permitted for the Second Defendant acting in that manner, all of which increased the costs of the First Defendant. 2.6 The Plaintiff has in effect, won against the Second Defendant and the Second Defendant and it was clear that the Plaintiff would have won as the Second Defendant's case was a hopeless case. This caused the First Defendant to continue in taking part in a proceedings which it did not wish to take place and to incur those costs."
There is no issue on Ran's statement of claim in respect of costs as between Jian jian and Jing.
After Jian jian consented to default judgment in favour of Ran, there was no obvious need for Jian jian to be specifically involved in the proceedings on Ran's statement of claim, to the extent that those proceedings continued against Jing.
There is, in my view, no reason to make any order for costs as between Jian jian and Jing of the proceedings on Ran's statement of claim and I decline to do so.
Ran's involvement in the proceedings and in listings before me, both in respect of pre-trial directions and listings and hearing itself, were exclusively or at least principally directed to the issue of the cross-claim.
That claim remains to be determined, as I note below. I reject Jian jian's claim for an order that Jing pay Jian jian's costs of the proceedings on Ran's statement of claim.

The judgment and double recovery

Jing in her email made a number of submissions regarding the cross-claim of Jian jian against her and also in relation to payment of Ran's money.
In relation to payment of Ran's money, Jing's submission is as follows: "3. If it is decided, the first defendant and I need to pay the plaintiff's money. I only bear half. [T]he reasons are: a. I can't replace the first defendant to pay the plaintiff. The first defendant and I have divorced. b. the divorce agreements and wechat chat records between me and the first defendant can prove that the Australian Property belongs to me, the money for selling Australian Property belongs to me. c. the first defendant has no money in Australia. d. the first defendant owes me a lot of money in China. Even he refused to pay the alimony of our child."
Jing's submission that "If it is decided, the first defendant and I need to pay the plaintiff's money. I only bear half", potentially raises a question regarding entry of judgment and recovery in respect of judgments.
Equity will by injunction restrain a plaintiff receiving double satisfaction upon execution of a plurality of judgments which have been recovered by the plaintiff: see Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574 at 608; [1996] HCA 38 per Gummow J citing Morris v Robinson (1824) 3 B & C 196 at 205-206; 107 ER 706 at 710.
The authorities in this regard have been recently considered by the Court of Appeal in James v Australia and New Zealand Banking Group Ltd (2018) 97 NSWLR 663; [2018] NSWCA 41.
Judgment has already been given in favour of Ran against Jian jian as I mentioned in the principal judgment at [15]-[16].
There will be as I note below judgment in favour of Ran against Jing for payment of the money.
The judgment will be for the full amount claimed.
The principles against double recovery or double satisfaction of judgments will, if applied, prevent Ran from recovering more than is properly due to her in respect of the loan monies.
What, if any, rights of contribution that Jian jian and Jing have against one another in respect of the judgments obtained by Ran against them remain to be seen and might well be impacted upon, in respect of the proceedings on the cross-claim.

The cross claim

Jing for her part made a number of submissions concerning the cross-claim.
Her submissions were as follows: "2. Matters concerning the cross claim of the first defendant in the judgment … [there followed extracts from the principal judgment at [25] and [31]] a. From these two points, I seem to understand that because I don't have a lawyer, I don't understand the legal procedures that ordinarily a claim and a cross-claim are heard together and not in a staggered or piecemeal way. As a result, the claim of the plaintiff and I was carried out separately, and many important evidences of the first defendant and I were not adopted. b. I don't understand why the cross claim has been rejected, the first defendant can repeatedly make cross claims. From a legal point of view, I don't have a lawyer. As my own representative, I don't agree with the first defendant's endless cross claims. I do not agree with the first defendant's endless delay. c. Moreover, if the first defendant really has reasonable reasons and sufficient evidence to make a cross claim, he cannot delay for more than a year. d. One of the purposes of the first defendant delay is to want the lawsuit between me and the plaintiff to proceed independently first. So that the court can ignore the important evidence between me and the first defendant. In this way, the evidence between me and the plaintiff is incomplete. Because the first defendant is the main person in the process of borrowing money from the plaintiff. I am not the main person. It can also be seen from wechat that the first defendant took the initiative to raise funds from the plaintiff or the plaintiff took the initiative to inquire. e. Another purpose of the first defendant's delay in cross claim is that he hopes that after the plaintiff's money is returned, he can use the plaintiff's money as a guarantee to sue me, which is more convenient for him."
The hearing was part heard on 22 June 2022. On 29 June 2022 at a directions listing prior to the recommencement of the hearing on 30 June 2022, I made the following directions: "Grants leave to the first defendant to file an Amended Cross Claim in the form sent to the Associate to Meek J on 24 June 2022. Grants leave to Second Defendant to file a Defence to the Amended Cross Claim in the form sent to Associate to Meek J on 27 June 2022. Stands the proceeding on the Amended Cross Claim over to next Thursday, 7 July 2022 before the Registrar for directions."
Those directions were made in a context in which Jian jian and Jing had prepared amended documents. The clear expectation was that the documents would be filed prior to the listing before the Registrar on 7 July 2022.
Jian jian has not yet filed any such amended form of cross-claim. Jing has complained, with some justification, that Jian jian has delayed in respect of the prosecution of the cross-claim.
Ultimately, the Registrar on 11 July 2022 made specific orders for the filing and serving by Jian jian of an (amended) cross-claim by 18 July 2022 and for Jing to file and serve any defence to such claim by 15 August 2022.
I set out at length in the reasons for judgment procedural issues arising in respect of Jian jian's cross-claim. In particular, see the principal judgment at [23]-[51].
The cross-claim is yet to be determined. A significant part of the reason for that is the delay in Jian jian in formulating an amended form of cross-claim.
However, as I noted in the principal judgment Parker J on 3 June 2022 made an order that the cross-claim by Jian jian against Jing be heard after the hearing of Ran's claim against Jing.
That was an order for separate determination of the proceedings on the cross-claim: r 28.2 Uniform Civil Procedure Rules 2005 (NSW).
In those circumstances, I do not embark upon or make any specific finding in relation to the matters raised by Jing against Jian jian regarding divorce and monetary issues as between them as submitted by Jing.
Further, as I have noted above, there is no issue in respect of Ran's statement of claim of costs as between Jian jian and Jing. I expressly do not make any finding in respect of costs or other rights as between Jian jian and Jing in respect of Ran's statement of claim. The rights as between one another in the claims rising on the cross-claim remain to be determined.

Orders

The orders of the Court will be substantially in accordance with the short minutes of order as proposed by Mr Reynolds which are as follows: 1. Judgment for the Plaintiff against the Second Defendant in the sum of $264,530.25, being: 1. The initial advance of $245,795.50; 2. Less the payment of $12,000 made by the First Defendant on 27 May 2019 and the payment of $5,000 made by the Second Defendant on 20 July 2019; and 3. Plus interest in the sum of $35,734.75, calculated at the contractual rate of 3.95% per annum from 31 August 2018 to 22 July 2022. 1. Declare that: 1. the property known as [redacted] Wolli Creek, NSW 2205 and being all of the land in certificate of title folio identifier [redacted] (Property), and the proceeds of sale thereof, was charged by the Defendants with repayment to the Plaintiff of the sum of $245,795.50 together with interest accruing at the rate of 3.95% per annum from 31 August 2018; and 2. accordingly, the sum of $264,530.25 held by the Second Defendant in the National Australia Bank account [details redacted] (being part of the proceeds of sale of the Property transferred by the Second Defendant to the stated account), plus interest accruing from and including 23 July 2022 pursuant to section 101 of the Civil Procedure Act 2005 (NSW), is the subject of a charge in favour of the Plaintiff, to which the Plaintiff is immediately entitled. 1. Order that the Second Defendant pay the Plaintiff's costs as agreed or assessed, together with interest on costs, calculated on the ordinary basis.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 July 2022

Common Law Practice Act 1867(Qld)

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Judgment (11 paragraphs)

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