ACN 116 746 859 (formerly known as Palermo Seafoods Pty Ltd) v Lunapas Pty Ltd (No. 2)

[2017] NSWSC 1799

Supreme Court

New South Wales

Medium Neutral Citation:	ACN 116 746 859 (formerly known as Palermo Seafoods Pty Ltd) v Lunapas Pty Ltd & Anor (No. 2) [2017] NSWSC 1799
Hearing dates:	15 December 2017
Date of orders:	15 December 2017
Decision date:	15 December 2017
Jurisdiction:	Equity
Before:	Slattery J
Decision:	Judgment to be paid to the plaintiff for interest entered in the sum of $70,648.12. Directions made for written submissions in relation to other issues.
Catchwords:	CIVIL PROCEDURE- Court administration – case management – Practice Notes - interest – interest up to judgment – Civil Procedure Act 2005, s 100 – whether compound interest applicable – application of Practice Note SC Gen 16.
Legislation Cited:	Civil Procedure Act 2005 s 100
Cases Cited:	ACN 116 746 859 (formerly known as Palermo Seafoods Pty Ltd) v Lunapas Pty Ltd & Anor [2017] NSWSC 1583
Category:	Costs
Parties:	Plaintiff: ACN 116 746 859 (formerly Palermo Seafoods Pty Ltd) Defendant: Lunapas Pty Ltd Second Defendant: Luciano Menniti
Representation:	Solicitors: Plaintiff: in person Defendants: in person, John Gregg, Gregg Lawyers
File Number(s):	2013/206954
Publication restriction:	No

Judgment

1. This is the Court’s second judgment upon the retrial of these proceedings. In the first judgment on the retrial, the Court awarded $250,000 to the plaintiff against both defendants on account of the defendants’ conversion of the plaintiff’s goods: ACN 116 746 859 (formerly known as Palermo Seafoods Pty Ltd) v Lunapas Pty Ltd & Anor [2017] NSWSC 1583. (“the principal judgment”). But in the principal judgment the Court reserved questions of interest and costs for further argument

2. This judgment should be read together with the principal judgment. Events, matters and persons are referred to in this judgment in the same way as they are in the Court’s principal judgment.

3. This judgment deals with the contested question of interest which was the subject of argument on 15 December 2017. Other outstanding issues have been adjourned for further argument to 18 February 2018.

4. With the leave of the Court, the parties both appeared by audio link at the hearing on 15 December 2017. The principals of both parties are all resident out of Sydney; Messrs Palermo on the north coast of New South Wales, and Mr Menniti in Queensland. The Court accommodated their respective requests to conserve their resources and to take an economical approach to the conduct of post-judgment directions hearings. Provided the parties serve all the documents upon which they propose to rely in advance of audio hearing, the Court has been prepared to accommodate these requests.

5. The interest issue in contest between the parties may be shortly stated. After the orders on the principal judgment were made on 11 December 2017, the Court provided to the parties a draft calculation of interest on the judgment sum of $250,000 from 8 May 2013 up to 11 December 2017. That calculation was undertaken in accordance with the applicable rates of interest during the period under which interest was accruing, pursuant to Civil Procedure Act 2005 s 100 and Practice Note SC Gen 16. The calculation provided by the Court to the parties concluded that a total interest figure of $70,648.12 had accrued under SC Gen 16 up to the date of judgment. The calculation was as follows:

INTEREST CALCULATION

FOR THE PURPOSES OF HIS HONOUR’S ORDERS MADE ON 11 DECEMBER 2017

Start Date: 8 May 2013

End Date: 11 December 2017

Applicable Interest rate: see Civil Procedure Act 2005 (NSW), s 100, Supreme Court of NSW Practice Note SC Gen 16 and Reserve Bank of Australia Cash Rate (“Cash Rate”).

Number of days: 1679

Pre-judgment Interest Calculations:

Date from	Date to	Base	Days in period	Rate	Daily Rate	Simple Interest
8/5/2013	30/06/2013	250,000	54	7%	$47.9452	$2,589.04
1/07/2013	31/12/2013	250,000	184	6.75%	$46.2329	$8,506.85
1/01/2014	30/06/2014	250,000	181	6.50%	$44.5205	$8,058.22
1/07/2014	31/12/2014	250,000	184	6.50%	$44.5205	$8,191.78
1/01/2015	30/06/2015	250,000	181	6.50%	$44.5205	$8,058.22
1/07/2015	31/12/2015	250,000	184	6%	$41.0959	$7,561.64
1/01/2016	30/06/2016	250,000	182	6%	$40.9836	$7,459.02
1/07/2016	31/12/2016	250,000	184	5.75%	$39.2760	$7,226.78
01/01/2017	30/06/2017	250,000	181	5.50%	$37.6712	$6,818.49
01/07/2017	11/12/2017	250,000	164	5.50%	$37.6712	$6,178.08
TOTAL	$70,648.12

6. Palermo contested this calculation on two bases. First, Palermo contended that the calculation should use compound interest, not simple interest, leading to a total interest figure for the period of $84,490.88. Alternatively, Palermo contended that the interest calculation should be based upon the replacement cost of the goods, $521,025.90, leading to a total interest figure of $196,365.55.

7. Neither of these contentions is persuasive. As to the first contention, the proper basis for the calculation of interest up to judgment under Civil Procedure Act, s 100 is by the application of simple interest. The Court explained to Messrs Palermo that the Practice Note SC Gen 16 margin of 4% above the bank bill rates under the Practice Note provides for some degree of interest compensation above simple interest in any event. And as the principal judgment pointed out (at [187]), compensatory compound interest is only available in limited circumstances that Palermo has not established here.

8. The second contention may also be rejected. The Court has already dismissed the plaintiff’s contention that the replacement value of the plaintiff’s goods is the appropriate measure of its loss: principal judgment (at [170]). The Court sees no basis for now for reintroducing a calculation based upon the replacement value of the goods of $521,025.90. Interest is appropriately measured on the basis of the actual judgment sum of $250,000 reached by the court in the principal judgment.

9. Two other matters remain. First, the parties are in issue about costs. The defendants contend: that the plaintiff substantially failed on its principal claims of over $16,450,309.78, recovering a judgment for $250,000 plus interest; and that as a result, the plaintiff should now be required to bear its own costs. The plaintiff says it is entitled to a full order for costs in its favour.

10. The defendants also contend that they are entitled to a set-off for unpaid rent. Whilst it seemed doubtful on first examination of the issue during argument that such a set-off was available, the defendants sought more time to put on written submission on the question, which the Court granted. The Court’s doubts arose: because a set-off for rent is not pleaded; because the issue was not before on dealt with by Young AJA (“the June 2014 judgment, at [177]); because the set-off could only be available to the party to whom the rent was owed, Lunapas, not Mr Menniti; and because, no attempt seems to have been made before or at the hearing before Young AJA to transfer into this Court certain other proceedings in the Southport Magistrates Court that Lunapas had brought for alleged unpaid rent. The Court has therefore made directions for the parties to exchange written submissions in relation to this issue.

11. And the matter will be brought back at 9.30am on 16 February 2018 for further limited oral argument on these two issues.

12. Accordingly, the Court makes the following orders and directions.

1. Direct the plaintiff, Palermo, to file and serve, by 19 January 2018, upon the defendants and provide to the Court, any submissions that the plaintiff wishes to advance on the question of costs in answer to the written submissions of the defendants served yesterday, 14 December 2017.

2. Direct the defendants to file any submissions in reply on costs by 2 February 2018.

3. Appoint 9.30am on 16 February 2018 for a further directions hearing to deal with any outstanding costs issues and jurisdictional issues in relation to rent set-off, noting that the parties may appear by audio link at that hearing and are excused from personal attendance in Court.

4. Direct the defendants to file and serve on the parties and the Court, any submissions by which they wish to contend that this Court has jurisdiction to deal with a set-off of rent against the judgment moneys in these proceedings by 19 January 2018.

5. Direct the plaintiff to file and serve by 2 February 2018 on the parties and the Court, any submissions in reply on the question of jurisdiction to make a set-off order.

6. Orders pre-judgment interest from 8 May 2013 up until 11 December 2017 for the sum of $70,648.12.

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Decision last updated: 27 April 2018