Ajaimi v Giswick Pty Ltd (No 3)
[2022] VSC 447
•11 August 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2021 01055
| HABIB AJAIMI | Applicant |
| v | |
| GISWICK PTY LTD (ACN 098 613 837) | Respondent |
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JUDGE: | M Osborne J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers, following receipt of submissions on 3, 14 and 21 June 2022 |
DATE OF RULING: | 11 August 2022 |
CASE MAY BE CITED AS: | Ajaimi v Giswick Pty Ltd (No 3) |
MEDIUM NEUTRAL CITATION: | [2022] VSC 447 |
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TENANT AND LANDLORD — Interest entitlement asserted by tenant — Amount of interest owing on sum subject of a Court order.
JUDGMENT — Entitlement to post-judgment interest under Supreme Court Act 1986 (Vic) ss 58 and 101 – Interest on judgment — Penalty interest — Date when judgment was given — Appropriate rate of interest — Entitlement to interest under Retail Leases Act 2003 (Vic) s 91(2).
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr M Dean | JAG Lawyers |
| For the Respondent | Mr D Carlile | Peter Lustig |
HIS HONOUR:
Introduction
Part 10 of the Retail Leases Act 2003 (Vic) (‘the Retail Leases Act’) deals with dispute resolution. It requires parties to a retail premises lease to engage in compulsory mediation before the Small Business Commissioner before legal proceedings are initiated. Proceedings must be commenced at the Victorian Civil and Administrative Tribunal (‘VCAT’), a comparatively low-cost and informal jurisdiction. The Retail LeasesAct provides that each party is to bear their own costs of the VCAT proceeding, save where conduct has been vexatious. The intent behind such a regime is to minimise the risk of incurring unnecessary and excessive legal costs where parties are in an ongoing commercial relationship.
It does not always succeed. This is such a case. The parties engaged in a hard fought seven day hearing at VCAT in August 2020. The relevant events the subject of the VCAT hearing took place between 5 October 2011 and 25 January 2019. Giswick Pty Ltd (‘the tenant’) was successful in the VCAT action. I heard an application for leave to appeal brought by Habib Ajaimi (‘the landlord’) pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act1998 (Vic) (‘the VCAT Act’). I granted leave to appeal, allowed the appeal in part and reduced the sum required to be paid by the landlord to the tenant.[1] The parties could not agree on orders as to the costs of the appeal nor on the consequential costs orders at VCAT, and I determined those issues.[2]
[1]Giswick Pty Ltd v Ajaimi [2022] VSC 131 (‘Giswick No 1’).
[2]Giswick Pty Ltd v Ajaimi [2022] VSC 275 (‘Giswick No 2’).
Now they do not agree on the interest entitlement asserted by the tenant. The amount in issue is $16,257.40.[3] Although the further dispute is regrettable, the issues raised are not altogether free from complexity.
[3]As at 2 June 2022, the landlord has paid $211,758.69 to the tenant. This represents the order for payment on appeal of $207,650, with penalty interest of $4,108.69 from the date of the order, 17 March 2022, to 2 June 2022. The tenant as at 3 June 2022 sought $228,016, representing the order for payment on appeal of $207,650, with penalty interest of $20,366.77 from the date of the original order of the Senior Member, 24 March 2021, to 17 March 2022. $228,016 less the paid amount of $211,758.60 is $16,257.40. This is the maximum amount sought.
The VCAT hearing and the appeal
The tenant operates a newsagency business at 348 Glenhuntly Road, Elsternwick (‘the property’). The tenant leases the property from the landlord. Defects in the property have disrupted the tenant’s business. The tenant brought proceedings in VCAT, seeking compensation from the landlord for breaches of the lease agreement. The VCAT action was heard between 25 and 31 August 2020.
The tenant was successful at VCAT.[4] On 24 March 2021, Senior Member Her Honour Judge Jenkins ordered inter alia that the landlord ‘pay to the tenant $399,405.68 inclusive of interest, on the Applicant’s claims’ (‘the VCAT order’). The $399,405.68 included as a component a claim for Hungerford’s damages.
[4]Giswick Pty Ltd v Ajaimi (Building and Property) [2021] VCAT 267.
On 9 April 2021, the landlord filed an application for leave to appeal (for convenience, ‘the appeal’) pursuant to s 148 of the VCAT Act.
On 19 May 2021, the tenant registered the VCAT order with this Court (‘the Registration Date’).
Notwithstanding the appeal, the tenant sought an order for costs at VCAT. On 2 July 2021, VCAT made such an order holding that the landlord had conducted the VCAT proceeding vexatiously.[5] On 17 March 2022, I granted leave to appeal, allowed the appeal and reduced the amount payable by the landlord to $207,650. The relevant orders set aside the VCAT order and in lieu thereof ordered that the landlord pay to the tenant $207,650 (‘the Court order’).
[5]Giswick Pty Ltd v Ajaimi (Costs) (Building and Property) [2021] VCAT 717.
By 2 June 2022, the landlord had paid to the tenant $211,758.69.[6] This amount represented the sum of the $207,650 plus post-judgment interest of 10%[7] per annum of $4,108.69, earned from 17 March 2022 (the date of the Court order) to 2 June 2022 (the date of payment).
[6]Paid in two instalments of $150,000 on 25 May 2022 and 61,758.69 on 2 June 2022.
[7]The relevant rate fixed under the Penalty Interest Rates Act 1983 (Vic).
The parties now dispute the amount of interest owing on the sum the subject of the Court order. The tenant submits that it is entitled to interest at the Penalty Interest Rates Act 1983 (Vic) (‘the Penalty Interest Rate Act’) from the date of the VCAT order, or from the Registration Date to the date of payment. The landlord submits that interest only commenced to run from the date of the Court order.
The tenant submits that I should amend the Court order pursuant to r 36.07 (the ‘slip rule’) of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’) so as to vary the VCAT order and reduce the amount payable thereunder from $399,405.68 to $207,650. Instead, the Court order sets the VCAT order aside and in lieu thereof orders the landlord to pay $207,650 to the tenant. The tenant submits that an amendment to the Court order is not strictly necessary but would clarify that post-judgment interest should run from the date of the VCAT order.
The landlord submits that the only entitlement to interest is from the date of the Court order to the date of payment (and which sum has been paid).
Post-judgment interest, pre-judgment interest and Hungerford’s damages
It is important to distinguish between post-judgment interest, pre-judgment interest and Hungerford’s damages.
Post-judgment interest refers to interest on a judgment from the date of the judgment to the date of payment. In this Court, a right to post-judgment interest is conferred under Pt 6, Div 7 of the Supreme Court Act 1986 (Vic) (‘the Supreme Court Act’): s 101.
Section 101 provides:
Interest on judgment
(1)Every judgment debt carries interest at the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 from the time the judgment was given.
(2)The amount of the interest must be stated in the body of, and may be levied under, a warrant of execution on the judgment.
Section 3 of the Supreme Court Act provides that ‘judgment’ includes an order.
By contrast, pre-judgment interest refers to interest included in a monetary order, referable to any interest-bearing components of that order.[8] In this Court, various rights to pre-judgment interest are conferred under Pt 5, Div 7 of the Supreme Court Act: ss 57-60.
[8]Minister for Energy, Environment and Climate Change v Megson (2019) 58 VR 189, [92] (Emerton JA).
The tenant initially suggested that s 91 of the Retail Leases Act and s 58 of the Supreme Court Act support its claim for post-judgment interest. In its written submissions the tenant instead put forward s 101 of the Supreme Court Act as the basis of its post-judgment interest claim, and arguably implicitly abandoned reliance on s 91 of the Retail Leases Act and s 58 of the Supreme Court Act. In any event, it is necessary to deal with all three sections.
Section 58 of the Supreme Court Act provides:
Interest to be allowed when debts or sums certain recovered
(1)If in a proceeding a debt or 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 or, in respect of any bill of exchange or promissory note, at 2% 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.
…
(3)A debt or sum payable or a date or time is to be taken to be certain if it has become certain.
Section 91 of the Retail Leases Act provides:
Orders the Tribunal can make
(1)The Tribunal may, in a proceeding under this Part, make one or more orders—
…
(b) requiring a party to pay money, by way of restitution or compensation or otherwise, to a specified person; …
(2)In ordering the payment of a sum of money by a party, the Tribunal may order the payment of interest on that sum by the party at the rate fixed from time to time under section 2 of the Penalty Interest Rates Act 1983 or at any lesser rate it thinks appropriate.
The landlord’s submits that the phrase ‘in a proceeding’, found in both s 91(2) of the Retail Leases Act and s 58 of the Supreme Court Act, has the effect that those sections are confined to an award of interest made as part of the determination of a proceeding and can have no application ‘post the proceeding or judgment’.
Monetary orders made under s 91 of the Retail Leases Act are the equivalent at VCAT to judgments in a Court. Such orders, being for ‘restitution or compensation or otherwise’, form the substantive relief in disposition of the dispute before the Tribunal. Subsection (2), by its proximity to sub-s (1) in the Retail Leases Act and in accordance with the routine procedure of bodies that award monetary relief, contemplates an additional order for interest to be made at the same time as any substantive relief.
Similarly, s 58 of the Supreme Court Act contemplates an award of interest on a debt or sum certain that is ‘recovered’. The ‘recovery’ of such a sum is properly read as the substantive relief afforded to a plaintiff in disposition of its action. The interest which is to be allowed by that subsection is the interest on that sum. This is all the more so where s 101 of the Supreme Court Act specifically creates a statutory right to post-judgment interest: when ss 58 and 101 are read together, it is clear that they provide for pre-judgment interest and post-judgment interest respectively.
I largely agree with the landlord’s submissions. Section 58 of the Supreme Court Act has no work to do here; it clearly contemplates pre-judgment interest. I also agree with the landlord that s 91 of the Retail Leases Act confers power on the Tribunal to make such an order at the same time as the order for substantive relief, although for reasons developed below, I do not consider that its scope is necessarily confined to pre-judgment interest. I do not agree that the section precludes the making of an order that has post-judgment effect but I do agree that the section contemplates that any order made in reliance thereon is made at the same time as the substantive order. In any event, what is significant for present purposes is that VCAT did not make an order for interest pursuant to s 91 of the Retail Leases Act.
The Supreme Court Act also provides for pre-judgment interest in circumstances apart from s 58 including in s 60 which provides that:
(1)The Court, on application in any proceeding for the recovery of debt or damages, must, unless good cause is shown to the contrary, give damages in the nature of interest at such rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 as it thinks fit from the commencement of the proceeding to the date of the judgment over and above the debt or damages awarded.
In the event of a judgment for damages (or debt), that section permits the inclusion in the judgment of a further amount representing the ‘damages in the nature of interest’. It bears some similarity to the entitlement to interest under s 58 in that the order for payment is made as part of the judgment or order made by the Court. It is convenient to regard it therefore as a form of pre-judgment interest.
Hungerford’s damages in contrast are designed to compensate the injured party for the loss sustained as a result of being deprived of money which could have been invested at interest or used to reduce an existing indebtedness or in the form of borrowing costs, i.e. interest payable on borrowed money or interest forgone because an existing investment is realised or reduced.[9]
[9]Hungerford’s v Walker (1989) 171 CLR 125, 143.
Although Hungerford’s damages more closely resemble pre-judgment interest than post-judgment interest, they are distinct; Hungerford’s damages involve in effect interest as damages whilst pre-judgment interest involves interest on damages.[10]
[10]Cheshire and Fifoot, Law of Contract, 11th Australian Edition, [23.33].
Relevant Authorities
The landlord submits that the usual course on appeal is to calculate interest to the date of judgment on appeal. The landlord relies on GEF Packaging Services Pty Ltd v Kevin Craig Turner[11] (‘GEF Packaging’) and State of Victoria v McIver (No 2)[12] (‘McIver’).
[11]GEF Packaging Services Pty Ltd v Turner (VCSA, 5 September 1995, unreported).
[12]State of Victoria v McIver(No 2) [2005] VSCA 126.
The tenant resists that submission and relies on Edmonds v Donovan[13] and French v Smith.[14]
[13]Edmonds v Donovan [2005] VSCA 97.
[14]French v Smith [2005] VSCA 114.
GEF Packaging and McIver are distinguishable to the present case. GEF Packaging was a personal injury claim arising out of an industrial accident. The court below had awarded principal damages of $184,740, with additional ‘damages in the nature of interest of $16,349 pursuant to s 60 of the Supreme Court Act’. The principal damages were assessed by a jury. On appeal, the principal damages were reassessed at $120,000. In a subsequent ruling, the Court of Appeal considered what additional damages in the nature of interest should be awarded on appeal.
Brooking JA with Hayne JA agreeing said:
It will be noted that the respondent’s approach has the result that, in respect of
…
When in Victoria the appellate court re-assesses damages on appeal, the judgment which the court substitutes by its order for the judgment below takes effect from the date of the order made on appeal, unless the court, either expressly or by implication, directs that the judgment as substituted by its order take effect from some other date, and in particular from the date of the judgment below …
Although I have made no search, I am not aware of any case in Victoria in which the Full Court or Court of Appeal has directed that the judgment below for damages for personal injuries substituted by its order take effect from the date of the original judgment. It is my belief that when appellate courts have in this State re-assessed damages for personal injuries they have done so on the basis that the substituted judgment will take effect from the date of the order made on appeal, and on the basis that the adjustment to the award of interest below should reflect not only the alteration to the amount of damages awarded but also the period for which interest is allowed so as to treat that period as ending on the day on which the appellate court makes its order, and on the basis that the rate employed should be the same as that used by the trial judge.
…
Where this practice is followed, the judgment for damages substituted by the order on appeal bears interest under s 101 of the Supreme Court Act only from the date of the order made on appeal, since that is the date on which the judgment is given … A plaintiff cannot recover in respect of the same damages and the same period both interest under s 60 and interest under s 101.
In GEC Packaging, the reason for calculating post-judgment interest from the date of the order of the Court of Appeal was because pre-judgment interest was calculated up to the date of the order of the Court of Appeal. The observations as to the practice ordinarily followed arise in that context.
In McIver, in a personal injury claim for unlawful arrest the County Court had entered judgment for the plaintiff in the amount of $310,710. The Court of Appeal set aside that judgment and in lieu thereof ordered that there be judgment for the plaintiff in the amount of $295,760. Additionally, the Court of Appeal ordered damages in the nature of interest pursuant to s 60 of the Supreme Court Act. In a subsequent ruling, the Court of Appeal determined the interest-bearing component of the award at $95,000, for the period down to the date of its award on appeal.[15]
[15]In contrast with GEF Packaging, where the interest ran down to the date of final orders on interest, rather than down to the date of the award on appeal.
Ormiston, Callaway and Batt JJA stated (in reasons totalling some five paragraphs):
We consider, however, that Mr McIver should receive interest at a higher rate, equivalent to interest on the whole $95,000 at 4% per annum, for the period after judgment in the County Court during which he was deprived of the fruits of that judgment by a stay as of right. It is too late to consider backdating the judgment. The usual practice of the Court is to calculate interest down to the date of judgment in the Court of Appeal.
In their short reasons in McIver, the Court ordered that pre-judgment interest run to the date of the appeal; and post-judgment interest run thereafter. That case, unlike GEF Packaging, did not concern an appeal of damages assessed by a jury. The brevity of their Honours reasons makes it difficult to discover their Honours reasons for treating their orders as a reassessment of damages. On the face of the reasons, it appears their Honours deferred to the ‘usual practice’ of the Court.[16] I further note that McIver concerned a personal injury claim, and again the case involved both pre-judgment and post-judgment interest.
[16]Curiously, the Court also stated that ‘it was too late to consider backdating the judgment’. In both French v Smith and Edmonds v Donovan, decided previously and by a similarly constituted Court in the same year, the Court was not of the view that fixing pre-judgment interest down to the date of trial would amount to an impermissible backdating of the judgment. In McIver, the Court had left its determination of pre-judgment interest open following its award on appeal; in French v Smith and Edmonds v Donovan, amounts for pre-judgment interest had been provided in the awards on appeal, and the Court was in the dispute before them asked to determine only the relevant date for post-judgment interest. Perhaps the Court, no longer entering judgment on appeal but rather giving a subsequent ruling as to interest, felt that it was beyond its power to decide at that time that the pre-judgment interest only ran to the date of trial, which may have had the effect of altering its past judgment: by contrast, in French v Smith and Edmonds v Donovan, the Court was in its rulings on interest arguably only giving effect to its previous reasons which had already evinced an intention for pre-judgment interest to run down to the date of trial.
In Edmonds v Donovan,[17] the trial judge ordered equitable compensation in favour of the plaintiff in the amount of $3,327,174.67, plus pre-judgment interest in the amount of $75,015.02. The Court of Appeal reduced the equitable compensation to $2,793,708, with a commensurate reduction in pre-judgment interest (to the date of the order at trial) to $61,704.09. In a subsequent ruling, the Court of Appeal considered the plaintiff’s entitlement to post-judgment interest under s 101 of the Supreme Court Act. The Court assessed post-judgment interest as running from the date of the judgment at trial not on appeal.
[17][2005] VSCA 97.
Winneke P and Charles JA stated that:
It is perfectly clear from the wording of the orders made on appeal that the principal sum of compensation, excluding interest, was assessed as at 6 December 2002, and that the quantum of interest up to 6 December 2002 was varied from the amount ordered below because of the variation in the principal sum assessed. It follows that this Court has by clear implication directed that the judgment as substituted should take effect from the date of the judgment below. Furthermore the decision in GEF Packaging, unlike the present case, is to be distinguished in that it concerned considerations such as the value of money at the time of the reassessment and a reassessment of damages for personal injuries in circumstances where the original assessment was set aside and the Court reassessed for itself the damages which it regarded as warranted by the evidence.
…
In Hartley Poynton Ltd v Ali (as Executor and Trustee of the Estate of Ali) Ormiston JA said that the right to a claim of interest under s 101 “is one which flows in favour of every judgment creditor and is not within the direct power of the Court to award or vary”. We accept the respondents’ submission that there is no basis for penalty interest to cease as at 18 December 2002, since the respondents were deprived of the fruits of their judgment for more than another two years following that date, and the interest in the joint account was significantly lower than the penalty interest rate. Penalty interest should therefore be fixed at the appropriate rate under the Penalty Interest Rates Act 1983.
In our view penalty interest only ceased to accrue when the judgment was satisfied on 7 March 2005. Under s 101, penalty interest accrues on every judgment debt from the time judgment is given, and for the duration of the debt. We do not accept that the Court has a discretion to vary the amount of interest, nor in the present case to set an alternative date from which the penalty interest accrues. Accordingly the date on which the entitlement to penalty interest rate calculated under s 101 ceased was 7 March 2005.
In French v Smith, the trial judge ordered judgment for the plaintiff against various defendants, who were to account to the plaintiff for certain amounts in the context of a joint venture agreement. On appeal, the Court of Appeal reduced the amount ordered against the defendants. In a subsequent ruling, the Court of Appeal rejected the defendants’ argument that the entitlement to post-judgment interest arose only from the date of the judgment given on appeal, holding that post-judgment interest arose from the date of the trial judgment but on the reduced sum specified by the Court of Appeal, as was the case in Edmonds v Donovan. Nevertheless, in rejecting the defendants’ argument, the Court of Appeal noted that acceptance of the defendants’ argument would mean that the plaintiff was entitled to pre-judgment interest pursuant to s 60 of the Supreme Court Act to the date of the judgment of the Court of Appeal and thereafter post-judgment interest.
Charles and Chernov JJA and Harper AJA referred to both GEF Packaging and Edmonds v Donovan, stating:
Counsel argued that, ordinarily, the date from which penalty interest under s 101 is to take effect, in circumstances where an appeal against an award of damages has succeeded, is the date on which the order is made, that being the date on which it ordinarily takes effect. In support of this contention, counsel relied on the decision of the High Court in Official Receiver in Bankruptcy v Schultz, where the Court held that “the presumption is that the order of the appellate court takes effect from the date on which it is made.” That the penalty interest is payable from this date is also supported, counsel said, by the decision of this Court in GEF Packaging Services Ltd v Turner, in which Brooking JA, with whom Hayne JA agreed, held:
When in Victoria the appellate court reassesses damages on appeal, the judgment which the Court substitutes by its order for the judgment below takes effect from the date of the order made on appeal, unless the Court, either expressly or by implication, directs that the judgment as substituted by its order takes effect from some other date, and in particular from the date of the judgment below.
Accordingly, the appellant submitted, the Court not having ordered otherwise, interest under s 101 is to be calculated from today’s date. By way of contrast, it was contended for Quarry Quip that interest under s 101 should accrue from the date of the decision below, namely, 25 September 2000.
If [counsel] is correct in his principal contention, it must follow that interest under s 60 of the Act would be calculated on the sum of $421,147.70 for the period 26 July 1996 until today. In our view, as we explain, it is clear that, in the circumstances of this case, the s 101 interest is to be calculated from 25 September 2000 (and interest pursuant to s 60 of the Act is to be calculated to that date). Our order of 24 November 2004, allowing the appeal against his Honour’s impugned decision, operated only to the extent that it varied the amount payable to Quarry Quip pursuant to that order from $604,213.54 to $421,147.70. Moreover, in setting aside the impugned order we did not reassess the damages in the sense of assessing them on a basis that was materially different from that applied by the learned trial judge. We concluded merely that his Honour incorrectly treated certain amounts as being due to Quarry Quip and, thus, we reduced the judgment sum. In the circumstances, we think, it is plain enough that we intended that the date of judgment remain 25 September 2000.
A like situation was considered in Edmonds v Donovan, where, so far as is relevant, the appeal was allowed but only to the extent of reducing the amount awarded to the successful parties by the trial judge. In that case, Winneke, P and Charles JA distinguished23. GEF Packaging Services on the basis that that case, unlike the one before their Honours, concerned “considerations such as the value of money at the time of the reassessment and a reassessment of damages for personal injuries in circumstances where the original assessment was set aside and the Court reassessed for itself the damages which it regarded as warranted by the evidence; cf Backwell v AAA24.” Their Honours went on to note that the relevant aspect of their order only varied the principal sum assessed by the trial judge (and, necessarily, the amount of the interest payable under s 60 of the Act). In the circumstances, their Honours concluded: “It follows that this Court has by clear implication directed that the judgment as substituted should take effect from the date of the judgment below.” For like reasons, we think, it is necessarily implicit from our reasons for judgment and the terms of our order of 24 November 2004 that the date of judgment was to remain 25 September 2000. Accordingly, as we have said, interest under s 101 of the Act should run from that date.
From the above cases, it appears that the ordinary course where pre-judgment interest has been sought and was the subject of the judgment at trial, is for the judgment of the appellate court to take effect on the date it is made. In accordance with this, pre-judgment interest will run to the date of the judgment on appeal and the orders on appeal will incorporate pre-judgment interest (sometimes referred to as damages in the nature of interest owing) as at the date of the orders on appeal.[18] As a consequence, and to avoid pre-judgment (s 60) and post-judgment (s 101) interest running for the same period, post-judgment interest will then run from the date of the orders of the Court of Appeal, and no earlier. It is in that respect that reference to the ‘usual course’ (post-judgment) for interest to run from the date of the order on appeal is to be understood.
[18]Preferring the approach of Brooking JA and Hayne JA in GEF Packaging, which ensures interest runs up to the date that interest is in fact awarded: see fns 12 and 13 above.
However, departures are made from the ordinary course. In such a case, the Court sitting on appeal makes it clear that it intends that its judgment takes effect from the date of the judgment below.
The cases appear to draw a contrast between a variation in the amount of the judgment below where the Court on appeal will re-calculate pre-judgment interest up to the date of the judgment below, and post-judgment interest from that date onwards, to circumstances where the Court on appeal sets aside and reassesses the amount ordered below where it calculates pre-judgment interest up to the date of the judgment on appeal, and post-judgment interest from that date onwards. However, it must be said that the distinction between varying an assessment and reassessing is not precise.
What matters is not so much whether the calculation of pre-judgment interest runs to the date of the original judgment or the judgment on appeal, and post-judgment interest thereafter, or whether pre-judgment interest runs to the date of the original judgment, and post-judgment interest thereafter; but rather that there is no overlap (and thus double counting).
The entitlement to pre-judgment interest depends on an entitlement arising under Div 7 of the Supreme Court Act; the entitlement to interest under ss 58 and 60 is only of a prima facie nature and there is provision for the Court to otherwise order. In contrast, in the case of post-judgment interest under s 101, the section provides that interest must be paid. Aside from those cases where the Court determines to ‘otherwise order’ and not order pre-judgment interest, it will not matter much which approach is taken; the difference between the two courses will not make any practical difference because the deployment of the later date for the application of post-judgment interest will be offset by the recalculation of pre-judgment interest up to the date of the order on appeal.
Approach to this case
In this case, the appeal involved numerous grounds on questions of both liability and quantum. Many of the grounds of appeal which I rejected impugned the quantum of the heads of damage ordered at VCAT on the grounds of insufficient evidence. The primary ground upheld resulted in a considerable reduction in the amount of damages based on my rejection of both the methodology deployed and the absence of evidence verifying key assumptions which underpinned the flawed methodology. I assessed the damages on a different basis. Quite whether this amounted to a reassessment or a variation of the assessment is difficult to say.
In French v Smith, the Court considered that a reading of their reasons on appeal disclosed an ‘implicit’ intention that the date of judgment was to remain that of the court below.
In Edmonds v Donovan, the Court of Appeal had not updated pre-judgment interest to run to the date of the appeal. The Court reasoned that, if post-judgment interest were not to run from the date of trial, the plaintiff would be deprived of the fruits of its judgment for the period after the judgment at trial while the matter was on appeal. Similarly, in the instant case the tenant would be deprived of the fruits of its judgment for the period from the date of the VCAT orders.
Given my rejection of the tenant’s argument that it is entitled to post-judgment interest pursuant to s 58 of the Supreme Court Act and noting that no order was made by the Tribunal for interest pursuant to s 91(2) of the Retail Leases Act, the tenant’s remaining claimed entitlement to interest is pursuant to s 101 of the Supreme Court Act.
Section 100(7) of the Magistrates’ Court Act 1989, s 74(3) of the County Court Act 1958, and s 101(1) of the Supreme Court Act each provide for post-judgment interest to accrue on a judgment debt.
The substance of the Court order and my intention in making it was to reduce the amount payable by the landlord to the tenant and there is arguably a degree of infelicity about the wording of the Court order. The tenant requests that I am amend the Court order so as to vary the VCAT order and reduce the amount payable thereunder from $399,405.68 to $207,650. The slip rule would permit such an amendment.
However, such an amendment pursuant to the slip rule only takes the tenant so far. Section 101(1) of the Supreme Court Act only has application in relation to a ‘judgment debt’. Whilst judgment includes ‘order’ it is plain that this is a reference to a Court order not a VCAT order.
The VCAT order is not a judgment debt for the purposes of s 101 of the Supreme Court Act. Without more therefore, s 101 does not assist the tenant.
Because the VCAT order does not create a judgment debt, unless the VCAT order becomes a judgment of the Court on registration in the Supreme Court, there is no entitlement to interest under s 101(1) of the Supreme Court Act.
Relevantly, there are no provisions in the VCAT Act for the enforcement of its orders. Rather, s 121 of the VCAT Act provides:
(1)A person in whose favour a monetary order is made may enforce the order in—
(a)if the amount owing under the order is within the jurisdictional limit of the Magistrates’ Court, the Magistrates’ Court; or
(b)otherwise, either the County Court or the Supreme Court.
(2)For the purposes of the enforcement of a monetary order under subsection (1), the order is taken to be an order of the court in which it is to be enforced.
The VCAT order was registered with this Court. There are no provisions in the Rules or in the Supreme Court Act, which in fact deal with the registration of a VCAT order in the Court. The practice in the Court is to accept the document sought to be registered and allocate it a Supreme Court proceeding number. That is all that occurs; there is no authentication or sealing of the VCAT order by the Court.[19]
[19]Cf Order 59 of the Rules.
In Re Kornucopia Pty Ltd (No 4),[20] Sifris J in the course of dealing with an appeal against the making of a winding up order arising from a failure to comply with a statutory demand, explained the operation of s 121 of the VCAT Act in this way:
… A monetary order made by VCAT is not a ‘judgment debt’ for the purposes of its enforcement. In order to enforce an order of VCAT, it must be registered with the appropriate court under s 121 of the VCAT Act, to be treated as a judgment of that court.[21]
[20][2020] VSC 7.
[21]Ibid [156].
Whilst s 121(2) of the VCAT Act provides that the VCAT order becomes for the purposes of its enforcement an order of the Court, that is not the same thing as making it a judgement debt for the purposes of establishing a statutory entitlement to post-judgment interest pursuant to a provision in a different Act. I do not take his Honour’s observations in Re Kornucopia Pty Ltd (No 4) to go any further than re-starting the effect of s 121(2). His Honour is not stating that on registration, the VCAT order becomes a judgment debt for the purpose of rendering it a judgment debt for the purposes of s 101 of the Supreme Court Act.
In the result, the tenant has no entitlement to post-judgment interest whether pursuant to ss 58 or 101 of the Supreme Court Act (even if I were to amend the Court order pursuant to the slip rule as the tenant requests).
That leaves the question of an entitlement to interest pursuant to s 91(2) of the Retail Leases Act. The power to make such an order is conferred on the Tribunal, not the Court. However, in dealing with an application for leave to appeal made pursuant to s 148 of the VCAT Act, the Court has power to make any order that the Tribunal could have made in the proceeding.[22]
[22]Section 148(7)(b) of the Retail Leases Act.
Further, whilst I accept that s 91 of the Retail Leases Act contemplates that an order will be made at the same time as the making of the substantive order, there is no reason to read it as being confined to an order for pre-judgment interest, unlike ss 58-60 of the Supreme Court Act, which sit in an Act which contains a specific provision for post-judgment interest (s 101). There is no equivalent to s 101 of the Supreme Court Act either in the VCAT Act, nor the Retail Leases Act. By its terms, s 91(2) of the Retail Leases Act permits the making of a further order for the payment of interest at the penalty rate (or some other rate), on the amount of compensation or damages ordered by the Tribunal. The section confers power to make an order in favour of a successful party for the payment of pos- judgment interest, or pre-judgment interest. Given that the Court has power under s 148(9) of the VCAT Act to make orders that the Tribunal could have made, it is open to the Court in an appropriate case to make such an order pursuant to s 91(2) of the Retail Leases Act.
However, I do not consider that I should make such an order in this case.
First, the tenant did not seek any order at VCAT pursuant to s 91(2) of the Retail Leases Act for the payment of pre-judgment interest. Whilst the VCAT order was ‘inclusive of interest’, in fact Hungerford’s damages were claimed. Had it sought pre-judgment interest, then the allowance of the appeal by this Court would, in all likelihood, have been accompanied by an updating of the calculation of pre-judgment but calculated by reference to the lesser sum. Such an approach would have been in conformity with the approach in GEF Packaging and McIver.
Secondly, the tenant did not seek any order at VCAT pursuant to s 91(2) of the Retail Leases Act for the payment of post-judgment interest. Had there been such an order, then post-judgment interest could have run on the reduced amount from the date of the VCAT order, assuming that the Court order made it clear that it was intended to take effect as and from the date of the VCAT order. An amendment to the Court order to make that clear would facilitate this, but only if there was in place an existing order by the Tribunal which provided that post-judgment issue would run (which there is not).
In circumstances where the VCAT order did not carry an entitlement to post-judgment interest, then any variation to the orders made by the Court such as to vary it pursuant to the slip rule and provide that the VCAT order is varied to reduce the amount from $399,405.68 to $207,650 or otherwise vary it to make it clear that it takes effect from the date of the VCAT order, serves no purpose.
The variation serves no purpose unless it is accompanied by a further order from the Court to give the tenant, as the respondent to the appeal, what it previously did not have which is an entitlement under s 91(2) of the Retail Leases Act to post-judgment interest. To the extent to which the tenant’s submission can be treated as a submission that the Court should make such an order, I reject it. The tenant did not seek such an order at VCAT; nor did it file any cross appeal (or its s 148 equivalent), in relation to the fact that no such order was made. In any event, the making of such an order goes beyond the limited sphere of errors capable of being corrected pursuant to the slip rule jurisdiction, which is confined to errors in the nature of a clerical mistake or arising from an accidental slip or omission, or to correct errors which had legal consequences unforeseen or unintended.[23]
[23]Civil Procedure Victoria, [36.07.5,36.07.30].
It follows, therefore, that there is no utility in amending the Court order. The tenant is not entitled to the interest sought even if the Court order is varied. All amounts due by the landlord to the tenant have been paid. In that circumstance there is no reason why the landlord should not be released from undertakings given by him to the Court on 21 June 2021 and 12 July 2021.
The remaining question concerns the costs of this application. Whilst the tenant has failed in its application for interest, and on that basis the ordinary course would be that the tenant should pay the landlord’s costs of this remaining aspect of the appeal, in the circumstances of this case it is appropriate to depart from the usual course. I have previously determined that the parties’ costs of the appeal should lie where they fall. This later point relates to the appeal generally and should be treated in the same way.
Accordingly, the only order I will make is to release the landlord from his undertakings provided to the Court on 21 June 2021 and 12 July 2021.
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