Anthony v Tasmanian Alkaloids Pty Ltd (No 2)

[2005] TASSC 68

[2005] TASSC 68

CITATION:            Anthony v Tasmanian Alkaloids Pty Ltd (No 2) [2005] TASSC 68

PARTIES:  ANTHONY, Brendan John
  v
  TASMANIAN ALKALOIDS PTY LTD

TITLE OF COURT:  SUPREME COURT OF TASMANIA
JURISDICTION:  ORIGINAL
FILE NO/S:  LDR 77/2000
DELIVERED ON:  28 July 2005
DELIVERED AT:  Hobart
HEARING DATE:  25 July 2005
JUDGMENT OF:  Blow J

CATCHWORDS:

Procedure – Judgments and orders – Interest on judgments – In general – Execution stayed and judgment sum invested pending appeal – Whether statutory interest payable.

Supreme Court Civil Procedure Act 1932 (Tas), s165.
Morse v Muir [1939] 2 KB 106, distinguished.
Aust Dig Procedure [497]

REPRESENTATION:

Counsel:
           Plaintiff:  K E Read
           Defendant:  H S Murray
Solicitors:
           Plaintiff:  B J Lillas
           Defendant:  H S Murray

Judgment Number:  [2005] TASSC 68
Number of paragraphs:  10

Serial No 68/2005
File No LDR 77/2000

BRENDAN JOHN ANTHONY
v TASMANIAN ALKALOIDS PTY LTD (NO 2)

REASONS FOR JUDGMENT  BLOW J

28 July 2005

1. There is a dispute between the parties as to the liability of the defendant for interest on a judgment debt pursuant to the Supreme Court Civil Procedure Act 1932, s165. On 25 October last I ordered that judgment be entered for the plaintiff against the defendant for $712,181: Anthony v Tasmanian Alkaloids Pty Ltd [2004] TASSC 118. The defendant appealed to the Full Court in respect of liability and quantum. It applied for a stay of execution in respect of the judgment, conditionally upon it paying $50,000 to the plaintiff's solicitors to be held in trust for him, and paying the balance of the judgment sum into an interest bearing account in the joint names of the parties. It also sought an order that interest cease to accrue once those amounts had been paid. On 6 December last, at the request of counsel for both parties, I made a consent order that execution on the judgment be stayed until the determination of the appeal, on conditions that the defendant pay the plaintiff's solicitors $200,000 to be held in a trust account in the name of the plaintiff, and pay "to a bank of the defendant's choice the balance of the judgment amount, not including any costs, plus interest accrued on that amount to the date of payment, such total amount to be credited to an interest bearing account in the joint names of the plaintiff and the defendant …". Also by consent, I adjourned sine die those parts of the defendant's interlocutory application by which it sought an order that interest was to cease to accrue upon payments being made by it of $50,000 and the balance of the judgment sum.

1. The Full Court subsequently dismissed the appeal: Tasmanian Alkaloids Pty Ltd v Anthony [2005] TASSC 53. The interest that has accrued on the invested monies was paid at a rate or rates much lower than the prescribed rate under s165. The plaintiff contends that the defendant is obliged to pay the difference. The defendant contends that it is not. The defendant has had the adjourned parts of its stay application relisted. It is seeking an order that no interest is payable in respect of the period since the making of payments in accordance with the orders of 6 December.

1. The section that creates a liability to pay interest on judgment debts, s165, is silent as to when interest ceases to accrue. It reads as follows:

"Every such judgment and order as is mentioned in section 164(1) shall carry interest at the rate of 5 per centum per annum, or such other rate as may be prescribed by the Rules of Court, from the time of the trial or inquiry, or, if there has been no trial or inquiry, from the time of signing or entering up judgment; and the amount of such interest shall be stated in the body of, and may be levied under, a writ of execution on such judgment."

1. The predecessor of s165 was the Interest on Judgments Act 1872, s1. It expressly provided that a judgment was to carry interest "until the same shall be satisfied". There is no reason to think that Parliament, when it enacted s165, intended that interest should cease to accrue on a judgment debt at any time other than the date that the judgment was satisfied. Plainly the intention of s165 was that, in the event of a delay in the satisfaction of a judgment, the judgment creditor should be compensated for the loss of the use of the judgment monies, and the judgment debtor should be encouraged to pay the judgment debt by the imposition of a high rate of interest.

1. It follows that s165 requires the payment of interest on a judgment sum until the judgment is satisfied, unless an order is made that has a contrary effect. If, for example, a stay of execution is ordered pending the determination of an appeal, the stay may be granted upon terms, and those terms might include an order as to interest. There might be an order that no interest is to accrue, or an order that interest is to accrue at some rate other than that prescribed under s165. Alternatively, an order might be made which, without expressly referring to interest, has the effect of discharging the liability of the judgment debtor to pay interest under s165.

1. Counsel for the defendant, Mr Murray, relied on Morse v Muir [1939] 2 KB 106. In that case a judgment creditor had issued a judgment summons, upon the return of which an order had been made for the judgment debtor to pay the judgment debt by instalments. After the principal debt had been fully paid by instalments, the judgment creditor brought an action to recover interest on the judgment debt. Goddard LJ (as he then was) held that, as a result of the making of the order for payment by instalments, the original judgment debt had gone, and been replaced by a debt payable by instalments. The action therefore failed. The proposition that the order for the payment of instalments replaced the original judgment debt was derived from the English Court of Appeal's decision in Woodham Smith v Edwards [1908] 2 KB 899, which had nothing to do with interest. Goddard LJ also referred to comments made in Aman v Southern Railway Co [1926] 1 KB 59. For example, Scrutton LJ said, at 73, "It appears to me that if the tree falls the fruit falls with it, and if the judgment is gone the incidents of the judgment are equally gone, including statutory interest." However that case referred to the effect of legislation concerning the amalgamation of railway companies which provided that the allocation of certain stock was to be "in satisfaction of all claims … including any arrears of interest".

1. In the present case, no order was made or sought as to what was to become of the invested monies following the determination of the appeal to the Full Court, nor as to the rights of the parties in respect of interest. The judgment debt remained owing to the plaintiff. The fact that an order had been made temporarily preventing execution, and the fact that sums sufficient to satisfy the judgment had been invested pursuant to an order intended to operate temporarily, did not extinguish the judgment debt. When the parties agreed to the consent orders of 6 December, they made no agreement in relation to interest. Since no order was made as to interest, no order was made discharging the judgment debt, and no contractual arrangement was made as to interest, the judgment debt continued to "carry interest" pursuant to s165.

1. I must therefore refuse to make the order as to interest that the defendant is seeking.

1. Prior to the trial, the plaintiff made an offer of compromise which the defendant did not accept.  The judgment was more favourable to the plaintiff than the terms of his offer.  On 15 November last I made an order that the defendant pay the plaintiff's costs on a solicitor/client basis in accordance with the Supreme Court Rules 2000, r289(1). Mr Read submitted on behalf of the plaintiff that I should order the defendant to pay his client's costs in relation to the stay application on a solicitor/client basis. However I think an order for party/party costs is appropriate. I think that, for the purpose of the provisions of the Supreme Court Rules as to offers of compromise, a stay application made after judgment should be regarded as a separate proceeding.  However the defendant should pay the party/party costs of that proceeding since it has been unsuccessful, both in the Full Court appeal to which the application related, and in the recent argument as to interest.

1. I order that the defendant pay the plaintiff's party/party costs of and incidental to the interlocutory application filed on 3 December 2004.  I certify for counsel in respect of the appearance on 25 July 2005.