Carbone v Melton City Council

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2019 0030

PAOLO CARBONE and GAETANA CARBONE	Applicants
v
MELTON CITY COUNCIL	First Respondent
and
THE REGISTRAR OF TITLES	Second Respondent

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JUDGES:	TATE, KYROU and NIALL JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	29 April 2020
DATE OF JUDGMENT:	13 May 2020
MEDIUM NEUTRAL CITATION:	[2020] VSCA 117
JUDGMENT APPEALED FROM:	[2018] VSC 812 (Emerton JA)

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INTEREST – Whether amount of compensation paid by first respondent prior to judgment for acquisition of part of applicants’ land constituted ‘a debt or sum certain’ that was ‘recovered’ in the proceeding – Whether ‘good cause is shown to the contrary’ – Leave to appeal granted – Appeal allowed – Supreme Court Act 1986 s 58.

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APPEARANCES:	Counsel	Solicitors
For the Applicants	Mr J D S Barber	Purcell & Purcell
For the First Respondent	Mr J S Graham	Harwood Andrews
For the Second Respondent	No appearance

TATE JA
KYROU JA:

Introduction and summary

The applicants, Paolo and Gaetana Carbone, were the registered proprietors of approximately 10 hectares of land at 828–850 Taylors Road, Plumpton, Victoria (‘Land’). They sold part of the Land to a residential developer, York Place Pty Ltd (‘York’), subject to the registration of a plan of subdivision.

As part of the subdivision, the first respondent, the Melton City Council, acquired part of the Land for active open space and road widening and offered the applicants the amount of $3,104,888 in compensation (‘offered amount’ or ‘compensation sum’) subject to the execution of a deed which included a release and an indemnity in favour of the Council. The offered amount was calculated in accordance with the applicable development contributions plan.[1] The applicants considered the offered amount inadequate and refused to sign the deed. They requested payment of the offered amount as an advance on the compensation payable by the Council. They also sought interest. The Council responded that the offered amount would be paid as soon as the applicants signed the deed.
[1]Part 3B of the Planning and Environment Act 1987 provides the legislative support for development contributions plans.

The applicants commenced a proceeding in the Trial Division in which they relevantly alleged that: the amount of compensation payable was $4,845,000; the legal basis for the Council’s obligation to pay compensation was the Land Acquisition and Compensation Act 1986 (‘LAC Act’); and they were entitled to interest under s 58 of the Supreme Court Act 1986 (‘SC Act’).

As s 58 of the SC Act is central to the issues on the appeal, it is relevantly set out below:

58 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 … 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.

On 21 December 2018, Emerton JA, sitting as a judge in the Trial Division, held that the applicants were not entitled to more compensation than had been paid by the Council and that such compensation was payable otherwise than under the LAC Act.[2] The judge also decided that the applicants were not entitled to interest. On 7 March 2019, she made an order dismissing the proceeding and requiring the applicants to pay the Council’s costs.
[2]Carbone v Melton City Council [2018] VSC 812 (‘Reasons’).

The applicants have sought leave to appeal against the judge’s decision on the sole ground that she erred in law in dismissing their claim for interest under s 58(1) of the SC Act. The particulars in support of that ground are set out at [39] below. The Council has filed a notice of contention seeking to uphold the judge’s decision on the ground that, if s 58 of the SC Act applied, there was good cause for the Court to exercise the discretion to refuse an award of interest.

For the reasons that follow, leave to appeal will be granted and the appeal will be allowed.

Facts

By a contract of sale dated 18 June 2010, the applicants sold Lot B on a proposed plan of subdivision for the Land to York for $4,253,250. The contract of sale:

(a)specified that the purchase price was payable by a deposit on the signing of the contract, the sum of $1,701,300 six months from the date of the contract or 30 days from registration of the plan of subdivision, whichever was later, and the balance 12 months from the date of contract or 30 days from registration of the plan of subdivision, whichever was later;
(b)contained a condition requiring York to immediately take all necessary steps to have the proposed plan of subdivision approved by the Council and registered by Land Victoria;
(c)authorised York to make any necessary application and sign any document required to have the plan of subdivision certified and registered; and
(d)made provision for the payment of any development contributions that might be imposed in relation to the subdivision.

On 21 July 2010, York’s solicitors lodged with the Council an application for a planning permit for a two-lot subdivision on the Land, which divided the Land into ‘Lot A’ and ‘Lot B’. Lot B was a single large parcel comprising most of the middle of the Land, and Lot A was two non-contiguous parcels which would continue to be owned by the applicants. Lot A was made up of the house parcel fronting onto Taylors Road and a much larger parcel across the rear of the Land which the applicants understood would be acquired by the Council for public open space in due course.

At the date of the application for the subdivision permit, the permit could not be granted because, whilst the Land was in an Urban Growth Zone, no ‘precinct structure plan’ applied to the Land. The provisions of the Urban Growth Zone (cl 37.07 of the Melton Planning Scheme) prohibited the subdivision of the Land into lots of less than 40 hectares unless and until a precinct structure plan governing the development of the Land applied. This involved amendment of the Melton Planning Scheme to incorporate a precinct structure plan.

On 28 October 2010, Amendment C82 to the Melton Planning Scheme was gazetted. It incorporated into the Melton Planning Scheme the Taylors Hill West Precinct Structure Plan, May 2010 (‘PSP’) and the Taylors Hill West Development Contributions Plan, July 2010 (‘DCP’).

On 13 July 2011, the Council’s solicitors wrote to York’s solicitors in the following terms:

There are fundamental deficiencies in the current (application) plan of subdivision. These are:
·     it fails to show the reservation for Taylors Road across the entire frontage of the subject land vesting in the relevant road authority in return for compensation;
·     it fails to show the active public open space land at the rear of the land vesting in Council in return for compensation;
·     it fails to provide adequate road reservation access to the large lot for the existing dwelling;
·     the large lot for the existing dwelling is inconsistent with the subdivision pattern expected for the area.[3]

[3]Emphasis in original.

The letter went on to state that in order to gain the Council’s support, the application for subdivision had to be amended to address the above matters.

On 8 August 2011, York’s solicitors submitted to the Council’s solicitors a revised plan of subdivision (‘Plan of Subdivision’) showing two road reserves across the front of the Land (known as ‘Road R1’ and ‘Road R2’) and a reserve for public open space at the rear of the Land (known as ‘Reserve No 1’).

On 9 September 2011, the Council granted a planning permit for the subdivision of the Land.

On 10 November 2011, York submitted the Plan of Subdivision to the Council and the Council endorsed it under the permit. The endorsed Plan of Subdivision showed the reserves for road widening and active open space issuing to the Council upon registration of the Plan of Subdivision.

On 13 December 2011, the applicants signed an application to Land Victoria for the registration of the Plan of Subdivision. The Plan of Subdivision showed the reserves over parts of the Lot A land in favour of the Council. Notwithstanding this, the applicants made no inquiry about the amount of compensation that they would receive for that part of the Land which would vest in the Council upon the registration of the Plan of Subdivision or about the basis on which such compensation would be calculated.

On 15 December 2011, York sent an email to the Council referring to a telephone discussion on 8 December 2011 regarding ‘the land being vested in [C]ouncil upon registration of the plan of subdivision’. The email referred to the timing for the Council to pay for that part of the Land being vested in it and continued:

Further we agreed that the quantum of monies would be in accordance with the Taylors Hill West DCP and applying the current valuation amounts to the area vested. You were checking on the status of the current valuation. It is noted that the [applicants are] only entitled to compensation to the part of the R1 being vested which abuts the Lot A. The part R1 which abuts Lot B we are providing to Council and will be part of our DCP offset.

The Council responded to the above email by letter dated 9 January 2012. The letter stated that it was the Council’s intention to acquire ‘the active open space and land for the [road] widening’ in the 2011/2012 financial year or early in the 2012/2013 financial year. The letter noted that the Council was seeking revaluations for ‘the property’ which, when received, would be incorporated into a letter of agreement between the Council and the applicants (as the owners of Lot A) regarding ‘payment and timing’.

On 20 February 2012, York lodged the Plan of Subdivision for registration. On 6 March 2012, the Plan of Subdivision was registered and separate titles were issued in respect of the following interests in the Land:

(a)Lot A, registered in the name of the applicants;
(b)Lot B, registered in the name of the applicants;
(c)Reserve No 1, registered in the name of the Council;
(d)Road R1, registered in the name of the Council; and
(e)Road R2, registered in the name of the Council.

We will refer to Reserve No 1 and Road R1 as ‘the Subject Land’. It is obvious from the sequence of events described above that the applicants and the Council did not at any time enter into an agreement to sell or convey the Subject Land to the Council. The Subject Land vested in the Council through the registration of the Plan of Subdivision and the issue of the relevant certificates of title.

On 23 March 2012, the applicants and York completed the sale of Lot B.

On 13 June 2012, the Council obtained a valuation from Charter Keck Cramer for the purpose of determining the value of land to be acquired by the Council for the purposes of the PSP and the DCP (‘CKC valuation’). An addendum to the CKC valuation was provided to the Council on 27 July 2012. The CKC valuation valued Reserve No 1 at $900,000 per hectare and Road R1 at $925,000 per hectare.

Under cover of a letter dated 13 June 2013, the Council’s solicitors submitted to the applicants a draft deed of agreement (‘Deed’) by which the Council proposed to pay to the applicants the offered amount ($3,104,888) in respect of the Subject Land. Recital R5 stated that ‘[t]he parties agree that the [applicants are] entitled to be reimbursed by Council for the vesting of the [Subject] Land in accordance with this deed and in the amount specified under the [DCP]’. Clause 1.2 stated that the offered amount was calculated in accordance with the DCP. Clause 4 provided for a release and covenant not to sue by the applicants in favour of the Council. Clause 4 also contained an indemnity by the applicants in favour of the Council in respect of any claim that may be made by any other person in relation to the vesting of the Subject Land in the Council.

On 1 July 2013, the applicants’ solicitors wrote to the Council’s solicitors stating that the amount of compensation for the Subject Land had never been agreed and enquiring as to how the offered amount had been calculated. The Council’s solicitors wrote back on 8 August 2013, explaining as follows:

In summary, the compensation has been determined in accordance with the land values in the [DCP] (adjusted to the most recent Council valuation). There are two relevant projects:
·Project DI-LA-01, which relates to the road widening, of which a total of 0.17 hectares of 10.04 hectares has been provided by [the applicants]. The value of the 10.04 hectares (that is the total area) is as adjusted, $9,275,000 and proportionately this equates to compensation of $157,888.
·Project DI-LA-03, concerning the open space, relates to a total of 8.71 hectares and has a total value of $7,825,000 as adjusted. The [applicants’] contribution to this area is 3.28 hectares, with a value of $2,947,000.

Together, these amounts have been determined to be $3,104,888.

The applicants did not accept this explanation. By letters from their solicitors to the Council’s solicitors dated 22 August 2013 and 6 September 2013, the applicants sought payment from the Council of the offered amount as an advance of compensation without prejudice to the final amount sought. By a further letter dated 3 October 2013, the applicants demanded payment of the offered amount as an advance of compensation plus penalty interest to the date of payment, making a total of $3,113,819.86.

By letters dated 11 October 2013 and 12 November 2013, the Council’s solicitors informed the applicants’ solicitors that the Council had the funds available to immediately pay the offered amount as soon as the applicants executed the Deed.

Trial Division proceeding

The applicants commenced the proceeding on 4 February 2014. By their statement of claim, they alleged that the acquisition of the Subject Land by the Council fell within the scope of the LAC Act and sought compensation assessed in accordance with that Act. In the alternative, they sought restitutionary damages for the value of the Subject Land assessed as if upon a quantum valebat. They also claimed interest under s 58(1) of the SC Act.

Seven weeks after the proceeding was commenced, on 30 March 2014, the Council paid the applicants the offered amount in respect of the Subject Land unconditionally.

The applicants obtained a valuation report dated 8 September 2015 from Les Brown, who valued the Subject Land as at 6 March 2012 — being the date when the Council became its registered proprietor — at $4,845,000 excluding GST.

By their further amended statement of claim, the applicants acknowledged the Council’s payment of $3,104,888 and claimed the difference between that amount and the value of the Subject Land as at 6 March 2012, as assessed by Mr Brown. The further amended statement of claim added an alternative claim to the effect that if the Council accepted the Subject Land pursuant to or in accordance with the DCP, then the applicants were entitled to compensation for the acquisition for the full value of the Subject Land as at 6 March 2012, less the payment of $3,104,888.

The relief sought in the further amended statement of claim included the following:

B[C]ompensation for the [Subject Land] as if the [Council] had acquired it subject to the [LAC Act], less the sum of $3,104,888 paid on 30 March 2014.
…
DAlternatively to … B … restitution of, or restitutionary damages to, the value of the [Subject Land] less the sum of $3,104,888 paid on 30 March 2014, as if upon a quantum valebat or otherwise …
E[I]nterest pursuant to statute, including under section 58 of the [SC Act].

By its second amended defence, the Council denied that the applicants were entitled to compensation on the bases pleaded by them. Paragraph 35A(e) admitted that ‘[p]ursuant to the DCP, upon the [Subject Land] being invested in Council, the [applicants] … are entitled to a credit against development contributions and/or payment for the value of the land as determined under the DCP’. Paragraph 35B stated that the value of the Subject Land, as determined under the DCP as at 6 March 2012, did not exceed $3,104,888.

In their closing written submissions at trial, the applicants expressly stated that they claimed (in the alternative) interest on the amount of $3,104,888 from 6 March 2012 until 30 March 2014, under s 58 of the SC Act.

Judge’s decision

The judge rejected the applicants’ claim in its entirety. She held that the LAC Act did not apply to the vesting of the Subject Land in the Council and that the Council had not been unjustly enriched by that vesting. She did not accept Mr Brown’s opinion of the market value of the Subject Land and concluded that the applicants had failed to satisfy her that the amount that the Council paid to the applicants was unfair.

Although the judge determined that compensation for the vesting of the Subject Land in the Council was not payable under the LAC Act and referred to the competing submissions of the parties as to the legal source of the Council’s obligation to pay compensation, she did not make any positive finding as to the legal basis on which compensation was payable.

The judge gave the following brief reasons for rejecting the applicants’ claim for interest under s 58(1) of the SC Act:

Regardless of whether the Court orders compensation in addition to the amount already paid by the Council, the [applicants] claim interest under s 58 of the [SC Act] for interest on that sum ($3,104,888) from 6 March 2012 until the date of payment on 30 March 2014.
In substance, the [applicants] complain that despite their demand on 22 August 2013 for payment of the $3,104,888, being the amount that the Council conceded that it should pay, the Council made no payment until seven weeks after the proceeding was commenced.
Section 58 of the [SC Act] does not apply to compensation awarded under Part 3 of the LAC Act or to compensation awarded under Part 5 of the [Planning and Environment Act 1987] because such compensation is not a ‘debt or sum certain’. Interest has been allowed under s 60 of the [SC Act] on amounts awarded under Part 5 of the [Planning and Environment Act 1987] on the basis that compensation is ‘debt or damages’ for the purpose of that provision.
In my view, s 58 does not apply to the amount advanced by the Council as compensation for the vesting of the Subject Land.
In any event, the amount of $3,104,888 was offered to be paid in full and final settlement of the Council’s obligations for the Subject Land well before the commencement of the proceeding, but the [applicants] refused the offer on the basis that they did not want to sign the Deed and accept the amount offered in full and final settlement of the Council’s obligations. They brought the proceeding in order to obtain a greater amount of compensation.
The [applicants] have failed to establish an entitlement to any greater sum. They have been paid the amount of … $3,104,888. It was not an amount recovered in the proceeding.
The [applicants] have no entitlement to interest under s 58 of the [SC Act].[4]

[4]Reasons [194]–[200] (citations omitted).

The judge made an order on 7 March 2019 dismissing the proceeding and ordering the applicants to pay the Council’s costs.

Ground of appeal and ground in notice of contention

As we have already stated, the applicants sought leave to appeal on the sole ground that the judge erred in law in dismissing their claim for interest under s 58(1) of the SC Act. In support of that ground, the applicants relied on six particulars, namely, that the judge:

(a)wrongly concluded that section 58 did not apply to the sum of $3,104,888 (the Sum) ultimately paid by the [Council] by way of compensation for the acquisition of the [Subject Land];
(b)failed to recognise that the Sum was recovered in the proceeding, when the Applicants had had to commence the proceeding in order to obtain unconditional payment of the Sum;
(c)wrongly concluded that the Sum was not a ‘debt or sum certain’ within the meaning of section 58;
(d)failed to apply sub-section 58(3) or to recognise that the Sum had become certain;
(e)failed to allow interest under section 58 when no good cause to the contrary had been shown, nor was any identified in her Honour’s reasons;
(f)took into account an irrelevant consideration, being the Council’s offer to pay the Sum before the commencement of the proceeding, which was irrelevant because it was conditional upon the Applicants giving Council a release and indemnity which they were under no legal obligation to give, alternatively, failed to take into account a relevant consideration being Council’s insistence, until after the commencement of the proceeding, on the Applicants giving Council a release and indemnity as a condition of payment of the Sum.

The applicants sought orders which included the following:

2The judgment given on 7 March 2019 be set aside and in lieu thereof the Court orders that:
(a)the [Council] pay the Applicants interest on the sum of $3,104,888 pursuant to sub-s 58(1) of the [SC Act] calculated at the statutory rate:
(i)from 6 March 2012 to 30 March 2014; alternatively
(ii)from 22 August 2013 to 30 March 2014.

(b)the [Council] pay the Applicants’ costs of the proceeding below.

It was common ground before us that interest for the period between 6 March 2012 and 30 March 2014 amounted to $672,115.64 and that interest for the period between 22 August 2013 and 30 March 2014 amounted to $196,342.95.

As we have already stated, the Council filed a notice of contention by which it sought to uphold the judge’s decision on the following ground:

If, contrary to the findings of the learned trial judge, section 58 of the [SC Act] applied, there is good cause for the Court to exercise its discretion to refuse an award of interest.

Relevant legal principles

We will summarise the principles applicable to awards of interest under s 58(1) of the SC Act — the terms of which are set out at [4] above — prior to setting out the parties’ submissions and our conclusions.

The statutory power to award interest has a twofold beneficial purpose. First, to compensate a party who has been obliged to take proceedings to recover a money sum and who in the meantime has been kept out of moneys which could otherwise have been used or upon which interest could have been earned.[5] Secondly, to encourage the early resolution of litigation.[6] In AJ Lucas Drilling Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd, this Court stated that s 58 should not be given a narrow meaning and that its beneficial purpose should be given a broad application.[7]
[5]Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520, 546 [69]; [2001] HCA 53 (‘Esso’); AJ Lucas Drilling Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2009] VSCA 310, [170] (‘McConnell’); Minister for Energy, Environment and Climate Change v Megson (2019) 58 VR 189, 211 [104]; [2019] VSCA 19.
[6]Ruby v Marsh (1975) 132 CLR 642, 652–3; [1975] HCA 32.
[7][2009] VSCA 310, [171].

Debt or sum certain

The phrase ‘debt or sum certain’ is not confined to sums whose quantum is agreed. It includes a sum for which, although the precise amount has not been agreed, is capable of ascertainment without valuation or estimation.[8] An amount of compensation will not constitute a debt or sum certain where it is required to be assessed by a court.[9] In Amaca Pty Ltd v CSR Ltd [No 2], Macaulay J stated:

[T]he situations to which s 58 generally apply are those for the recovery of an ascertained sum — being a sum that, of its nature, does not require the bringing of a proceeding to ascertain the amount to be paid — that was due and payable before the initiation of the proceeding.[10]

[8]See, eg, Esso (2001) 207 CLR 520, 533–4 [30], 556 [97]; [2001] HCA 53 in relation to ‘debt or damages’ under s 60(1) of the SC Act.

[9]Giller v Procopets [No 2] (2009) 24 VR 1, 127 [36]; [2009] VSCA 72; Talacko v Talacko [2009] VSC 579, [7].

[10][2015] VSC 605, [10] citing The City Mutual Life Assurance Society Ltd v Giannarelli [1977] VR 463, 466 (‘Giannarelli’); Saunders v Nash [1991] 2 VR 63, 68; Chong v CC Containers Pty Ltd (2015) 49 VR 402, 476 [256]; [2015] VSCA 137 (‘Chong’).

In The City Mutual Life Assurance Society Ltd v Giannarelli, McInerney J considered what constituted a ‘debt’ under the predecessor to s 58 of the SC Act as follows:

Debt is ordinarily understood as meaning ‘a sum of money due from one person to another’ ...
Debt lies only for a liquidated sum of money, that is, a pecuniary demand where the amount due is fixed and specific, or where it can readily be reduced to certainty by a mathematical computation.[11]

[11][1977] VR 463, 467–8 (citations omitted).

However, the mere fact that a further calculation is required may not, in the particular circumstances of a case, alter the characterisation of a claim as being one for a debt or sum certain.[12] In the present case, the applicants relied on authorities that have held that the term ‘debt’ in provisions comparable to s 58 of the SC Act can include certain types of claims that require determination of the amount payable by the court.[13]
[12]Farrow Finance Company Ltd (in liq) v Farrow Properties Pty Ltd (in liq) [1999] 1 VR 584, 638–9 [192], referring to Oddy v Fry (Unreported, Supreme Court of Victoria, McDonald J, 16 June 1997) (‘Oddy’).
[13]See [64] and n 38 below.

Recovered in a proceeding

In order for the Court to allow interest on a debt or sum certain under s 58(1) of the SC Act, the debt or sum certain must have been ‘recovered’ ‘in a proceeding’. Whether an amount is recovered in a proceeding gives rise to the issue whether judgment must have been obtained in favour of the plaintiff prior to the amount being paid.

In Melbourne & Metropolitan Board of Works v Bevelon Investments Pty Ltd,[14] the plaintiff issued a writ claiming unpaid statutory rates of $216,609.65 and interest. After it filed a summons for final judgment, and before the hearing of the summons, the defendant paid the amount of $216,609.65 but disputed the plaintiff’s claim for interest on the basis that the plaintiff had not recovered any sum in the proceeding. Anderson J gave judgment in favour of the plaintiff for the interest amount of $26,361.27 on the basis that the amount of $216,609.65 had been recovered by the plaintiff in the proceeding even though judgment for that amount was no longer sought.[15] He held that it was ‘not necessary for there to be judgment for an amount in order that a sum of money be “recovered” in an action’.[16]
[14][1977] VR 473 (‘Bevelon’).
[15]Bevelon [1977] VR 473, 475.
[16]Bevelon [1977] VR 473, 475.

Anderson J applied three English decisions, namely, Pearce v Bolton,[17] Lamb Brothers v Keeping[18] and Mason v Burningham.[19] He said the following in relation to the decision of the Kings Bench Division in Pearce:

In Pearce v Bolton the Divisional Court had to consider whether the plaintiff was entitled to his costs in an action in the County Court where he had obtained judgment for £19 and there was a rule that provided that ‘if in an action founded on contract the plaintiff shall recover a sum less than £20, he shall not be entitled to any costs of the action’. It so happened that the plaintiff had issued his writ claiming £27 and the defendant, after appearance, had paid £8 directly to the plaintiff. The majority of the Court … held that since the £8 had been paid after action brought, he had in substance recovered a sum of not less than £20 and so was entitled to his costs. In the present case, counsel for the defendant argued that the real effect of the majority judgment in Pearce v Bolton … was that, before money paid after the commencement of the action could be regarded as being ‘recovered in [the] action’ it was necessary for the plaintiff to have obtained judgment for some amount, and that the only reason why the £8 was regarded by their Lordships as having been ‘recovered in [the] action’ was because judgment had been entered for £19 in the action. That, however, is not what their Lordships were saying; the purport of their judgments is that, though the judgment was entered only for £19, the plaintiff had in substance recovered in the action the £8 earlier paid, thus bringing the ‘amount recovered in [the] action’ to an amount not less than £20 and so entitling the plaintiff to an order for costs. It was not the joining of £8 to the £19 which made the £8 money recovered in the action; it was the addition of £8 already ‘recovered in [the] action’ to the £19 which enabled the plaintiff to have his costs.[20]

[17][1902] 2 KB 111 (‘Pearce’).

[18][1914] 111 LT 527 (‘Lamb’).

[19][1949] 2 KB 545 (‘Mason’).

[20]Bevelon [1977] VR 473, 474.

In Commonwealth v SCI Operations Pty Ltd,[21] Gaudron J held that s 51A of the Federal Court of Australia Act 1976 (Cth), which provides for the payment of interest, did not have the effect that interest could not be awarded on moneys paid prior to judgment.[22]
[21](1998) 192 CLR 285; [1998] HCA 20 (‘SCI’).
[22]SCI (1998) 192 CLR 285, 301 [26]–[27]; [1998] HCA 20.

In Seoud v Fortythird Garland Pty Ltd,[23] McMillan J stated that it was unclear whether a judgment of the Court is required for an amount to be ‘recovered’ under s 58(1) of the SC Act as there is conflicting authority on this point.[24] In that case, after the commencement of litigation, the defendant paid certain sums into Court to be invested on behalf of the plaintiff (who was a minor) pursuant to consent orders that were made under a compromise of the proceeding. The plaintiff then sought interest on the sums paid into Court pursuant to s 58(1) of the SC Act. As the issue of whether judgment was required was not in contention between the parties, McMillan J assumed that the amounts in question were ‘recovered’ for the purposes of s 58(1), notwithstanding the absence of judgment in the plaintiff’s favour.
[23](2019) 57 VR 262; [2019] VSC 192 (‘Seoud’).
[24]Seoud (2019) 57 VR 262, 279–80 [75]–[77]; [2019] VSC 192. McMillan J referred to Bevelon [1977] VR 473, 475 as supporting the proposition that judgment is not required in order for interest to be awarded under s 58 of the SC Act and James Edelman and Derek Cassidy, Interest Awards in Australia (LexisNexis Butterworths Australia, 2003) 144 [7.9], citing the first five cases listed at [101] below as supporting the proposition that judgment was required.

Section 58(1) of the SC Act presupposes that the debt or sum certain that is recovered in a proceeding was payable before the commencement of the proceeding.[25]
[25]Dimos v Willetts (2000) 2 VR 170, 210 [108]–[109]; [2000] VSCA 154; Chong (2015) 49 VR 402, 476 [256]; [2015] VSCA 137. If this temporal requirement is not satisfied, the plaintiff cannot be a ‘creditor’ for the purposes of s 58(1) of the SC Act.

Time from which debt or sum certain is payable

Under s 58(1) of the SC Act, the time from which interest accrues depends upon whether the debt or sum certain is payable by virtue of some written instrument and at a date or time certain, or if otherwise, a demand of payment has been made.

Where s 58(1) of the SC Act applies to a claim pursuant to a contract but the contract does not provide for payment of the amount claimed ‘at a date or time certain’, interest is payable ‘from the time when demand of payment was made’.[26] A demand need not be in any particular form, or specify the exact sum due, so long as it contains a distinct demand of payment.[27] The issue of a writ does not constitute a demand for payment for the purposes of s 58(1).[28]
[26]Chong (2015) 49 VR 402, 477 [257]; [2015] VSCA 137.
[27]McConnell [2009] VSCA 310, [179].
[28]Chong (2015) 49 VR 402, 477 [257]; [2015] VSCA 137.

Section 58(3): When a debt or sum payable or a date or time will be certain

Under s 58(3) of the SC Act, a debt or sum payable or a date or time is to be taken to be certain if it has become certain. In Aqua-Max Pty Ltd v MT Associates Pty Ltd,[29] this Court stated that a date or time can become certain for the purposes of s 58(3) even if a court is required to resolve disputed questions of fact or law to determine the date or time.[30] The Court said that difficulty in making findings of fact or law cannot prevent the existence of the necessary certainty and that only impossibility in a finding of the facts that have to be determined in a given case will prevent it being said that the date or time at which the sum was payable has become certain.[31]
[29](2001) 3 VR 473; [2001] VSCA 104 (‘Aqua-Max’).
[30]Aqua-Max (2001) 3 VR 473, 497–8 [189]; [2001] VSCA 104.
[31]Aqua-Max (2001) 3 VR 473, 497–8 [189]; [2001] VSCA 104.

Good cause shown to the contrary

If the requirements of s 58(1) of the SC Act are satisfied, a plaintiff is prima facie entitled to an award of interest unless good cause to the contrary can be demonstrated.[32] The onus is on the defendant to show good cause.[33]
[32]Jeffrey v Giles [2015] VSCA 70, [56], citing Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382, 389 (‘Clarke’).
[33]Kalenik v Apostolidis (No 2) [2009] VSC 410, [12], citing Marsh v Ruby [1975] VR 191, 193.

In Clarke v Foodland Stores Pty Ltd, this Court stated that the phrase ‘to the contrary’ means ‘for not allowing it’.[34] The Court went on to say that what constitutes ‘good cause to the contrary’ depends on the facts and circumstances of the case, and may be shown in many ways, not just by evidence led by the defendant. The Court stated:

‘[G]ood cause to the contrary’ means no more and no less than good reason, according to the justice of the case, for not allowing interest at all or, if interest is to be allowed, then for not allowing interest for the whole of the period marked out by [s 58(1)].[35]

[34]Clarke [1993] 2 VR 382, 392.

[35]Clarke [1993] 2 VR 382, 394.

The purpose of the discretion to refuse an award of interest is not to punish the plaintiff but, in a proper case, to relieve the defendant against any injustice.[36]
[36]Clarke [1993] 2 VR 382, 393.

Parties’ submissions

The applicants submitted that the proper characterisation of the Council’s obligation to pay the compensation sum was a ‘debt’ pursuant to s 58(1) of the SC Act. According to them, a debt is any sum, whether liquidated or unliquidated, that a person is required to pay under a contract or under statute.[37]
[37]The applicants referred to Esso (2001) 207 CLR 520, 536 [35]; [2001] HCA 53, citing The Aldora [1975] QB 748, 751.

In their written case, the applicants contended that the entitlement to compensation arose under statute and that they were properly regarded as creditors in respect of the compensation sum. They argued that the judge’s reasons support their contention that the entitlement to compensation arose under statute. In their oral submissions, the applicants contended that the entitlement arose under the DCP or under restitutionary principles and that the judge’s reasons are not inconsistent with that contention.

In the alternative, the applicants submitted that the compensation sum was a ‘sum certain’ for the purposes of s 58(1) of the SC Act. They contended that the sum was certain because there was no uncertainty about its calculation nor about the fact that at least that amount was owing to them. According to the applicants, although there was uncertainty about whether they were entitled to additional compensation, this could not reduce the Council’s liability to pay the compensation sum.

The applicants argued that the compensation sum became a sum certain upon receipt by the Council of the CKC valuation on 13 June 2012 or upon receipt of the addendum on 27 July 2012. They contended that the effect of s 58(3) was that, once the compensation sum became certain, it was to be taken to be certain for the purpose of s 58(1).

The applicants submitted that even if the compensation sum needed to be assessed, a claim for reasonable value is a claim for a debt or sum certain, notwithstanding that the court has to make an assessment of the value.[38] They contended that in the present case, the sum had been calculated by the Council — by applying the values in the CKC valuation to the areas of the Subject Land — well before the commencement of the proceeding.
[38]The applicants relied on Spain v The Union Steamship Company of New Zealand Ltd (1923) 32 CLR 138, 142, 145, 158; Alexander v Ajax Insurance Co Ltd [1956] VLR 436, 445; Crisp & Gunn Co-operative Ltd v Hobart Corporation (1963) 110 CLR 538, 542–3; [1963] HCA 65; Lombard Australia Ltd v Smeaton [1966] VR 272, 275–6; Giannarelli [1977] VR 463, 467–8; BP Exploration Co (Libya) Ltd v Hunt[No 2] [1979] 1 WLR 783, 836; Oddy (Unreported, Supreme Court of Victoria, 16 June 1997, McDonald J) 8–12; Pavey & Matthews Pty Ltd v Paul (1986) 162 CLR 221, 249–51; [1986] HCA 5.

The applicants argued that their submission that the compensation sum was a debt or sum certain was consistent with the beneficial purpose of s 58 of the SC Act, as set out [44] above.

The applicants submitted that the compensation sum paid by the Council constituted recovery ‘in a proceeding’ within the meaning of s 58(1) of the SC Act. Relying on Bevelon,[39] they argued that, in order for an amount that is paid to be recovered in a proceeding, it was not necessary for there to be judgment for that amount.
[39][1997] VR 473, 474–5.

The applicants contended that the compensation sum was recovered in the proceeding because they had to commence the proceeding in order to receive payment. They relied on the fact that, prior to the commencement of the proceeding, the Council refused to pay the compensation sum unless the applicants agreed to the release and indemnity in the Deed, for which there was no legal justification. That was because, from the time the Council became the owner of the Subject Land (6 March 2012), it was obliged to pay compensation for it and that obligation was not conditional on the applicants providing a release or an indemnity. According to the applicants, the fact that they had to commence the proceeding in order to receive any payment from the Council on an unconditional basis meant that the payment they received unconditionally after they commenced the proceeding was recovered in the proceeding.

The applicants argued that the compensation sum was payable by virtue of some written instrument at a date or time certain within the meaning of s 58(1) of the SC Act. They noted that the phrase ‘by virtue of’ implies a relationship of cause and effect and requires a practical application of ordinary principles of causation.[40]
[40]The applicants relied on WBM v Chief Commissioner of Police (2012) 43 VR 446, 454 [34]; [2012] VSCA 159; Human Rights and Equal Opportunity Commission v Mount Isa Mines Ltd (1993) 46 FCR 301, 321–2.

In their written case, the applicants contended that the certificates of title that were issued to the Council on 6 March 2012 were the written instruments by virtue of which the compensation sum was payable. This was said to be because the certificates of title gave rise to the obligation to pay the compensation sum. It followed, so it was said, that interest ought to have been awarded from 6 March 2012. In their oral submissions, the applicants argued that the written instruments were a combination of either the DCP, the Plan of Subdivision, the CKC valuation and the addendum or, alternatively, the Council’s letter of 13 June 2013 offering the compensation sum and the applicants’ letter of 22 August 2013 demanding payment of that sum. The applicants relied on Anchen v Mendes da Costa[41] for the proposition that a combination of documents can constitute a written instrument for the purposes of s 58(1) of the SC Act.
[41][2005] VSC 191, [17] (‘Anchen’).

The applicants argued in the alternative that interest should have been awarded from the time at which the amount of the compensation sum became certain, which was on 13 June 2012, or alternatively 27 July 2012, as set out at [63] above. In the further alternative, the applicants argued that interest should have been awarded from the date of demand on 22 August 2013.

The applicants submitted that the judge erred in taking into account the Council’s offer of compensation prior to the proceeding being commenced. According to them, that offer contained conditions which made it unreasonable to suggest that the applicants ought to have accepted it and it was therefore irrelevant to the claim for interest. In the alternative, they contended that if the offer was to be taken into consideration then the judge erred in failing to consider the terms of the offer, in particular the indemnity which they said was unjustified.

The applicants argued that they brought the proceeding not only to obtain a greater amount of compensation — as identified by the judge — but also to obtain unconditional compensation simpliciter and interest on the compensation. They also relied on the fact that, after they received the amount of $3,104,888, they maintained the proceeding in order to obtain a greater amount of compensation and also interest on compensation. According to them, the judge’s reasoning overlooked the fact that the claim for interest included a claim for interest on the sum that had been paid.

The applicants submitted that as the ‘good cause’ ground in the Council’s notice of contention was not raised by the Council at trial, reliance could not be placed on it on appeal. They stated that they were prejudiced by the ground being raised now because, had it been raised at trial, they would have adduced evidence as to why they did not enquire about the compensation the Council was prepared to pay or seek to negotiate a price for the Subject Land.

Notwithstanding their objection to the notice of contention, the applicants addressed its substance. They contended that there was no good cause not to award interest pursuant to s 58(1) of the SC Act. They argued that the litigation had been caused by the Council because they had to commence the proceeding in order to obtain compensation, without submitting to the Council’s unjustified demand for a release and indemnity. They said that they had been kept out of the compensation sum from the date of acquisition on 6 March 2012 until payment was made on 30 March 2014, despite demands made on 22 August 2013 and 6 September 2013. They argued that an order for the payment of interest would not cause any injustice to the Council from which it ought be relieved.

The Council submitted that the compensation sum was not a ‘debt or sum certain’ within the meaning of s 58 of the SC Act. Rather, so it was said, it was an amount arrived at by the Council in circumstances where no contract, statute or other instrument prescribed the amount of compensation to be paid, the method for its calculation or the timing of payment. The Council disputed the applicants’ contention that the judge’s reasons show that the entitlement to compensation arose under statute.

In oral submissions, the Council conceded that it had a legal obligation to pay compensation to the applicants for the vesting of the Subject Land in it but contended that the source of that legal obligation and the timing for the payment of the compensation were never agreed between the parties or determined by the judge.

The Council argued that the compensation sum was not certain by virtue of the fact that it had been calculated by the Council. It said that it had calculated the compensation sum in accordance with the practice of paying the price outlined in the DCP, but the DCP did not fix the price for the Subject Land. The Council submitted that the compensation sum was not a sum which, although the precise amount was not agreed, was capable of ascertainment without valuation or estimation. The Council noted that: it could not force the applicants to accept its calculation of the compensation sum; the applicants disputed that sum and sought greater compensation; and there was never any agreement between the applicants and the Council on that sum.

The Council submitted that the compensation sum was not recovered ‘in the proceeding’. It argued that the applicants made no claim for payment of the compensation sum in the proceeding and they did not obtain judgment or an order for payment of that sum. Rather, so it was said, they pursued claims for payment of a greater amount of compensation which were rejected by the judge.

According to the Council, the fact that the compensation sum was paid to the applicants by it while the proceeding was on foot did not mean that it was recovered in the proceeding. The Council sought to distinguish Bevelon on the basis that, in that case, the amount that was paid by the defendant after commencement of litigation had been claimed by the plaintiff in its specially endorsed writ. The Council also submitted that Bevelon had an ‘uncertain status’.[42]
[42]The Council referred to Seoud (2019) 57 VR 262, 279–80 [75]; [2019] VSC 192; Rosenberg v Fifteenth Eestin Nominees Pty Ltd [No 3] [2011] VSC 66, [27] (‘Rosenberg’); Re Adaz Nominees Pty Ltd [No 6] [2019] VSC 14, [27], [33]–[36] (‘Adaz’).

The Council argued that the applicants had failed to establish that the compensation sum was payable before the commencement of the proceeding, as required by s 58(1).[43]
[43]See [53] above.

With regard to the application of s 58(3), the Council contended that, as the compensation sum was never certain, s 58(3) did not apply to produce any different result.

The Council submitted that if the preconditions for an award of interest under s 58(1) of the SC Act were satisfied, in the circumstances of the present case, there was good cause to refuse an award of interest. In particular, so it was said, those circumstances included that the Council is a public body, that the applicants voluntarily transferred the Subject Land to the Council, that the applicants did not enquire about the amount of compensation the Council was prepared to pay or seek to negotiate an acceptable price, and that the applicants failed in their claims for a greater amount of compensation. The Council argued that the applicants were not kept out of their money, that the litigation was not caused by any conduct on the Council’s part and that an award of interest would not further the purposes of s 58 or the overarching purpose in the Civil Procedure Act 2010 (‘CPA’).[44]
[44]The overarching purpose in s 7 of the CPA is to ‘facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute’.

The Council contended that even if s 58(1) of the SC Act did apply, interest should be awarded from the date of the applicants’ demand on 22 August 2013 until the date of payment on 30 March 2014. This was said to be appropriate as the compensation sum was not payable by virtue of a written instrument at a date or time certain within the meaning of s 58(1). According to the Council, the compensation sum was not payable by virtue of the certificates of title, as they do not refer to any entitlement to compensation and, for the reasons set out at [77] above, the compensation sum did not become certain when the Council calculated it.

The Council argued that its offer to pay the compensation sum prior to the commencement of the proceeding was relevant to the assessment the judge made under s 58(1) of the SC Act and that the applicants’ criticism that the judge ignored the conditional nature of the offer was misplaced.

Decision

In order to succeed in their claim for interest under s 58(1) of the SC Act, the applicants had to establish that the compensation sum was:

(a)       either a debt or a sum certain;
(b)      payable before the commencement of the proceeding; and
(c)       recovered in the proceeding.

However, even if the applicants satisfied the above requirements, the judge had a discretion to refuse their claim for interest if the Council showed good cause for doing so.

If the applicants established the requirements summarised at [85] above and the Council did not show good cause for refusal of their claim for interest, they were entitled to interest at a rate determined in accordance with s 58(1) of the SC Act. The period over which interest was payable was as follows:

(a)If the applicants established that the compensation sum was payable by virtue of some written instrument and at a date or time certain, they were entitled to interest from the time when the compensation sum was payable.
(b)If (a) above did not apply, the applicants were entitled to interest from the time when they demanded payment.

We will first consider whether the compensation sum was a ‘debt or sum certain’. The disjunctive ‘or’ means that the requirement can be satisfied if the compensation sum was either a debt or a sum certain.

It is not necessary for us to decide whether the compensation sum was a debt, as we are firmly of the view that it became a sum certain on 22 August 2013.

The amount of $3,104,888 was not a ‘sum certain’ either when the CKC valuation was prepared on 13 June 2012 (or supplemented on 27 July 2012) or when the amount was offered to the applicants on 13 June 2013. That is because, at those times, the amount was no more than a sum that the Council considered to be fair compensation, without any input from the applicants.

However, the position changed on 22 August 2013 when the applicants demanded payment of the amount of $3,104,888 as an advance on the compensation to which they were entitled. That is because, at that time, both parties accepted that, whatever the amount of compensation that was payable to the applicants, it would be not less than the fixed sum of $3,104,888.

It is true that, as at 22 August 2013, the Council was not prepared to pay the amount of $3,104,888 to the applicants unless they executed the Deed, which would have precluded them from claiming a larger sum. However, there was no legal basis for the Council to require the applicants to sign the Deed.[45] In the unusual and difficult circumstances of this case, it would undermine the beneficial purpose of s 58(1) of the SC Act set out at [44] above if a broad interpretation of ‘sum certain’ was not adopted that allowed for the compensation sum to be considered a sum certain.
[45]In oral submissions, the Council argued that it was entitled to insist on the applicants executing the Deed because, although the Council had a legal obligation to pay compensation to the applicants, the amount of compensation payable was in dispute. However, as mentioned, as at 22 August 2013, it was common ground between the parties that the amount of compensation payable was not less than $3,104,888.

We now turn to whether the compensation sum was recovered in the proceeding.

In resolving this issue, it is necessary to determine whether, in order for a sum to be recovered in a proceeding, judgment for that or some other amount needs to be entered in the proceeding. Following the English decisions in Pearce, Lamb and Mason, in Bevelon, Anderson J decided that judgment was not necessary provided that, in the circumstances of the case, it can be said that the relevant sum was in substance recovered in the proceeding. We are of the opinion that this principle is consistent with the beneficial purpose of s 58(1) of the SC Act and should be followed.

Where the defendant refuses to pay to the plaintiff unconditionally a sum which the defendant accepts is owing to the plaintiff, but does so promptly after the plaintiff commences a proceeding, we can see no good reason to deny the plaintiff interest under s 58(1) of the SC Act. To exclude s 58(1) in such circumstances would encourage defendants to delay payment of amounts due until after a proceeding is commenced. The fundamental problem is that the plaintiffs in those circumstances have been kept out of moneys which the defendants were obliged to pay, and which the plaintiffs could otherwise have used to their benefit, until they commenced proceedings to enforce recovery. The purpose of s 58(1) is to provide redress in those circumstances.

We are not aware of any Australian case which has expressly rejected the principle derived from Bevelon, which is set out at [94] above. The cases of Seoud, Rosenberg v Fifteenth Eestin Nominees Pty Ltd [No 3][46] and Re Adaz Nominees Pty Ltd [No 6],[47] on which the Council relied, in no way diminish the authority of Bevelon.
[46][2011] VSC 66.
[47][2019] VSC 14.

In Seoud, McMillan J referred to Bevelon for the proposition that an amount may be recovered in a proceeding in the absence of a judgment in that proceeding and stated that ‘other sources express the view that there must be a judgment’.[48] The ‘other sources’ to which McMillan J referred were two academic publications, one of which was Interest Awards in Australia by James Edelman and Derek Cassidy.[49] As the issue whether a judgment is required for the purposes of s 58(1) of the SC Act was not in contention in Seoud, McMillan J ordered the payment of interest under that section even though no judgment had been given for the amounts on which interest was claimed.[50] That approach was entirely consistent with Bevelon.
[48](2019) 57 VR 262, 280 [75]; [2019] VSC 192.
[49]See n 24 above.
[50](2019) 57 VR 262, 280 [77]; [2019] VSC 192.

In Rosenberg, Habersberger J held that a declaratory judgment under which no sum — certain or otherwise — had been recovered, did not engage s 58(1) of the SC Act.[51] He did not refer to Bevelon and therefore cannot be taken to doubt its correctness.
[51][2011] VSC 66, [27].

In Adaz, Robson J observed that it is implicit that the recovery of a sum of money in a proceeding is achieved by an order of the Court.[52] However, this observation was in reference to the phrase ‘any proceeding for the recovery of debt or damages’ in s 60(1) of the SC Act rather than the phrase ‘in a proceeding a debt or sum certain is recovered’ in s 58(1). Bevelon was not mentioned.
[52][2019] VSC 14, [27].

We have also considered the passage from Interest Awards in Australia by James Edelman and Derek Cassidy to which reference was made by McMillan J in Seoud. The relevant passage is in Part 2 of the book titled ‘Statutory Interest’, which was written by Derek Cassidy. It was in these terms:

There is dispute whether, when the statute [empowers the court to include interest in the judgment], there is jurisdiction to award interest if the defendant satisfies the plaintiff’s claim after the proceedings are commenced but without a trial, for example, where the writ is specially endorsed by paying the amount claimed within the time prescribed in the writ. It is suggested that there is no judgment to which the interest can be attached and no procedure for bringing the claim for interest before the court. …
The tide has turned and it seems probable that now, at least in Australia, statutory interest may be awarded in these circumstances.[53]

[53]James Edelman and Derek Cassidy, Interest Awards in Australia (LexisNexis Butterworths, Australia, 2003) 144 [7.9] (citations omitted).

In support of the proposition in the second sentence in the above passage, the author cited five English cases decided over 25 years ago, namely, The ‘Medina Princess’,[54] Techno-Impex v Gebr van Weelde Scheepvaartkantoor BV,[55] The Tharros Shipping Case,[56] Mathew v T M Sutton Ltd[57] and President of India v La Pintada Compania Navigacion SA.[58] In support of the proposition in the third sentence, the author cited SCI,[59] State Bank of New South Walesv Commonwealth Savings Bank of Australia,[60] SCI Operations Pty Ltd v Commonwealth[61] and Bevelon. Far from casting doubt on the correctness of the principle set out at [94] above, the above passage, on balance, supports it.
[54][1962] 2 Lloyd’s LR 17.
[55][1981] QB 648.
[56][1981] 1 Lloyd’s LR 166.
[57][1994] WLR 1455.
[58][1985] 1 AC 104, 121.
[59](1998) 192 CLR 285, 301; [1998] HCA 20.
[60](1984) 154 CLR 579; [1984] HCA 41.
[61](1996) 69 FCR 346.

In the present case, the circumstances that are relevant to the application of that principle are as follows:

(a)On 13 June 2012 and 27 July 2012, the Council received the CKC valuation and the addendum respectively, which indicated that the compensation payable to the applicants was $3,104,888.
(b)On 13 June 2013, the Council offered to pay the amount of $3,104,888 to the applicants provided they executed the Deed containing a release and an indemnity.
(c)There was no legal basis for the Council to require the applicants to execute the Deed.
(d)On 22 August 2013 and 3 October 2013, the applicants demanded payment of the amount of $3,104,888 as an advance on the compensation payable to them.
(e)On 11 October 2013 and 12 November 2013, the Council advised the applicants, in effect, that the amount of $3,104,888 would not be paid to them unless they executed the Deed.
(f)On 4 February 2014, the applicants commenced the proceeding.
(g)On 30 March 2014 — less than two months after the commencement of the proceeding — the Council paid the amount of $3,104,888 to the applicants unconditionally.

On these facts, there can be little doubt that, in substance, the amount of $3,104,888 was recovered by the applicants in the proceeding. The Council had no legal basis to resist payment of the amount unconditionally prior to the commencement of the proceeding and capitulated shortly after that commencement. Accordingly, there is a clear causal relationship between the proceeding and the payment of the amount. The Council would not have paid the amount unconditionally if the applicants had not commenced the proceeding and the promptness with which the payment was made after that commencement indicates that the proceeding was the sole reason for the payment. In making the payment when it did, the Council may have been motivated by a desire to protect its position in relation to costs. However, that would support, rather than negate, our conclusion.

We reject the Council’s submission that Bevelon can be distinguished on the basis that the applicants in the present case did not include in their pleading a claim for the compensation sum. At all times, the applicants pleaded that they were entitled to the value of the Subject Land and that the value exceeded the compensation sum.[62] In finding that the compensation sum was not unfair compensation for the Subject Land, the judge implicitly accepted that the Council correctly assessed the value of the Subject Land at the compensation sum. It follows that the applicants’ claim included the compensation sum and that the judge’s decision is consistent with the proposition that the applicants were entitled to that sum.
[62]See [28]–[32] above.

The circumstances set out at [102] above also establish that the amount of $3,104,888 was payable before the commencement of the proceeding. That is because, prior to that commencement, there was no dispute between the Council and the applicants that at least that amount was payable. The only reason why the Council refused to pay the amount was its insistence, without any legal basis, that the applicants execute the Deed.

In our opinion, interest on the compensation sum was payable from the date that the applicants demanded payment, namely, 22 August 2013. We reject the applicants’ submission that interest was payable from 6 March 2012, when the certificates of title for the Subject Land were issued to the Council. Although the Council was obliged to pay compensation to the applicants consequent upon the Subject Land vesting in it, the certificates of title merely represented the final formal step in the vesting process. They were documents of title which established the Council’s ownership of the Subject Land but did not in themselves give rise to any payment obligation on the part of the Council.

We reject the applicants’ alternative contention made in oral submissions that the compensation sum was payable by virtue of a combination of instruments. It is not necessary for us to decide the attributes that a document must possess for the purposes of the term ‘some written instrument’ in s 58(1) of the SC Act or whether that term can include a combination of instruments. That is because the combination of the putative instruments on which the applicants relied came into existence not at the same time — or even at proximate times — but at various times during the period from May 2010 until 22 August 2013.[63]
[63]See [11], [20], [23]–[24], [26], [69] above.

Further, there is a difficulty in attributing the source of the obligation to pay compensation to a particular instrument or combination of instruments in circumstances where the judge considered the parties’ competing contentions as to the source of the Council’s legal obligation to pay compensation but did not make a positive finding as to the source.[64]
[64]See [36] above.

The decision of Ashley J in Anchen cannot assist the applicants, as it turned on its peculiar facts and does not contain any general statement of principle.

The parties did not agree on whether the judge’s reasons disclose that she concluded that the applicants’ entitlement to compensation arose under statute. Although the judge did not determine the legal source of the Council’s obligation to pay compensation to the applicants for the vesting in it of the Subject Land, her reasons clearly proceeded on the basis that there was such a legal obligation. This is unsurprising, as the Council admitted in para 35A(e) of its second amended defence that it was obliged to pay compensation.[65] Before us, the Council conceded that it was legally obliged to pay compensation to the applicants.[66]
[65]See [33] above.
[66]See [76] above.

For the purposes of determining whether the applicants are entitled to interest under s 58(1) of the SC Act, it is not necessary for us to determine the legal source of the Council’s obligation to pay compensation to the applicants. Indeed, it would be inappropriate for us to do so in circumstances where the parties made competing submissions on this issue at trial and the judge made no positive finding. All that is relevantly required in the present context is that the Council was under a legal obligation to pay compensation to the applicants and that the obligation arose prior to the commencement of the proceeding.

In our opinion, the Council’s legal obligation to pay compensation arose upon the vesting of the Subject Land in the Council on 6 March 2012. However, whether interest is payable from that date under s 58(1) of the SC Act depends on whether the compensation was payable by virtue of some written instrument. For the reasons we have already explained, that requirement was not satisfied in the present case. Accordingly, in accordance with s 58(1), interest was payable from the date of the applicants’ demand on 22 August 2013.

It follows that the applicants have satisfied the conditions in s 58(1) of the SC Act for an award of interest on the compensation sum from 22 August 2013 until they received the compensation sum on 30 March 2014.

In our opinion, as the Council did not rely at trial on the ‘good cause’ provisions of s 58(1) of the SC Act to disentitle the applicants to interest on the compensation sum, they should not be permitted to rely on those provisions on appeal.[67] That is because those provisions give rise to a judicial discretion which requires careful consideration of the evidence in each case. The Court of Appeal should not be required to exercise that discretion at first instance. That is particularly so when the party seeking interest was not given any notice that those provisions would be invoked and thus did not have an opportunity to adduce evidence or make submissions against the applicability of the provisions.
[67]For completeness, we note that, in its written closing submissions at trial, the Council contended that, due to delays by the applicants in amending their statement of claim, there was good reason not to allow them interest for the whole of the period from the commencement of the proceeding to judgment. This brief submission was directed to s 60 of the SC Act rather than s 58.

In any event, had we been called upon to exercise the discretion, we would have rejected the Council’s submissions that there was good cause in the present case for denying the applicants’ claim for interest. That is because:

(a) The Council became the owner of the Subject Land on 6 March 2012.
(b)On 13 June 2012 and 27 July 2012, the Council received the CKC valuation and the addendum respectively, which indicated that the compensation payable to the applicants was $3,104,888.
(c)The Council delayed offering the amount of $3,104,888 to the applicants until 13 June 2013, a period of 12 months.
(d)The Council sought to impose conditions on the payment of the amount of $3,104,888, namely, a release and an indemnity, for which there was no legal basis.
(e)When the applicants demanded payment of the amount of $3,104,888 as an advance on the compensation payable to them, the Council refused to make the payment unless the applicants signed the Deed containing the release and indemnity.
(f)The Council paid the amount of $3,104,888 to the applicants unconditionally on 30 March 2014, less than two months after the applicants commenced the proceeding on 4 February 2014.

The Council delayed payment of the amount of $3,104,888 to the applicants for nearly two years after it received advice on the amount payable, and deprived the applicants of the use of that amount (or the ability to earn interest on it) for that period. In these circumstances, there is no good cause for denying the applicants interest for the much shorter period between the making of the demand of 22 August 2013 and the date of payment on 30 March 2014.

Conclusion

For the above reasons, leave to appeal will be granted and the appeal will be allowed.

It was common ground before us that if the appeal is allowed, the judge’s

costs order must be set aside. It was also common ground that the Council was successful on the substantive liability issues at trial. The applicants submitted that reversal of the judge’s decision on interest should result in an order that the Council pay ‘something like’ ‘half or a quarter’ of their costs of the trial. The Council submitted that such a reversal should result in an order that the applicants pay ‘in the order of 90 per cent’ of its costs of the trial.

In our opinion, as our decision has the effect that the applicants are entitled to judgment for interest in the amount of $196,342.95,[68] it would not be appropriate to order them to pay any part of the Council’s costs of the trial. However, as interest represented a small proportion of the issues at trial, the Council should be ordered to pay only a small proportion of the applicants’ costs. Doing the best we can, we have determined that that proportion should be 15 per cent.
[68]See [41] above.

NIALL JA:

I have had the advantage of reading in draft the joint reasons of Tate and Kyrou JJA. I regret that I am unable to share in the conclusions reached by their Honours. For the reasons that follow, which I will endeavour to explain without any unnecessary repetition, the payment by the Council of $3,104,888 did not represent the recovery of a debt or sum certain in the proceeding. Section 58 of the Supreme Court Act 1986 (the ‘Supreme Court Act’) had no application.

I too would grant leave to appeal but I would dismiss the appeal.

Section 58

Section 58 of the Supreme Court Act relevantly provides:

58 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 … 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 58 applies where a debt or sum certain is recovered in a proceeding. Generally, that will require a proceeding for a debt or sum certain and a judgment or order providing for its recovery. Underpinning s 58 is a harmony between the nature of the amount owing, the claim in the proceeding and the payment that is made. An order under s 58 will usually be ancillary to the primary orders in the proceeding.

It is not possible to recover a debt or sum certain in a proceeding where the plaintiff does not make a claim for a debt or sum certain. Equally, it is not open to characterise a payment received after a proceeding has commenced as a debt or sum certain, without regard to the nature of the cause of action and the relief sought in the proceeding.

In the usual case it will therefore be necessary to consider the claim, in the context of substantive law and procedural rules of court, and the order made on the claim to determine whether or not the plaintiff has recovered a debt or sum certain in the proceeding.

In some cases, a debt or sum certain may be recovered in a proceeding even though the proceeding is not prosecuted to completion resulting in an order for payment. In those cases, of which Melbourne & Metropolitan Board of Works v Bevelon Investments Pty Ltd[69] provides a useful example, it will be necessary to examine the relationship between the claim and the payment to see if it properly comes within s 58. This latter process must take into account the beneficial purpose of s 58 to compensate a party who is kept out of his or her money.
[69][1977] VR 473 (‘Bevelon’).

The pleaded case

The starting point therefore is the claims made by the applicants.

The applicants pleaded three bases for relief: a statutory claim for compensation under the Land Acquisition and Compensation Act 1986 (‘LACA’);[70] a ‘claim in restitution’ seeking ‘restitution or restitutionary damages’ ‘as if upon a quantum valebat or otherwise’, seeking the full value of the land;[71] and a claim to recover the land and compensation for wrongful occupation.[72] In their prayer for relief, the applicants sought a declaration and compensation under the LACA and restitution or restitutionary damages to the value of the land.
[70]Statement of Claim, [27]–[31].
[71]Ibid [32]–[36].
[72]Ibid [37]–[45].

In an amendment to the pleading made after the payment, the applicants abandoned the claim based on wrongful occupation and added an alternative claim, described below, under the Development Contribution Plan (‘DCP’).

Claim under the LACA

The first, and primary, claim of the applicants was for a declaration that the LACA applied and for compensation under that Act.[73]
[73]Reasons [34]–[37].

The judge found, no doubt correctly, that the parcels of land that were vested in the Council were not compulsorily acquired under the LACA or in any other way.[74] The lots were created on the registration of the plan of subdivision and vested in the Council.[75] It also follows that the LACA did not provide any basis for compensation or interest to be payable in respect of the vesting of the land in favour of the Council.[76]
[74]Ibid [107], [114].
[75]Ibid [126].
[76]Ibid [137]–[146].

The judge also held that s 58 of the Supreme Court Act does not apply to compensation awarded under Part 3 of the LACA or to compensation awarded under Part 5 of the Planning and Environment Act 1987 (‘PE Act’) because such compensation is not a ‘debt or sum certain’.[77] Her Honour noted that interest had been allowed under s 60 of the Supreme Court Act on amounts awarded under Part 5 of the PE Act on the basis that compensation is ‘debt or damages’ for the purpose of that provision.[78]
[77]Ibid [196].
[78]Ibid.

The applicants do not challenge those findings in their application for leave to appeal. In any event, it could not be contended that the applicants recovered an amount under the LACA in circumstances where the Council denied that the LACA applied, the payment made did not rely on the LACA or a claim having been made under the LACA and the judge rejected the applicants’ case under the LACA. In the circumstances, that aspect of the claim can be put to one side.

Claim under the DCP

There are only two references to the DCP in the pleadings filed by the applicants. The first appears in paragraph 3 of the Statement of Claim and Further Amended Statement of Claim in relation to the Council’s intention to acquire the land. The second appears in paragraph 46 of their Further Amended Statement of Claim in these terms:

Alternatively to paragraphs 33 to 36 hereof, if the Council accepted the Acquired Land pursuant to or in accordance with the Development Contributions Plan forming part of Amendment C82 to the Melton Planning Scheme together with section 46P(2) of the Planning and Environment Act1987 (Vic), which is denied, then the Plaintiffs are entitled to compensation for the acquisition, in the amount of the full value of the Acquired Land as at 6 March 2012, less $3,104,888 paid by the Council on 30 March 2014.

It is not easy to discern how this pleading featured in the applicants’ case below. We were told that the applicants submitted to the judge that the DCP only authorised the Council to accept land in satisfaction of a development infrastructure levy. It was common ground that this land did not satisfy a development infrastructure levy because the development infrastructure levy had been satisfied, and that therefore the Council could not lawfully acquire this land under the DCP. In other words, the applicants did not advance a case based on a liability to pay under the DCP. Indeed, such an approach would have been inconsistent with the applicants’ case based on the LACA and recovery of full value.

Importantly, the judge found that neither the PE Act nor the DCP provided that the land values specified in the DCP established the compensation required to be paid for the transfer of private land into public ownership.[79]
[79]Ibid [165].

However, it is not necessary to further explore those matters because paragraph 46 of the Further Amended Statement of Claim was introduced after the payment had been made by the Council. On no view did the applicants recover the payment in the proceeding based on that claim. Indeed, the only point of paragraph 46 was to recover a further amount on top of the amount already paid. Like the LACA claim, it can be put to one side.

Claim in restitution

The applicants also pleaded a ‘claim in restitution’ seeking ‘restitution or restitutionary damages’ ‘as if upon a quantum valebat or otherwise’ for the ‘full value’ of the land.[80]
[80]Further Amended Statement of Claim, [33]–[36]; Reasons [38].

The claim was made in four paragraphs that pleaded:

(a) the Council had been enriched by its registration as the proprietor of the parcels of land;[81]
[81]Further Amended Statement of Claim, [33].

(b) the enrichment was at the expense of the applicants;[82]

(c) the enrichment was unjust because the applicants had not intended to gift[83] or agreed to sell[84] or convey[85] the land to the Council; the Council had no right to receive the land without compensating the applicants; save for the payment of $3,104,888 the Council had never paid any compensation; until 26 March 2014 the Council had not made an unconditional offer to pay compensation; and had not made an unconditional offer in excess of $3,104,888;[86] and

(d) the applicants are entitled, as if upon a quantum valebat or otherwise, to restitution or restitutionary damages to the full value of the land less the sum received on 30 March 2014.[87]

[82]Ibid [34].

[83]Ibid [6].

[84]Ibid [7].

[85]Ibid [8].

[86]Ibid [35].

[87]Ibid [36].

In its Defence dated 19 March 2014 and its Second Amended Defence dated 19 December 2016, the Council denied that the land had been compulsorily acquired or that the LACA applied. It denied the allegations concerning restitution, and pleaded that the applicants were ‘entitled to a credit against development contributions and or payment for the value of the land’ pursuant to the DCP.[88]
[88]Defence and Second Amended Defence, [35A(e)].

Was the restitution claim a claim for a sum certain?

I have found the question of whether the claim for restitutionary damages for loss of land was a claim for a debt or sum certain a difficult one.

The circumstances in which the law treats an amount alleged to be owing as a debt or sum certain include the self-evident and the arcane. For example, a loan of money payable on request creates an immediate debt.[89] An action to recover an amount owing under an executed contract can be brought in debt, even where it is necessary to calculate the amount owing on some objective basis. Indebtedness in a sum certain for an executed consideration is not merely a breach of contract for which a claim in damages may lie but may be enforced by an action in debt or indebitatus assumpsit.
[89]Young v Queensland Trustees Ltd (1956) 99 CLR 560, 567, 569; [1956] HCA 51 (Dixon CJ, McTiernan and Taylor JJ); Mann v Paterson Constructions Pty Ltd [2019] HCA 32, [62] (Gageler J) (‘Mann v Paterson’).

The common law also provides for restitutionary remedies in defined categories, including money had and received,[90] quantum meruit and quantum valebat. Actions for quantum meruit to recover remuneration for services rendered in performance of an unenforceable contract or for quantum valebat to recover reasonable remuneration for goods are treated as actions to recover a sum certain and came to be enforced by the writ of debt.[91]
[90]Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; [2001] HCA 68 (‘Roxborough’).
[91]Mann v Paterson [2019] HCA 32, [150], [182] (Nettle, Gordon and Edelman JJ).

Historically, the action would be in debt if the plaintiff claimed a liquidated sum and in indebitatus assumpsit for a nominated sum being ‘so much money as he therefore reasonably deserved to have’.[92] Regardless of whether the action was in debt or indebitatus assumpsit, both came within the description of debt or liquidated demand and would, I consider, fall within the ambit of s 58.[93]
[92]Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221, 250–1; [1987] HCA 5 (Deane J) (‘Pavey’) (emphasis in original).
[93]Ibid 251 (Deane J).

In Farah Constructions v Say-Dee Pty Ltd, the High Court emphasised that restitution based on unjust enrichment is not a ‘definitive legal principle according to its own terms’[94] and depends on the existence of a qualifying or vitiating factor falling into some particular category such as mistake, duress or illegality.[95]
[94](2007) 230 CLR 89, 156 [151]; [2007] HCA 22 (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ) (citations omitted).
[95]Ibid 156 [150] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ).

As Nettle, Gordon and Edelman JJ explained in Mann v Paterson, in the context of a claim on quantum meruit that applies equally to quantum valebat:

The ‘qualifying or vitiating’ factor giving rise to a prima facie obligation on the part of the enriched party to make restitution is a total failure of consideration, or a total failure of a severable part of the consideration. In this context, consideration means the matter considered in forming the decision to do the act: ‘the state of affairs contemplated as the basis or reason for the payment’. In many cases the relevant basis will be the benefit that is bargained for. In those cases, ’[t]he test is whether or not the party claiming total failure of consideration has in fact received any part of the benefit bargained for under the contract or purported contract’.[96]

[96][2019] HCA 32, [168] (citations omitted).

There is authority to similar effect in relation to the recovery of the purchase price under an unenforceable contract for the conveyance of land.[97] In Turner v Bladin, Williams, Fullagar and Kitto JJ said:

We consider that we should add that, though the agreement sued on was found to be an agreement for the sale of an interest in land, we do not think that s 128 of the Instruments Act was any defence to the plaintiff recovering at law in an action of indebitatus assumpsit the amount of the instalments which had become payable at the date of the writ and overdue interest to the date of judgment in the action. The consideration moving from the plaintiffs to the defendant was fully executed with the result that the defendant became indebted to the plaintiffs for the balance of purchase money and interest. An action to recover these sums would not be an action brought on the agreement but an action of indebitatus assumpsit.[98]

[97]Pavey (1987) 162 CLR 221, 233, 240 (Brennan J), 249 (Deane J); [1987] HCA 5.

[98](1951) 82 CLR 463, 474; [1951] HCA 13.

In such a case, the plaintiff could bring an action as a common money count for the balance of the price of land sold and transferred by the plaintiff to the defendant under an unenforceable contract.

Actions for quantum meruit and quantum valebat were, in earlier times, including in Turner v Bladin, said to be founded on an implied contract to enforce the terms of the unenforceable contract. That view has now been rejected.[99]
[99]Pavey (1987) 162 CLR 221; [1987] HCA 5 (Mason CJ, Wilson and Deane JJ).

In Pavey, Mason CJ and Wilson J, agreeing with Deane J, concluded that the implied contract theory should be rejected but emphasised that the true basis of the action on a quantum meruit is execution of work for which the unenforceable contract provided and that proof of the oral contract may be an indispensable element in the plaintiff’s success.[100]
[100]Ibid 227–8 (Mason CJ and Wilson J) and 255–7 (Deane J).

Both quantum meruit and quantum valebat arise in the context of an unenforceable or terminated contract. The existence of an unenforceable contract was also the foundation for the extension of indebitatus assumpsit to land in Turner v Bladin. In Mann v Paterson, the High Court emphasised the connection between the remedy and the terms of the unenforceable bargain in holding that the amount recoverable in an action for quantum meruit cannot exceed the amount due under the unenforceable contract.[101]
[101][2019] HCA 32, [102], [105] (Gageler J), [110], [174] (Nettle, Gordon and Edelman JJ).

In the present case, the applicants pleaded by analogy with quantum valebat but did not plead any agreement or contract in respect of which there was a failure of consideration. For that reason, there does not appear to be any basis for concluding that the claim fell within the quantum valebat line of authority.

In Roxborough, the High Court observed that restitution may be available outside a contractual setting.[102] In that case, payments of money were held to be recoverable because of the failure of the basis on which the payments had been made by the payers. In that setting, broader concepts of a total failure of consideration or ‘failure of basis’[103] may be employed to provide the rationale for the remedy. It might be that a claim made on this basis could be brought to recover a debt or on an action indebitatus assumpsit. But that was not the pleaded case.
[102]Roxborough (2001) 208 CLR 516, 522 [5]; [2001] HCA 68 (Gleeson CJ, Gaudron and Hayne JJ).
[103]Mann v Paterson [2019] HCA 32, [77].

The applicants’ recourse to the quantum valebat cases and reliance on Pavey by way of analogy was doubtful. Nevertheless, at this point in the analysis, the issue is to identify the claim rather than to determine whether it would have succeeded. I am prepared to proceed on the basis that the claim for the reasonable value of the land on a restitutionary basis was a claim for a sum certain, being the reasonable value of the land.

As the quantum meruit line of authority makes clear, the fact that the amount of the claim may need to be quantified by a Court, and is pleaded as an action to recover a reasonable amount for the services or goods, does not preclude the action from being one for a debt or sum certain.[104]
[104]Horton v Jones (1934) 34 SR (NSW) 359, 367 (Jordan CJ); Horton v Jones [No 2] (1939) 39 SR (NSW) 305, 319 (Jorden CJ); Pavey (1987) 162 CLR 221, 256–7 (Deane J); Mann v Paterson [2019] HCA 32, [74] (Gageler J).

In Oddy v Fry,[105] McDonald J applied the same line of reasoning to a claim under s 46 of the Partnership Act 1958 to recover profits in respect of a retained partnership interest after dissolution of the partnership. The plaintiff was a partner in a law firm. He was entitled to be paid one-ninth of the value of the firm as at the date of his retirement. The continuing partners retained that amount and, as was found, used it in the partnership. The judge had found that the profits attributable to the use of the plaintiff’s share of the partnership’s assets was $402,883 and, on an accounting under s 46 (which gave a statutory right to a share of profits after dissolution but before settlement of accounts), gave judgment in that amount to the plaintiff.
[105]Unreported, Supreme Court of Victoria, McDonald J, 16 June 1997 (‘Oddy’).

The judge ordered interest under s 58 on the amount from the date of the demand on the basis that the amount due was a debt or sum certain. His Honour concluded that the entitlement became a sum certain ‘on it being determined what share of the profits of the continuing firm, made since the time that the plaintiff retired from it, was attributable to the use of his share of the partnership assets’.[106]
[106]Ibid 11.

In so holding, McDonald J applied the reasoning of Hudson J in Lombard Australia Ltd v Smeaton, that where a reasonable sum is to be paid under a contract, the quantification is ‘capable of ascertainment by some objective test’ and that sum is a liquidated amount.[107]
[107]Ibid 11-12; Lombard Australia Ltd v Smeaton [1966] VR 272, 275–6.

His Honour was influenced by the organising principle by which interest is payable, namely, to compensate a plaintiff who has suffered by being kept out of his or her money during the relevant period.[108]
[108]Oddy (Unreported, Supreme Court of Victoria, McDonald J, 16 June 1997), 5, citing MBP (SA) Pty Ltd v Gogic (1991) 171 CR 657, 663; [1991] HCA 3 (Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ) and Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382, 396 (Fullagar, Marks and JD Phillips JJ).

Did the applicants recover an amount in the proceeding?

The next point of note is that the applicants did not obtain an order in their favour on their restitutionary claim. Indeed, it was dismissed. They fall outside the usual case in which s 58 is applied.

As noted, the applicants call in aid the line of authority that applies provisions akin to s 58 to payments made after the commencement of a proceeding but without judgment on the claim having been entered. In Bevelon, Anderson J held that it was not necessary that there be a judgment in order for a sum to be recovered in an action. Consistently with the purpose of the provision in question, his Honour approached the question as being one of substance.

The facts of Bevelon are important. In that case, the plaintiff sought recovery of statutory rates in a specified amount. After commencement of the proceeding but before judgment, the defendant paid the plaintiff the precise figure that was claimed. The tender of the payment was an acknowledgement of the debt and answered the claim in its entirety and in every respect and, accordingly, interest was ordered on the sum recovered.

In Pearce v Bolton,[109] one of the trilogy of English cases relied on by Anderson J in Bevelon, a Divisional Court held that a plaintiff had recovered £27 in an action, thus beating the costs cap of £20, in circumstances where it commenced an action for £27, the defendant paid £8 and the plaintiff obtained judgment for £19. It provides an example of where a partial payment of the claimed sum can be recovered in an action even where it is not caught by the final order.
[109][1902] 2 KB 111.

I take the line of reasoning in those cases to apply where the payment can be said to correspond to the claim made. In my view, in order to come within that approach, it is not sufficient that the payment was made after the commencement of the proceeding and was taken into account to reduce the value of the claim because the applicants brought the amount to account. I consider that a greater degree of connection between the payment and the claim is required.

It is not necessary to determine what legal obligation underpinned the payment by the Council. In this Court, the applicants sought to articulate a case, not run below, that would explain a legal entitlement to the $3,104,888 on a basis that was not inconsistent with the judge’s findings. That reconstituted claim had the following composition:

(e) the obligation to pay the development infrastructure levy fell on the applicants as developer of the land;

(f) by contract, it was agreed between the applicants and the purchaser that the purchaser would be responsible for the infrastructure levy insofar as it related to the purchased land;

(g) the purchaser registered the plan of subdivision and paid the entire infrastructure levy in respect of the whole land; and

(h) the road reserve and public reserve were vested in the Council as payment of the levy in circumstances where the levy had already been paid in full, giving rise to a credit to the value of the reserved land under the DCP.

That analysis does not sit well with the judge’s findings based on the common ground of the parties that the land did not satisfy any development infrastructure levy or community infrastructure levy liability.[110]
[110]Reasons [168].

Whether or not that analysis is sound, the basis for the payment made by the Council is clear. It was never intended by the applicants, the purchaser or the Council that the relevant land would be gifted or donated by the applicants to the Council. It was always intended that the Council would pay for the land, not as consideration on sale or transfer, but as compensation for the loss and corresponding acquisition of the land. It was based on an acceptance of an obligation to pay compensation for the land in accordance with the values specified in the DCP.

So much appears from correspondence from the Council’s solicitors referred to in the joint reasons, the terms of the Deed and the Council’s Defence, all of which record a willingness to pay compensation or make a payment linked to a valuation based on DCP figures. Before the proceeding commenced, the Council offered to pay the applicants that amount subject to executing the Deed.

In their various responses, the applicants asserted that ‘the amount to be received in respect to the compensation has never been agreed upon‘[111] and sought clarification as to how the ‘figure offered for compensation ha[d] been calculated’[112] and an additional payment for their Growth Areas Infrastructure Contribution (‘GAIC’).[113]
[111]Letter dated 1 July 2013.
[112]Ibid.
[113]Letter dated 22 August 2013.

On 22 August 2013, the applicants sought an amount be added to the $3,104,888 based on a proportion of the GAIC that it had paid and added:

In the meantime, our clients have instructed us to accept an advance of compensation by way of a cheque made out to them, of the sum of $3,104,888.00 pursuant to s 51 of the Land Acquisition and Compensation Act 1986 and without prejudice to the final settlement amount sought.

In the letter of 6 September 2013, the applicants repeated the request for an advance of compensation pursuant to s 51 of the LACA and pointed to s 51(2) of that Act. They also raised the GAIC issue. The demand under the LACA and demand for part payment was repeated on 3 October 2013.

On 11 October 2013, the Council’s solicitors replied, rejecting any liability to pay any amount in respect of GAIC and advising that the LACA had no application as there had been no compulsory acquisition under that Act. They stated that the Council had funds available to pay compensation of $3,104,888 as soon as the applicants executed the Deed.

On 17 October 2013, the applicants’ solicitors sought evidence of an ‘exemption’ from the LACA, referring in particular to s 7 of that Act, and information regarding the Council’s understanding of the basis of its power to acquire the land.

On 13 December 2013, the applicants’ solicitors reiterated their request for further information.

They did not refer to the Council’s position, again repeated on 12 November 2013, that the Council had the funds available to immediately pay the compensation offered of $3,104,888 as soon as the applicants executed the Deed.

The letter of 13 December 2013 went on to say that in the absence of the documents and information, the solicitors could not understand how the Council acquired the land and ‘the basis of Council’s title is unclear’. The letter concludes by insisting that:

… the Council compensate [the applicants] for the full value of the land taking into account the GAIC and the drainage levy … that they have paid and all other entitlements as if Council had acquired the land in accordance with the [LACA], including interest from the date of acquisition. …

On 4 February 2014, the applicants commenced the proceeding. On 30 March 2014, the Council paid the applicants $3,104,888.

It follows that the applicants sued for recovery of an amount based either on the LACA or on the ‘full value’ of the land. It did not bring the proceeding to recover an amount calculated by reference to the DCP.[114] The applicants sought to establish the full value was $4,845,000 based on the opinion of an independent expert land valuer.[115] That opinion was sought as to market value compensation payable under the LACA on an assumed compulsory acquisition.[116]
[114]The pleaded reference to DCP is dealt with above and does not assist the applicants.
[115]Reasons [172].
[116]Ibid [171].

Although it is true that the applicants sued to recover compensation and the Council made the payment after the proceeding commenced, there was a significant disjunction between the basis for the payment and the claim, including the source of the liability, the methodology for its ascertainment and its timing. This is not a case where the defendant capitulated to the claim, having forced the plaintiff to sue.

Having received the payment, the applicants continued to claim the full value of the land, without regard to the DCP, but accepted that the amount received should be credited against the amount of any award under or based on the LACA.

I would distinguish Bevelon and hold that the payment was not recovered in the proceeding.

The Council not unreasonably sought the applicants to acknowledge that the payment was made on the basis of the DCP in satisfaction of the liability for compensation. As the judge explained, the Council were not compulsorily acquiring the land and were working towards agreed compensation based on the DCP.[117] The applicants maintained an entitlement to the LACA interest and to other payments that the Court rejected. The applicants failed to establish any greater entitlement. Had the applicants not made the additional claims and issued the proceeding, they would have obtained the compensation that had been offered. In those circumstances, the issuing of the proceeding was not necessary in order to secure payment.
[117]Ibid [167]–[168].

Even if the insistence by the Council on the execution of the Deed was high handed or objectionable, the fact is that the applicants did not accept the basis for the Council’s payment or the Council’s view that it had no greater obligation towards the applicants. It was that fact, rather than the requirement to sign the Deed, that led the applicants to prosecute their claims to judgment even after the payment had been made unconditionally. The fact that the applicants continued with their case is stark evidence that they did not accept the amount or basis of the payment. The fact that the applicants were unsuccessful in their claims means that execution of the release would not have curtailed their rights: they could not establish an entitlement to any greater compensation for the land.

I would also add that the approach in Bevelon cannot apply, without a significant reworking of principle, where the cause of action is dismissed on the merits. Although the judge took into account the fact that the compensation had been received, she did not find that the payment was made in satisfaction of any liability claimed by the applicants. The payment was not a down payment for the claim which was dismissed. The Council agreed to pay compensation for the land based on DCP values.[118] The judge considered that this was relevant to whether the applicants had received just and fair compensation in the circumstances,[119] notwithstanding that it was less than what they might have obtained in a compulsory acquisition.[120]
[118]Ibid.
[119]Ibid [165]; see also [156], [170], [193].
[120]Ibid [156].

Although the payment was relevant to the question of whether the Council had been unjustly enriched, it is clear from the judge’s analysis that there were other significant problems with the applicants’ case based on restitution. They included that the transfer took place at the initiation of the applicants and was the consequence of their voluntary act. The judge in substance rejected a failure of basis.[121]
[121]Ibid, see [153]–[154].

The cases on which the applicants rely involve an implicit acceptance that the claims would have succeeded, were accepted by the payee or answered by the payment. Unlike, in Bevelon, having had regard to the pleaded case, I would not regard the payment as evidence of success in the proceeding either as a matter of form or substance. It follows that the applicants did not recover the payment in the proceeding. The judge was correct to so hold.[122]
[122]Ibid [199].

Was the amount recovered a sum certain?

Further, for the reasons that follow, I cannot accept that the payment made by the Council was for a sum certain. I have accepted, for the purpose of my decision, that the claim for full value in restitution was a claim for a sum certain. However, the applicants were not paid the amount of their claim. Nor were they paid part of their claim.

I accept that, looked at as a matter of substance, the applicants were going to be paid at least $3,104,888. That was the amount calculated by the Council under the DCP and paid over in discharge of the Council’s obligation to pay compensation. There is no reason to think that the Council would have reduced the amount that it offered.

Of course, the figure proffered by the Council and ultimately paid by it was a finite amount. One cannot make a payment of other than an exact amount. But that, to my mind, is not what s 58 is concerned with. The sum certain referred to in s 58 is not a payment along the way in a finite amount; were it so, every part payment on account of damages would be a sum certain. The sum certain is the sum sought in the claim, not a component part of it. I would not construe the phrase ‘sum certain’ as including a sum of at least a defined amount.

If a plaintiff recovers a sum certain then he or she will be entitled to interest from the date it was payable or the time of demand. If the sum certain had been part paid, then interest would need to take into account those payments once liability to pay the sum certain is established. However, that is not this case.

The liability to pay a sum certain was not established and the payment was not itself a ‘sum certain’. The payment did not represent part payment of the sum certain claimed by the applicants calculated by reference to fair value on a compulsory acquisition. It was full payment of a different liability.

It follows in my opinion that the payment received by the applicants did not constitute the recovery of a sum certain.

Conclusion

The preconditions for interest under s 58 were not established. The decision of the judge to refuse interest under s 58 of the Supreme Court Act was correct.

I would grant leave to appeal but dismiss the appeal.

–––

[2020] VSCA 117

13 May 2020