Commissioner for Fair Trading v Jonval Builders Pty Ltd (No 3)

[2022] NSWSC 1641

Supreme Court

New South Wales

Medium Neutral Citation:

Commissioner for Fair Trading v Jonval Builders Pty Ltd (No 3) [2022] NSWSC 1641

Hearing dates:

29 November 2022

Date of orders:

1 December 2022

Decision date:

01 December 2022

Jurisdiction:

Common Law

Before:

Schmidt AJ

Decision:

See paragraph 58

Catchwords:

CIVIL PROCEDURE — Construction of Civil Procedure Act 2005 (NSW), s 101 — calculation of post judgment interest — meaning of “unpaid” — where orders required defendants to pay named consumers who were not parties — where conditional stay ordered on payment of judgment sum into court by specified dates — ­where money paid into court but conditions not satisfied ­— where payment of judgment sum to consumers ordered after appeal dismissed — where calculation and payment of post judgement interest disputed — judgment remained unpaid until payments made to consumers

Legislation Cited:

Civil Procedure Act2005 (NSW), ss 56, 101

Fair Trading Act1987 (NSW)

Uniform Civil Procedure Rules 2005 (NSW), rr 39.49, 41.3, 41.6, 41.11, 42.1, 50.7

Court Suppression and Non-publication Orders Act 2010 (NSW), ss 7, 8, 12

Cases Cited:

Commissioner for Fair Trading v Jonval Builders Pty Ltd [2019] NSWSC 1893

Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2014] NSWCA 158

Grills v Leighton Contractors Pty Ltd(No 2) [2015] NSWCA 348

JKB Holdings Pty Ltd v de la Vega [2013] NSWSC 501

Jonval Builders Pty Ltd v Commissioner for Fair Trading [2021] HCASL 32

Jonval Builders Pty Ltd v Commissioner for Fair Trading (2020) 104 NSWLR [2020]; NSWCA 233

Rahme v Benjamin & Khoury Pty [2016] NSWSC 774

Robb Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170

Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) [2011] NSWCA 256

Texts Cited:

Macquarie Dictionary, online ed, accessed 29 November 2022

Category:

Principal judgment

Parties:

Commissioner for Fair Trading (Plaintiff)
Jonval Builders Pty Ltd (First Defendant)
Hacienda Caravan Park Pty Ltd (Second Defendant)

Representation:

Counsel:
Ms R Francois (Plaintiff)
Ms T Hickling (Defendants)
Solicitors:
Department of Customer Service (Plaintiff)
Worcester & Co (Defendant)

File Number(s):

2015/291362

JUDGMENT

1. These proceedings concerned the operation of a caravan park and the sale of moveable dwellings to named consumers, the Commissioner successfully seeking declarations that conduct pursued by the defendants was unlawful and contrary to the Fair Trading Act1987 (NSW): Commissioner for Fair Trading v Jonval Builders Pty Ltd [2019] NSWSC 1893.

2. Orders were made by Rothman J on 17 March 2020. They required Hacienda Caravan Park Pty Ltd, which operated the park, Jonval Builders Pty Ltd, which sold the dwellings and Mr Willmott, a director of both companies, to pay each of the named consumers, who were not parties to the proceedings, specified sums totalling $2,353,828.

3. The judgment was appealed in April 2020. By motion filed in July 2020 the Commissioner sought orders requiring the payment into court of the total judgment sum. It was resolved by consent orders made by the Court of Appeal on 27 July 2020:

“1. Pending further order, orders 5 and 7 made by Justice Rothman on 17 March 2020 are stayed on the condition that the Appellants pay the sum of $2,353,926 into Court in the following instalments:

(a) $500,000 to be paid on or before 31 July 2020; and

(b) the balance to be paid on or before 10 August 2020.

2. The Respondent's Notice of Motion filed on 17 July 2020 is stood over to the hearing of the appeal on 10 August 2020.

The Court notes that:

3. Upon compliance with order 1, the Respondent withdraws her three Notice to produce dated 8 May 2020.”

4. The money was paid into court, but not within the time specified in the orders, with the result that the stay did not continue to operate. Despite this the consumers were not paid until after the defendants’ later application to the High Court for special leave to appeal was refused, their appeal against Rothman J’s judgment having failed.

5. Neither Rothman J’s orders nor the stay orders dealt with post judgment interest, which was payable as the result of the operation of s 101 of the Civil Procedure Act2005 (NSW).

6. The defendants have paid the Commissioner $141,575.48 for such interest, but they claim that involved a considerable overpayment, given the proper construction of s 101. That money is still held in trust, together with some $12,000 interest earned on the money paid into court, which was paid to the Commissioner as the result of the orders made by White JA.

7. The Commissioner’s proposed further orders take that interest into account for the benefit of the defendants, in the calculation of the unpaid post judgment interest. The mathematics of the respective calculations are not in issue.

8. The Commissioner contends that under s 101 post judgment interest totalling $189,963.15 was payable, calculated up to the date of the payments made to the consumers out of the money which had been paid into court. The defendants contend only $66,787.71 post judgment interest was payable, calculated to the date of their payment of the judgment sum into court.

9. The orders which the defendants propose proceed on the basis that the interest must be paid to the consumers, given the construction of s 101 which they advance. If the Commissioner’s construction is correct, they accept that the interest should be applied in the way for which the Commissioner contended.

10. For reasons which follow I am satisfied that the orders which the Commissioner seeks must be made.

Issues

11. There is no issue that the defendants are obliged to pay post judgment interest in accordance with s 101. The parties also agreed that:

1. it was 17 March 2020, when the orders requiring payment to each consumer were made and entered by Rothman J to give effect to his December 2019 judgment, that post judgment interest began to accrue; and

2. none of the consumers ever applied to the Court to have the part of the judgment sum Rothman J had entered to be paid to them under the Uniform Civil Procedure Rules 2005 (NSW), out of the money which had been paid into court.

12. What is in issue thus not only concerns the proper construction of s 101, but also the operation of the Rules and the impact of the consumers not having applied to the Court to have their share of the judgment sum paid out to them. The defendants relied on this to advance their case that post judgment interest ceased to be payable when they paid the judgment sum into court.

The proper construction of s 101 of the Civil Procedure Act

13. The section provides:

101 Interest after judgment

(1) Unless the court orders otherwise, interest is payable on so much of the amount of a judgment (exclusive of any order for costs) as is from time to time unpaid.

(2) Interest under subsection (1) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from—

(a) the date on which the judgment takes effect, or

(b) such later date as the court may order.

(3) Despite subsection (1), interest is not payable on the amount of a judgment if the amount is paid in full within 28 days after the date on which the judgment takes effect, unless the court orders to the contrary.

(4) Unless the court orders otherwise, interest is payable on an amount payable under an order for the payment of costs.

(5) Interest on an amount payable under an order for the payment of costs is to be calculated, at the prescribed rate or at any other rate that the court orders, as from the date the order was made or any other date that the court orders.

(6) This section does not authorise the giving of interest on any interest payable under this section.

(7) In this section, a reference to the prescribed rate of interest is a reference to the rate of interest prescribed by the uniform rules for the purposes of this section.

14. It is the meaning of the undefined word “unpaid”, as it is used in s 101(1), on which the construction question turns.

How the dispute arose

15. There was no issue that the defendants did not pay the money into court within the time specified in the stay order, with the result that the stay did not continue to operate. While this was raised in the Court of Appeal, the defendants did not seek to have the stay revisited. Nor did they seek to have the money they had paid into court either repaid to them, or paid to the consumers, even after they failed both on their appeal and on their application to the High Court for special leave to appeal.

16. It was only then that steps were pursued by the Registrar of the Court of Appeal to have the money held in court paid out.

17. On the case which the Commissioner advanced it may be assumed that the consumers were kept aware of developments. But none of them sought to exercise any rights which they had under the Rules to seek payment of the judgment sum to which they were entitled, out of the money which had been paid into court. Nor did they appear before White JA who heard the parties on what should be done with the money paid into court.

18. The Commissioner then sought orders for the payment of the moneys to the consumers, which the defendants neither consented to nor opposed. The dispute about calculation of post judgment interest was referred to, but it did not there arise for determination.

19. The defendants had paid the Commissioner $141,575.48 for post judgment interest, which their solicitor had calculated was payable until the date the special leave application was refused. Later they sought the repayment of most of that sum, then considering that post judgment interest was only payable until the judgment sum had been paid into court. That was disputed by the Commissioner, who contended that s 101 required payment of post judgment interest until the sums White JA had ordered, were paid to the consumers.

20. His Honour ordered:

“1. To the extent as may be necessary pursuant to section 14 of the Civil Procedure Act 2005 (NSW), the requirement of rule 41.11 of the Uniform Civil Procedural Rules 2005 (NSW) (UCPR) is dispensed with in relation to orders 2(a) to (g) below.

2. Pursuant to rule 41.3(1) of the UCPR, the Court orders that the funds held by the court be paid as follows:

a. $224,380.63 to Mr Bruce Denley;

b. $371,072.34 to Brian and Annette Hamilton;

c. $371,833.00 to Sandra Sorensen;

d. $343,103.43 to Percival and Gail Hannah;

e. $355,978.20 to Barbara Timms;

f. $299,674.03 to John Pestridge ;

g. $387,883.62 to John and Diana Hodson;

h. the balance of the monies held to the Respondent.

3. Pursuant to the Court Suppression and Non-publication Orders Act 2010 (NSW), the Court:

a. orders pursuant to section 7(a) that the bank account details identified in order 2 are not to be disclosed to anyone except the parties to the proceedings, the parties’ legal representatives, the Court and Court staff;

b. specifies under section 8(2) that the grounds on which the above order under section 7(a) is made are those in section 8(1)(e) being that – as the banking details are private, have the potential to be misused if made public and were not relevant to the case – it is otherwise necessary in the public interest for the order to be made and that public interest significantly outweighs the public interest in open justice; and

c. specifies under section 12(1) that the above order under section 7(a) operates until 20 years from the date of this order.

4. No order as to costs.”

21. There is no issue about when the payments so ordered were made.

The parties’ cases

22. The cases which the parties advanced had regard to the December 2019 judgment and the entry of the March 2020 orders which gave it effect, as well as:

1. the stay ceasing to have effect on 1 August 2020 because the conditions imposed by the orders were not complied with;

2. dismissal of the appeal from Rothman J’s orders in September 2020: Jonval Builders Pty Ltd v Commissioner for Fair Trading (2020) 104 NSWLR 1; [2020] NSWCA 233;

3. the High Court’s refusal of the application for special leave to appeal in February 2021: Jonval Builders Pty Ltd v Commissioner for Fair Trading [2021] HCASL 32;

4. payment of $141,575.48 to the Commissioner on 11 May 2021, calculated to the date of dismissal of the special leave application;

5. the later notice given to the parties by the Registrar of the Court of Appeal of an intention to pay the monies and any interest accrued out of court and directing them to make submissions;

6. the defendants’ position before White JA that they had no entitlement to the money or any interest in its payment and so did not consent to or oppose the proposed payment out to the consumers, albeit submitting that it would be unjust for them to have to pay post judgment interest past 26 August 2020 when the money was paid into court, or in the alternative, 25 September 2020, when the appeal was refused;

7. the orders made by White JA on 21 June 2021 under r 41.3(1) that the funds held in court be paid to the named consumers in the amounts ordered by Rothman J, which did not deal with post judgment interest; and

8. payment to the consumers of the amounts ordered by the Court on or about 29 June 2021.

23. The Commissioner’s case was that in those circumstances post judgment interest continued to be attracted until the money paid into court was paid to the consumers on 29 June 2021 as the result of the steps taken by the Registrar of the Court of Appeal. Until then the judgment remained “unpaid”.

24. The defence case was that once payment was made into court the judgment was no longer “unpaid”. The result was that post-judgment interest ceased:

“2…(a) in respect of $500,000 on 6 August 2020 when the said amount of judgment sum funds were paid by the Defendants.

(b) in respect of $1,853,926 on 26 August 2020 when the balance of judgment sum funds were paid by the Defendants.

or in the alternative

(c) the 25 September 2020 when the Court of Appeal dismissed the appeal of the Defendants and the judgment sum funds had been paid in full as per 2(a) and (b) above.”

25. Further, that:

“3. In respect of 2(a) and 2(b) above the conditional stay as per the Supreme Court of NSW Court of Appeal order of 27 July 2020 ceased to exist or have effect from 1 August 2020 as the conditions had not been met.

4. The alternative 2(c) is only applicable in the event that the court decides that the Supreme Court of NSW Court of Appeal order of 27 July 2020 continued to have effect until the determination of the appeal on 25 September 2020.”

What does “unpaid” mean?

26. The construction issue turns on the undefined word “unpaid” which takes its ordinary meaning. It is defined in the Macquarie Dictionary to mean “not paid”.

27. The defendants’ case rests on the fact that they did pay the judgment sum, albeit into court, rather than to the consumers, with the result that it was no longer “unpaid”. That was the outcome of what the Commissioner had sought by motion, the price for which the parties agreed was the conditional stay of Rothman J’s orders which was ordered.

28. There was no issue that if the conditional stay had not been agreed, the consumers would have been entitled to enforce the orders against the defendants, whose appeal provided them with no defence against enforcement. That position was restored when the conditions of the stay were not met. Still, I am satisfied that contrary to the defendants’ case, leaving the money with the court did not have the result that post judgment interest did not continue to accrue.

29. That is because the word “unpaid” must necessarily be understood in the statutory context in which it is used in s 101(1). The construction of s 101 does not arise to be determined in the context of what occurred in this particular case.

30. That means that account must be taken of the purpose of the requirement to pay post judgment interest imposed by s 101, which is a compensatory one, given what has to be spent on the pursuit of litigation: Robb Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170 at [44] and Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2014] NSWCA 158 at [403].

31. It follows that until the person entitled to be paid under the Court’s order, has actually been paid the judgment sum, that compensatory purpose is not achieved, with the result that the judgment remains “unpaid”. The result is that even if the money ordered is paid into court, for the purpose of s 101, it remains “unpaid” and continues to attract post judgment interest.

32. Of course, as this case establishes, when paid into court the money earns interest. In a practical sense that will later be available to help pay the post judgment interest which continues to be payable under s 101, on the still unpaid judgment debt. But until paid to the person to whom the Court has ordered the money should be paid, the judgment sum remains “unpaid” and thus continues to attract post judgment interest.

33. That construction accords with r 41.6 which provides that money paid into court for specified purposes does not attract interest. They do not include a payment of a judgment debt into court, pending determination of an appeal. It provides:

41.6 Interest not payable on certain funds in court

(1) Money that is paid into court as security for costs or as security on an appeal, or in relation to an offer of compromise under the Commercial Arbitration Act 1984, does not bear interest.

(2) Subrule (1) does not apply to interest accruing on money paid to the NSW Trustee and Guardian.

34. Also relevant is that r 50.7 provides that an appeal does not operate as a stay of proceedings under the decision of the court below. That requires a specific order.

35. It has thus been held that judgment interest is payable from the date of a first instance judgment, with the entitlement to post judgment interest under s 101 not being discretionary: Grills v Leighton Contractors Pty Ltd(No 2) [2015] NSWCA 348. Further, that by its terms interest is payable on so much of the judgment sum as is from time to time unpaid; if a party wishes to contest the entitlement to interest, or there are reasons why the Court considers that the entitlement to interest for which the section provides is not appropriate, there is a discretion in the Court to make a different order; but in such a case the terms of any such different order need to be stated by the Court: at [17].

36. It follows that neither the Act nor the Rules contemplate that payment of a judgment sum into court as the condition of a stay also relieves or stays a defendant’s obligation to pay post judgment interest to the person entitled to the benefit of the order. That requires a specific order in the exercise of the Court’s s 101(1) discretion: Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) [2011] NSWCA 256.

37. There was no such order made in this case.

38. Even if at the time the conditional stay of Rothman J’s judgment was ordered by consent by the Court of Appeal, it could also have made an order under s 101(1) in respect of the post judgment interest which was then accruing, that was not ordered or even raised on the appeal. The power then to make such an order may be doubtful, but the Court of Appeal was not asked to do so.

Post judgment interest continued to accrue until the payments were made to the consumers by the Registrar of the Court of Appeal

39. The result of the course the defendants so pursued was thus that post judgment interest continued to accrue until the judgment sums Rothman J had ordered were paid to the consumers.

40. That did not occur until the moneys were paid out in June 2021 by the Registrar of the Court of Appeal, in accordance with White JA’s orders.

41. In the result post judgment interest must be calculated from the date the judgment took effect in March 2020 until those payments were made in June 2021, the Court not having ordered otherwise “at the time of, or pursuant to, the judgment itself”: Tomanovic at [30].

The impact of the consumers not taking steps to have the money paid to them

42. In all these circumstances, the fact that the consumers could also have earlier taken steps under the Rules to seek to have the money the defendants had paid into court, paid out to them, did not relieve the defendants of the consequences which flowed under the Act and Rules from the course which they pursued.

43. None of the consumers were parties to the proceedings. But under the Rules they were each entitled to enforce the orders Rothman J had made in their favour as if they were a party: r 39.49. The money the defendants had paid into court could only be paid out by the authority of the Rules or of a judgment or order of the Court: r 41.3. Rule 41.11 permitted payment to be made to a party entitled to such payment. Such an application may be pursued by motion: Rahme v Benjamin & Khoury Pty [2016] NSWSC 774.

44. It follows that the effect of r 39.49 was that the consumers could have pursued a motion seeking that orders for payment out of court be made in their favour, once the stay of Rothman J’s orders ceased having effect as it did. How the defendants would have responded to such an application cannot, of course, be known.

45. There was no suggestion that in the circumstances in which the defendants had paid the money into court, that it did not remain theirs until White JA’s orders were made. Certainly, if they had succeeded on their appeal there could have been no question that they were entitled to have what they had paid into court repaid, together with the interest it had earned.

46. It follows that the defendants would have been entitled to be heard on any motion brought by the consumers. They could, of course, have consented.

47. But given the course the defendants in fact pursued, such consent appears unlikely. After all, they did not take steps to have the money paid to the consumers, as they could have, when their special leave application failed. They did not even consent to the orders which the Commissioner later sought, as they should have, consistently with their obligations under s 56 of the Civil Procedure Act. These obligations required the defendants to assist the Court to facilitate the overriding purpose there specified, “the just, quick and cheap resolution of the real issues in the proceedings.”

48. Instead a hearing was required before White JA and even then the defendants’ consent was not forthcoming. In the circumstances, that unnecessarily increased the costs which the parties had to incur.

49. It follows that on a motion being filed by the consumers, the defendants might have sought to have the conditions of the stay altered. Or they could have sought to have the money repaid to them, having failed to meet the conditions of the stay of Rothman J’s orders which had been agreed.

50. It is unnecessary to speculate further. No motion was filed by the consumers and having failed on appeal and on their High Court application, the defendants also took no steps to have the money paid out to the consumers. The money was thus left in court, where it remained for the Court of Appeal to deal with.

51. As Lindsay J explained in JKB Holdings Pty Ltd v de la Vega [2013] NSWSC 501 at [8], r 41.11 “does not mandate that funds in court can only be paid out to, or at the direction of, the party who paid them in. Once moneys are paid into court they come under the general control of the court and are liable to be dealt with, in the ordinary course of the business of the court, subject to such orders as may be made by the court from time to time”. The terms upon which funds are paid into court are set by the orders made for payment in: at [20].

52. That the course which the defendants so pursued was in their own interests is not apparent, given that it was only payment of the judgment debt to the consumers which stopped post judgment interest accruing under s 101, as I have explained.

53. It follows that the defendants’ submission to the Court of Appeal that they had no interest in the money being paid out of court had no foundation. They were certainly interested in the calculation of post judgment interest, as was even then submitted. In the circumstances, no order having been made in respect of post judgment interest which disturbed the operation of s 101, it continued to accrue until payment was actually made to the consumers, as I have explained.

54. All that had been agreed was that Rothman J’s orders would be stayed by the Court of Appeal on condition that $500,000 be paid into court by 31 July and the balance, $1,853,926 by 10 August. That did not affect the operation of s 101, which required a specific order. The result was that the defendants were not relieved of their liability to pay post judgment interest.

55. The fact that the consumers did not seek to enforce payment of the judgment sums when that was no longer stayed, did not alter that position. Neither the Act nor Rules impose such a burden on the consumers. That is, a failure to pursue such a course depriving them of the benefit of the post judgment interest which was payable to them as the result of the operation of s 101.

56. In the result I am satisfied that orders of the kind which the Commissioner sought must be made and that those sought by the defendants must be refused. That includes those sought under the Court Suppression and Non-publication Orders Act 2010 (NSW), about which there was no issue and which I am satisfied must be made in the public interest, for the reasons specified in the orders themselves.

Costs

57. The usual order under the Rules is that costs follow the event: r 42.1. The parties agreed that the usual order would be made in this case.

Orders

58. For the reasons given I order that:

1. A declaration that the Plaintiff may disburse monies currently held by her on trust as follows:

1. $14,680.09 to Mr Bruce Denley;

2. $24,277.39 to Brian and Annette Hamilton;

3. $24,327.16 to Sandra Sorenson;

4. $22,447.53 to Percival and Gail Hannah;

5. $23,289.86 to Barbara Timms;

6. $19,606.16 to John Pestridge; and

7. $25,377.28 to John and Diana Hodson.

2. Pursuant to s 101 of the Civil Procedure Act 2005 (NSW), the Defendants pay to the Plaintiff, within 28 days of the date of this order, an amount of $35,957.67 of post judgment interest on the judgment sums ordered on 17 March 2020.

3. A declaration that the Plaintiff may, upon receipt, disburse the monies referred to in Order 2 as follows:

1. $3,427.55 to Mr Bruce Denley;

2. $5,668.36 to Brian and Annette Hamilton;

3. $5,679.98 to Sandra Sorenson;

4. $5,241.12 to Percival and Gail Hannah;

5. $5,437.79 to Barbara Timms;

6. $4,577.71 to John Pestridge; and

7. $5,925.16 to John and Diana Hodson.

4. Under s 7(a) of the Court Suppression and Non-publication Orders Act 2010 (NSW), that the bank account details identified on:

1. page 17 of the Joint Court Book filed on 21 November 2022;

2. pages 41-42 of the Court Book;

3. pages 84-85 of the Court Book; and

4. page 87 of the Court Book;

are not to be disclosed to anyone except the parties to the proceedings, the parties’ legal representatives, the Court and Court staff.

5. That it is specified under s 8(2) of the Court Suppression and Non-publication Orders Act that the grounds on which the above order under s 7(a) is made are those in s 8(1)(e) of the Court Suppression and Non-publication Orders Act being that – as the banking details are private, they have the potential to be misused if made public and were not relevant to the case – it is otherwise necessary in the public interest for the order to be made and that the public interest in the making of this order significantly outweighs the public interest in open justice.

6. That under s 12(1) of the Court Suppression and Non-publication Orders Act that the order under s 7(a) operates until 20 years from the date of this order.

7. The defendants bear the Commissioner’s costs of the motion, as agreed or assessed.

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Decision last updated: 01 December 2022