David Olifent v Emwest Products Pty Ltd and Ors (No. 2) No. SCGRG 94/1951 Judgment No. 5388 Number of Pages 5 Corporations Winding up Interest

In the case of David Olifent v Emwest Products Pty Ltd and Ors, the plaintiff sought interest and costs against the defendant in the context of a winding-up proceeding. The plaintiff successfully sought a judgment against the defendant for $136,269.00. The legal issues before the court were whether interest should run from the date of the winding up or from the date of the liquidator's demand for repayment of a preference, the appropriate interest rate, and whether the plaintiff was entitled to his full costs of action. The court considered authorities such as Ferrier v Civil Aviation Authority and Spedley Securities Ltd, and concluded that interest should run from the date of the liquidator's demand, and not from the date of the winding up. The court also held that the appropriate interest rate was that provided for in the Third Schedule to the Supreme Court Rules, and that the plaintiff was entitled to only a portion of his costs of action on the solicitor/client scale.

The court found that the plaintiff was entitled to interest from the date of the liquidator's demand for repayment of a preference, as this aligned with the more recent Federal Court decision in Ferrier. This was in contrast to the approach taken in South Australia in the past, which had been to allow interest from the date of the winding up. The court held that it was desirable to have a uniform approach to the calculation of interest in preference cases across jurisdictions. The court also rejected the defendant's argument that the appropriate interest rate was a cash management rate, and held that the Third Schedule to the Supreme Court Rules was the appropriate basis for calculating the interest owed to the plaintiff.

With regard to the costs, the court found that the plaintiff was entitled to his costs of action as party/party costs from the defendant up to the commencement of the trial, and thereafter, on the solicitor/client scale. The court held that the defendant had not acted reasonably in not accepting the plaintiff's offer to consent to judgment, as the defendant had not had the benefit of up-to-date information on a crucial aspect of the defence, namely the issue of insolvency. The court found that it was unfair to visit the consequences of the defendant's failure to act reasonably upon the defendant by way of a penal order for costs. The court held that it had the power to make a partial order for penal costs, and declined the plaintiff's invitation to order whole of action costs for the plaintiff pursuant to Rule 41.04.

In conclusion, the court held that the plaintiff was entitled to interest from the date of the liquidator's demand for repayment of a preference, at the rate provided for in the Third Schedule to the Supreme Court Rules, and to a portion of his costs of action on the solicitor/client scale. The court's decision provides clarity on the calculation of interest in preference cases, and the circumstances in which a plaintiff may be entitled to penal costs.