Dumayne Property Group Pty Ltd v Balanced Securities Ltd (No. 2)
[2016] VCC 1439
•6 October 2016
| IN THE COUNTY COURT OF VICTORIA | Revised (Not) Restricted Suitable for publication |
AT MELBOURNE
COMMERCIAL DIVISION
GENERAL CASES LIST
Case No. CI-15-00798
| DUMAYNE PROPERTY GROUP PTY LTD | Plaintiff |
| v. | |
| BALANCED SECURITIES LTD | Defendant |
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JUDGE: | His Honour Judge Anderson | |
WHERE HELD: | Melbourne | |
DATE OF SUBMISSIONS: | 23 and 26 September 2016 | |
DATE OF JUDGMENT: | 6 October 2016 | |
CASE MAY BE CITED AS: | Dumayne Property Group Pty Ltd v Balanced Securities Ltd (No. 2) | |
MEDIUM NEUTRAL CITATION: | [2016] VCC 1439 | |
REASONS FOR JUDGMENT
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Catchwords: Practice and procedure – Interest – Whether “demand of payment” made – Section 58(1) Supreme Court Act 1986 (Vic).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J. Tsalanidis of Counsel | Kalus Kenny Intelex |
| For the Defendant | Dr O. Bigos of Counsel | Thomson Geer |
HIS HONOUR:
1Interest is sought on the judgment entered on 20 September 2016. The plaintiff seeks interest pursuant to section 58 of the Supreme Court Act 1986 (“The Act”) from the date of a “demand of payment” made in correspondence between solicitors from April to June 2013.
2The defendant contends that no relevant demand of payment was made and the plaintiff is only entitled to interest pursuant to section 60 of the Act from the date of the issue of the writ on 15 February 2015.
3Section 58(1) of the Act provides as follows:
“(1) If in a proceeding a debt or sum certain is recovered, the Court must on application, unless good cause is shown to the contrary, allow interest to the creditor on the debt or sum at a rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 or, in respect of any bill of exchange or promissory note, at 2% per annum more than that rate from the time when the debt or sum was payable (if payable by virtue of some written instrument and at a date or time certain) or, if payable otherwise, then from the time when the demand of payment was made”.
4Pursuant to section 58, as the “debt or sum certain” recovered in the proceeding was not “payable by virtue of some written instrument and at a date or time certain”, the plaintiff claims to be entitled to interest “from the time when demand of payment was made”.
5The Court of Appeal in AJ Lucas Drilling Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2009] VSCA 310 (“Lucas Drilling”) considered the meaning of the words “demand of payment” in the section. The statements made or approved by the Court of Appeal included that:
a.a demand of payment “need not be in any particular form”;
b.a demand need not “specify the exact sum due”;
c.a demand must contain “a distinct demand of payment”;
d.“the word ‘demand’ need not be used”;
e.a demand may be “clothed in the language of politeness”;
f.“the nature of the language is immaterial”;
g.the demand “must be of a preemptory character and unconditional”;
h.the “constitution of a demand may vary according to the circumstances of the particular case”.
6In the appeal before it, the Court of Appeal considered that the letter relied upon as a “demand of payment” for the purposes of section 58, “was not a demand; rather it noted a number of matters concerning the termination [of an agreement], promised to provide information and sought to open a discussion between the parties”.
7In the present application, the plaintiff has obtained summary judgment in respect of four amounts the defendant was required it to pay in order to settle the repayment of a loan on 26 June 2013. The defendant contended that the loan should have been repaid by 20 April 2013. Her Honour Judge Kennedy (as she then was) had determined as a preliminary question that the settlement date, advanced by the plaintiff of 27 June 2013, was the correct date.
8In order to settle on 27 June 2013, the defendant required the plaintiff to pay four additional sums which, on the basis of Judge Kennedy’s decision, it had not been obliged to pay:
a.$111,499.36 as a “rollover fee”, because the defendant considered that the plaintiff was in default;
b.$252,458.69 as an “additional fee on discharge” equivalent to two months interest at the “higher rate”;
c.$107,551 additional interest, being the difference between interest being charged at the acceptable rate, and interest charged at the higher rate;
d.$50,000 as security for the defendant’s legal costs of enforcing the agreement.
9Copies of the relevant correspondence between solicitors leading up to the repayment of the loan on 26 June 2013 is attached to these reasons, as follows:
a.letter dated 18 April 2013 from Rennick & Gaynor (plaintiff’s solicitors) to the defendant;
b.letter dated 5 June 2013 (with the date of 30 May 2013 on pages 2 and 3 of the letter) from Rennick & Gaynor to David Geer (defendant’s solicitor);
c.letter dated 12 June 2013 from David Geer to Rennick & Gaynor;
d.letter dated 24 June 2013 from David Geer to Rennick & Gaynor;
e.letter dated 26 June 2013 from Rennick & Gaynor to David Geer.
10The letter dated 18 April 2013 put a general proposal to resolve the dispute over the repayment date for the loan. The letter dated 5 June 2015, after setting out the plaintiff’s contentions, made a specific offer in the final paragraphs, as follows:
“To resolve this impasse our client is prepared to:
a) Effect repayment of the facility on 26 June 2013;
b) Tender payment of the balance outstanding noting that:
(i) The commencement date is 27 March 2013;
(ii) The Rollover Fee does not apply; and
(iii) Interest at the higher rate does not apply.
Please calculate a payout figure based on the above and advise us accordingly, noting that our client calculates the pay out figure as approximately $6,900,000.00.
If we do not receive a response within 7 days from the date of this letter, we are instructed to issue proceedings for determination of the dispute.
We await receipt of payout figure”.
11The letter dated 12 June 2013 answered the plaintiff’s contentions and then responded to the offer made by its solicitors in the letter dated 5 June 2013, as follows:
“We note in your letter that your client intends to litigate.
Accordingly, my client requires security for the costs it will incur in defending the threatened proceedings in the sum of $50,000.00 and accordingly as at 26 June 2013 and in order for my client to discharge it’s security it will require the following Bank Cheques:
1. $7,387,066.77 made payable to Balanced Securities Limited; and
2. $50,000.00 made payable to Balanced Securities Limited…
I note that the amount referred to in 2 above is my client’s best estimate as to its costs in defending the threatened proceedings”.
12The letter dated 24 June 2013 confirmed that settlement would take place on 26 June 2013 and listed the payments the defendant required. The letter dated 26 June 2013 reads as follows:
“We are instructed by our client that it is effecting settlement today, under protest. The basis of our protest has been outlined to you in our letter dated 5 June 2013.
To that end, we note that $50,000.00 is being provided to Balanced Securities Limited (“Balanced”) as security for its costs (“the Security”).
We confirm your advice that if our client notifies Balanced that it will not pursue its claim, then our client is entitled to reimbursement of the Security, less any reasonable legal fees incurred by Balanced”.
13The plaintiff submits that “its advice to the defendant on 18 April 2013, 5 June 2013 and 26 June 2013 that the defendant was not entitled to the amounts charged constitutes a demand for payment in the circumstances. Moreover, the amounts the subject of the summary judgment of $521,509.05 were not debts or sums that were payable by the plaintiff to the defendant”.
14The Oxford Dictionary gives as the relevant definition of “demand”; “request made as of right or peremptorily”. “Peremptorily” in the definition is, in my view, used in the sense of “admitting no denial or refusal”.
15In Lucas Drilling, the Court of Appeal, referred with approval to the decision of Justice Walker, in the matter of The Colonial Finance, Mortgage, Investment and Guarantee Corporation Ltd (1905) 6 SR (NSW) 6. Justice Walker reached the conclusion that a particular “letter is a demand. It is a plain intimation from the bank that they require their customer to pay off his overdraft in whole or in part; and further it contains a specific request that 2,000/. shall be paid into the account, which would of course have the effect of liquidating the overdraft to that extent; so that it is a distinct and preemptory demand by the bank on the customer to pay off the whole or part of the overdrawn account by a date mentioned” (at page 9).
16In my view, the correspondence between the parties makes it clear that a “demand of payment” for the purposes of section 58 was made by the letter dated 5 June 2013. The relevant “circumstances of [this] particular case” which fashioned the “constitution of [the] demand” were as follows:
a.the parties were in dispute as to whether the loan was due for repayment on 20 April 2013 or 27 June 2013;
b.the plaintiff was anxious to repay the loan by 27 June 2013, which it considered was the due date;
c.the defendant would only settle if further sums were paid. These sums were part of the total of $7,437,066.77 required to settle as set out in the letters from David Geer dated 12 and 24 June 2013;
d.the Rennick & Gaynor letter dated 5 June 2013 anticipated that the settlement sum would include a “rollover fee” and “interest at the higher rate”;
e.the rollover fee was charged and interest at the higher rate was also imposed, being two months interest as the “additional fee on discharge”, and by charging the higher rate of interest for the period from 20 April 2013 until settlement;
f.the additional $50,000 was imposed by the letter dated 12 June 2013 because the defendant required “security for the costs it will incur in defending the threatened proceedings”;
g.the letter dated 5 June 2013 sought a settlement on the basis that “the rollover fee [and] interest at the higher rate does not apply”, and threatened the issue of proceedings a response was not received within 7 days which calculated “a payout figure based on the above” (without the rollover fee and interest at the higher rate);
h.the letter dated 12 June noted that the plaintiff “intends to litigate”, and the defendant indicated the basis on which it would “discharge the security”. This included a demand for an additional $50,000;
i.by the letter dated 26 June 2013, the plaintiff stated that “it is effecting settlement today, under protest”, and referred to the basis of the protest having been outlined in the letter dated 5 June 2013.
17In the circumstances of this case, the plaintiff was not by the letter dated 5 June 2013, pursuing a stand alone claim for money to which it said it was entitled. Rather, the plaintiff was wishing to repay loan money on what it asserted was the due date, but wanted to do so on the basis of what was due on that date and not with the further penalties which the defendant was asserting were due because it alleged the loan should have been repaid on 20 April 2013.
18The plaintiff’s solicitors by their letter dated 5 June 2013 made a request setting out the plaintiff’s right to settle without a rollover fee or the repayment of interest at a higher rate. This was the clear assertion of the plaintiff’s right to pay the repayment sum free of the additional penalties.
19The letter dated 26 June 2013 indicated that the settlement would be effected “under protest”. Payment would be made, but the unwarranted payments required by the defendant would be the subject of legal action for their recovery.
20The defendant’s solicitor clearly understood this request or “demand of payment”, and its legal basis. The demand was made “as of right or peremptorily”, as the decision of Judge Kennedy later confirmed. The defendant’s solicitor not only knew that the plaintiff was likely to pursue its legal rights, but demanded a further sum as security for the defendant’s costs of the proceeding.
21As Justice Kirby said in Victorian WorkCover Authority v Esso Australia Limited (2001) 207 CLR 520 at 546, section 58, as well as sections 59 and 60 of the Act, have “the beneficial purpose of providing…for the award of interest to compensate parties who have been obliged to take ‘proceedings’ to recover a money sum and who in the meantime have been kept out of moneys which they could otherwise have used or upon which they could otherwise have earned interest”.
22The Court of Appeal in Lucas Drilling said at paragraph 171 that, according to Justice Kirby’s reasoning, “section 58 of the Supreme Court Act should not be given a narrow meaning. Section 58 has the same beneficial purpose as section 60 and should be given a similarly broad application”.
23Accordingly, having satisfied the requirements of section 58 by having “recovered” a “debt or sum certain” in the proceeding, the plaintiff should be entitled to interest under the Penalty Interest Rates Act 1983 “from the time when demand of payment was made”.
24However, I am not satisfied that it would be appropriate for interest to commence to run until payment of the unwarranted sums was made on 26 June 2013. There is “good cause” to disallow interest from an earlier date.
25The following orders will be made, unless before 10am on Monday 10 October 2016, a party notifies my Associate in writing that it wishes to be heard further on the form of the orders proposed, and sets out the basis of the concern:
1.The judgment entered by the order of His Honour Judge Anderson made 20 September 2016 shall be varied to add, in addition to the sum of $521,509.05 which the defendant must pay to the plaintiff, interest pursuant to statute on the said sum of $521,509.05 from 26 June 2013 to 20 September 2016 of $172,400.14, total judgment $693,909.19.
2.The defendant must pay the plaintiff’s costs of and incidental to the obtaining of these orders including in relation to the written submissions of the parties.
3.Stay execution on the judgment and the order for costs until the Court of Appeal has determined the application made by the defendant for a stay of the orders made by Her Honour Judge Kennedy on 24 May 2016 and by His Honour Judge Anderson on 20 September 2016, or until further order.
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Certificate
I certify that these 7 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 6 October 2016.
Dated: 6 October 2016
Carla Cianfaglione
Associate to His Honour Judge Anderson
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