French v Smith
[2005] VSCA 114
•11 May 2005
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No. 2237 of 1996
| WALTER MURDOCH FRENCH & ORS | |
| Appellants | |
| v. | |
| MICHAEL ROSS SMITH & ORS | Respondents |
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JUDGES: | CHARLES and CHERNOV, JJ.A. and HARPER, A.J.A. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 18 March 2005 | |
DATE OF JUDGMENT: | 11 May 2005 | |
MEDIUM NEUTRAL CITATION: | [2005] VSCA 114 | |
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JUDGMENT – Cost of trial and appeal – Whether costs should follow the event – Costs in each case to lie where they fall.
JUDGMENT – Interest on judgment – Penalty interest – Date from which penalty interest is payable – Principal sum upon which penalty interest is to be calculated – Relevance of payments by defendant to successful plaintiff and into joint account maintained by solicitors for both parties – Supreme Court Act 1986 s.101.
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| APPEARANCES: | Counsel | Solicitors |
For the 1st and 2nd Appellants | Mr P.J. Bick, Q.C. with Mr D.J. Farrands | Norton Gledhill |
| For the 1st, 3rd and 4th Respondents | Mr C. Gunst, Q.C. with | Middletons |
| For the 2nd Respondent | In person |
CHARLES, J.A.:
CHERNOV, J.A.:
HARPER, A.J.A.:
Towards the end of a trial which occupied 56 sitting days before a judge of this Court, the plaintiffs, in written submissions, summarised their then claims. We refer to them in more detail below. It is sufficient for the present to record that they were large. The great majority of the monetary sums to which the plaintiffs asserted entitlement were attributed to the profits said to have been generated by a joint venture the existence of which was strongly pressed by the plaintiffs and equally strongly disputed by the defendants. According to the plaintiffs, the parties to the alleged joint venture were the first and second plaintiffs (respectively, Michael Ross Smith and Mark Anthony McCallum) and the first defendant (Walter Murdoch French).
The existence or otherwise of the joint venture occupied a substantial proportion of the time taken at trial. The other principal issue at trial, and a principal issue on appeal, was whether the first defendant (French), the fourth defendant (Ballarto Pastoral Pty. Ltd.) (“Ballarto”), and the seventh defendant (Quarry View Pty. Ltd.) (“Quarry View”) should succeed on their counterclaim for an order that the third plaintiff (Quarry Quip Engineering Pty. Ltd.) (“Quarry Quip”) be wound up.
The fourth, and originally the only, plaintiff, Skye Quarries Pty. Ltd. (“Skye Quarries”), led the way in relation to the plaintiffs' monetary claims. It sought not only from French but also from the third defendant (Ian Dalton Hosking), the fourth defendant (Ballarto), the fifth defendant (Skye Quarries Sales Pty. Ltd.) (“SQ Sales”) and the seventh defendant (Quarry View) a minimum of $8,947,314 plus interest and a maximum of $12,660,014, plus interest. The same plaintiff also submitted that it was entitled to judgment against the second defendant (French's wife, Nancy French) in the sum of $400,000 and against the sixth defendant (Skye Poultry Pty. Ltd.) (“Skye Poultry”) in the sum of $73,120.48. Again, interest was claimed in each case. The third plaintiff, Quarry Quip, sought payment of “not less than” $1,334,000, together with interest, from French, Hosking, Ballarto, SQ Sales and Quarry View. As formulated in their written submissions, the plaintiffs' total monetary claims therefore ranged from not less than $10,754,434.00 to a maximum of $14,467,134.00.
The fourth (and final) amended statement of claim contained, in its prayer for relief, an additional claim that should be noted for present purposes, since it is the only claim that includes all the plaintiffs collectively. It was the first claim in the prayer for relief, and (so far as is relevant) was for “All necessary inquiries and accounts, and consequential orders for the payment to the plaintiffs of such sums as are found due on the taking of such accounts”.
The trial judge delivered his judgment on 25 September 2000.[1] The plaintiffs were less than wholly successful. No reference was made in the judgment as authenticated to any individual claims that Smith and McCallum may have had. The claims by both Quarry Quip and Skye Quarries against Hosking, SQ Sales and Quarry View were dismissed, as was the claim by Quarry Quip against Nancy French. Judgment was therefore entered for each of those defendants. Quarry Quip obtained judgment against French not for $1,334,000, but for $604,213.54. Ballarto was found to be jointly liable with French for all but $50,750.00 of this sum, its liability therefore amounting to $553,463.54. Skye Quarries obtained judgment against French not for $12,660,014 but for $1,749,149.38. Once more, Ballarto was jointly liable with him; but again its liability was reduced as against his. The difference in this instance was $52,606.56, with judgment therefore being entered against the company for $1,696,542.82. It was further ordered that Skye Poultry pay the sum of $45,029.14 to Skye Quarries.
[1]In the “General Form of Judgment” as authenticated, Skye Quarries was named as first plaintiff, Smith as second, McCallum as third and Quarry Quip as fourth.
On the other hand, the defendants French, Ballarto, Skye Poultry and Quarry View were certainly not successful either. Not only did the first three suffer judgment against them in the monetary sums set out above, but the counterclaim against Smith, McCallum and Skye Quarries was dismissed.
After initially reserving the question of costs, the trial judge on 21 December 2000 dealt with each of the several costs issues save the costs of the counterclaim. The latter he further reserved, while granting liberty to Skye Quarries to apply for the discharge of an order made against it for security for the defendants' costs at trial. His Honour ordered that the costs, including reserved costs, of Quarry Quip be paid by each of French and Ballarto. The same order was made in favour of Skye Quarries, with the exception that the costs of its claim against Skye Poultry were to be paid by the latter. Quarry Quip and Skye Quarries were ordered to pay the costs of Nancy French, Hosking, SQ Sales and Quarry View, including any reserved costs.
The unsuccessful defendants appealed. The respondents to the appeal were Smith and McCallum, together with Quarry Quip and Skye Quarries. All but McCallum not only appeared on the hearing of the appeal, but shared common representation. We shall refer to McCallum by name and, when collectively referring to Smith, Quarry Quip and Skye Quarries, call them “the respondents”.
Judgment in the appeal was delivered on 23 November 2004. Again, neither camp was wholly successful. We upheld the trial judge's decision that the counterclaim be dismissed. But we reduced by $183,065.84 the amount recovered by Quarry Quip, and held that, whereas his Honour had pronounced judgment in favour of Skye Quarries against French for $1,749,149.38 and against Ballarto for $1,696,542.82, that plaintiff was entitled to nothing from either defendant.
As we then indicated, our initial view was that the costs of the appeal should lie where they fall. Because this was but a tentative conclusion, however, we informed the parties that we would hear them on that and any other question of costs about which they could not agree. We allowed both written and oral submissions to be put before us.
No agreement having been reached, each party took the opportunity to make submissions. These encompassed, in addition to the question of interest, the costs of the trial as well as those of the appeal. We must now, having regard to those submissions, deal with the costs of both.
The respondents argued that the costs of both the trial and the appeal should follow the event. Mr Smith having “wholly succeeded in defending the appeals brought against him”,[2] it was right that the appellants should pay his costs of both the appeal and the trial - or, at least (the submissions are not entirely clear) that part of the trial which was concerned with the counterclaim.
[2]Written submissions dated 10 December 2004 of the first, third and fourth respondents, at para.3.
The respondents submitted that Quarry Quip's position should be seen in a somewhat different light. It had been “substantially” successful on appeal. It failed only on “a single minor issue which occupied only a very short time in argument”.[3]For this reason, it too was entitled to its costs of the appeal; but the submissions do not specify which appellants should pay them. By contrast, those submissions appear to argue (again, they are not entirely clear) that the costs of Quarry Quip in prosecuting its claims at trial be paid by French and Ballarto, while the costs of all the respondents then incurred in defending the counterclaim should be paid “by the appellants and SQ Sales”.[4]Those liable for the latter costs would therefore be not only French and Ballarto, but also Skye Poultry, Quarry View (as the other two appellants) and SQ Sales (which, although the fifth defendant, was not an appellant). No order for costs is sought against the other defendants (that is, Nancy French and Ian Hosking). The apparent difference in approach as between trial and appeal and as between SQ Sales on the one hand and Nancy French and Ian Hosking on the other was not explained. But the position of SQ Sales need not trouble us beyond saying that, since the trial judge did not make any order for costs against that company, there could be no basis upon which such an order should be made against it now.
[3]Ibid, para.4.
[4]Ibid, para.8(b).
Skye Quarries had as a result of the appeal lost that small portion of its claim on which it had been successful at trial. The respondents therefore accepted that that company should pay all of the appellants’ costs of the appeal except their costs of the counterclaim; and it is to be noted that the respondents did not seek Skye Quarries' own costs of that aspect of the appeal. The respondents likewise accepted that “the costs of ... French, Ballarto ... and Skye Poultry ... [at trial] in defending the claims made by ... Skye Quarries should be paid by ... Skye Quarries”.[5] Inconsistently with this, the respondents nevertheless submitted (as we have noted above) that, “in respect of the counterclaim” the “costs at trial of [all of] the respondents” - and this, of course, includes Skye Quarries – “be paid by the appellants and SQ Sales”.
[5]Ibid, para.8(a)(ii).
The respondents did not seek any interference with the trial judge's order that the costs at trial of Nancy French, Hosking, SQ Sales and Quarry View, as the successful defendants to the claims made by Quarry Quip and Skye Quarries, be paid by the latter two.
In their written submissions, the appellants put several alternative proposals. The first of these is that, should the costs of the appeal lie where they fall, then the costs of the trial should be divided. On one side of the divide, the appellants submit, are the costs associated with the resolution of the counterclaim (or, to adopt the appellants' phraseology, the costs concerning “Ground 13 matters” - Ground 13 being the ground of appeal that sought to overturn the decision of the primary judge that the counterclaim be dismissed). On the other side of the divide are the remaining costs of the trial. French should, according to the primary submission of the appellants, pay the former. The balance (that is, those costs not associated with “Ground 13 matters”) “should be borne by the plaintiffs” (that is, by Smith, McCallum, Quarry Quip and Skye Quarries), “on a solicitor/client basis”.
The ground relied upon in support of the application for solicitor/client costs is that the respondents' claim “was really about” whether a joint venture had come into existence and, accordingly, “who was entitled to the profits over time from the operation of the quarry.”[6] It was argued, however, that this claim was “largely hopeless”;[7] and not only that, but - even while the respondents “well knew that the joint venture claims could not be sustained”[8] - they ignored a warning from the trial judge “when, as it transpired, the trial was less than half completed”[9], that “the joint venture claim would fail.”[10] Consistently with this (so the appellants contend) “[i]t was the plaintiffs who would not settle.”[11]
[6]Appellants’ outline of submissions dated 10 December 2004, para.61.
[7]Ibid, para.62.
[8]Ibid, para.31.
[9]Ibid, para.6.
[10]Ibid, para.7.
[11]Ibid, para.8.
The Court has a broad discretion to make such orders for costs as meet the justice of the particular case. That discretion, although not unlimited, and although it must be exercised judicially and not unreasonably, extends to an award of costs on a solicitor and client basis. It nevertheless remains true that, unless “special” considerations apply, the usual basis upon which costs are awarded - that of party and party - should prevail: BassCoast Shire Council v. King & Ors[12].
[12][1997] 2 V.R. 5 at 29.
This was the basis upon which the trial judge ordered that the costs of the trial be assessed. In our opinion it is not in the present circumstances appropriate that we should interfere with it. The fact is that the trial judge was necessarily in a far better position than are we to evaluate the strength of the arguments put before us by the appellants in support of this part of their case.
The point may be illustrated by two examples. The first concerns a warning which, although couched in general terms, was - as the appellants ask us to accept - issued by his Honour to the respondents. It was - again, as the appellants would seek to persuade us - based upon the proposition, adopted by the trial judge, that the respondents' case was, at least on the joint venture point, weak; and to that extent would fail. Yet the respondents wilfully ignored it.
These submissions were forcefully made for the appellants, but we do not accept them. The principal proposition itself implies that his Honour had formed a view about the merits of the case when the trial was less than half completed; for it was at that point that the warning on which the appellants rely was given. Very properly, however, his Honour was careful to couch what he said in terms which did not indicate that his mind was closed. Thus he urged “both sides at this point to give very serious consideration to seeing if issues can be resolved.” The appellants argue that “it is hard to imagine a clearer warning to the plaintiffs that the joint venture claim would fail”. It is, however, by no means clear to us that the warning was directed only to the plaintiffs, rather than to “both sides”.
The second example concerns the so-called “Schedule 2 claims”. These were for amounts that the respondents alleged had been wrongfully paid by or at the behest of French to interests connected to him out of the Skye Quarries bank account. The trial judge allowed some of those claims, to the value of $1,749,149.38: see paragraph [5] above. We disallowed them all, on the basis that they necessarily fell with the finding that the joint venture on which the respondents relied had never come into existence. The appellants now submit that for this reason “the Schedule 2 claims could not succeed ... and should never have been pursued.”[13] They also submit that the “general approach of the plaintiff [sic] was to leave the mess relating to Schedule 2 for the defendants and the Court to sort out.”[14]
[13]Ibid, para.33.
[14]Ibid, para.37.
Again, this submission depends for its proper evaluation on a knowledge of the conduct of the trial which the trial judge had but an appellate court cannot have. It also depends on our acceptance of the proposition that claims which the trial judge upheld in part should never have been pursued. This, too, is unsustainable.
The appellants put alternative submissions. If we are not prepared to order that their costs of the trial, other than the costs of the "Ground 13" matters, be paid by the respondents after being assessed as between solicitor and client, then they ask that there be no order as to costs. In this context, they point out that such a result would bring "the proceeding to an end without the need for the preparation and taxation of lengthy and complex bills of costs and the time, effort and expense of the parties and their legal advisers in attending to these matters and the time and facilities of the Court to resolve them.”
Given the very long and very expensive life of this litigation, that is an important consideration. A decision that costs should follow the event would force the parties - and, failing agreement, the Taxing Master - to undertake a particularly complicated analysis. The respondents made the attempt in their submissions dated 10 December 2004; but, as we have already pointed out, the results are not transparently clear. And they did not deal with all the issues that, at least on one view of what is meant by the expression "follow the event", would require resolution. For example, the appellants have indicated, in their submissions of the same date, that if costs are to follow the event they will claim the costs of "the counterclaim of the appellants in the alternative for a fair allowance.”[15] This is a claim which, if the appellants persist, will of course require resolution - with all the consequential expense of time, money and effort. To emphasise the point, the appellants' submissions continue:
"The trial judge acknowledged French and Ballarto were entitled to a fair allowance for the sand, facilities and equipment provided, but the plaintiffs never did. While that claim was in a technical sense dismissed by the Court of Appeal, the appellants were in effect wholly successful on this claim because the Court ruled that the French and Ballarto interests at all relevant times owned the quarry. Therefore, it is submitted that the appellants should have their costs of this issue at trial.”
[15]Ibid, para.32.
All the respondents (as, for the purposes of this judgment, we have defined that expression) were represented by one set of solicitors and counsel, and all the appellants by another. The same is true of the representation enjoyed by the plaintiffs and defendants at the trial.[16] Yet, for obvious reasons, both respondents and appellants submit that, if costs are to follow the event, it will be necessary to separate individual sets of costs from other, previously linked, sets of costs. In that case, difficult and artificial distinctions between parties would have to be drawn.
[16]As we have noted, McCallum was not represented, and did not appear, on the appeal.
It does not seem to us that justice requires that this exercise be undertaken. Indeed, in our view, no injustice would be done if there were no order as to costs. Smith and McCallum could, it is true, argue with force that (insofar as, separately from the other relevant parties, they incurred any costs on the counterclaim) they are entitled to those costs both at trial and on appeal.[17]But each was a party to claims based upon a joint venture that we have found never existed. Each stood to benefit, albeit indirectly, from a finding that it did. Their case was that they were themselves joint venturers with French. They chose to operate through a corporate entity from which they would realise their share of the profits of the joint enterprise. Their interest in the litigation, as plaintiffs and respondents, was in the realisation of those profits through that entity. By becoming parties they sought to pursue that interest. They failed at the trial. Insofar as Skye Quarries and the other respondents, by seeking to uphold the conclusion that Skye Quarries was the beneficial owner of the quarry business, attempted on appeal to preserve the judgment below, the respondents (including Smith) failed again. McCallum 's position on costs was unaffected, because he chose not to appear on the appeal. In our opinion, those two have a consequential liability in costs which, in the particular circumstances of this proceeding, should properly be set off against their costs of the counterclaim.
[17]It will be remembered that the trial judge reserved the costs of the counterclaim, which now fall to be decided by us both at trial and on appeal.
The same may, we think, be said of Quarry Quip and Skye Quarries. The former did of course recover something from what were referred to throughout the trial and appeal as its "Schedule 1" claims. The amount in question was, however, such a small proportion of the total of those claims, and so close to the amount which on 17 September 1999 the appellants offered by way of settlement, that we do not think it proper to make a separate order for costs in respect of them.
In the result, for these reasons, we accept the appellants' alternative submission that the costs of the trial should lie where they fall. We remain of the like view expressed in paragraph [10] above as to the costs of the appeal.
There remain a number of questions relating to the interest that is payable by the appellants to Quarry Quip on the principal sum ultimately recovered by it following this Court’s decision of 24 November 2004. Essentially, three questions arise for resolution. First, what is the date from which penalty interest pursuant to s.101 of the Supreme Court Act 1986 (“the Act”) is payable? Secondly, is such interest to be applied only to the (reduced) judgment sum or is it to be calculated on the total of that sum and the damages in the nature of interest that were awarded pursuant to s.60 of the Act? Thirdly, how are the following payments that have been made by the appellants to Quarry Quip to be taken into account in determining the amount due to it? On 24 November 2000, French and Ballarto paid Quarry Quip the sum of $300,000 in partial satisfaction of the judgment of 25 September 2000. They also paid, on 28 November 2000, the balance of the judgment - $304,213.54 – into an account at the Macquarie Bank, which was jointly controlled by the parties. Furthermore, on 31 January 2001 the French interests paid Quarry Quip the sum of $145,000 in partial satisfaction of his Honour’s order of 21 December 2000 that they “pay to Quarry Quip ... damages in the nature of interest in the sum of $286,699.58”.[18] On the same day, the appellants paid into the Macquarie bank account the sum of $141,699.58, being the “balance” of these damages.
[18]It seems clear enough that this amount was arrived at by applying the relevant penalty rate of interest, calculated on the principal sum of $604,213.54 for the period 26 July 1996 to 25 September 2000.
We turn first to the question, from what date is Quarry Quip entitled to be paid penalty interest under s.101 of the Act. It was submitted by Mr Bick for the appellants that any interest payable on the reduced principal sum in favour of Quarry Quip pursuant to s.101 of the Act was to be calculated from this date, that is, the date of this Court’s decision as to the award of such interest. Alternatively, as we understand him, counsel contended that such interest is to run from 24 November 2004, being the date on which we ordered that the judgment sum be reduced to $421,147.70. Mr Bick relied in support of this contention principally on Rule 59.02(1), which provides that a judgment of the Court “shall take effect from the day it is given or made, unless the Court orders otherwise.” He argued that, given that Quarry Quip had not made an application to this Court that its order as to interest be antedated, such interest should be calculated from today. Furthermore, counsel argued that, ordinarily, the date from which penalty interest under s.101 is to take effect, in circumstances where an appeal against an award of damages has succeeded, is the date on which the order is made, that being the date on which it ordinarily takes effect. In support of this contention, counsel relied on the decision of the High Court in Official Receiver in Bankruptcy v. Schultz[19] where the Court held that “the presumption is that the order of the appellate court takes effect from the date on which it is made.” That the penalty interest is payable from this date is also supported, counsel said, by the decision of this Court in GEF Packaging Services Ltd. v. Turner[20], in which Brooking, J.A., with whom Hayne, J.A. agreed, held[21]
“When in Victoria the appellate court reassesses damages on appeal, the judgment which the Court substitutes by its order for the judgment below takes effect from the date of the order made on appeal, unless the Court, either expressly or by implication, directs that the judgment as substituted by its order takes effect from some other date, and in particular from the date of the judgment below.”
Accordingly, the appellant submitted, the Court not having ordered otherwise, interest under s.101 is to be calculated from today’s date. By way of contrast, it was contended for Quarry Quip that interest under s.101 should accrue from the date of the decision below, namely, 25 September 2000.
[19](1990) 170 CLR 306 at 318.
[20]Victorian Court of Appeal, Unreported, 5 September 1995, Brooking and Hayne, JJ.A.
[21]At [5].
If Mr. Bick is correct in his principal contention, it must follow that interest under s.60 of the Act would be calculated on the sum of $421,147.70 for the period 26 July 1996 until today. In our view, as we explain, it is clear that, in the circumstances of this case, the s.101 interest is to be calculated from 25 September 2000 (and interest pursuant to s.60 of the Act is to be calculated to that date.). Our order of 24 November 2004, allowing the appeal against his Honour’s impugned decision, operated only to the extent that it varied the amount payable to Quarry Quip pursuant to that order from $604,213.54 to $421,147.70. Moreover, in setting aside the impugned order we did not reassess the damages in the sense of assessing them on a basis that was materially different from that applied by the learned trial judge. We concluded merely that his Honour incorrectly treated certain amounts as being due to Quarry Quip and, thus, we reduced the judgment sum. In the circumstances, we think, it is plain enough that we intended that the date of judgment remain 25 September 2000.
A like situation was considered in Edmonds v. Donovan[22] where, so far as is relevant, the appeal was allowed but only to the extent of reducing the amount awarded to the successful parties by the trial judge. In that case, Winneke, P. and Charles, J.A. distinguished[23] GEF Packaging Services on the basis that that case, unlike the one before their Honours, concerned “considerations such as the value of money at the time of the reassessment and a reassessment of damages for personal injuries in circumstances where the original assessment was set aside and the Court reassessed for itself the damages which it regarded as warranted by the evidence; cf. Backwell v. AAA[24].” Their Honours went on to note that the relevant aspect of their order only varied the principal sum assessed by the trial judge (and, necessarily, the amount of the interest payable under s.60 of the Act). In the circumstances, their Honours concluded: “It follows that this Court has by clear implication directed that the judgment as substituted should take effect from the date of the judgment below.” For like reasons, we think, it is necessarily implicit from our reasons for judgment and the terms of our order of 24 November 2004 that the date of judgment was to remain 25 September 2000. Accordingly, as we have said, interest under s.101 of the Act should run from that date.
[22][2005] VSCA 97. See also Gould v. Vaggelas (1985) 157 C.L.R. 215 at 274 per Gibbs, C.J., Wilson, Brennan and Dawson, JJ.
[23]At [9].
[24][1997] 1 V.R. 182 at 212ff.
We now turn to the question, what is the principal sum on which penalty interest under s.101 is to be applied? It was Mr. Bick’s case that such interest is payable on the judgment sum of $421,147.70 and not on any damages awarded by way of interest pursuant to s.60 of the Act. In our view, however, the principal sum to which the s.101 penalty interest rate should be applied is the whole of the judgment debt, namely, the total of the (reduced) judgment sum and the interest payable on it by way of damages under s.60 of the Act up to 25 September 2000. The award of interest by way of damages merged with the principal judgment sum awarded to Quarry Quip so as to constitute a single, total judgment debt and it is on that sum that interest under s.101 of the Act must accrue. This was recognised in Edmonds where Winneke, P. and Charles, J.A. held that the amount on which such interest was to be calculated was the total of the reduced amount awarded to the successful party by the trial judge by way of equitable compensation on 6 December 2002 and the s.60 interest payable on that sum up to that date.
As to the third question, it is obvious enough that the above-mentioned payments of $300,000 and $145,000 must be taken into account for the purpose of adjusting the outstanding sum on which such interest is to be calculated. The real question is whether those amounts are to be credited to the principal judgment debt or, first, to the accrued s.101 interest. It was the appellants’ contention that the sum of $300,000 was effectively “allocated” or directed to the reduction of the (reduced) principal judgment sum of $421,147.70 and, similarly, the sum of $145,000 was “allocated” to the payment of interest awarded on 21 December 2000. Consequently, it was said, those payments should be applied accordingly. In our view, however, this argument must fail for these reasons. First, as we have explained, the interest that was awarded in the nature of damages merged with the principal sum so as to constitute one judgment debt and it is on that sum that interest under s.101 was to accrue so that the purported allocation of these sums to a particular component of the judgment debt must be ineffective. Secondly, unless there is agreement to the contrary, and there is no such agreement here, the amounts paid should be applied in accordance with the well-recognised principle that a sum paid in partial reduction of a debt is appropriated first against interest accrued on that debt and any balance is treated as reducing the capital amount[25]. Thus, the $300,000 should be appropriated, first against the s.101 interest that accrued to 24 November 2000, and any balance remaining should be treated as reducing the judgment debt. The sum of $145,000 should be similarly applied.
[25]See Falk v. Haugh (1935) 53 C.L.R. 163 at 173 per Rich, Dixon, Evatt and McTiernan, JJ and Farrow Finance Co Ltd (in liq) v ANZ Executors and Trustee Company Ltd [1998] 1 V.R.50 at 68 and 71.
As to the amounts of $305,213.54 and $141,699.58 that were paid into the account at Macquarie Bank, as mentioned earlier, we consider that, contrary to the appellant’s submissions, they cannot be taken into account in reducing Quarry Quip’s entitlement to interest under s.101 of the Act. Although the appellants have not had the use of such funds, more relevantly, neither did Quarry Quip. Importantly, it has been kept out of the fruits of its judgment for over four years and should not be required to forego its entitlement to be paid interest that is properly due on the whole judgment debt. Such entitlement of a judgment creditor was recognised in Hartley Poynton Ltd. v. Ali[26] and Edmonds. In the latter case this Court ordered, on 16 December 2002, as a condition of the stay of execution of the judgment of 6 December 2002 below, that the appellants pay into a joint trust account the balance of the judgment debt (there having been an earlier payment into that account of an amount which, together with the sum so ordered, would equate to the judgment debt). At a subsequent hearing relating to various questions concerning the respondents’ entitlement to penalty interest on the judgment sum, the appellants argued, inter alia, that if interest did carry under s.101 from 6 December 2002, any entitlement to such penalty interest ceased on 18 December 2002, being the date on which the appellants complied with the Court’s order of 16 December 2002. The Court rejected this argument and, so far as is relevant, concluded, in light of the observations of Ormiston, J.A. in Hartley Poynton[27], that there was no basis for the penalty interest to cease on 18 December 2002, given that the respondents were deprived of the fruits of their judgment for over two years following that date. Similarly, as we have pointed out, Quarry Quip has been held out of the fruits of its judgment well beyond the dates on which the moneys were paid into the Macquarie Bank account. Essentially, they were placed into that account, as if in “escrow”, until the resolution of the appeal. These amounts, no doubt, earned interest, so that the capital sum deposited and the interest earned could be properly applied to discharge the amounts due to Quarry Quip, calculated as described.
[26][2005] VSCA 53.
[27]Ormiston, J.A., with whom Buchanan and Eames, JJ.A. agreed, relevantly said at [100] that every judgment creditor is entitled to interest under s. 101 and that it “is not within the direct power of the Court to vary the award”.
It follows that the orders arising from the judgment of this Court on 23 November 2004 should be formulated on the basis of the answers to the questions, contained in the reasons set out above.
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