Ikosidekas v Glenis
[2023] VSCA 134
•7 June 2023
| SUPREME COURT OF VICTORIA COURT OF APPEAL |
| S EAPCI 2022 0056 |
| PETER IKOSIDEKAS | Applicant |
| v | |
| JERRY GLENIS | Respondent |
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| JUDGES: | BEACH, NIALL and HARGRAVE JJA |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 21 April 2023 |
| DATE OF JUDGMENT: | 7 June 2023 |
| MEDIUM NEUTRAL CITATION: | [2023] VSCA 134 |
| JUDGMENT APPEALED FROM: | Ikosidekas v MWL Finance Pty Ltd [2022] VCC 633 (Judge Burchell) |
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INTEREST – Supreme Court Act 1986 (the ‘Act’) ss 58, 60 – Claim against three defendants for $160,000 plus statutory interest – Plaintiff settled with two defendants who paid principal sum of $160,000 in full settlement of all claims – Plaintiff proceeded to trial against remaining defendant for interest and exemplary damages – Whether interest entitlement under ss 58 or 60 of the Act to the date of payment of the principal sum should be calculated before deducting principal sum from plaintiff’s damages entitlement – Held: (1) interest entitlement to date of payment of principal sum formed part of damages entitlement; (2) principal sum to be deducted from total damages; (3) plaintiff entitled to judgment for amount of accrued interest at date principal sum paid; (4) plaintiff entitled to exemplary damages consequent on order for compensatory damages – Appeal allowed.
Williams v Volta [1982] VR 739, 746, 757; A J Lucas Drilling Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2009] VSCA 310; Carbone v Melton City Council (2020) 60 VR 539; [2020] VSCA 117, applied.
INTEREST – Section 58(1) of the Act – Fictitious loan procured by fraudster – Demand for repayment from fictious borrower – Fraudster received demand – Whether a demand for purposes of s 58(1) of the Act – Held: demand from fictitious borrower was in circumstances a demand from fraudster – Interest under s 58(1) awarded – Appeal allowed.
A J Lucas Drilling Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2009] VSCA 310, [171].
DAMAGES – Plaintiff claimed same damage from three defendants – Plaintiff received settlement sum from two defendants for part of claimed amounts – Remaining defendant held liable for greater amount – Whether plaintiff’s claim for costs against defendants who settled was a concurrent claim – Whether claim for costs against defendants who settled required to be taken into account in assessing plaintiff’s damages entitlement – Onus of proof – No evidence of amount of costs incurred in pursuing defendants who settled – Full amount of settlement sum credited to plaintiff’s damages entitlement.
Banque Keyser Ullman SA v Skandia (UK) Insurance Co Ltd (No 2) [1988] 2 All ER 880; Townsend v Stone Toms & Partners (a firm) (1984) 27 BLR 26; Boncristiano v Lohmann [1998] 4 VR 82, considered and applied.
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| Counsel | |||
| Applicant: | Mr AC Blair | ||
| Respondent: | Mr J Lipinski | ||
Solicitors | |||
| Applicant: | Klonis Kirby & Co | ||
| Respondent: | Stenta Legal | ||
TABLE OF CONTENTS
Grounds of appeal
Should the judge have put Ikosidekas to his election between alternative remedies?
Was Ikosidekas entitled to statutory interest?
Should an amount for legal costs have been allowed against the Contribution?
Was Ikosidekas entitled to exemplary damages?
Conclusion and orders
BEACH JA
NIALL JA
HARGRAVE JA:
Peter Ikosidekas was defrauded by Jerry Glenis of $160,000 in May 2013. Glenis was at the time an employee of MWL Finance Pty Ltd. Glenis fraudulently represented to Ikosidekas that he had arranged for him to lend $160,000 to Jonathan White, a director of MWL, at high interest rates and secured by a caveat over real estate purportedly owned by White. The supposed loan and security arrangements were a complete sham, involving forged and fictitious loan documents prepared by Glenis. In reliance on the fraudulent representations and loan documentation, Ikosidekas paid the purported loan funds of $160,000 to or for the benefit of Glenis. White knew nothing of the fictitious loan.
Further, in August 2013 Glenis prepared a purported letter from White to Ikosidekas which acknowledged the loan and interest and promised to repay it, forged White’s signature on the letter, and provided it to Ikosidekas (‘forged acknowledgment’).
Not knowing the true facts, on 3 May 2019 Ikosidekas sued MWL, Glenis and White in the County Court. He claimed that Glenis made the false representations on behalf of MWL, White made the representations on his own behalf, and in reliance on the representations he entered into the fictitious loan agreement and advanced the $160,000. Ikosidekas claimed damages against all defendants for misleading or deceptive conduct, or involvement in such conduct, under s 18 of the Australian Consumer Law or s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (‘ASIC Act’). Alternatively, he sued White for debt under the purported loan agreement, including by alleging that White had acknowledged indebtedness to him under the loan agreement by the forged acknowledgment. In his Prayer for Relief, Ikosidekas also claimed interest and costs against all parties.
There was a mediation of the County Court proceeding between Ikosidekas, MWL and White in May 2020. White and MWL were represented by solicitors appointed by their professional indemnity insurer. All claims in the proceeding against White and MWL were settled on the basis that MWL and White pay $160,000 to Ikosidekas, and that sum was paid to him on 31 May 2020 (‘Contribution’).
Ikosidekas continued the proceeding against Glenis on an amended statement of claim. By his amended statement of claim, Ikosidekas alleged that Glenis made the false representations on his own behalf and fraudulently, also made fraudulent warranties to him, that he relied on the false representations and warranties, and thereby suffered loss and damage. He claimed:
(1)damages for the tort of deceit at common law, which he quantified by reference to the amount owing under the fictitious loan agreement;
(2)alternatively, damages for misleading or deceptive conduct or unconscionable conduct under ss 12DB, 12DA, 12CB, 12BB and 12GF of the ASIC Act;
(3)alternatively, the sum of $160,000 as restitution for money had and received;
(4)further, exemplary damages;
(5)interest ‘pursuant to statute’, a clear reference to a successful plaintiff’s entitlement to interest either s 58 or s 60 of the Supreme Court Act 1986 (the ‘Act’); and
(6)costs.
Importantly, Ikosidekas pleaded that he would ‘give an allowance … for any contribution he receives from’ MWL or White in reduction of his claims. The amount of the Contribution, and the date it was received, were not stated in the amended statement of claim.
In his defence to the amended statement of claim, Glenis made certain allegations which he did not support by evidence at trial, made admissions, non-admissions and denials, and did not plead to many paragraphs on the ground that ‘such a plea may expose him to increased jeopardy of criminal prosecution or subject him to increased jeopardy of exposure to a penalty’.
Glenis applied to the County Court for production of a copy of the terms of settlement between Ikosidekas, MWL and White. A judicial registrar dismissed that application on the erroneous ground that the terms of settlement were expressly confidential. Glenis did not appeal against that order. It was not until 29 April 2022, shortly before the trial of the proceeding in the County Court, that Ikosidekas specified the amount of the Contribution and the date it was paid. In a chronology filed and served in preparation for the trial, Ikosidekas recorded:
31/05/[20][1] Plaintiff received $160,000 pursuant to terms of settlement with [MWL and White] which upon payment released them from the present action.
[1]The Chronology wrongly states the date as ‘31/05/21’.
The trial of the County Court proceeding took place on 4 and 5 May 2022. Ikosidekas and White gave evidence. Glenis gave no evidence. The terms of settlement were not produced in evidence and not called for by Glenis during the trial.
The County Court judge delivered prompt reasons on 13 May 2022.[2] Later, the judge gave a considered ruling on costs.[3]
[2]Ikosidekas v MWL Finance Pty Ltd [2022] VCC 633 (‘Reasons’).
[3]Ikosidekas v MWL Finance Pty Ltd (Costs) [2022] VCC 887 (‘Costs Ruling’).
The County Court judge found that all of the causes of action alleged by Ikosidekas were proved. The judge assessed the damages on a reliance basis in the sum of $160,000 and the restitution claim in the same amount. The judge held, however, that the whole of the Contribution of $160,000 should be deducted from that amount, with the result that Ikosidekas was not entitled to judgment for any amount. On this basis, the judge also dismissed the claims for exemplary damages and interest pursuant to statute. The judge reasoned that each of these claims depended upon Ikosidekas obtaining judgment for damages or restitution — which he had not when the Contribution was deducted.
If Ikosidekas had been entitled to judgment for any sum, the judge held that he would also have been entitled to exemplary damages, which she assessed at $96,000. In the Costs Reasons, the judge concluded that Glenis should pay Ikosidekas’s costs of the proceeding until receipt of the Contribution on 31 May 2020; and that Ikosidekas should pay Glenis’ costs from 1 June 2020.
Grounds of appeal
Following abandonment of proposed ground 1(a), all of the proposed grounds are arguable and leave to appeal is granted. The grounds of appeal may be summarised as follows:
(1)Ground 1(b). The judge erred in not putting Ikosidekas to an election between damages and restitution as the basis for entering any judgment.
(2)Grounds 2, 3(i) and 3(ii). The judge erred by deducting the whole of the Contribution from the assessed damages and restitution amount, thus arriving at a zero figure. Instead, the judge should have first made allowances against the Contribution for:
(a)legal costs incurred by Ikosidekas which were paid from the Contribution and related only to the claim against MWL and White at that date; and/or
(b)unpaid interest due on 31 May 2020 under the terms of the purported loan agreement with White.
(3)Ground 3(iii). The judge erred in failing to give judgment for exemplary damages.
(4)Grounds 3(iv) and Ground 4. The judge erred by misconstruing ss 58(1) and 60(1) of the Act and, as a result, failing to award statutory interest.
Based on the grounds of appeal, the questions for determination may be summarised as follows:
(1)Should the judge have put Ikosidekas to his election between alternative remedies?
(2)Was Ikosidekas entitled to statutory interest?
(3)Should an amount for legal costs have been allowed against the Contribution?
(4)Was Ikosidekas entitled to exemplary damages?
Should the judge have put Ikosidekas to his election between alternative remedies?
Counsel who appeared at trial ought to have made an election between the various legal bases upon which Ikosidekas had established his case. In the absence of counsel doing so, it was for the judge to raise the issue. This is because, it is established law that a successful plaintiff such as Ikosidekas is entitled up until the time judgment is pronounced and authenticated to elect between alternative remedies which have been established following a trial.[4]
[4]United Australia Ltd v Barclays Bank Ltd [1941] AC 1, 18, 30, 34; Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2002) 406 ALR 632, 650 [64]; [2022] HCA 38 (Kiefel CJ, Edelman, Steward and Gleeson JJ).
The election was of particular importance in this case because, if Ikosidekas elected for judgment on the restitution claim, he may have had an entitlement to statutory interest under s 58(1) of the Act, running from the date of any demand made before issue of the proceeding — a position for which he contended below and repeats on appeal. If so, Ikosidekas would on any view be entitled to judgment for the amount of that interest which had accrued until receipt of the Contribution, and would thus have been successful in the proceeding.
We turn to consider the question of interest.
Was Ikosidekas entitled to statutory interest?
In the hearing before us, different counsel for Ikosidekas elected for judgment in restitution and sought interest under s 58(1) of the Act. Section 58(1) relevantly provides that a plaintiff who successfully recovers ‘a debt or sum certain’ is entitled to interest at the prescribed rate from the time it was payable under ‘some written instrument … or, if payable otherwise, then from the time when demand of payment was made’.
The $160,000 was not repayable by Glenis to Ikosidekas under a written instrument. It was repayable under the law of restitution. Accordingly, Ikosidekas needed to prove a demand for payment from Glenis in order to recover interest under s 58(1).
Ikosidekas relies on a letter of demand dated 9 April 2014 which he sent to White, formally demanding repayment of the purported loan amount and interest from him. Glenis contends that this demand cannot stand as a demand for the purposes of s 58(1), because a demand for payment from White under the fictitious loan agreement cannot amount to a demand that he make restitution of the $160,000. Accordingly, Ikosidekas is not entitled to interest under s 58(1) of the Act. Instead, any interest entitlement he may have lies under s 60(1) of the Act.[5]
[5]David Leahey (Aust) Pty Ltd v McPherson’s Ltd [1991] 2 VR 367, 381 (Tadgell J); A J Lucas Drilling Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2009] VSCA 310, [187]–[188] (Redlich and Dodds-Streeton JJA, Beach AJA).
We do not accept Glenis’ contentions in this regard. Viewing the letter of demand dated 9 April 2014 in context, and having regard to the deceit practised by Glenis throughout, it should be understood as a demand that Glenis repay the $160,000 and interest. As appears below, the facts demonstrate that Glenis was fully aware of the letter of demand and continued to practise his fraud by responding to it, purportedly on behalf of White but without his knowledge. The responses were themselves fictitious promises by White to repay the loan and interest from a property sale. Our reasons follow.
First, Ikosidekas gave unchallenged evidence that he sent the letter of demand in the belief that White was in fact the borrower. That false belief was fraudulently induced by Glenis.
Second, Ikosidekas gave evidence that he sent a copy of the letter of demand to Glenis. Further, although Ikosidekas could not recall it during his evidence, there is documentary proof from which it can be readily inferred that Ikosidekas charged Glenis with the responsibility of sending or delivering the letter of demand to White. By email dated 9 April 2014, Ikosidekas wrote to Glenis asking him to ‘confirm when [he had] forwarded or handed this letter to Mr Jon White.’ It would be a remarkable coincidence if this was not a reference to the letter of demand bearing that date.
Third, the only responses which White received to the letter of demand were from Glenis. Some of the responses were by Glenis in continuation of his deceit, purporting to act on behalf of White. Others were written responses purportedly from White, which had been fraudulently prepared by Glenis to give the impression that White was engaging with the letter of demand. The chronology of these responses in set out below.
The first written response was by email from Glenis to Ikosidekas dated 5 June 2014. The 5 June 2014 email from Glenis to Ikosidekas is in the following terms:
Peter,
See restructured letter for you to peruse and advise in relation to White loan agreements and requests/confirmations past and going forward.
Please let me know so I can forward to Jon [White] and seek his assurances etc.
By that email, Glenis enclosed a draft letter for Ikosidekas to send to White concerning the failure of White to repay the $160,000 or interest. Glenis referred to this draft letter in his email as a ‘restructured letter’, and it can readily be inferred from this that there had been prior contact between Glenis and Ikosidekas concerning it. Glenis asked Ikosidekas for approval to forward the restructured letter to White.
The restructured letter is in the following terms:
Mr Jon White
5 Tovell street,Brighton Vic 3186
Dear Jon,
Loan agreement 14/5/2013
The terms of our above loan agreement was for a short term loan of $160k to be repaid by 31/8/2013.
For various reasons this has not occurred and the loan remains outstanding as of 5/6/2014.
By my calculations Interest accrued today is approx. $95,000 plus the principal amount of $160k equates to total outstanding of $255,000 as of 31/5/2014
My understanding is that the property is on the market for sale and that proceeds of that sale will clear these loan arrears in full, principally by way of release of the deposit upon sale and at or prior to settlement of the property
I would like you to respond in writing within 7 days and confirm the following:
1/ Your agreement to the total outstanding (Principal plus Interest)
2/ Confirmation of the sale of the property, the marketing schedule and the auction date
3/ You will arrange for the release of the deposit and partially pay back outstanding arrears
4/ Current balance of the existing mortgage on the property (to ensure sufficient surplus exists to meet outstanding arrears.
5/ Clearance of all arrears at settlement of the sale of the property
I look forward to your timely response.
Yours sincerely
Peter Dekas
In substance, the restructured letter was a further letter of demand, sought confirmation as to the amount of principal and interest owing, and sought confirmation as to Ikosidekas’ understanding as to how the loan and interest was to be repaid from the proceeds of sale of a property which White had on the market for sale. Taking the evidence as a whole, and the fact that Glenis had obviously drafted the restructured letter, we readily infer it was Glenis who told Ikosidekas about the proposed sale of property by White in order to fund repayment of the loan and interest. We infer that Ikosidekas approved the form of the restructured letter drafted by Glenis, as he gave evidence that he ‘sent it by email to [Glenis]’.
Next, Glenis continued the fraudulent deception by preparing and providing the forged acknowledgement, dated 19 June 2014, to Ikosidekas. The forged acknowledgement was in the form of a letter from White to Ikosidekas. In addition to acknowledging indebtedness for the principal of $160,000 and outstanding interest, including penalty interest of $2,000 per week from the date the loan was due to be repaid, the letter confirmed that ‘the property’ was on the market for sale and would be sold by auction if not sold by a stated date. The letter promised repayment of the loan and interest from the proceeds of sale of the property.
Later, Glenis prepared and forged an acknowledgement of the loan and outstanding interest signed by White’s wife, who it appears was a joint proprietor or joint tenant in respect of ‘the property’ which was on the market for sale. This acknowledgment stated that Mrs White and her husband ‘would expect to pay out this loan in full (Principal plus outstanding Interest) at settlement December 12 2014’.
In these circumstances, given the purpose of the demand was to require the recipient of the loan to repay it, it is obvious that Ikosidekas would not have directed his letter of demand to White had he known the true facts. It is equally obvious that Glenis must have understood the letter of demand as a demand that he repay, at least, the principal amount of the fictitious loan — $160,000.
We conclude that the letter of demand dated 9 April 2014 was, for the purposes of s 58(1) of the Act, a demand that Glenis repay the $160,000 paid to him and that he received that demand and so understood it.
In reaching this conclusion, we have taken into account that it is accepted law that the interest provisions in ss 58 and 60 of the Act serve a beneficial purpose and should be given a broad, rather than narrow, construction.[6] Moreover, in considering whether there has been a demand for the purposes of s 58(1) of the Act, it is established that ‘the constitution of a demand may vary according to the circumstances of the particular case’,[7] and that a demand need not be in any particular form so long as it contains a distinct demand for payment.[8]
[6]AJ Lucas Drilling v McConnell Dowell Constructors (Aust) Pty Ltd [2009] VSCA 310, [171] (Redlich and Dodds-Streeton JJA, Beach AJA).
[7]Ibid [180].
[8]Ibid [179].
It follows that grounds 3(iv) and 4 are made out and the appeal must be allowed. On that basis, Ikosidekas is entitled to judgment for the amount of the penalty interest that accrued under s 58(1) of the Act in the period commencing on 9 April 2014 and ending on 31 May 2020 when the Contribution was received. Whether Ikosidekas is also entitled to judgment for any adjustment to the Contribution for his legal costs of pursuing White and MWL, or for exemplary damages, is considered below.
Further, even if Ikosidekas had not proved a demand and an entitlement to interest under s 58(1), he was nevertheless entitled to interest under s 60(1) of the Act from the date of issue of the writ until the time the Contribution was paid.
Section 60(1) of the Act provides:
(1)The Court, on application in any proceeding for the recovery of debt or damages, must, unless good cause is shown to the contrary, give damages in the nature of interest at such rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 as it thinks fit from the commencement of the proceeding to the date of the judgment over and above the debt or damages awarded.
The judge reasoned that the amount of damages or restitutionary relief should be fixed before approaching the issue of statutory interest.[9] In reaching this conclusion, the judge accepted the submissions made on behalf of Glenis at trial, which were repeated on appeal. In summary, Glenis contends that there is no basis for awarding interest under s 60(1) of the Act unless a judgment for debt or damages is first ‘awarded’, because there is otherwise no amount ‘over and above’ which damages in the nature of interest may be ‘given’ under that section. While we accept that this may be so, that proposition says nothing about the time at which the Contribution ought to have been taken into account. For the following reasons, we are of the view that the judge ought to have first assessed all of the monetary relief to which Ikosidekas was entitled at the date he received the Contribution on 31 May 2020 — including his entitlement to interest under s 58(1) or s 60(1) of the Act — before subtracting the amount of the Contribution. Our reasons follow.
[9]Reasons, [111]–[113].
First, a successful plaintiff’s entitlement to statutory interest under either s 58 or s 60 is ‘an additional head of damages’ to which the plaintiff is entitled to recover judgment.[10]
[10]Williams v Volta [1982] VR 739, 746, 757.
Second, the judge’s approach gives a narrow meaning to s 60(1). This is contrary to the beneficial purpose of the Court’s power to award penalty interest as compensation to a successful plaintiff for being kept out of money which could otherwise have been utilised, as summarised by Tate and Kyrou JJA in Carbone v Melton City Council: [11]
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. Secondly, to encourage the early resolution of litigation. In A J 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.[12]
[11](2020) 60 VR 539; [2020] VSCA 117.
[12]Ibid 549 [44] (citations omitted).
Third, the position is analogous to the common sense approach in the offer of compromise regime under O 26 of the Supreme Court (General Civil Procedure) Rules 2015. Rule 26.08(5) provides that, where the Court is considering whether a plaintiff obtains a judgment on the claim which is no less favourable to the plaintiff than the terms of an offer of compromise, the amount of the plaintiff’s interest entitlement to the day of the offer of compromise is to be taken into account.
Should an amount for legal costs have been allowed against the Contribution?
Ikosidekas gave unchallenged evidence at trial that the Contribution paid to him by White and MWL was in return for a release from all claims against them, including his claims for interest and costs. He contended at trial that he was on that basis entitled to allocate the Contribution towards his legal costs of pursuing White and MWL until payment by them of the Contribution.
As to the amount of such costs, Ikosidekas relied on a trust account statement from his solicitors which recorded the total amount of his legal costs at that time, the receipt of the Contribution, and that a portion of the Contribution had been applied toward unpaid legal fees. On this basis, he contended that, although his evidence on this issue was ‘thin’, the judge ought to have allocated a specified part of the Contribution towards his costs of pursuing White and MWL until payment by them of the Contribution. Thus, the whole of the Contribution should not have been deducted from his damages or restitution entitlement of $160,000, but only that amount less an allocation for legal costs incurred against White and MWL.
The judge reasoned that, as no such claim had been pleaded or proved, and the settlement deed with White and MWL had not been produced, the whole of the Contribution should be deducted from the assessed damages or restitution amount of $160,000.[13] The judge was given no assistance by counsel who appeared for Ikosidekas at trial as to the authorities now relied on in this court which state the relevant legal principles.
[13]Reasons, [76]–[78], [86]–[90]; Costs Ruling, [22].
Ikosidekas contends that his claim against White and MWL for legal costs was not concurrent with his claims against Glenis, and that he had an entitlement to allocate the Contribution to that legal costs claim first, before giving credit against his overlapping claims against Glenis for $160,000 plus interest. He relies in this regard on the decision of Steyn J in Banque Keyser Ullman SA v Skandia (UK) Insurance Co Ltd (No 2),[14] where the principle is stated in the following terms:
The principle appears to be that if a plaintiff who receives payment from one tortfeasor, establishes an additional separate claim against that tortfeasor, the payment is allocated first to that claim, and credit must be given in favour of the second tortfeasor only for the excess necessarily referable to the overlapping claim.[15]
[14][1988] 2 All ER 880 (‘Banque Keyser’).
[15]Ibid 882.
The issue in Banque Keyser has some similarity to the issue here. The defendant who settled was sued in vicarious liability for the wrongs of other defendants who were found liable for concurrent claims. In circumstances where the terms of settlement recorded that the settlement was in respect of all claims ‘including interest and costs’,[16] and the other defendants agreed the amount of the plaintiff’s costs in pursuing the defendant who settled,[17] it was held that the plaintiff was entitled to deduct those costs from the settlement sum before giving credit to the other defendants. This was because the costs claim against the defendant who settled was an additional claim which was not concurrent with the claims against the other defendants.[18]
[16]Ibid.
[17]Ibid 881.
[18]Ibid 882.
Next, Ikosidekas relies on the decision of this Court in Boncristiano v Lohmann,[19] where Winneke P referred to Banque Keyser with approval and accepted the rule against double compensation was correctly stated by Oliver LJ in Townsend v Stone Toms & Partners (a firm) in following terms:
The starting point, and one on which there is a good deal of clear authority, is that where a plaintiff with concurrent claims against two persons has actually recovered all or part of his loss from another, that recovery goes in diminution of the damages which will be awarded against the defendant.
A plaintiff can never, as I understand the law, merely because his claim may lie against more than one person, recover more than the total sum due.[20]
[19][1998] 4 VR 82, 89–90 (Winneke P, Charles and Batt JJA agreeing at 96) (‘Boncristiano’).
[20](1984) 27 BLR 26, 38 (‘Townsend’).
Boncristiano was a building case. The plaintiff owners sued the defendant builders, who alleged that the plaintiffs were estopped from making their claims because of an earlier compromise. As a result, the plaintiffs joined their solicitors who had advised them in connection with the alleged compromise. The plaintiffs settled their claim against their solicitors before trial for $5,000. The plaintiffs succeeded against the builders at trial for damages, which the judge reduced by an amount of $3,000, being part of the $5,000 paid by the solicitors in settlement of the claim against them. The plaintiffs contended on appeal that their claims against the solicitors were not concurrent with the claims against the builders. That contention was rejected.[21]
[21]Boncristiano [1998] 4 VR 82, 89 (Winneke P, Charles and Batt JJA agreeing at 96).
The plaintiffs contended that the evidence before the Court did not enable the Court to find ‘what, if any, portion of settlement sum was attributable to the satisfaction of the substance of the [plaintiffs’] claim as distinct from a claim, say, for costs of that claim’.[22] Winneke P considered that the lack of evidence did not assist the plaintiffs. This was because the claims against the builders and the solicitors were concurrent claims and, in those circumstances, there was a presumption that the whole of the settlement amount was in satisfaction of the concurrent claim.[23] As to the onus of proof in rebutting that presumption,[24] Winneke P accepted the statement by Oliver LJ in Townsend as representing the law in the following terms:
It is said that the burden lies on the defendant to show that a part of the claim against him has already been satisfied and to demonstrate the extent to which recovery has already been completed by the plaintiff ... Allowing this, however, it seems to me that the initial burden is discharged when the defendant shows acceptance of a payment‑in, in causes of action where there are concurrent claims against him. If it is to be said that the payment‑in relates to some claims which are not concurrent, or which could not succeed against the defendant, the only person capable of providing that guidance is the plaintiff himself, who has accepted the payment.[25]
[22]Ibid.
[23]Ibid.
[24]Ibid 89–90 (Winneke P, Charles and Batt JJA agreeing at 96).
[25]Townsend (1984) 27 BLR 26, 41.
On this basis, there being no evidence adduced by the plaintiffs as to the settlement sum of $5,000 including claims which are not concurrent, Winneke P held that the presumption had not been rebutted and that the reduction of only $3,000 by the trial judge was ‘generous to the [plaintiffs] in not requiring [them] to account for the whole of the $5,000’.[26]
[26]Boncristiano [1998] 4 VR 82, 90.
Ikosidekas also relies on the statement of Hansen J in RACV Insurance Pty Ltd v Unisys Australia Ltd,[27] where, after referring to Banque Keyser and Boncristiano, Hansen J stated:
In short, when a plaintiff sues two defendants and settles with one but continues to judgment against the other, in the calculation of damages payable by the latter the plaintiff is entitled to treat the settlement sum as allocated first to any claim separate and additional to any claim that was common to the defendants, and the costs of that separate claim, and, secondly, any excess of the settlement sum necessarily referable to the common or overlapping claim is to be credited in favour of the second defendant. It will be recalled … that the terms of settlement did not apportion the settlement sum to claim, interest or costs. Thus there is nothing in the terms of settlement that could affect the application of these principles.[28]
[27][2001] VSC 300.
[28]Ibid [555].
Glenis contends that the judge made no error, because she proceeded on the basis of the case pleaded by Ikosidekas, which:
(1)stated that Ikosidekas would give an allowance in his claim against Glenis for ‘any contribution he [receives] from the first and third defendants (Contribution)’;
(2)sought relief for loss or damage ‘less the Contribution’; and
(3)pleaded the restitution claim as a claim for ‘the sum of $160,000, less the Contribution, being money had and received by Glenis for the use of Ikosidekas’.
Further, Glenis contends that, in circumstances where the deed of settlement was not produced and Ikosidekas did not call evidence as to the amount of the total costs referred to in the trust account statement which were referrable to pursuit of the case against White and MWL, there was insufficient evidence before the Court to make any finding as to the amount to be deducted from the Contribution for such legal costs. Moreover, Glenis contends that it would be unfair to now apportion part of the Contribution to those legal costs, in circumstances where there could have been full discovery on the issue and cross-examination of any evidence as to the amount of such legal costs.
The contentions made by Glenis on this issue should be accepted. The onus was clearly on Ikosidekas to put evidence before the Court as to the amount of the total legal costs referred to in the trust account statement which it was contended related only to the claims against White and MWL. Such a claim could easily be pleaded and supported by evidence. For example, the solicitor for Ikosidekas could have given evidence based on his records of the work done, and produced the bills of costs rendered to Ikosidekas. None of this was done. Further, the fact that the settlement deed was not produced is relevant. Although Ikosidekas gave unchallenged evidence that the settlement was for all of his claims, including interest and costs, that was second‑hand evidence of a document which ought to have been produced in evidence. There was no good reason for not doing so. Accordingly, the facts of this case are similar to those in Boncristiano, and distinguishable from the facts in Banque Keyser.
Before leaving this issue, we note that in his grounds of appeal and written case, Ikosidekas contended that the judge erred by not first allocating the Contribution amount to the exceedingly high interest due under the fictitious loan agreement, with the result that there was no amount to deduct from his assessed damages and restitution entitlement. That argument was effectively abandoned in oral submissions, and rightly so. The issue was not pleaded and the claim against White under the fictitious loan agreement was hopeless.
Was Ikosidekas entitled to exemplary damages?
The judge denied the claim for exemplary damages on the sole ground that such damages are parasitic on a plaintiff proving an entitlement to a judgment for compensatory damages.[29] The judge applied accepted principles in this regard.[30] However, as we have concluded that Ikosidekas is entitled to judgment for compensatory damages in the nature of interest, that reasoning no longer provides an answer to the exemplary damages claim.
[29]Reasons, [79]–[83].
[30]XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448, 468-9; [1985] HCA 12 (Brennan J) (‘XL Petroleum’).
The judge said she would have assessed exemplary damages at $96,000. Reference to the transcript of the trial shows that the judge based this amount on an assumed average penalty interest rate of 10 per cent applicable under ss 58 and 60 of the Act for the period from the payment of the $160,000 by Ikosidekas to Glenis, on 16 May 2013, to the payment of the Contribution to Ikosidekas on 31 May 2020, a period of approximately seven years. At trial, counsel for Glenis accepted that this approach was open to the judge. Clearly, now that we have concluded that interest should have been awarded under s 58(1) of the Act, the judge’s basis for assessing exemplary damages must be put aside and this Court must re‑consider whether Ikosidekas is entitled to any amount of exemplary damages, and if so in what amount.
The principles governing the award of exemplary damages were summarised by this Court in Carter v Walker,[31] in the following terms:
Exemplary damages are damages over and above those necessary to compensate the plaintiff. They are awarded to punish the defendant. They are intended to act as a deterrent to the defendant, and to others minded to behave in a like manner. They are also intended to demonstrate the Court’s disapprobation and denunciation of such conduct. Such damages may be awarded in respect of any tort that is committed in circumstances involving a deliberate, intentional, or reckless disregard of the plaintiff’s rights.[32]
[31](2010) 32 VR 1; [2010] VSCA 340.
[32]Ibid 53 [284] (Buchanan, Ashley and Weinberg JJA) (citations omitted).
In XL Petroleum,[33] Brennan J described the award of exemplary damages:
As an award of exemplary damages is intended to punish the defendant for conduct showing a conscious and contumelious disregard for the plaintiff’s rights and to deter him from committing like conduct again, the considerations that enter into the assessment of exemplary damages are quite different from the considerations that govern the assessment of compensatory damages. There is no necessary proportionality between the assessment of the two categories.
…
The social purpose to be served by an award of exemplary damages is, as Lord Diplock said in Broome v Cassell & Co … ‘to teach a wrong-doer that tort does not pay’.[34]
[33](1985) 155 CLR 448; [1985] HCA 12.
[34]Ibid 471 (citation omitted); quoted with approval in Lamb v Cotogno (1987) 164 CLR 1, 9; [1987] HCA 47 (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ)); New South Wales v Landini [2010] NSWCA 157, [113] (Macfarlan JA, Tobias JA and Sackville AJA agreeing at [1] and [119] respectively).
In fixing the amount of exemplary damages, restraint must be exercised so as to avoid the danger of an excessive award.[35] Further, it is necessary for the Court to consider whether the compensation awarded to the plaintiff is, of itself, adequate to punish the defendant for the conscious and contumelious conduct in disregard of the plaintiff’s rights which is to be punished and deterred.[36]
[35]XL Petroleum (1985) 155 CLR 448, 463; [1985] HCA 12 (Gibbs CJ); Backwell v AAA [1997] 1 VR 182, 205–7 (Ormiston JA, Brooking JA agreeing at 184).
[36]Backwell v AAA [1997] 1 VR 182, 206–9 (Ormiston JA, Brooking JA agreeing at 184).
In this case, the cynical and continuous conduct of Glenis in disregard of the rights of Ikosidekas is of such a character that the Court’s denunciation by an award of exemplary damages is warranted. While it may be said that there is an element of punishment in the penalty interest which will be awarded to Ikosidekas under s 58(1) of the Act, that can be said of any judgment for a successful plaintiff who obtains an award of statutory interest. In our view, although commercial interest rates were low for most of the period, the award of penalty interest is not enough to punish and deter Glenis from like conduct. In reaching this conclusion, we have taken into account the fact that the Contribution was paid by White and MWL, thus relieving Glenis of the obligation to repay it and stopping the interest clock running on the whole of the $160,000 more than three years ago.
In all the circumstances, we would award exemplary damages and fix them in the sum of $20,000.
Conclusion and orders
For the above reasons, we will grant leave to appeal and allow the appeal. The judge’s orders will be set aside and in place of them it will be ordered that there be judgment in favour of Ikosidekas for $118,471.66, calculated as follows:
(1)Interest under s 58(1) of the Act on $160,000 from 9 April 2014 until 31 May 2020 — $98,471.66.
(2)Exemplary damages of $20,000.
(3)Total – $118,471.66.
We will hear the parties as to costs.
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