Kalls Enterprises Pty Ltd (in liq) v Baloglow (No 3)

Kalls Enterprises Pty Ltd (in liq) was the second plaintiff, and Baloglow was the first defendant. The dispute concerned the calculation of pre-judgment interest on a sum awarded to the second plaintiff. The matter came before the Court of Appeal of New South Wales.

The primary legal issue before the court was whether pre-judgment interest should be calculated at the rates prescribed by Schedule 5 of the *Supreme Court Rules 1970* (NSW) for the entire pre-judgment period, or if other considerations, such as delay in prosecuting the proceedings, the establishment of commercial rates of interest, or the failure to claim recovery from other parties, warranted a different approach. The court also considered the compensatory purpose of an award of interest and whether the Schedule 5 rates would lead to overcompensation.

The Court of Appeal affirmed that the compensatory purpose of pre-judgment interest is to compensate the plaintiff for the loss of use of money. It held that the Schedule 5 rates are the ordinary basis for calculating such interest, and that the defendant had not established that applying these rates would result in overcompensation, despite the delay in the proceedings. The court noted that the defendant had not demonstrated that commercial rates of interest would be more appropriate or that the plaintiff's failure to pursue other avenues of recovery impacted the calculation of interest owed by the defendant.

The Court of Appeal ordered that the previous order of 9 August 2007 be discharged and replaced with a new order granting judgment for the second plaintiff against the first defendant for $1,190,596.64, with that judgment taking effect on 9 August 2007.