LCM Operations Pty Ltd v Rabah Enterprises Pty Ltd (No 2)

[2023] NSWSC 722

Supreme Court

New South Wales

Medium Neutral Citation:

LCM Operations Pty Ltd v Rabah Enterprises Pty Ltd (No 2) [2023] NSWSC 722

Hearing dates:

On the papers

Date of orders:

28 June 2023

Decision date:

28 June 2023

Jurisdiction:

Equity - Commercial List

Before:

Rees J

Decision:

Interest up to judgment included in judgment sum.

Catchwords:

INTEREST — interest up to judgment — s100, Civil Procedure Act 2005 — plaintiff sued for debts arising under a contract for services — cause of action accrues when service performed, absent contrary agreement — no contrary agreement — whether depends on demand for payment — no agreement as to this either — making of demand not necessary for cause of action in debt to accrue — entitled to interest from date of performance.

Legislation Cited:

Civil Procedure Act 2005 (NSW) s 100

Cases Cited:

Emery v Day (1834) 1 Cr M&R 247; 149 ER 1071

Birse Construction Ltd v McCormick (UK) Ltd [2004] EWHC 3053

Young v Queensland Trustees Ltd [1956] HCA 51; (1956) 99 CLR 560

Ogilvie v Adams [1981] VR 1041

Fischer v Nemeske Pty Ltd [2015] NSWCA 6

Texts Cited:

G E Dal Pont, Law of Limitation (LexisNexis Butterworths 2nd Edition)

Peter Handford, Limitation of Actions (Thomson Lawbook Co, 2nd Edition)

Category:

Costs

Parties:

LCM Operations Pty Ltd (Plaintiff)
Rabah Enterprises Pty Ltd (Defendant)

Representation:

Solicitors:
Stacks Law Firm (Plaintiff)
Bartier Perry (Defendant)

File Number(s):

2020/262271

Judgment

1. HER HONOUR: I gave judgment in this matter on 2 June 2023, giving judgment in favour of the plaintiff in the sum of $14.8 million together with interest calculated in accordance with section 100 of the Civil Procedure Act 2005 (NSW): LCM Operations Pty Ltd v Rabah Enterprises Pty Ltd [2023] NSWSC 590. I directed the plaintiff to provide a calculation of the interest within seven days, preferably agreed with the defendant, so that the amount of the judgment could be varied accordingly.

2. The parties have been unable to agree on the date from which interest should begin to accrue. This judgment assumes familiarity with my primary judgment; the same terms are used.

Submissions

3. The plaintiff seeks interest for the whole of the period from the time the cause of action arose until the time the judgment took effect. The plaintiff submitted that $14.8 million was payable on 316 Group’s performance of its obligations under the oral agreement with Rabah. 316 Group had completed its work when the liability was recorded in 316 Group’s general ledger on 30 March 2016, at which time the Burwood development was being marketed for sale. Interest from 30 March 2016 to 2 June 2023 is $5,418,949.04.

4. Alternatively, the plaintiff submitted that the cause of action in debt arose when Rabah was liable to pay the debt owed to 316 Group. Rabah’s financial statements for the financial year ended 30 June 2016 record the unpaid fee as a current liability. This was said to be sufficient evidence to establish that the debt was due and acknowledged by Rabah to be payable, at least, as at 30 June 2016. Interest from 30 June 2016 to 2 June 2023 is $5,195,124.38.

5. Rabah submitted that the financial documents did not identify the date on which the fee became due and payable. It was said to often be the case that work may be undertaken but fees rendered may not be immediately payable or called upon, particularly for family businesses and arrangements between family members. This was said to be one such situation, where 316 Group was controlled by Youssef and Rabah was controlled by his brother, Nouredeen. The first call for payment of the fee was by the liquidator of 316 Group on 14 June 2017, requiring payment by 21 June 2017. Rabah submitted that the first date on which the fee became due and payable was 22 June 2017; interest calculated from this date was $4,415,590.69.

Interest up to judgment

6. Section 100(1) of the Civil Procedure Act provides: (emphasis added)

In proceedings for the recovery of money (including any debt …), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit –

(a)   on the whole or any part of the money, and

(b)   for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect.

7. The purpose of the discretion to award interest is to permit a successful party to be properly compensated for the practical loss it has suffered; successful plaintiffs who obtain a money judgment will generally be entitled to an award of interest: Ritchie’s Uniform Civil Procedure NSW at [100.10].

8. What then was the plaintiff’s cause of action? The plaintiff sued for debts arising under a contract for services between 316 Group and Rabah. Specifically, it was the plaintiff’s case that 316 Group agreed to provide construction and project management services in relation to the Burwood development for reward. Having provided the services and completed the Burwood development on 24 February 2016, 316 Group charged a fee of $14,800,000 on or around 30 March 2016.

9. At trial, the plaintiff proved both the existence of the contract and its performance: LCM at [162]-[176]. Specifically, at [171]:

Having regard to the brothers’ evidence of the oral contract, which was unclear and logically uninviting, as opposed to the clear post-contractual conduct, I conclude that Rabah appointed 316 Group as project manager for the Burwood development. Rabah would provide the funds for the development, which would be deployed by the project manager and recorded in its accounts. On completion of the project, the project manager would charge a fee for construction of the project, which fee included the development expenses and an uplift. Rabah agreed to pay this fee.

10. A cause of action for payment for services accrues when the service is performed, in the absence of a contrary agreement: Peter Handford, Limitation of Actions (Thomson Lawbook Co, 2^nd Edition) at [5.10.670] citing Emery v Day (1834) 1 Cr M&R 247; 149 ER 1071, which concerned a contract to build a toll-house.

11. In Birse Construction Ltd v McCormick (UK) Ltd [2004] EWHC 3053, which involved a contract to construct a dry dock for some £4 million, Judge Coulson QC explained this principle at [7]: (emphasis added)

The date of the accrual of a cause of action for sums due under a contract for work or services will usually depend on the terms of the contract itself. But it is important to note that the starting point for any consideration of this question is the established principle that, in the absence of any contractual provision to the contrary, a cause of action for payment for work performed or services provided will accrue when that work or those services have been performed or provided. In such circumstances, the right to payment does not depend on the making of a claim for payment by the party who has provided the work or services.

12. There was no evidence, in this case, of a contrary agreement. Rather, Nouredeen and Youssef agreed that the fee would be rendered on completion of the development: LCM at [101]. They did not discuss when, or how, the fee would be paid: LCM at [98]. In these circumstances, the cause of action accrued when the service was performed by 316 Group. The strata plan for the Burwood project was registered on 24 February 2016 and, thus, it is safe to assume that 316 Group’s services had also been performed by then.

13. Nor was it necessary for demand for payment to be made before the cause of action arose. Even if the contract had referred to ‘payment on demand’ – and there was no evidence that it did – the making of a demand is not necessary for a cause of action in debt to accrue: Young v Queensland Trustees Ltd [1956] HCA 51; (1956) 99 CLR 560 at 566 (per Dixon CJ, McTiernan and Taylor JJ); Ogilvie v Adams [1981] VR 1041 at 1051 (per Fullagar J); Fischer v Nemeske Pty Ltd [2015] NSWCA 6 at [98]-[100] (per Barret JA); G E Dal Pont, Law of Limitation (LexisNexis Butterworths, 2^nd Edition) at [5.24].

14. For these reasons, the plaintiff’s calculation of interest from 30 March 2016 is the most appropriate. I make the following orders:

1. Vary Order 1 made on 2 June 2023 to enter judgment in favour of the plaintiff in the sum of $20,218,949.

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Decision last updated: 28 June 2023