Macquarie Bank Limited v Juno Holdings S.a.r.l

[2015] NSWSC 1260

Supreme Court

New South Wales

Medium Neutral Citation:	Macquarie Bank Limited v Juno Holdings S.a.r.l. [2015] NSWSC 1260
Hearing dates:	20 August 2015
Decision date:	03 September 2015
Jurisdiction:	Equity - Commercial List
Before:	McDougall J
Decision:	Plaintiff entitled to judgment but with simple interest only. Parties to calculate amount. Reserve costs.
Catchwords:	PRIVATE INTERNATIONAL LAW – enforcement of foreign judgment – where plaintiff obtained judgment in the Court of First Instance in the Netherlands Antilles – where defendant exhausted all avenues of appeal available in that jurisdiction – common law enforcement of that judgment in New South Wales – requirement at common law that the primary judgment be for a sum certain in money – dispute between parties as to whether judgment interest calculable on a simple or compound basis – whether permissible to go behind the judgment to the background factual matrix to illuminate the basis of interest calculation contemplated by the judgment – where so to do would be to undo the final and conclusive nature of the primary judgment upon which common law enforcement depends – where the judgment itself makes no provision for compound interest – irrelevance of other considerations – result that simple interest only to be awarded
Legislation Cited:	Civil Procedure Act 2005 (NSW) Foreign Judgments Act 1991 (Cth)
Cases Cited:	Damberg v Damberg (2001) 52 NSWLR 492 Nouvion v Freeman (1889) 15 App Cas 1
Category:	Principal judgment
Parties:	Macquarie Bank Limited (Plaintiff) Juno Holdings S.a.r.l (Defendant)
Representation:	Counsel: I M Jackman SC / DFC Thomas / E Bathurst (Plaintiff) P M Wood / D Sulan (Defendant)   Solicitors: Quinn Emanuel Urquhart & Sullivan (Plaintiff) Arnold Bloch Leibler (Defendant)
File Number(s):	2015/162523

Judgment

1. HIS HONOUR:   The plaintiff (Macquarie) seeks to enforce a judgment (the primary judgment) recovered by it against the defendant (Juno) in the Court of First Instance of the Netherlands Antilles, together with orders for costs made by that Court and by intermediate and final appellate courts. It was common ground that the Foreign Judgments Act 1991 (Cth) does not apply. Accordingly, Macquarie seeks judgment in this Court on the basis that the primary judgment creates a “debt” for a “sum certain in money”.

2. It was also common ground between the parties that:

1. the Court of First Instance had jurisdiction to hear and decide the dispute between Macquarie and Juno;

2. this Court would recognise that jurisdiction;

3. the primary judgment was final and conclusive; and

4. the parties in the Court of First Instance, who are bound by the primary judgment, are the same as the parties in this Court.

The issue for decision

3. The fundamental issue between the parties was whether the primary judgment was for a sum certain in money. That dispute turned on Macquarie’s claim to interest, as awarded by the Court of First Instance. I shall set out the Court’s order later in these reasons. It is sufficient to note, at present, that there were two, cumulative, entitlements to interest given to Macquarie under that judgment. Macquarie contended that under each, it was entitled to interest on a compound basis. Juno contended that Macquarie was not entitled to interest on a compound basis. In essence, Juno submitted, unless and until those competing contentions could be resolved, there could be no judgment debt for a sum certain in money.

The primary judgment

4. The decision of the Court of first instance was given on 19 April 2010. It was rendered in the Dutch language. The parties relied on a certified English translation. It is from that translation that I take what follows.

5. The Court’s reasons identified the parties and their dispute, and set out their competing contentions. It then made an “assessment” of those competing contentions. Having done so, the Court gave the following “decision”, which set out what I understand to be the Court’s judgment, or orders:

Decision

The Court:

in the main claim

orders Juno against due receipt to pay to Macquarie the sum of 15,994,541.95 Australian Dollars, at any rate [sic] the equivalent value in American Dollars or in the Netherlands-Antillean currency, to be increased by the contractual interests equalling “the official cash rate of the central bank for the Nominated Currency plus 2%” on the principal sum of 15,625,000 Australian Dollars or the equivalent value in American Dollars or the Netherlands-Antillean currency, also to be increased by a penalty interest of 1% on 15,994,541.95 Australian Dollars or the equivalent value in American Dollars or the Netherlands-Antillean currency, both to be calculated as from 27 March 2008 until the day of the full payment;

orders Juno to pay the costs of the proceedings incurred on the part of Macquarie, estimated to the day of this judgment at Naf. 539.50 in summoning costs, Naf. 7,500 in court costs and Naf. 24,400 in attorneys’ salaries;

declares this judgment immediately enforceable.

in the counterclaim

rejects the claim;

orders Juno to pay the costs of the proceedings incurred on the part of Macquarie, estimated to the day of this judgment at Naf. 12,200 in attorney’s salaries.

6. The expression “Naf.” refers to the currency of the Netherlands Antilles: Netherlands Antilles Florins.

7. Juno appealed to the appropriate intermediate appellate court, the Joint Court of Justice of Aruba, Curaçao, Sint Maarten and of Bonaire, Sint Eustatius and Saba. That Court gave its decision on 21 February 2012. For detailed reasons that it gave, the Court confirmed the challenged judgment and ordered Juno to pay costs “estimated to date at NAF. 303.38 in costs of service and NAF. 43,500 in attorneys’ salaries”.

8. Juno appealed from there to the ultimate appellate court, the Supreme Court of the Netherlands. That Court gave judgment on 13 September 2013. It dismissed the appeal and ordered Juno to pay costs estimated at €6,118.34 for disbursements and €2,200 for “salaries”.

The transaction documents

9. Macquarie entered into a Note Purchase Agreement, and a Strategic Alliance Agreement, with Juno (and other parties), each on 29 April 2004. It is clear that the agreements were interdependent. Each was said to be governed by the law of the Netherlands Antilles.

10. Under the Note Purchase Agreement, Juno was obliged to issue notes to Macquarie, and Macquarie was obliged to accept them and pay the purchase price. The “Terms of the Note” were defined in Annexure 3 to the Note Purchase Agreement. Clause 3 of those Terms gave Macquarie an entitlement to interest (cl 3 interest) “on a daily basis” at the rate of 1% per annum on so much of the principal as should be outstanding, and at that rate on any overdue money payable “in relation to the Note (including interest…)”.

11. Clause 4 provided that Macquarie might, after two years from the issue of the Note but before its “Maturity Date” (five years from the date of issue), require Juno to repay the principal and all other amounts owing. Where the date of actual repayment was more than three months after the repayment notice was given, Juno was obliged to pay unpaid interest for the first three months of that period and thereafter, up until the date of actual payment, interest at the official cash rate of the central bank for the “Nominated Currency” plus 2% (cl 4 interest).

12. By letter dated 29 April 2004, Macquarie nominated Australian dollars as the “Nominated Currency”. It was common ground, accordingly, that the cl 4 interest rate was the cash rate from time to time fixed by the Reserve Bank of Australia, plus 2%.

The parties’ submissions

13. Mr Jackman of Senior Counsel, who appeared with Mr Thomas and Ms Bathurst of Counsel for Macquarie, submitted that, under the terms of the primary judgment, his client was entitled both to cl 3 interest calculated at the rate of 1% per annum, and to cl 4 interest calculated in the manner that I have described. I do not think that Mr Wood of Counsel, who appeared with Mr Sulan of Counsel for Juno, submitted otherwise. In any event, the submission (so far as it goes) seems to me to reflect the terms of the primary judgment.

14. Mr Jackman then submitted that Macquarie was entitled to cl 3 interest compounding on daily rests. Mr Wood, I think, was not disposed to argue the point, although he did submit that, as a matter of consistency, it was no more permissible to go to the underlying transaction documents to understand the basis on which cl 3 interest should accrue (simple or compound) than it was to undertake the same task in respect of cl 4 interest.

15. Mr Jackman submitted, further, that cl 4 interest should compound, at either six-monthly or annual rests. This was so, he submitted, for two (related) reasons:

1. it was a right arising on the proper construction of the Note Purchase Agreement, including the Terms of the Note;

2. it was a right incidental to the relationship of banker and customer which, Mr Jackman submitted, was established by or reflected in the agreements in question.

16. Those two submissions were related because, Mr Jackman submitted, the proper construction of the Note Purchase Agreement was to be informed by the relationship of banker and customer. However, he relied on the second reason as an independent reason which would justify the implication in law of a term as to compound interest into the Note Purchase Agreement.

17. Mr Wood’s primary submission was that it was not permissible to go behind the terms of the primary judgment. That was so, he submitted, because the cause of action on which Macquarie had sued in the Court of First Instance had merged in the judgment, and whatever rights Macquarie had in respect of the debt were rights under that judgment, and those rights only.

18. Further, Mr Wood submitted, if it were legitimate to go to the transaction documents to understand and define the nature of the parties’ rights and obligations, then there should be no limit to that process. Mr Wood submitted that, if the question were to be reopened for the purpose of determining the nature of the entitlement to (specifically) cl 4 interest, then it was open for reargument at large.

19. In any event, Mr Wood submitted, the terms of the Note Purchase Agreement did not display any intention that Macquarie should have cl 4 interest on anything other than a simple basis. He contrasted the express recognition of compounding in respect of cl 3 interest with the absence of any reference to compounding in respect of cl 4 interest. (Mr Jackman had submitted that the implication of compounding into cl 4 would render it “harmonious” with cl 3.)

20. Mr Wood submitted, next, that the relationship between Macquarie and Juno was not one of banker and customer. He referred to the interdependence of the Note Purchase Agreement with the Strategic Alliance Agreement, and noted that the latter (without which the former would not have come into effect) gave Macquarie many, potentially valuable, rights of a commercial nature which were not incidents of the relationship of banker and customer.

21. There was some question as to whether the law of the Netherlands Antilles recognised any right to compound interest. Mr Jackman submitted that, in the absence of such evidence, the Court would assume that the law of that jurisdiction was the same as the law of New South Wales. Mr Wood submitted that the circumstances in which that presumption could be applied were severely limited. He referred to the judgment of Heydon JA (with whom Spigelman CJ and Sheller JA agreed) in Damberg v Damberg (2001) 52 NSWLR 492 at [144]-[147] and [160]-[163].

Decision

22. I start with the proposition that, in my view, Macquarie’s rights (and Juno’s obligations) are to be found in the primary judgment, and nowhere else. In saying that, I leave aside the various entitlements to costs, as to which there is no dispute. For the avoidance of doubt, I should note that Macquarie did not claim interest, on any basis, on the various costs awards in its favour.

23. At common law (that is to say, in the absence of any statutory regime) there were two ways in which a litigant who had recovered a judgment in a foreign court might enforce it in an English (or Australian) court. One way was to sue on the original cause of action. The common law did not regard the judgments of foreign courts as leading to merger of the cause of action in the judgment. It did however regard the defendant as estopped by the foreign judgment from raising any defence that could and should have been raised before the foreign court.

24. The other method of enforcement was to sue on the debt created by the foreign judgment. A court of common law would enforce a foreign judgment for a debt if the “enforcing” court were satisfied, among other things, that the court rendering the judgment had jurisdiction, which the “enforcing” court recognised, over the parties, and that the judgment was final. Where those (and other, presently irrelevant) requirements were met, the enforcing court treated the judgment of the foreign court as creating a debt that was recoverable by action in the enforcing court.

25. Since the action was brought on the debt created by the foreign judgment and not on the underlying cause of action, the defences were limited to those that could “negative” the obligation created by that judgment. See Blackburn J (with whom Mellor J agreed) in Godard v Gray (1870) LR 6 QB 139 at 148-149. It was immaterial that the foreign judgment might be wrong in law (including under the law governing proceedings of the particular kind in the foreign court). See Merker v Merker [1963] P 283 at 298-299 (a case where the decree made by a German court was, under German law, “a nullity”). And in Godard, the French court had proceeded on an incorrect application of English law, but this did not render the judgment unenforceable in England. See, further, Benefit Strategies Group Inc v Prider (2005) SASR 544 at 567, where Bleby J (with whom Vanstone and Anderson JJ agreed) discussed the authorities.

26. Accordingly, in my view, Mr Woods’ submission that the Court should not go behind the primary judgment is correct. If the Court were to do so, it would in effect be reopening the controversy between the parties. Macquarie has elected to sue in this Court for the debt created by the primary judgment. This Court’s task is therefore to discern what are the rights (and corresponding obligations) created by that judgment on its proper construction, and to give effect to those rights.

27. Mr Jackman relied on the reference to “the contractual interests” as justifying resort to the transaction documents to understand what those interests were. I do not agree. In my view, the primary judgment was saying no more than that Macquarie was entitled to judgment, in accordance with the contract between it and Juno, in the manner thereafter described. It is not necessary to refer to the contract to see what those “contractual interests” are. That is because they are both described:

1. the official cash rate of the central bank for the Nominated Currency plus 2% on $15,625,000.00; and

2. interest at 1% on $15,994,541.95;

in each case from 27 March 2008 until the date of payment.

28. The identity of the “central bank for the Nominated Currency” was not in dispute between the parties. It was no doubt described in the evidence before the Court of First Instance. Regardless, the identification of that “central bank”, and hence of “the official cash rate” from time to time involves no disputed question of contractual interpretation.

29. In my view, when the primary judgment provides for interest to run from 27 March 2008 until the date of full payment, it must be construed as providing for interest on a simple basis only, in respect of cl 4 interest as well as in respect of cl 3 interest. There is no reference to interest (of either kind) compounding, whether at daily, six-monthly, annual or some other intervals. In the absence of any such specification, it is in my view impossible to construe the judgment in such a way as to impose any obligation for compound interest.

30. The primary judgment provides for interest to be payable at the cl 4 rate on the principal sum of $15,625,000.00, and at the cl 3 rate on the sum of $15,994,541.95. It does not provide for any other interest to be payable. Specifically, it does not provide for interest to be paid on interest due but unpaid (except in so far as the latter sum, on which cl 3 interest is payable, itself includes an amount on account of interest).

31. Macquarie sued, in the Court of First Instance, to recover both principal and interest. It follows, in my view, that the Court’s judgment that interest is to run on the two sums at the respective rates specified, and not otherwise, must be read as a final and conclusive decision as to Macquarie’s entitlements to interest. There is no room to read into the primary judgment any additional entitlement, to interest on interest (let alone, as to the way in which interest on interest should be compounded).

32. I accept that, if one were to have recourse to the terms of the Note Purchase Agreement (including the Terms of the Note), one might readily discern that cl 3 interest was to compound at daily rests. Thus, construing the primary judgment as I have, it may be that it is, in this respect, “incorrect”. However, even if this were so, it does not seem to me to matter. The simple fact is that, as the parties accepted, the primary judgment fixes, conclusively, their rights in respect of the early repayment that Macquarie demanded of Juno.

33. Even if it could be said that, either on the basis of the proper construction of, or implication, into, the Note Purchase Agreement, cl 4 interest was also to compound (and even if one could specify, in the absence of any indication, the compounding intervals), the same reasoning would apply. The primary judgment is conclusive. It deals with the question of interest. Whatever it says on the topic of interest, properly construed, represents the full extent of the parties’ respective rights and obligations.

34. Since I have come to the view that the parties’ rights and obligations are to be found exclusively in the primary judgment on its proper construction, it is not necessary to resolve the questions of construction and implication that were argued in relation to the Note Purchase Agreement. The relevant facts are not in dispute. The documents were in evidence. If the matter goes further, and if others should take the view that it is legitimate to go to the transaction documents, the question can be argued at that point. There is no need for any findings of fact to be made to ground a decision on that question.

Conclusion and orders

35. I conclude that Macquarie is entitled to judgment for the total of:

1. the sum of $15,994,541.95, together with interest on that sum from 27 March 2008 up until the date of entry of judgment in this Court, at the rate of 1% per annum; and

2. interest on the sum of $15,625,000.00 from 27 March 2008 until the date of entry of judgment in this Court, at the cash rate from time to time fixed by the Reserve Bank of Australia plus 2%;

3. the various amounts of costs specified, in the primary and appellate judgments, to be payable, at Macquarie’s election, in the currencies in which those costs were ordered or in the Australian dollar equivalents of those currencies.

36. Although the parties did not in terms address the mechanics of conversion, I expect them to agree on this (should it arise). In the context of the dispute overall, parties properly advised as to their obligations under s 56 of the Civil Procedure Act 2005 (NSW) ought not trouble the Court with what is a minor and, in financial terms, insubstantial issue.

37. I recognise that there will be a dispute as to costs. As at present advised, I think that it would be appropriate to dealt with that dispute on the papers.

38. I make the following orders:

1. Direct the parties to submit to my Associate by 7 September 2015 an agreed form of judgment giving effect to the plaintiff’s monetary entitlements quantified in the manner set out at [35] above;

1. Stand the proceedings over to 9:30am on 8 September 2015 for entry of judgment and for directions as to costs;

2. Reserve for further consideration the question of costs.

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Decision last updated: 03 September 2015