McConnell Dowell Middle East LLC v Royal & Sun Alliance Insurance plc (No 3)
[2009] VSC 94
•27 March 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 5641 of 2003
| McCONNELL DOWELL MIDDLE EAST LLC | Plaintiff |
| v | |
| ROYAL & SUN ALLIANCE INSURANCE PLC | Defendant |
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JUDGE: | HANSEN J | |
WHERE HELD: | Melbourne | |
DATE OF JUDGMENT: | 27 March 2009 | |
CASE MAY BE CITED AS: | McConnell Dowell Middle East LLC v Royal & Sun Alliance Insurance Plc (No 3) | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 94 | |
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INTEREST – Defendant liable to pay amounts under insurance contract – Court reserved decision on interest – Defendant paid amounts under insurance contract – Court subsequently decided that interest payable under s 57 of Insurance Contracts Act 1984 (Cth) – Discussion as to date on which judgment for s 57 interest was given – Application of s 57 after amounts under insurance contract paid – Whether interest accrued on unpaid s 57 interest pursuant to s 101(1) of Supreme Court Act 1986 – Date from which interest accrued.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J J Gleeson SC and Mr J J Whelen | Deacons |
| For the Defendant | Mr C M Caleo SC and Mr A P Young | DLA Phillips Fox |
HIS HONOUR:
These reasons deal with the one remaining issue between the parties, namely whether the interest payable by the defendant under s 57 of the Insurance Contracts Act 1984 (Cth) carries interest under s 101(1) of the Supreme Court Act 1986, and if so from what date. The parties agree that the quantum of unpaid s 57 interest is US$1,866,804.27 and A$11,824.23.
The background to the issue is as follows. On 25 November 2008 I gave judgment[1] and on 28 November ordered the defendant to pay to the plaintiff within 21 days the amount of US$3,319,145.50 on the claim in respect of the plant and equipment, and the amount of A$27,296.03 on the claim in respect of professional fees. Interest and costs remained in dispute so I adjourned the hearing to allow the parties to file written submissions on those issues, following which counsel made oral submissions on 11 December 2008, and I reserved my decision thereon.
[1][2008] VSC 501.
On 19 December 2008 the defendant paid to the plaintiff the judgment amounts but no amount for interest. On 20 February 2009 I handed down my decision on interest and costs[2], concluding that the defendant was obliged to pay interest under s 57 of the Insurance Contracts Act as from 1 January 2002 on the amount of US$3,319,145.50 on the claim in respect of the plant and equipment, and as from 9 January 2004 on the amount of A$27,296.03 on the claim in respect of professional fees. I pronounced orders to that effect.
[2][2009] VSC 49.
Shortly after the conclusion of the 20 February hearing, on the same day, it became apparent that my reasons for decision on interest and costs, and the orders I had pronounced that morning, needed to be revised because they referred to a single start date for s 57 interest (1 January 2002) on the judgment amount of US$3,319,145.50, whereas my intention (apparent in my reasons for judgment) was that there should be two different start dates in respect of the s 57 interest on the judgment amount of US$3,319,145.50, namely 1 January 2002 in respect of a US$3,038,376.00 part of the amount, and 11 May 2006 in respect of the remaining US$280,769.50 part of the amount.
Late on 20 February, the parties were informed that appropriate revisions to the reasons and orders would be made. The parties were also asked to confirm the correct value of one of the items of plant and equipment that made up part of the judgment amount.
On 24 February the plaintiff responded that the value of the item and the judgment amounts were correct. On 2 March, the defendant having been granted an extension of time to respond to the query, confirmed that the value of the item and the judgment amounts were correct.
On 6 March the parties were provided electronically with a revised version of the orders pronounced on 20 February, which the Court proposed be authenticated on 6 March. That same day, the plaintiff’s solicitor informed the Court that the parties wished to raise with the Court one remaining disagreement between the parties, as referred to at [1] above.
In light of that intimation of a further issue, authentication of the orders of 20 February was held over, lest in some way the matter to be raised affected the orders. It now being clear that that is not so, the orders were authenticated on 25 March 2009 but of course speak as of 20 February 2009.
As to the remaining issue between the parties, the parties were informed that they could provide written submissions and that I would deal with the matter on the papers. Having received submissions, I now rule on the issue.
Submissions
The plaintiff submitted that interest on the s 57 interest has been accruing pursuant to s 101(1) of the Supreme Court Act since 20 December 2008. The argument was this. Judgment for s 57 interest ought be taken to have been given on 25 November 2008 (or 28 November at the latest). Ordinarily, s 101(1) of the Supreme Court Act would have applied thereafter in respect of any amount of interest awarded to the plaintiff. But in this case the plaintiff’s primary entitlement to interest (as distinct from interest on judgment) was governed by s 57 of the Insurance Contracts Act by which s 57(4) expressly ousted s 101(1) of the Supreme Court Act. After payment of the judgment amount, however, s 57 had no operation, with the result that s 101(1) of the Supreme Court Act resumed its normal operation. In that situation the s 57 interest amounts should be characterised as “judgment debts” for the purpose of s 101(1), and interest under s 101(1) has been accruing on those amounts since 20 December 2008. Alternatively, the plaintiff submitted that if judgment for s 57 interest was not taken to have been given until 20 February 2009, interest on the s 57 interest had been accruing under s 101(1) since that date.
The defendant’s primary submission was that s 101(1) of the Supreme Court Act has no application in the present case because of the terms of s 57(4) of the Insurance Contracts Act.
Alternatively, the defendant submitted that no interest had accrued under s 101(1) because although the Court had “delivered reasons for judgment”, it had not yet “given judgment” for the s 57 interest within the meaning of s 101(1). In seeking to draw this distinction between “delivering reasons for judgment” and “giving judgment”, the defendant referred to and relied on the following passage in Trippe Investments Pty Ltd v Henderson Investments Pty Ltd[3], where Nader ACJ and Angel J observed that[4]:
“The ‘giving’ of a judgment or the ‘pronouncing’ of a judgment is quite distinct from the ‘passing’ of a judgment, the ‘entering’ of a judgment or, under the new Rules, the ‘authenticating’ of a judgment: Turner v Manier (No 1) [1958] VR 350; and Antoniadis v Ramsay Surgical Ltd [1972] VR 323. It is also quite distinct from the giving or delivering of reasons for judgment: see Blackmore v Flexhide Pty Ltd [1979] 1 NSWLR 103. The learned judge, having delivered his reasons for judgment and having stood the proceedings over for minutes to be brought in and for argument on costs, it cannot be said that judgment was given or pronounced until those matters were finalised.
…
[I]t was only when his Honour pronounced the orders in terms of the minutes … that judgment was formally and finally pronounced or given … .”
[3](1990) 101 FLR 261.
[4]At 265-266.
The defendant submitted that the Court had not “given judgment” until authentication of the orders requiring the defendant to pay the s 57 interest. Nor, in that situation was there a “judgment debt” in respect of the s 57 interest amounts. In short, no judgment for s 57 interest had been given in respect of which s 101(1) may operate.
Decision
It is convenient to say at the outset that I reject the defendant’s contention that the Court has not yet given judgment for s 57 interest.
I do not overlook Trippe Investments Pty Ltd but in my view that decision does not assist the defendant, as it turned on particular facts quite different from the present case. There, in July 1989 the trial judge published reasons for judgment and at the time of doing so stated that he refused the remedies sought by the plaintiffs, that the defendants were not entitled to any damages, and that “there will be declarations along the lines sought by the defendants in their amended defence. I will hear counsel as to the precise terms of those declarations and any other machinery orders …”. Then, when the matter returned before the trial judge in November 1989 he noted that the matter had not yet been finalised, referred back to the July hearing and noted that he had then indicated that there would be declarations “but there were obviously then questions of detail to be worked out”. At the end of the November hearing he made orders in accordance with minutes provided. In considering whether an appeal had been brought within the time fixed by the rules, the Court had to consider the question of when judgment was given. The majority viewed as important the trial judge’s remarks in November to the effect that he did not intend to finalise anything in July. In effect, the majority considered that the July decision was provisional and could have been recalled in November. Kearney J took a different view, concluding that at the earlier time the trial judge gave final judgment, in which the plaintiffs’ claims were wholly rejected. The fact that the Court was split as to how it characterised the trial judge’s July “decision” (to use a neutral word) serves to demonstrate that a question as to when a judgment was given cannot be answered by reference to an abstract (and undeniably true) statement to the effect that there is a difference between giving reasons for judgment and giving judgment, but rather must be answered by paying close attention to what the Court did on the relevant occasion, to ascertain whether judgment was given or not.
Turning to that question, I consider that I gave judgment for s 57 interest on 20 February 2009 when I published reasons for decision on interest and costs, and then orally pronounced orders to that effect. True it is, as the defendant points out, that the orders then pronounced have been revised. As revised they were authenticated on 25 March 2009. But that is neither here nor there. It is well established that a judgment or order can be recalled or revised at any time before authentication, and it is not uncommon for a judgment or orders pronounced in open court to be revised in chambers, with the revised form being authenticated at a later date, but speaking as of the date the order or judgment was originally pronounced in court. As to this, see r 59.02(1) of the Supreme Court (General Civil Procedure) Rules 2005 which provides that “a judgment given or order made by the Court shall bear the date of and shall take effect on and from the day it is given or made, unless the Court otherwise orders.” And as to the Court’s power to antedate and postdate orders see Williams’ Civil Procedure[5] and Vitous v Tuohill[6]. In my view, notwithstanding the subsequent revisions and the delay in authentication, the Court gave judgment for s 57 interest on 20 February 2009.
[5]At [I 59.02.10].
[6][1964] VR 624 at 631.
It is next convenient to consider the relationship between s 57 of the Insurance Contracts Act and s 101 of the Supreme Court Act. The effect of s 57 is that interest on the primary judgment amounts is payable to the plaintiff for the period commencing on the relevant start dates and ending on the day on which “the payment” is made[7]. Read in context, the term “the payment” in s 57(2)(a) is a reference to the payment of the judgment amounts of US$3,319,145.50 and A$27,296.03 rather than a reference to payment of the s 57 interest amounts. It follows that in this case, where the defendant made payment of the judgment amounts on 19 December 2008, the period for s 57 interest ended on that day. As I have noted, s 57 interest (unpaid) has accrued to the extent of US$1,866,804.27 and A$11,824.23 up to the end date being 19 December. After that date, s 57 had no further operation. It follows that as from 20 December 2008, s 57 did not exclude the application of s 101(1).
[7]Section 57(2).
Section 101(1) provides that:
“Every judgment debt carries interest at the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 from the time the judgment was given or, in the case of costs which are assessable by the Taxing Master, from the date of the order of the Taxing Master stating the result of the assessment or such other date as the Court orders.”
The term “judgment debt” is not defined in the Supreme Court Act or the rules. I note, however, that s 3 of the Judgment Debt Recovery Act 1984 states that the term means “the amount of money recoverable or payable under and in respect of a judgment”.
In submitting that s 101(1) applied as from 20 December 2008, the fundamental premise underlying the plaintiff’s submission is that notwithstanding the fact that I reserved the question of interest and costs in November 2008, my judgment of 25 November (or 28 November) ought be taken as being a judgment for s 57 interest.
Taken at face value, that premise is erroneous. As I have concluded above, I gave judgment for s 57 interest on 20 February 2009, and not before. In November 2008 I gave judgment for the plaintiff only on its primary claim, my orders on 28 November expressly reserving the question of interest and costs to allow counsel time to consider the matter. Indeed counsel requested that time. I do not overlook the fact that following the judgment in November it probably seemed inevitable to the parties that s 57 interest would be payable. Indeed, the defendant’s submissions on interest filed in early December accepted that at least some s 57 interest would be payable, the dispute really being as to the amount of interest rather than the liability to pay it at all, given the disagreement between the parties as to the appropriate start date. Yet these are subjective matters which cannot change the objective fact that the Court did not give judgment for s 57 interest until 20 February 2009.
But it does not follow that the judgment debt constituted by the 20 February judgment for s 57 interest can only carry interest under s 101(1) as from the date of the judgment, being 20 February. Rather, s 101(1) relevantly provides that “Every judgment debt carries interest … from the time the judgment was given … or such other date as the Court orders (emphasis added).” This is consistent with the power of the Court to provide for the date on and from which a judgment or order takes effect, as the justice of the case may require.
In my view, in the present case it is overwhelmingly just and equitable to order that the judgment debt arising from the 20 February judgment for s 57 interest carry interest under s 101(1) from 20 December 2008. In so concluding, I note that judgment for s 57 interest was delayed until 20 February only because the parties wished to address detailed submissions on the issue, which led to a reserved judgment. The substance of the matter is that the defendant accepted that s 57 interest was payable, albeit from a start date much later than that proposed by the plaintiff. And regardless of the defendant’s position, the situation revealed by the 20 February decision was that s 57 interest had accrued up to the end date (19 December 2008), and was payable by the defendant. It is true that there was not then an order requiring the defendant to pay s 57 interest, and indeed the order to pay s 57 interest can only be enforced by execution as a judgment debt upon authentication of the order, yet the substance of the matter is that the defendant has had the use of money for a period of several months which, if s 57 interest and costs had readily been calculable immediately following judgment in November, the plaintiff would presumably have had at a much earlier time.
In the circumstances, I will order pursuant to s 101(1) of the Supreme Court Act that the judgment debt arising from the order made on 20 February 2009 carry interest under section 2 of the Penalty Interest Rates Act 1983 from 20 December 2008. I will also order that the plaintiff’s costs of and incidental to the issues raised by the parties’ submissions be the plaintiff’s costs in the proceeding.
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