Motor Accidents (Compensation) Commission v Motor Accidents Insurance Board (No 2) - [2023] NTSC 71

CITATION:Motor Accidents (Compensation) Commission v Motor Accidents Insurance Board (No 2) [2023] NTSC 71
PARTIES:MOTOR ACCIDENTS (COMPENSATION) COMMISSION
v

MOTOR ACCIDENTS INSURANCE BOARD

TITLE OF COURT:  SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION:  SUPREME COURT exercising Territory jurisdiction
FILE NO:4/19 (21903729) and 5/19 (21903731)
DELIVERED:  15 August 2023
HEARING DATES:  4 July 2023
JUDGMENT OF:  Blokland J
CATCHWORDS:

PRACTICE – JUDGMENT – INTEREST – whether post-judgment interest should apply – both parties statutory insurers – plaintiff successful in enforcing statutory indemnity – how interest should be calculated – defendant claimed post-judgment interest was unfair rate as parties not commercial entities – other ways of calculating interest more appropriate in the circumstances – defendant claimed statutory indemnity is a different category of case and that previous decisions of the Court misguided on the issue – held the parties are commercial entities – the plaintiff proved the yield it would expect if it had use of the money during the relevant periods – plaintiff kept out of its money which would ordinarily be invested across a range of portfolios – held, post-judgment interest the appropriate rate.
Federal Court of Australia Act 1976 (Cth) s 52
Federal Court Rules 2011
Motor Accidents (Compensation) Act 1979 (NT) s 38
Motor Accidents (Compensation) Commission Act 2014 (NT) s 15
Personal Injuries (Liabilities and Damages) Act 2003 (NT) s 4
Personal Injuries (Liabilities and Damages) Regulations 2003 (NT)
Supreme Court Act 1979 (NT) s 84
Supreme Court Rules1987 (NT)
Territory Insurance Office Act 2010 (NT) s 22B
Acer Forester Pty Ltd v Complete Crane Hire (NT) Pty Ltd [2013] NTSC 41; Boronia Park Properties Pty Ltd v Johnston [1996] NTCA 4; Ceccon Transport Pty Ltd & Ors v Tomazos Group Pty Ltd (No 2) [2017] NTSC 55; Ferrier v CAA (1994) 127 ALR 472; Motor Accidents (Compensation) Commission v Motor Accidents Insurance Board [2023] NTSC 40; SCI Operations Pty Ltd v Commonwealth of Australia (1996) 69 FCR 346; Sherwin and Sherwin v Commens and Commens [2008] NTSC 45; Territory Sheet Metal Pty Ltd v Australia and New Zealand Banking Group Ltd (2010) NTLR 1; TTG Nominees Pty Lt v Aileron Pastoral Holdings Pty Ltd [2020] NTSC 15; TTG Nominees Pty Ltd v Aileron Pastoral Holdings Pty Ltd [2020] NTSC 15; Volmer v Northern Territory Electricity Commission (1985) 34 NTR 12, referred to.
REPRESENTATION:
Counsel:
Plaintiff:A Lindsay SC, K Frost
Defendant:R Bonig, J Ward
Solicitors:
Plaintiff:Hall and Wilcox
Defendant:Finlaysons
Judgment category classification:    B
Judgment ID Number:  BLO2312
Number of pages:  17

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN
Motor Accidents (Compensation) Commission v Motor Accidents
Insurance Board (No 2) [2023] NTSC 71

No. 4/19 (21903729) and 5/19 (21903731)
BETWEEN:

MOTOR ACCIDENTS (COMPENSATION) COMMISSION

Plaintiff

AND:

MOTOR ACCIDENTS INSURANCE BOARD

Defendant

CORAM: BLOKLAND J
REASONS FOR JUDGMENT
(Delivered 15 August 2023)
Decision on interest

Following a trial to determine whether a statutory indemnity under s 38 of the Motor Accidents (Compensation) Act 1979 (NT) (‘the Act’) could be enforced, the Court found for the plaintiff.
In terms of the course of the litigation, the defendant’s denial as the indemnifier in the context of the Act, required the plaintiff to prove a deceased driver was liable in tort for injuries, loss and damage to the occupants of a vehicle involved in the collision. The plaintiff succeeded in proving liability on that basis.[1]
The sums awarded in favour of the plaintiff were as follows:
Supreme Court No 4 of 2019: $1,342,083.99
Supreme Court No 5 of 2019: $133,695.98
Pursuant to Order 59 and Order 60 of the Supreme Court Rules1987 (NT), the judgment date was deferred until the question of interest was determined. The parties have been unable to reach agreement on the question of interest.
As at 30 June 2023, the claim for interest was: Supreme Court No 4 of 2019: $558,226.72, accruing at $334.37 per day to the date of decision on interest. Supreme Court No 5 of 2019: $133,695.98, accruing at $33 per day to the date of decision on interest.
The exercise of the discretion to award interest
As the respondent emphasises, the question of whether interest is to be awarded and if so at what rate, is principally governed by s 84(1) of the Supreme Court Act 1979 (NT). Section 84(1) states the Court ‘may order that there shall be included in the sum for which judgment is given, interest at such rate as it thinks fit on the whole or any part of the sum for the whole or any part of the period between the date when the cause of action arose and the date of the judgment.’[2]
The discretion is plainly wide, and must be exercised judicially. There is significant coalescence among Northern Territory decisions dealing with the exercise of the discretion as it applies to pre-judgment interest. All relevant decisions accept the principle that the purpose of pre-judgment interest is ‘to compensate the plaintiff for the loss or detriment which that party has suffered by being kept out of its money during the applicable period.’ [3]
While it is by no means a fixed starting point, this Court has generally applied the post-judgment rate of interest governed by the Supreme Court Rules (NT).[4] The series of cases which have dealt with the issue of pre-judgment interest have invariably acknowledged that while upon proof, commercial rates may be awarded,[5] significant regard is to be had to fixing interest at the post-judgment rate. This is because generally the successful party will have been ‘kept out of its money’ during the trial period.
Rule 59.02(3) of the Supreme Court Rules (NT) fixes post-judgment interest at the per annum rate set out under s 52(2)(a) of the Federal Court of Australia Act 1976 (Cth). Section 52(2)(a) refers to the Federal Court Rules 2011. Rule 39.06 of the Federal Court Rules, fixes the prescribed rate under s 52(2)(a) as 6 percent above the Reserve Bank cash rate prior to 1 January to 30 June in any year and 6 percent above the Reserve Bank cash rate, prior to 1 July to 31 December in each year. No issue is taken with the correctness or otherwise of the mathematical calculations of the rates set out in the ‘Plaintiff’s supplementary submissions on interest’.[6] However, the defendant argues the post judgment rate should not be applied and suggests a number of alternative ways to calculate interest in this particular case.
Consideration of the parties’ contentions
In board terms, counsel for the defendant submitted as follows. The discretion to award interest is a discretion of broad dimensions. There was no ‘normal practice’ adopted by the Court with respect to pre-judgment interest. If there was any general practice adopted, such a practice was misguided as such an approach ignored or potentially ignored the discretions conferred by s 84.
In any event, the defendant submitted this was a case which could be distinguished from the body of case law which has emerged in the Northern Territory, as unlike cases which are commercial in nature, this is a matter involving a statutory indemnity. The fact that this case is one involving a statutory indemnity was said to be an important distinction. The defendant argued the correct way to deal with the issue of pre-judgment interest was to consider what the plaintiff would have done with the money if the plaintiff had been paid the money at an earlier time or at the time of notification of the claim. It is not a matter of ascertaining what advantage the defendant has had by keeping the money. Through this lens, the focus is on the compensatory nature of awarding interest, rather than a punitive approach or an approach that leads to a windfall for the plaintiff.
The defendant relied in part on a line of cases which calculated interest when a liquidator or receiver was seeking to recover a preference payment.[7] Reference was made to SCI Operations Pty Ltd v Commonwealth of Australia[8] which relied in part on Ferrier v CAA.[9] Ferrier v CAA held that once a preference payment between creditors had been made, an award of interest should commence on the date of the demand from the creditor for the repayment of the money. It is when the demand for payment is made, the liability for interest arises. By analogy, the defendant argued the indemnity under the Act cannot by triggered until the demand is made as the defendant does not know whether a payment under the Act by the plaintiff has been made. The analogy from notification of preference payments between creditors is a long way from the statutory indemnity here. The indemnity here gives a right of repayment of each payment as it is made. Interest may accrue on each payment. The more helpful analogy is from cases involving commercial entities with some similarity with the parties here.
The defendant’s submissions and the affidavit of John Michael Ward (‘Mr Ward’) of 23 June 2023 set out the periods the defendant submits the demands were made on both actions and were the appropriate periods for which interest may arise.[10] This mode of calculation was said to be appropriate and in keeping with the line of cases commencing with Ferrier v CAA mentioned above.
Mr Ward’s affidavits of 23 June, 28 June and 3 July 2023 were read. In his correspondence, exhibited to the affidavit of 23 June 2023,[11] Mr Ward raised the issue of the significance of the statutory indemnity with the plaintiff’s lawyers and the need for interest to reflect the principle that interest be compensatory rather than punitive. In his affidavits of 3 July 2023, Mr Ward provided calculations made via a ‘stepped’ process as it was referred to in submissions on the basis of notification of payments due under the indemnity.[12] The defendant disagreed with a counter argument that this process may amount to compounding interest, which is prohibited under s 84(2) of the Supreme Court Act. In the defendant’s view, the stepped method represents a more appropriate method applicable to each demand. Through that method as set out in the Calculation of Interest – Reserve Bank Rates,[13] the interest would be $106,238.14 after going through the stepped process and applying the Reserve Bank rates as relevant from time to time.
The table in Exhibit JMW-2 of Mr Ward’s affidavit of 3 July 2023, is headed ‘Calculation of interest – MACC Annual Report Rates’ which utilises the plaintiff’s annual reports, applied to the stepped method which would amount to interest in the sum of $81,000 in Action No 4 of 2019 which would then be subject to the discretion under s 84. Exhibit JMW3 of the same affidavit provides the calculations under ‘Calculation of interest – Federal Court Post-Judgment Rates’ gives a figure of $526,338.90, which is based on the plaintiff’s asserted rate, but using the defendant’s preferred stepped approach. It was submitted this sum, and the sums put forward on behalf of the plaintiff are wholly disproportionate to the judgment sum in action No 4 of 2019 and which would require calibration via the discretion in s 84.
Exhibit JMW-5 of Mr Ward’s affidavit shows the calculations based on the stepped approach but based on the Federal Court pre-judgment rates, giving an amount of $376,000 in Action No.4 of 2019. Counsel for the defendant emphasised the Federal Court pre-judgment rate should be preferred, whichever method of calculation is used. The defendant urged the Court to apply this calculation in accordance with the MACC Annual Report.[14]
The defendant’s arguments about the calculation of different rates as relevant to the exercise of the discretion were said to have regard to the line of authority analysed in depth by O’Leary J in Volmer v Northern Territory Electricity Commission (‘Volmer’).[15] There his Honour dealt with not only the question of whether interest should be allowed on non-economic loss but also an award of interest was allowed, at what rate it should be fixed. After analysing a ‘fluctuation of opinion’[16] his Honour concluded, subject to other discretionary considerations, that the commercial rate was appropriate. At page 30, O’Leary J said:
Following the decision in Cullen v Trappell, then, I think it is clear that, although the award of interest should be approached “in a broad and practical way”, where interest is allowed it should be allowed at ordinary commercial rates, and the same rate of interest should be allowed for both economic and non-economic loss. That does not mean, of course, that one should simply allow interest at ordinary commercial rates for the whole of the amount of the pre-trial detriment, nor for the whole period from the date of the injuries to the date of the trial. The purpose of awarding interest is to compensate the plaintiff for being kept out of the moneys to which he has now been held to be entitled. Interest, therefore, should be awarded for the period from the time when the loss or detriment for which he is being compensated was suffered by him up to the date of Judgment.
The defendant can draw little comfort from Volmer. The cases since clearly start with the proposition that interest is compensatory not punitive. It simply compensates the successful party from being kept out of its money. What was said in Volmer must also be read in the light of the Supreme Court Act, the Supreme Court Rules and the body of case law which has developed. I accept a practice has developed over time which is reflected in the Northern Territory cases with respect to interest. In commercial cases, commercial rates should be applied and where evidence of the appropriate rate has not been led, as discussed at the outset, the cases have adopted the rate of applying the post judgment rate of interest to the judgment debt by reference to SCR 59.
Despite the valiant attempts by the defendant to persuade the Court otherwise, this is clearly a case of both parties being properly characterised as commercial entities. Both parties are statutory insurers. Both have investment obligations and are required to meet claims brought under their respective Acts. The affidavit of Matthieu Durin (‘Mr Durin’) of 28 June 2023 attests to the fact that the Motor Accidents (Compensation) Fund (‘MAC’) was the fund originally established and maintained pursuant to s 22B of the Territory Insurance Office Act 2010 (NT) (repealed). It continued under s 15 of the Motor Accidents (Compensation) Commission Act 2014 (NT). Mr Durin confirms the plaintiff actively manages its investment portfolio comprised by the MAC Fund to meet future cash flows arising from outstanding claims. The MAC Fund is administered and managed by Allianz Australia Insurance Limited, pursuant to an agreement between the Motor Accidents Compensation Fund, the Northern Territory and Allianz.[17]
The MAC Fund invests across a diverse range of managed funds to meet its objectives. Clearly the substance dealt with in the relevant Motor Accident Compensation legislation, including earlier versions, was regarded as and was intended to support a commercial enterprise. The second reading speech for the Territory Insurance Office and Other Legislation Amendments Bill 2010,[18] states inter alia ‘[T]he TIO Board also introduced measures to reinforce a separation of the MAC business from TIO’s commercial activities through a service level agreement, and the prudential framework for TIO was enhanced to provide a greater level of oversight to TIO and MAC operations and performance’. This is merely one indicator that the plaintiff is a commercial business, albeit established and subject to legislation, particularly with regard to oversight. The MACC Annual Report annexed to Mr Durin’s affidavit plainly shows the same. Commercial rates would ordinarily apply to such an entity. It would be surprising to the community to find that after all of its years of operation through different overarching statutory mechanism the MAC Fund was not considered a commercial entity.
The plaintiff has not simply applied a rate to the total amount owing but rather, in the print out before the Court, the ‘Amount’ of each payment the plaintiff has made and the date it was made on is set out. A calculation of the interest has been made for each period. It is not disputed the relevant rates, on the plaintiff’s case, for each period are as follows:[19]
·     1 January 2017 – 30 June 2019 – 7.5% (the claim No.4 of 2019 was enlivened in April 2017)
·     1 July 2019 – 31 December 2019 – 7.25%
·     1 January 2020 – 30 June 2020 – 6.75%
·     1 July 2020 – 31 December 2020 – 6.25%
·     1 January 2021 – 30 June 2022 – 6.10%
·     1 July 2022 – 31 December 2022 – 6.85%
·     1 July 2023 – 30 June 2023 – 9.10%
It seems to me that the method of calculating interest in the way the plaintiff has set out should be adopted. The plaintiff is clearly a commercial entity. The calculations are made in accordance with simple interest, from the date of loss, during the periods which ‘the money has been outstanding’.[20]
‘Ordinary commercial rates’ were applied by Hiley J in Ceccon Transport Pty Ltd & Ors v Tomazos Group Pty Ltd (No 2)[21] (‘Ceccon’). Ceccon was a dispute between commercial parties over loans and other agreements. The interest rate relevant to some of the agreements was fixed by contract. There were questions of delay and other issues which arose throughout the course of the litigation. The successful party applied for interest at the post judgment rate plus 8 percent. While the 8 percent was not allowed, Hiley J ordered that the post-judgment rate was the applicable rate. His Honour commented that evidence may be called, but when no evidence is called or no rate prescribed, interest should be allowed ‘at ordinary commercial rates’ and that when no evidence on the issue has been called, it is appropriate to order post-judgment interest rates under the Supreme Court Rules. His Honour cited Sherwin and Sherwin v Commens and Commens[22] for the proposition that the rates applicable to post judgment interest were a fair and reasonable rate of interest.
In TTG Nominees Pty Lt v Aileron Pastoral Holdings Pty Ltd,[23] Mildren AJ remarked that the successful plaintiff could call evidence about relevant commercial rates but in the absence of such evidence, the practice is to apply the rates from time to time applicable to post-judgment interest.[24]
While a specific commercial interest rate is not being claimed here, the commercial nature of the plaintiff as an entity and the fact that commercial rates could be claimed upon proof goes some way towards the conclusion that the exercise of the discretion should favour awarding post judgment interest at the rates specified in the Supreme Court Rules.
The defendant raised the following passage from Grant, Civil Procedure [8.24.21][25] which was referred to by Hiley J in Ceccon;
Interest should be referrable to the yield the plaintiff would have received for the past, not the rate of interest which the plaintiff as a notional borrower would have paid … this is because interest is to compensate the plaintiff for being kept out of the money, not to put the plaintiff in the position of a commercial lender over the period. For that reason, retail deposit and investment rates will be the appropriate measure, rather than the lending rates such as small business variable and the housing loan variable rates.
It is a fair reading of that paragraph in the context of broader principles and discretions concerning the awarding of interest that the learned author meant that a person who does not engage in commercial activities will not generally be awarded interest at the rate of a commercial investor or lender. It depends on the nature of the party and the yield the party seeking interest may have ordinarily received. It may also be noted that Hiley J declined to apply the retail investment rate in Ceccon rather, after considering the above passage his Honour made reference to how Olsen AJ dealt with the issue in Territory Sheet Metal. Olsen AJ[26] incorporated Southwood J’s approach in Sherwin v Commens,[27] where it was accepted that the post-judgment interest rate was the appropriate rate when evidence is not called as to the commercial rate. In the result, Hiley J held the approach in Sherwin should normally be applied, namely, post-judgment interest under the Supreme Court Rules.

In this matter, there is evidence of the likely return or rate of return the plaintiff would have had if the money in the judgment sums had been invested in its various investment portfolios. The yield the plaintiff would have received in the past may be measured by the commercial interest rates made on its investments. Matthieu Durin’s affidavit exhibits the MACC Annual Report of 2021-2022 (‘Annual Report’). Drawn from the Annual Report, Mr Durin sets out how the MAC fund is invested across a diverse range of managed funds to meet its future cash flows arising from outstanding claims. His affidavit extracts the fund performance for each year from 2016. Helpfully, he has calculated the compounded annualised investment return rates for the period under consideration here, September 2016 to May 2023 at 5.88 percent per annum.[28]
Some further observations may be made. The rates in the table extracted by Mr Durin are compound rates. The Annual Report shows how the funds are invested across the whole portfolio. (The percentages held in cash, shares, bonds, property and infrastructure are set out, as is the performance for the financial year).[29] The ‘cash at bank’ and ‘on hand’ is set in the Annual Report.[30] Cash comprises only 2 percent of the portfolio. As a minor part of the overall portfolio, it would be a distortion of the overall yield to concentrate on cash when considering the investment performance. The investment returns reported on[31] over the relevant period range from 14.2 percent to -4.5 percent.[32]
It is clear the plaintiff, through the general fund would have earned 5.88 percent on the money it would have been kept out of, compounding. The calculation set out in Mr Durin’s affidavit shows the plaintiff would have earnt $631,230 as opposed to the sum of $558,226 simple interest calculated in accordance with the Rules on No 4 of 2019 at the date of decision on 3 May 2023.
The defendant is also a statutory insurer and has had the benefit of the money throughout the relevant period and would no doubt maintain a commercial investment portfolio sufficient to maintain the value of the money it has held in order to service claims.
The post-judgment interest rate is the appropriate rate in these circumstances. I have come to this conclusion both through considering the technical arguments of the parties, the commercial character of the parties who are statutory insurers and the broad discretion available to the Court. Importantly, this decision on interest is not made on a punitive basis. It is made on the basis the plaintiff would have had access to the money to further its investment objectives. It compensates the plaintiff appropriately. The evidence shows it would have invested the money for the returns set out in the Annual Report. The plaintiff has been kept out of its money. The amount of interest claimed in such circumstances is not disproportionate to the overall sum.
The orders for interest will be finalised by the following calculation.[33] File 21903729, No 4 of 2019 $558,226.72, plus daily interest fixed at $334.37 for 46 days (30 June 2023 – 15 August 2023), $15,381.02. Total: $573, 607.74. File 21903731, No 5 of 2019, $61,390.22, plus daily interest fixed at $33.31 for 46 days (30 June 2023-15 August 2023), $1,532.26. Total $62,922.48.
As above, judgment was deferred until the question of interest was determined. The date Judgment will be formally entered is 15 August 2023.
Thus far no party has applied for costs. Leave will be granted to make a costs application should the issue of costs remain unresolved.
These reasons and the orders that follow will be forwarded to counsel by prior arrangement and take effect on 15 August 2023.
Orders
1. File No. 21903729, SC No.4 of 2019, judgment for the plaintiff. The defendant is to pay the plaintiff the sum of $1,342,083.99 plus interest in the sum of $573,607.74.
2.File No. 21903731, SC No.5 of 2019, judgment for the plaintiff. The defendant is to pay the plaintiff the sum of $133,695.98 plus interest in the sum of $62,922.48.
3.Failing agreement between the parties, leave is granted for a party who wishes to apply for costs to contact Chambers to set a date to hear any necessary application.
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[1] Motor Accidents (Compensation) Commission v Motor Accidents Insurance Board [2023] NTSC 40.

[2] None of the exclusions in s 84(2) of the Supreme Court Act apply. Payment of benefits and recovery of the same under the Motor Accidents (Compensation) Act 1979 (NT) are excluded from the Personal Injuries (Liabilities and Damages) Act 2003 (NT), by operation of s 4(3)(a), Personal Injuries (Liabilities and Damages Act 2003 (NT) read with Reg 3, Personal Injuries (Liabilities and Damages) Regulations 2003 (NT).

[3] Territory Sheet Metal Pty Ltd v Australia and New Zealand Banking Group Ltd (2010) NTLR 1 at [192].

[4] Acer Forester Pty Ltd v Complete Crane Hire (NT) Pty Ltd [2013] NTSC 41 at [51] (Kelly J); Ceccon Transport Pty Ltd & Ors v Tomazos Group Pty Ltd (No 2) [2017] NTSC 55 at [70]-[71], [80]-[81] and [91] (Hiley J); TTG Nominees Pty Ltd v Aileron Pastoral Holdings Pty Ltd [2020] NTSC 15 at [2] (Mildren J).

[5] Territory Sheet Metal Pty Ltd v Australia and New Zealand Banking Group Ltd (2010) 25 NTLR 1 at [196]-[198] (‘Territory Sheet Metal’).

[6] At [2.13], [2.14].

[7] Defendant’s submissions on interest at [12].

[8](1996) 69 FCR 346.

[9](1994) 127 ALR 472.

[10]Defendant’s submissions on interest at [12]-[14] and references to Mr Ward’s affidavit.

[11]JMW-1.

[12]JMW4 of Mr Ward’s affidavits of 3 July 2023.

[13]JMWI, to Mr Ward’s affidavit of 3 July 2023 in Action No 4 of 2019.

[14]JMW-2 of Mr Ward’s affidavit of 3 July 2023.

[15](1985) 34 NTR 12.

[16]Ibid at 29.

[17]Affidavit of Matthieu Durin, 28 June 2023 at Northern Territory Second Reading Speeches, Territory Insurance Office and Other Legislation Amendment Bill.

[19]Plaintiff’s Supplementary Submission on Interest at [2-13].

[20]Boronia Park Properties Pty Ltd v Johnston [1996] NTCA 4, page 11.

[21][2017] NTSC 55 at [81].

[22][2008] NTSC 45.

[23][2020] NTSC 15.

[24]Ibid at [5].

[25]Defendant’s submissions on interest.

[26] Territory Sheet Metal at [176], fn 72.

[27][2008] NTSC 45 at [67] – [68].

[28]Affidavit of Matthieu Durin, 28 June 2023 [4] – [8].

[29]Annual Report at 21.

[30]Ibid at 64.

[31]Ibid at 89.

[32]Affidavit of Matthieu Durin, 28 June 2023 at [11].

[33] The change in the daily rate from 30 June 2023 is not claimed at this stage.