Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council (No 2)

[2010] NSWCA 183

New South Wales

Court of Appeal

CITATION:	Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council (No 2) [2010] NSWCA 183
HEARING DATE(S):	On the papers.
JUDGMENT DATE:	3 August 2010
JUDGMENT OF:	Spigelman CJ; Campbell JA; Handley AJA
DECISION:	(1) Pursuant to leave reserved on 1 April 2010 substitute for the judgment in para 1 of the Orders of the Equity Division of 25 March 2009, judgment for the first defendant against the plaintiff for $1,626,612.01 with effect from 25 March 2009; (2) No order as to the costs of the written submissions filed pursuant to leave granted on 1 April.
CATCHWORDS:	PRACTICE - rate of interest payable on judgment debt - interrelationship of covenant in lease to pay interest on unpaid rent and of statutory provision for interest on judgment debts
LEGISLATION CITED:	Civil Procedure Act 2005
CATEGORY:	Consequential orders
CASES CITED:	Director-General of Fair Trading v First National Bank plc [2002] 1 AC 481 Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64
PARTIES:	Phoenix Commercial Enterprises Pty Limited (Appellant) City of Canada Bay Council (Respondent)
FILE NUMBER(S):	CA 40113/09
SOLICITORS:	Ferdinando Agresta (Appellant) Mills Oakley Lawyers (Respondent)
LOWER COURT JURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	1483/04
LOWER COURT JUDICIAL OFFICER:	White J
LOWER COURT DATE OF DECISION:	23 February 2009
LOWER COURT MEDIUM NEUTRAL CITATION:	Phoenix Commercial Enterprises v City of Canada Bay Council [2009] NSWSC 17

CA 40113/09

SPIGELMAN CJ
CAMPBELL JA
HANDLEY AJA

3 AUGUST 2010

PHOENIX COMMERCIAL ENTERPRISES PTY LIMITED v CITY OF CANADA BAY COUNCIL (No 2)

Judgment

1 THE COURT: On 1 April 2010 this Court gave judgment on the appeal and cross appeal in these proceedings and published its reasons: Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64.

2 The following orders, so far as relevant, were made:

"(1) Cross-appeal allowed’
(2) Set aside orders (1) and (9) in the Court below;
(3) Appeal dismissed;
…
(5) Direct the parties, within 14 days of the date of delivery of these reasons for judgment:
(a) to provide … agreed Short Minutes of the Order appropriately made in lieu of order (1) in the Court below;
(b) in the event that agreement is not possible, to provide … their respective written submissions about the order that should be made in view of order (1) in the Court below …
…
(7) Reserve further consideration of the orders appropriate to give effect to these reasons for judgment … ".

3 Order (1) in the Court below was:

"(1) I give judgment of the first defendant against the plaintiff in the sum of $948,671.55."

4 The figure in order (1) in the court below reflected the setting off of a verdict for unpaid rent and interest in favour of the Council against a verdict for liquidated damages and interest in favour of the appellant.

5 The dismissal of the appeal confirmed the Council’s right under its two leases to recover overdue rent of $900,000 and interest thereon at the rate of 2% above the 90 day AFNA Bank Bill rate from 1 February 1998.

6 The order allowing the Council's cross-appeal set aside the trial judge's finding that it had breached covenants in the leases which entitled the appellant to two awards of liquidated damages of $178,593.75 together with interest at the rate of 10% per annum from 22 February 2000.

7 Pursuant to order (5) made by this Court the appellant, represented by its authorised officer Mr Agresta, filed a six-page written submission on 14 April.

8 On 15 and 29 April the solicitor for the Council sought extensions of time for the filing of its written submissions. These were ultimately filed on 7 May.

9 Paragraph (1) of Mr Agresta’s submissions acknowledged that the amount of $1,626,612.01 for which the Council sought judgment in its notice of cross-appeal was correct. He pointed out however that the Council had not sought interest on this amount and submitted that it was not entitled to any.

10 Paragraphs 2-23 of his submissions canvassed matters which occurred prior to the conclusion of the trial.

11 Some of these paragraphs dealt with a letter from the appellant to the Council of 28 January 1998 and certain paragraphs in the affidavit of Stephen Nixon sworn 3 September 2004 which were not read at the trial, and were not in the appeal books.

12 Other paragraphs dealt with the construction of cl 15(d) of the leases and asserted a right in the appellant to multiple awards of liquidated damages for multiple breaches.

13 Other paragraphs referred to an interlocutory judgment of Gzell J on 17 August 2005 which was not in the appeal books, and questioned the authority of the Council’s General Manager to sign notices of termination of the leases. These paragraphs referred to affidavits by the Mayor of 11 November 2004 and 14 March 2007 which were not in the appeal books.

14 Other paragraphs dealt with the Council's response, or lack of it, to a subpoena for production dated 2 January 2008, and an order for interrogatories of 28 February that year.

15 The last paragraph dealt with what was said to be a factual error in the reasons of Campbell JA. There was no such error because the trial included the plaintiff's application to re-open heard on 6 February 2009.

16 The matters in paras 2-23 of Mr Agresta’s submissions relate to events which occurred before White J gave judgment on 23 February 2009. They were not matters raised for determination at the hearing of the appeal and cross-appeal and they depend, in large part, on material which is not in the appeal books.

17 These paragraphs did not respond to order (5) made by the Court on 1 April 2010 and are not relevant to the determination of the amount for which final judgment should be entered in favour of the Council.

18 The Council's submissions of 7 May sought judgment for $1,626,612.01 and interest thereon from 25 March 2009 to 1 May 2010 at the contractual rate amounting to a further $55,381.45.

19 The leases did not include covenants by the appellant to pay interest at the contractual rate on any judgment for unpaid rent. In accordance with long settled authority recently affirmed by the House of Lords the covenant to pay interest on unpaid rent merged in the judgment for the principal sum, and ceased to be enforceable: Director-General of Fair Trading v First National Bank plc [2002] 1 AC 481, 487-8.

20 The Council is therefore not entitled to interest on the judgment debt at the contractual rate.

21 On 1 April the Court set aside the judgment for $948,671.55 entered by White J on 25 March 2009 which, under s 101 of the Civil Procedure Act 2005, and without any order of the Court, automatically attracted judgment interest from that date at prescribed rates.

22 In accordance with its general practice, the Court, having varied the judgment below, should enter judgment for the Council for $1,626,612.01 with effect from 25 March 2009, the date of the judgment below, leaving the Council entitled, without any order of the Court, to interest on the judgment debt from that date in accordance with s 101 of the Civil Procedure Act.

23 The Council’s submissions were very late, and it sought interest on an incorrect basis. In the circumstances there should be no order for the costs of the written submissions filed pursuant to leave.

24 The following orders should be made:

(1) Pursuant to leave reserved on 1 April 2010 substitute for the judgment in para 1 of the Orders of the Equity Division of 25 March 2009, judgment for the first defendant against the plaintiff for $1,626,612.01 with effect from 25 March 2009;

(2) No order as to the costs of the written submissions filed pursuant to leave granted on 1 April.

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