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

Phoenix Commercial Enterprises Pty Ltd (the plaintiff) and the City of Canada Bay Council (the first defendant) were parties to litigation concerning a judgment debt. The dispute before the court involved the rate of interest payable on this judgment debt, specifically how a covenant within a lease agreement to pay interest on unpaid rent interacted with the statutory provision for interest on judgment debts. The matter was heard by Spigelman CJ, Campbell JA, and Handley AJA.

The central legal issue before the court was to determine the correct rate of interest applicable to the judgment debt owed by the plaintiff to the defendant. This required the court to consider the interplay between the contractual obligation to pay interest under the lease and the statutory entitlement to interest on a judgment debt, and to decide which rate, or combination of rates, should apply.

The court reasoned that the statutory provision for interest on judgment debts was intended to operate independently of any contractual provisions for interest. It held that the covenant in the lease to pay interest on unpaid rent did not preclude the operation of the statutory interest provisions once a judgment was entered. Therefore, the statutory rate of interest was to be applied to the judgment debt from the date of the judgment. The court granted leave to substitute the judgment amount, ordering that the first defendant have judgment against the plaintiff for $1,626,612.01 with effect from 25 March 2009. There were no orders as to the costs of the written submissions filed pursuant to leave granted on 1 April.