Purdon v Purdon [No 2]

[2007] NSWSC 395

CITATION:	Purdon v Purdon & Anor [No 2] [2007] NSWSC 395
HEARING DATE(S):	27 March 2007
JUDGMENT DATE :	27 April 2007
JUDGMENT OF:	Smart AJ at 1
DECISION:	See paras 35-36
CATCHWORDS:	Entitlement to Interest on Judgment - Entitlement to costs - both parties partly successful - whether taking of accounts should be ordered
LEGISLATION CITED:	Civil Procedure Act 2005 UCPR Rules Conveyancing Act 1919
CASES CITED:	MBP(SA) Pty Ltd v Gogic (1990-1991) 171 CLR 657
PARTIES:	John Wentworth Purdon (JP) v Steven Purdon (SP) & David Webb [No 2]
FILE NUMBER(S):	SC 3548/05
COUNSEL:	(P) Mr F Kalyk (D1) Mr G Segal
SOLICITORS:	(P) Kemp Strang (D1) Segal & Associates

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

SMART AJ

Friday, 27 April 2007

JUDGMENT

1 Following upon the earlier judgment the parties advanced arguments as to the terms of the orders which should be made, interest, costs and whether the taking of accounts should be ordered.

2 Counsel for JP prepared draft short minutes of the orders to be made consistent with the earlier judgment.

Form of Orders 1 and 3

3 Order 1 in the draft short minutes reads:

“Order that judgment be entered for the first defendant on the plaintiff’s claim under the assigned Citibank debt and guarantee.”

The first defendant was prepared to accept this draft order It accords with the first order envisaged in para 223 of my earlier judgment namely, “Judgment for SP on JP’s claim for $213,303.10 based on the assignment of the debt of $426,606.20 from Citibank to JP.” I am prepared to accept Order 1 in the draft short minutes.


4 As to Order 3 in the draft short minutes and proposed order 3 in para 223 of my judgment, I note that counsel for the plaintiff has told me that the plaintiff (JP) has elected to treat the transfer to the second defendant of the interest of the first defendant (SP) as a tenant in common in the property known as 39A Raimonde Road, Eastwood, being the land comprised in folio identifier 2/531646, of about 30 March 2001 as void. I should also record that during argument on 27 March 2007 it was made clear, with additional evidence, that this property had stood in the name of both the first and second defendants from 1987 to 30 March 2001 as tenants in common in equal shares. It was about this latter date that the first defendant transferred his interest to the second defendant.

5 Order 3 should read :

“Declare that the transfer of the interest of the first defendant to the second defendant in the property known as 39A Raimonde Road, Eastwood, being the land comprised in folio identifier 2/531646, about 30 March 2001 is void.”

Interest

6 The plaintiff sought interest on the amounts he paid to the guarantors and in respect of which he has sought contribution. This applies to the sum of $38,.500 being half the amount of $75,000 paid by the plaintiff to Citibank in early October 2003 and the amounts paid to Coca Cola. SP submitted that JP was not entitled to any interest in resect of the claim for $37,500 for these reasons:


i) The claim for $37,500 was only ever made on 13 December 2006 at the virtual conclusion of the hearing.

ii) The evidence established that SP was at all times willing to bear his share of any moneys actually paid.

iii) The amendments of 13 December 2006 represented a move away from (or in addition to) a claim pursuant to the assignment to a claim for contribution.

iv) The case proceeded on the basis that the sum of $37,500 was not in dispute.

v) The amendments made on 13 December 2006 was only to para 1 and 30 of the Further Amended Statement of Claim. Para 2 was not amended. There was never any claim for any interest in any pleading relating to $37,500. Interest such as is now claimed needs to be claimed specifically. Reliance was placed on the terms of the Uniform Civil Procedure Act, 2000 and the rules.

7 In June 2005 the first defendant (SP) became aware that the plaintiff had paid $75,000 to Citibank. SP (T273, lines 30-33) said that if he had been asked to pay that sum he had the capacity to do so.

8 SP contended that he had never been asked by JP to pay him half of $75,000, namely $37,500, that being a claim for contribution. At the hearing SP did not dispute that he was liable to pay this sum. It was not paid pending resolution of the proceedings. It was pointed out that in his Statement of Claim JP sought judgment against SP for $491,606.12. It is not stated how this sum is made up but from a study of paragraphs 23 and 28 (??) of the Statement of Claim it appears that the bulk of the claim comprises the amount of $426,606.20. That was the amount of the then debt assigned by Citibank to JP. The assignment is pleaded but no claim for contribution is pleaded. In addition to the claim for judgment interest is sought pursuant to s 94 of the Act. The claim for interest is repeated in the citation addressed to the second defendant.

9 The Amended Statement of Claim filed on 14 November 2005 contains no claim for contribution as to the $75,000 paid by JP. It seeks judgment for $218,374 and interest on that amount pursuant to the Facility Agreement and in the alternative pursuant to s 100 of the Civil Procedure Act 200 . The Amended Statement of Claim reveals that this sum was made up of half the sum paid to Coca Cola – this being an express claim for contribution – and half the amount due to Citibank. In para 29 JP relied on the assignment of about 4 March 2004 and in para 30 JP acknowledged that he was liable to contribute one-half. The claim was based on the assignment but the amount sought was discounted by half because of the admitted contribution obligations of JP.

10 The Further Amended Statement of Claim seeks judgment in the same amount as the Amended Statement of Claim. The composition of the amount claimed and the basis of that claim is repeated. Interest is claimed on the amount of $218,374 from 4 March 2004 (when the assignment was executed) pursuant to the Facility Agreement and in the alternative pursuant to s 100 of the Civil Procedure Act .

11 It was on the sixth and last day of the hearing (13 December 2006) and at he start of his closing speech that counsel for JP amended his claim to $252,754 and included a claim for $47,500 being one-half of the amount he had paid Citibank. That was a claim for contribution.

12 In paras 45 and 36 of the Defence to the Further Amended Statement of Claim, SP in effect asserted that any payment required of him to JP in excess of $37,m500 would be unjust.

13 However, para 21 of the Statement of Agreed Facts/Matters (Exhibit A) handed up at the start of the hearing, reads:

“In the event that John Purdon is unsuccessful in respect of his claims for money as assignee of the Citibank guarantee Steven Purdon remains liable to pay to John Purdon the amount of $37,500 paid by John Purdon to Citibank under the guarantee, together with interest in accordance with the Civil Procedure Act 2005.”
14 The date from which interest is to be paid is not stated. Section 100(1) of the Civil Procedure Act 2005 provides that in proceedings for the Court thinks fit:


(a) on the whole or any part of the money, and

(b) for the whole or any part of the period from the time the cause of action until the time the money was paid.

15 UCR 6.12 (1), (6), (7) and (8) provide:

“(1) A statement of claim or summons mist specifically state the relief claimed by the plaintiff.
…
(6) An order for interest up to judgment must be specifically claimed.

(7) In the case of a liquidated claim, a claim for interest up to judgment:


(a) must specify the period or periods for which interest is claimed, and

(b) must specify the rate or rates at which interest is claimed.

(8) If no rate of interest is specified under sub-rule (7)(b), the rate at which interest is claimed is taken to be the relevant rate of interest prescribed by Schedule 5 for the purposes of section 101 f the Civil Procedure Act 2005 .”


16 I regard the claim for contribution in the present case as a liquidated claim. That point was not argued.

17 Three points as to the ordering of interest emerge from the decision of the High Court in MSB(SA) Pty Ltd v Gogic (1990-1991) 171 CLR 657:

(a) It is discretionary,

(b) the discretion should be exercised in the light of the particular facts, and

(c) the function of an award of interest is to compensate a plaintiff for the loss or detriment which he or she has suffered by being kept out of his or her money during the relevant period.

These principles apply to awards of interest under the Civil Procedure Act 2005 and the Rules.

18 In summary, JP paid $75,000 to Citibank in early October 2003, the assignment occurred about 4 March 2004, SP did not become aware of the payment of $75,000 by JP to Citibank until June 2005, these proceedings were instituted on 20 June 2005. The agreed statement of facts recorded that SP was liable to pay to JP $37,500 and interest, SP was content to have Citibank pursue JP and effectively encouraged it to do so. SP made it difficult for Citibank to pursue him. SP acted with intent to defraud his creditors.

19 SP made it clear that once he became aware of the payment by his brother, he ()SP) was prepared to pay half of the amount which JP had paid. SP regarded that as the extent of his liability in respect of the debt to Citibank. Often a defendant is not aware, or fully aware, of all the events which have taken place and the expenses paid and incurred after the liability has arisen or crystallised. As at the present date SP has neither paid the sum of $37,500 to JP nor any sum on account of interest. SP submitted that it would not have been appropriate for him to do so because if accounts are ordered to be taken it may turn out that on balance JP is indebted to SP. I think that the matters should be kept separate. It has yet to be decided whether accounts will be ordered. As will later appear that is not straightforward. SP also reminded me that if he obtains a costs order in his favour the value of such an order may exceed the sum of $37,500.

20 These considerations may affect whether any stay is granted but they have marginal weight in determining whether SP should be ordered to pay interest.

21 The prevailing rate of interest under Schedule 5 to the Civil Procedure Rules was 9 per cent from March 2002 to 31 December 2006 and 10 per cent thereafter. Having regard to para 21 of the Statement of Agreed Facts/Matters set out earlier, SP should pay interest on the sum of $37,500. SP should not be allowed to resile from that agreement. If JP had been made aware of that change he could easily have made application to further amend the Further Amended statement of Claim. Pursuant to s 14 of the Uniform Civil Procedure Act 2005 I would dispense with the requirements of UCPR 6.12(6) and (7).

22 JP submitted that it was not necessary in a claim for contribution in equity to comply with UCPR 6.12(6) and (7). I doubt if this is correct, but it is not necessary to resolve this issue in view of the exercising of the dispensing power.

23 This issue remains: for what period should interest be payable. As earlier noted JP paid $75,000 in early October 2003. However, despite the stated consideration of ten dollars, it is probable that there would have been no assignment if $75,0900 had not been paid by JP and no payment of that sum by JP without proceedings if Citibank had not agreed to an assignment. They were linked. JP did not tell SP and would not have wished to tell SP about the intended assignment until it took place. On the other hand, SP had had the use of $37,500 from early October 2003, but that is not the only consideration. The Citibank-JP arrangement was not finalised until about 4 March 2004.

24 While the matter is not free from doubt interest should be payable as from 5 March 2004 to 31 December 2006 at the rate of 9 per cent sand 10 per cent thereafter on the sum of $37,500.

25 There is also the question of the payment of interest on $1951.57 being the balance due under the Coca Cola guarantee. There was substance in the contention of counsel for SP that the amount involved in the context of these proceedings was minimal and that neither brother knew what the other was doing because of the breakdown in their relationship. JP was aggrieved and rightly so that SP brought about a situation where Citibank pursued JP alone under the guarantee.

26 About 3 or 27 June 2003 JP paid Coca Cola $6500. The terms of settlement provided “Each party pay their own costs of the proceedings” in the Local Court. However, JP’s costs amounted to $3643.64, making a total of $10,143.63. SP paid $6240.50. This figure may need a minor adjustment of no consequence. The payment was made on 11 April 2003. This leaves a balance of $3903.14, one half being $1951.57. SP stated that his payment was made in full settlement of his liability to Coca Cola Amatil. I accept that SP did not become aware of the payment made by JP until he received his brother’s affidavit. JP’s affidavit of 1 February 2006 deals with the matter. However, when JP and Coca Cola Amatil settled with JP that company probably took into account the amount previously paid to it by SP. A substantial portion of the legal costs incurred by JP appear to relate to JP’s application to set aside a default judgment on which a bankruptcy notice was based. JP stated that he had not received the initial summons. The circumstances were not fully investigated before me and it would have been imprudent to do so because of the costs likely to be incurred.

27 There was no specific claim for interest on this amount and the matter is not referred to in the Statement of Agreed Facts/Matters. In the whole of the circumstances I am not persuaded that interest should be allowed on the sum of $1951.57.

Costs

28 JP sought an order that SP pay the costs of JP of the proceedings save those thrown away by the further amendment of the Statement of Claim. JP also sought that his costs include those JP incurred in bringing the proceedings against Mr David Webb and meeting any costs which it was liable to pay Mr Webb.

29 SP resisted orders to this effect ad sought an order that JP pay SP’s costs of the proceedings.

30 JP has succeeded to the extent that the transfer of 30 March 2001 has been set aside as having been made with intent to defraud creditors and a re-transfer ordered, and payment of $37,500 will be enforced.

31 While SP has succeeded on the assignment point, the other defences and the cross-claim failed. Over half the lengthy hearing time was occupied with these defences and cross-claims and the intent with which SP transferred his interest in the property art 39A Raimonde Road to Mr Webb. SP queried the utility of JP pressing ahead with his claim under s 347A of the Conveyancing Act, 1919 in view of his (SP) agreeing that the beneficial interest in his half share if that property transferred to Mr Webb remained with SP. Mr Webb did not dispute that. SP was not prepared to accept that the transfer by SP to Mr Webb wad made with intent to defraud creditors. Presumably, the various rejected defences were raised to meet the situation which could have arisen if either the assignment point was rejected or the proceedings were amended to include Citibank as a plaintiff or a defendant.

32 Usually costs follow the event and a successful defendant obtains an order for his costs. The defendant was partly successful and the plaintiff was partly successful. Rather than make cross orders as to costs which would involve matters of some complexity and an analysis of time devoted to various issues making the assessment of costs somewhat costly, the order which best reflects the justice of the situation is that each party bear its own costs of the proceedings.

Taking of Accounts

33 Having regard to the findings made in the earlier judgment counsel raised with me whether an order for the taking of accounts should be made in respect of the period prior to 8 August 2000. That raises questions of considerable difficulty. Most, if not all of the debts, and particularly those connected with rendering the Burwood premises appear to have been incurred in the name of Span Management Pty Limited. Its shareholding changed about 8 August 2000 when the unit trusts became shareholders. JP and SP guaranteed the debts of Span Management Pty Limited in three instances.

34 The question of the taking of accounts was not raised or argued during rhe hearing and I did not deal with it. The issue was said to arise because of the findings I made in respect of the period up to 8 August 2000. I requested counsel for JP and counsel for SP to give the matter further consideration as the taking of accounts is time consuming and cert expensive and I was not persuaded that in the circumstances of the present case it would achieve anything useful. I doubted if there was any point in resurrecting old debts. I have not formed a final view on this point. As estimated at the hearing on 27 March 2007 I will reserve liberty to either party to apply for an order for taking accounts. Such an application may involve further evidence and considerable argument.

35 I make the following orders and declaration:


1. Order that judgment be entered for the first defendant on the plaintiff’s claim under the assigned Citibank debt and guarantee.

2. Order that judgment be entered in favour of the plaintiff against the first defendant in the amount of $39,451 in respect of the plaintiff’s claim for contribution in respect of moneys paid to Citibank ($37,500) and in respect of the Coca Cola debt ($1951.57) together with interest on $37,500 at the rate of 9 per centum per annum from 5 March 2004 to 31 December 2006 and at 10 per centum per annum from 1 January 2007 to 27 April 2007, namely $10,763, making a total of $50,214.

3. Declare that the transfer of the interest of the first defendant to the second defendant in the property known as 39A Raimonde Road, Eastwood being the land comprised in Folio Identifier 2/531646, about 30 March 2001 is void.

4. Note the undertaking to the Court of the first defendant to lodge the transfer to him signed by David Webb in respect of the said property with the Land Titles Office (also known as the Land & Property Information (LPI) Office) within 42 days and take all necessary streps to procure the registration of such transfer including the payment of all duties and fees together with the Certificate of Title to the said property.

5(a) Order that in the event of the transfer from David Webb to SP not being registered within 56 days (or such further time as JP and SP may agree) the first defendant, within a further 14 days submit to David Webb a transfer in registrable form duly witnessed of one-half interest as tenant in common in the said property and that David Webb within 14 days of receipt of such transfer, execute and deliver it duly witnessed and in registrable form to Segal & Associates, Solicitors, Suite 14, The Mews Professional Centre, 201 New South Head Road, Edgecliff, NSW 2027.

(b) Order that the first defendant bear all duties, registration fees and legal fees of such transfer and cause such transfer, duly stamped or marked by the Stamp Duties Office to be lodged within 14 days of its receipt by Segal & Associates with the Land Titles Office (also known as Land & Property Information (LPI) along with the Certificate of Title (Folio identifier) (2/531646??) and take all necessary steps to procure its registration.

(c) Order that in the event of the transfer from David Webb to the second defendant of a one-half interest as tenant in common not being registered with the Land Property and Information Office on or before 31 July 2007 a Registrar (including a Deputy Registrar or other authorised officer of the Court) be appointed to execute the transfer in the name of David Webb and on his behalf and also in the name of and on behalf of the second defendant and that the first defendant pay all duties, registration fees and legal fees of the registration of such transfer.

(d) Liberty to any party to the proceedings to apply on 3 days notice as to the implementation, finalisation and registration from Mr David Webb to the first defendant.

6. No order as to the costs of any party of the proceedings; each party is to bear his own costs (including the costs thrown away by the further amendment of the Statement of Claim.

7. Liberty to the plaintiff and the first defendant to restore the matter to the list in the event of either seeking an order for taking accounts; any such application should include the directions sought as to the taking of accounts and the reasons why accounts should be taken.


Generally

36 There is a relatively small amount involved in these proceedings, the hearing of which extended over 6 days, albeit the hearing on 6 December 2006 was short. Costs have become a major factor. The orders for the transfer from Mr Webb to the first defendant of a one-half interest are cumbersome. They are designed to cover a number of possibilities. I have allowed for the resolution of the stamp duty questions taking some time. I have tried to avoid any further application to the Court and would encourage the parties and their legal representatives to co-operate. Any agreed variations to the orders may be dealt with in Chambers on the papers. The first defendant requested the Court to stay the execution of the judgment in favour of the plaintiff $50,214) pending the resolution of the taking and settling of the accounts between the plaintiff and the first defendant. In view of the admitted liability for contribution this would not be appropriate, especially as SP has known of this liability since at least June 2005. I do not think that I should hold up the re-transfer of SP's interest in the Eastwood property pending resolution of the accounts question.

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