Refaat v Barry (Ruling No 3)
[2014] VCC 622
•15 May 2014
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CIVIL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-12-02108
| SAMEH REFAAT | Plaintiff |
| v | |
| MICHAEL BARRY | Defendant |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers | |
DATE OF JUDGMENT: | 15 May 2014 | |
CASE MAY BE CITED AS: | Refaat v Barry (Ruling No 3) | |
MEDIUM NEUTRAL CITATION: | [2014] VCC 622 | |
REASONS FOR JUDGMENT
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Subject:Application to re-open terms of decision as to interest
Catchwords: Trial complete; reason published; application to re-open relative to interest; whether re-opening should be allowed; re-opening allowed; interest to be compounded monthly
Legislation Cited: Penalty Interest Rates Act 1983; Civil Procedure Act 2010
Cases Cited: Smith v New South Wales Bar Association (1992) 176 CLR 256
Judgment: Solicitors for the plaintiff submit calculations of interest in accordance with these reasons by close of business 21 May 2014.
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HIS HONOUR:
Background
1 This matter proceeded to trial before me in February this year for some 11 days, concluding on 19 February. On 11 March I delivered a reserved judgment.
2 The proceeding entailed a dispute between the parties to a venture to develop, manufacture and exploit a stonecutting machine.
3 Whilst the total amounts claimed and counterclaimed were of some substance, a constellation of issues, including the absence of a vital corporate party from the proceeding, led to the dismissal of the plaintiff’s claim in its totality, and a partial and modest success for the counterclaiming defendant. All in all, the amounts which were ultimately found owing scarcely justified the financial outlays in so long a trial, much less the emotional toll which it must have taken on the parties.
4 But this has not been the end of the matter. The plaintiff has indicated a desire to appeal, and when the matter came back before me on 10 April, in circumstances to which I will return presently, I stayed the operation of the order against him pending the determination of his proposed appeal or further order. I did not enter judgment on the counterclaim for a particular sum of money because there were interest calculations to be done. I determined that monies were payable by Dr Refaat to Mr Barry under Mr Barry’s counterclaim for two personal loans, referred to in the evidence and my reasons for judgment as personal loans 2 and 3. The calculations submissions on behalf of Mr Barry, by his counsel, entailed a daily compounding. I found that the parties agreed to link the interest payable under these loans to the interest payable by Mr Barry on his overdraft account with Westpac Banking Corporation. I rejected the contention that the evidence established an entitlement on his part to daily compounding.
5 I also determined that the claim by Mr Barry for outlays of $12,070.68, relative to the construction of a cutting room for the purposes of accommodating the stonecutting machine at a factory property occupied by a company he controlled, should be awarded as part of the counterclaim.
The hearing on 10 April
6 On 10 April at paragraph [199] of my reserved judgment, I directed that Mr Barry’s solicitors bring in short minutes to give effect to my reasons with respect to Mr Barry’s counterclaim. There was also a question as to how an amount of $5,000, which I found was payable by Dr Refaat relative to one of the personal loans should be characterised and dealt with for the purposes of interest calculations. Mr Barry’s counsel said that it should be regarded as forming part of the principal sum and attracting interest. I concluded, however, that it should be treated as a procuration fee, or something of the sort, and not as part of the principal. It would not attract evidence.[1]
[1]Paragraphs [15] and [16] of my supplementary reason
7 Regrettably, counsel for Mr Barry did not submit any calculations relative to the two personal loans based on my determination that simple interest only was recoverable. He submitted calculations based on daily compounding at what was said to be the rate of interest charged by Westpac. More surprisingly still, he submitted calculations of interest at the same rate relative to the cutting room outlays. Given that there was no finding of a contractual obligation on the part of Dr Refaat to pay interest on amounts of this type at a rate linked to Mr Barry’s cost of funds at Westpac, I rejected the latter out of hand, concluding, for reasons which I then gave, that interest at the rate prescribed under the Penalty Interest Rates Act was payable on these amounts.
8 Counsel for Mr Barry relied on a supplementary affidavit from his client exhibiting a facility letter from Westpac stating: “Interest will be calculated on the daily balance and charged monthly”. At paragraph [8] of my supplementary reasons I said, “To my mind, the words from the facility letter, upon which reliance I place, mean that there is to be daily calculation of the interest obligation of Mr Barry to the bank, and that he is to be charged that interest monthly”. I rejected the contention that this supported an entitlement to Mr Barry’s part to daily compounding interest payable by Dr Refaat. At paragraph [25] I concluded that part of my supplementary reasons by stating: “So, I direct the parties to make calculations and recalculations of the interest components of the judgment counterclaim in accordance with the findings and directions that I have just given”.
The later stage
9 For the second time Mr Barry and his legal advisors have flouted my direction. I have received yet a further supplementary affidavit, now from Mr Barry, which now makes a third attempt to argue the case for compounding. Mr Barry was under an obligation to put the whole of his case at trial. His counsel placed the evidence that he thought appropriate at trial and secured a finding which he did not accept. Without leave, Mr Barry put in new material and sought to reopen the issue of compounding. On 10 April I was convinced that the material relied on by Mr Barry did not support the claim which was being put. I did not, therefore, deal with the issue of his entitlement to seek to reopen an issue which my reasons had already determined and to rely on supplementary evidence. I simply rejected the contentions.
10 Mr Barry’s latest affidavit does not include the calculations which I directed but does include a statement of willingness to undertake those calculations. It involves further compounding calculation.
Should there be leave to reopen?
11 In these circumstances it is proper for me to consider whether I should entertain this material at all. In Smith v New South Wales Bar Association (1992) 176 CLR 256, the High Court of Australia had to consider the circumstances in which it would be proper for a court to grant leave to a party to reopen an issue following the conclusion of trial. Their Honours were considering the situation which confronts me here, where no judgment has been “entered”, or to use the more modern terminology appearing now in the court’s rules, “authenticated”. In a joint judgment Brennan, Dawson, Toohey and Gaudron JJ said:
“It is said in Ritchie's Supreme Court Procedure that the power to review a judgment in a case where the order has not been entered will not ordinarily be exercised “to permit a general re-opening”. As a general statement that is correct, both as to whether leave to re-open will be granted and, if it has been, as to the nature of the review involved. But it is a general statement only and, once a matter has been re-opened, the nature and extent of the review must depend on the error or omission which has led to that step being taken. Very little will be required in a case where, for example, all that is involved is a mathematical error in the calculation of some particular item of loss or damage. And, in the case of a factual error, the extent of the review will vary depending on whether the error goes to the heart of the matter or whether its significance is confined to some discrete subsidiary issue.”[2]
[2](1992) 176 CLR 256 at 265
12 Their Honours proceeded:
“It is again necessary to distinguish between the considerations which may bear on a decision to re-open and the processes involved in reconsideration once a case has been re-opened. If an application is made to re-open on the basis that new or additional evidence is available, it will be relevant, at that stage, to inquire why the evidence was not called at the hearing. If there was a deliberate decision not to call it, ordinarily that will tell decisively against the application. But assuming that that hurdle is passed, different considerations may apply depending on whether the case is simply one in which the hearing is complete, or one in which reasons for judgment have been delivered. It is difficult to see why, in the former situation, the primary consideration should not be that of embarrassment or prejudice to the other side. In the latter situation the appeal rules relating to fresh evidence may provide a useful guide as to the manner in which the discretion to re-open should be exercised. But those considerations bearing on re-opening are not decisive of the question whether, a matter having been re-opened by reason of error, further evidence can be called.”[3]
[3]Ibid at 266-7
13 The case is in the second of the categories referred to by their Honours, that is, those where reasons for judgment have already been delivered. In those cases, according to their Honours, the rules which govern the admission of further evidence on appeal may be appropriate. Without descending to detail, in broad terms, further evidence on appeal would only be allowed if it is demonstrated that the evidence could not with reasonable diligence have been placed before the court at trial: Commonwealth Bank of Australia v Quade (1991) 178 CLR 134, 141. Here, the further supplementary affidavit of Mr Barry was not apparently of this type at all. Mr Barry gave evidence at trial, and, therefore, could have said then what he now seeks to say in the further supplementary affidavit. He produces correspondence from an officer of Westpac. The correspondence post-dates trial but there is no reason why this officer could not have been called on to provide the same material in writing at trial, or give that evidence viva voce from the witness box.
14 Unsurprisingly, Dr Refaat has placed further material relative to the interest calculations before me. In response to his last such communication, Mr Barry’s solicitors said, “Sadly, we believe that Dr Refaat is now endeavouring to continue the trial which is now long finished”. This might be thought to be a case of “the pot calling the kettle black”.
15 The Civil Procedure Act 2010 by s8 requires courts to give effect to what is described as “the overarching purpose” which is “to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute” (s7(1)). Section 9(1) requires court to further the overarching purpose by having regard, amongst other things, to:
“(g) dealing with a civil proceeding in a manner proportionate to –
…
(ii) the amount in dispute.”
16 The amounts which are ultimately in issue here under the counterclaim are relative to the length of the trial and the further interlocutory steps which have now ensued scarcely proportionate. Interest which represented a small percentage of the principal sum is proportionately even less significant. Mr Barry’s continuing agitation of the compounding of interest issue is, in my view, at odds with the “overarching purpose” as identified and elaborated in the Civil Procedure Act and the principles in Smith’s case. My initial inclination was simply to refuse to entertain further argument on the matter.
17 Ultimately, however, I am persuaded that given that so much time and resources of the parties, legal advisors and the court have already been expended, it would be contrary to the interests of justice to turn aside from further evidence which might prove probative.
18 In my supplementary judgment in the course of rejecting a claim for interest compounding on a daily basis [emphasis added], I remarked at [8]:
“To my mind, the words from the facility letter upon which reliance I placed, mean that there is to be daily calculation of the interest obligation of Mr Barry to the bank, and that he is to be charged that interest monthly.
[9] During one of his submissions, Mr Wilkinson, I am sure inadvertently, misquoted the facility letter by referring to interest being ‘added’ monthly. If the facility letter had said that, I might have been persuaded that that entailed a compounding. But, of course, the compounding would have been monthly, not daily.”
19 In a letter to Mr Barry, dated 16 April 2014, a manager of Westpac Bank, Mr Reeve stated, in answer to queries relative to the obligation to pay interest on Mr Barry’s business overdraft account, “e.g. for illustration purposes only”, as follows:
“Interest at 7.83% pa would be a daily rate of approximately 0.0002145% of the debit balance calculated daily and added/charged monthly to the Business Overdraft Account …”
20 The example in the letter entails hypothetically six dollars interest on $1,000 principal balance which, at the end of the month, is added to the principal so as to make a principal for interest calculation purposes of $1,006 with the interest for the ensuing month being $6.69. As I suggested in my supplementary judgment, this is supportive of a compounding arrangement, but a monthly compounding and not a daily compounding. It was said to be the basis of the calculations advanced by counsel for Mr Barry on 10 April which I rejected.
21 Mr Barry includes calculations which capitalised the $5,000 figure which I treated as a procuration fee and not as part of the principal sum. There is no justification offered for this approach, which is in plain contradiction of my supplementary judgment in the circumstances and, based on the considerations that I have already mentioned, I simply refuse to countenance this. If my approach is incorrect then it is a matter to be dealt with on appeal. As Mr Barry’s solicitors themselves observed, the trial is “now long finished”.
22 The text of the facility letter and the material from Westpac in my view establishes a regime where interest is capitalised monthly not daily. I accept that on the personal loans interest so calculated is payable.
23 The interest on the outlays for the cutting room is to be in accordance with the Penalty Interest Rates Act.
Final orders
24 I propose entering a final judgment in this matter dated 2 June. For that purpose I direct that the solicitors for the plaintiff submit calculations of interest in accordance with these reasons by close of business 21 May. Failing submission of calculations made strictly in accordance with these reasons by that date, the judgment entered will omit any interest component.
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