Stroud v O'Connor

[2016] NSWSC 629

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Stroud v O’Connor [2016] NSWSC 629
Hearing dates:	13 May 2016
Date of orders:	17 May 2016
Decision date:	17 May 2016
Before:	Pembroke J
Decision:	Motion dismissed with costs
Catchwords:	EQUITY – accord and satisfaction – compromise agreement – effect on statutory claim for interest COSTS – discretionary entitlement to interest on costs – not available where court order for payment of costs ceases to be enforceable by reason of accord and satisfaction
Legislation Cited:	Civil Procedure Act 2005 (NSW)
Cases Cited:	Baxter v Obacelo Pty Ltd [2001] HCA 66; (2001) 205 CLR 653 El-Mir v Risk [2005] NSWCA 215 McDermott v Black [1940] HCA 4; (1940) 63 CLR 161 Osborn & Bernotti v McDermott [1998] 3 VR 1 Thompson v Australian Capital Television Pty Ltd [1996] 186 CLR 574
Category:	Principal judgment
Parties:	John Stroud – plaintiff Terence Michael O’Connor – defendant
Representation:	Counsel: Ms M Castle – for the plaintiff Mr G George – for the defendant   Solicitors: Willis & Bowring – for the plaintiff Cleary Finlay Solicitors – for the defendant
File Number(s):	2011/332884

Judgment

1. This is a claim by the defendant for interest on costs. Its jurisdictional basis is Section 101(4) of the Civil Procedure Act 2005 (NSW). That provision was significantly amended as from 24 November 2015. It formerly provided that the court may make an order for interest on costs. It now provides that interest is payable on costs unless the court otherwise orders. In both cases, obviously, the court retains a discretion.

2. The defendant’s claim for interest arises in the following circumstances. On 19 November 2012 this court ordered that the plaintiff pay the defendant’s costs on an indemnity basis. On 3 June 2013 the parties compromised the claim and reached an agreement that the plaintiff would pay $96,000 to the defendant by 30 June 2013 in full satisfaction of the claim. Payment was not made by the due date but was eventually paid on 22 January 2016. The ‘claim’ that was compromised by the agreement was the defendant’s entitlement pursuant to the original order for payment of indemnity costs. That claim carried with it a discretionary right to interest pursuant to Section 101(4).

3. The discretionary right to interest attaches to an ‘order’ of the court. It does not attach to the personal obligation of a party pursuant to an agreement to pay a specified sum for costs, unless they have specifically agreed that it should do so. In this case, the parties’ agreement operated in substitution for the order of the court made on 19 November 2012.

Accord and Satisfaction

4. The plaintiff resists the defendant’s application and relies on the doctrine of accord and satisfaction. That doctrine involves two simple concepts. It means an agreement or consent (accord) to accept something in place of the full remedy to which the recipient is entitled (satisfaction): Gummow J in Thompson v Australian Capital Television Pty ltd [1996] 186 CLR 574 at 610.

5. The principle was exhaustively discussed in El-Mir v Risk [2005] at [48] – [54] and pithily explained in Osborn & Benotti v McDermott [1998] 3 VR 1 at 8. In the latter case, Phillips JA said, in a passage that received the apparent approval of Gummow and Hayne JJ in Baxter v Obacelo Pty Ltd [2001] HCA 66; (2001) 205 CLR 653 at [56]:

Where there is an accord and satisfaction, the agreement for compromise may be enforced, and indeed only that agreement may be enforced, because ex hypothesi the previous cause of action has gone; it has been ‘satisfied’ by the making of the new agreement constituted by abandonment of the earlier cause of action in return for the promise of other benefit.

(emphasis added)

6. And as Dixon J explained in McDermott v Black [1940] HCA 4; (1940) 63 CLR 161 at 183-184:

The essence of accord and satisfaction is the acceptance by the plaintiff of something in place of his cause of action. What he takes is a matter depending on his own consent or agreement. It may be a promise or contract or it may be the act or thing promised. But, whatever it is, until it is provided and accepted the cause of action remains alive and unimpaired. The accord is the agreement or consent to accept the satisfaction.

(emphasis added)

7. In this case, I am satisfied, as a matter of fact, that the agreement made on 3 June 2013 operated, and was intended by the parties to operate, as an accord and satisfaction. The defendant’s previous cause of action, embodied in the court order made on 19 November 2012, including his related discretionary statutory entitlement to interest on costs, has ‘gone’. It was satisfied by the making of the compromise agreement and the plaintiff’s acceptance of the defendant’s ‘promise’, which took effect in substitution for his entitlement to enforce the order of the court for indemnity costs.

8. The defendant’s discretionary statutory entitlement to interest on costs cannot survive independently. It only takes effect in respect of an ‘amount payable under an order for the payment of costs’. But there is no longer any amount payable pursuant to a court order. The effect of the accord and satisfaction is that the court order ceased to be enforceable when the defendant accepted and agreed to the compromise agreement.

9. The defendant’s remedy, when the plaintiff failed to pay the sum of $96,000 by the due date, was for breach of contract. Having eventually received full payment on 22 January 2016, it was not open to the defendant to invoke the discretionary statutory entitlement to interest. That right did not survive the accord and satisfaction.

Discretion

10. In any event, it is unfair of the defendant to raise a claim for interest on costs almost three years after the compromise agreement. The parties agreed on a fixed sum. There was no mention of interest at the time of the negotiations and no mention of it prior to the payment of $96,000 on 22 January 2016. The delay has obviously caused prejudice to the estate of which the plaintiff is the executor; there is no explanation for the delay; and I am unwilling to cause any further depletion to the assets of the estate.

11. I therefore dismiss the notice of motion with costs.

Amendments

17 May 2016 - Para 4 (1006) to 1996)

Decision last updated: 17 May 2016