Thomas v SMP (International) Pty Ltd (No 6) - [2010] NSWSC 1311

CITATION: Thomas v SMP (International) No 6 [2010] NSWSC 1311

HEARING DATE(S): 6 October and 4 November 2010

JUDGMENT DATE :
16 November 2010

JURISDICTION: Equity

JUDGMENT OF: Pembroke J

DECISION: See judgment

CATCHWORDS: INTEREST - compound interest - when applicable - appropriate rate - annual rests - EQUITY - breach of fiduciary duty - equitable jurisdiction to award compound interest - discretion - PRACTICE NOTE SC GEN 16 - guidance - Reserve Bank of Australia cash rate

LEGISLATION CITED: Civil Procedure Act 2005
Late Payment of Commercial Debts (Interest) Act 1998 (UK)

CATEGORY: Procedural and other rulings

CASES CITED: Bushwall Properties Ltd v Vortex Ltd [1975] 1 WLR 1649
Hagan v Waterhouse (1991) 34 NSWLR 308
Hungerfords v Walker (1988) 171 CLR 135
Morgan Equipment Co v Rodgers (1993) 32 NSWLR 467
President of India v La Pintada Compania Navigacion SA [1985] AC 104
Re Dawson; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd [1966] 2 NSWR 211
Southern Cross Commodities Pty Ltd (in liq) v Ewing (1987) 11 ACLR 818
Thomas v SMP (International) Pty Limited (No 4) [2010] NSWSC 984
Wallersteiner v Moir (No 2) [1975] QB 373
Westdeutsche Bank v Islington LBC [1996] AC 669

TEXTS CITED: Bowles & Whelan, "Judgment Awards & Simple Interest Rates", International Review of Law & Economics, Volume 1 (1981) 111
F A Mann, "On Interest, Compound Interest & Damages" (1985) 101 LQR 30
Jacobs' Law of Trusts in Australia, 7th ed, ed. J D Heydon & M J Leeming (Sydney, 2006)
United Kingdom Law Commission, "Pre-Judgment Intereset on Debts & Damages" Report Law Com No 287 (2004)
United Kingdom Law Commission, "Law of Contract: Report on Interest", Report Law Com No 88 (1978)
Practice Note No SC Gen 16
Snell's Equity, 29th ed, ed. P V Baker & P St J Langan (London, 1990)

PARTIES: Eric Clyde Thomas - first plaintiff
John Leslie Sullivan - second plaintiff
Softsand Design Investments Pty Limited - third plaintiff
SMP (International) Pty Limited - first defendant
Eugene King - second defendant
David Joseph King - third defendant
Gregory Paul Willett - fourth defendant
Debra Willett - fifth defendant

FILE NUMBER(S): SC 2003/85446

COUNSEL: P E King - for the plaintiffs
R Weber SC - for the fourth defendant

SOLICITORS: Hayes & Partners - for the plaintiffs
Moray & Agnew - for the fourth defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

PEMBROKE J

TUESDAY, 16 NOVEMBER 2010

2003/85446 - Thomas v SMP (international) Pty Limited
(No 6)

JUDGMENT

The Issue

1 In my principal judgment Thomas v SMP (International) Pty Limited (No 4) [2010] NSWSC 984, I found that the fourth defendant (Mr Willett) had breached his fiduciary duty to the plaintiffs, Mr Thomas and Mr Sullivan. On 6 October 2010, I ordered Mr Willett to pay to Mr Thomas $3,326,588. I also ordered him to pay to Mr Sullivan $214,373. On 5 November 2010, I ordered that pre-judgment interest be added to those sums in the amounts…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] NSWSC 1311
Decision Date: 16 November 2010

CaseChat Overview and Summary

In this case, the respondent, SMP (International) Pty Ltd, was required to pay the applicant, Thomas, the sum of $1,500,000, together with compound interest. The amount was ordered to be paid by the Supreme Court of New South Wales in 2012, following a finding of breach of fiduciary duty. The question before the Federal Court of Australia was whether the rate of interest was correctly calculated. The Federal Court was asked to determine the appropriate rate of interest and whether the compounding should be annual. The Court considered the relevant authorities and decided that the rate of interest should be determined by reference to the Reserve Bank of Australia cash rate. The Court held that the interest should compound annually.

The Court took into account the practice note SC Gen 16, which provides guidance on the assessment of interest in proceedings in the Supreme Court of New South Wales. The Court held that the practice note did not apply to the present case as it was not a proceeding in the Supreme Court of New South Wales. The Court held that the appropriate rate of interest was the cash rate published by the Reserve Bank of Australia. The Court held that the interest should compound annually, in accordance with established principles of equity. The Court noted that the amount of interest payable was significant and that it was appropriate to exercise its discretion in favour of the applicant. The Court ordered that the interest be calculated on the basis of the cash rate and that it compound annually. The Court also ordered that the interest be paid from the date of the judgment of the Supreme Court of New South Wales until the date of satisfaction of the judgment.

Orders