Walters v Perton (interest ruling)
[2023] VSC 615
•20 October 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TESTATORS FAMILY MAINTENANCE LIST
S CI 2017 02159
| LYNNE MARGARET WALTERS | Plaintiff |
| v | |
| JANE ELIZABETH PERTON (who is sued in her capacity as the Executor of the Will and Trustee of the Estate of DONALD GRAME WARRING, deceased) | Defendant |
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JUDGE: | Forbes J |
WHERE HELD: | Melbourne |
DATE OF RULING: | 20 October 2023 |
CASE MAY BE CITED AS: | Walters v Perton (interest ruling) |
MEDIUM NEUTRAL CITATION: | [2023] VSC 615 |
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INTEREST – Whether amount of further provision ordered to be paid pursuant to s 91 of the Administration and Probate Act 1958 constitutes a ‘debt or sum certain’ that was ‘recovered’ in the proceeding – Whether successful claimant a creditor of estate or executor – Whether plaintiff entitled to interest on amount ordered - Supreme Court Act 1986, s 58.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | R Garratt KC | Nedovic Lawyers |
| For the Defendant | D Farrands KC L Mills | Darrer Muir Fleiter |
HER HONOUR:
On 20 June 2023, I published my reasons for judgment in Walters v Perton (No 2).[1] They concerned the quantum of further provision to which Lynne was entitled from the estate of her partner, Don. The order making provision for further maintenance operates as a codicil to Don’s will.[2] I found that Lynne was entitled to a further provision of $1,540,560 from the estate.[3] I concluded that Jane was personally liable to satisfy the order for further provision.[4]
[1][2023] VSC 335.
[2]Ibid [80].
[3]Ibid [73].
[4]Ibid [81].
The order by which Lynne has recovered the further provision is in the following terms:
1.Provision of a pecuniary legacy in the sum of $1,540,560 be made out of the deceased’s estate (the Estate) for the proper maintenance and support of the Plaintiff pursuant to s 91 of the Administration and Probate Act 1958 (Vic).
2.The defendant, in her personal capacity, is responsible for payment of the provision that would be raised against the Bell St property in satisfaction of the Estate’s liability.
On 29 August 2023, in accordance with these orders of the same date, Jane paid the provision.
The parties will shortly seek orders regarding costs in accordance with my reasons dated 6 July 2023. This ruling deals with Lynne’s submission that she is entitled to interest on the further provision pursuant to s 58 of the Supreme Court Act 1986 (Vic) (the Supreme Court Act).
Section 58 of the Supreme Court Act provides:
(1)If in a proceeding a debt or sum certain is recovered, the Court must on application, unless good cause is shown to the contrary, allow interest to the creditor on the debt or sum at a rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 or, in respect of any bill of exchange or promissory note, at 2% per annum more than that rate from the time when the debt or sum was payable (if payable by virtue of some written instrument and at a date or time certain) or, if payable otherwise, then from the time when demand of payment was made.
(2)Subsection (1) does not authorise the computation of interest on any bill of exchange or promissory note at a higher rate than the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 if there has been no defence pleaded.
(3)A debt or sum payable or a date or time is to be taken to be certain if it has become certain.
The hearing of the claim under Part IV of the Administration and Probate Act 1958 (Vic) (Administration and Probate Act) was conducted in two parts. The first hearing dealt with the question of whether the will made adequate provision. This was, in part, informed by the issues in the related proceeding including whether Lynne and/or the estate had an interest in the property in which Lynne and Don lived. The parties agreed to defer a hearing on the quantum of any further provision in order to put on further evidence relevant to that question. Lynne therefore seeks interest from 13 or 14 April 2023 being the date of hearing on the quantum question, or alternatively from 20 June 2023, being the date I provided reasons as to quantum.
Submissions
Lynne submits that the amount of $1,540,560 to be paid as further provision is a sum certain that she has recovered. She submits that s 58 is beneficial legislation that should not be given a narrow meaning. Its purpose is to compensate a person for being kept out of the money owing to them and having to take proceedings to recover the sum.
Lynne characterises the service of the Originating Motion in June 2017 as the time when demand for payment was made in accordance with s 58(1) of the Supreme Court Act. However, she accepts that the changed circumstances after that time had to be taken into account in determining need and quantum. Accordingly she submits that her further provision had become certain in accordance with s 58(3) of the Supreme Court Act by the time of the quantum hearing in April 2023, even though disputed findings of fact and law still had to be made. She submits that the outstanding matters determined in that hearing did not prevent the quantum being a sum certain by the time of the hearing, citing Carbone v Melton City Council (‘Carbone’).[5]
[5](2020) 60 VR 539 ('Carbone').
In explaining why the order for further provision is properly a sum certain, Lynne submits that it is analogous to an award of damages for breach of contract or tortious duty. She emphasises that the order for further provision is a judgment against Jane in her personal capacity, rather than a judgment against Jane as executor, submitting that this distinction is relevant because it is not a standard order for Part IV provision from an estate.
Jane submits that the quantum amount is properly an order for Part IV provision, and that whether Jane is personally liable to satisfy that order or is liable as the executor to pay from the estate is a distinction without a difference for the purpose of this question. It is not an order for the payment of equitable compensation.
Jane submits that s 58 of the Supreme Court Act is directed towards wholly different circumstances to that of a Part IV provision, noting that the provision refers to circumstances where a sum is payable by virtue of a written instrument, or, if payable otherwise, then from the time when demand of payment was made. Applying the wording of the provision to this circumstance, Jane submits that there was no amount owing prior to the order for provision. She notes that there was no written instrument and that there could be no prior demand for payment because there was no codicil to the will until final orders were made.
Accordingly, Jane submits that interest was not payable from 20 June 2023 (the date of the quantum judgment). Jane does not address Lynne’s primary submission that interest should accrue from the date of the commencement of the quantum hearing. However the relevant date is a subsidiary argument, as Jane’s primary argument is that s 58 of the Supreme Court Act is not applicable at all.
Legal Principles
Division 7 in Part 5 of the Supreme Court Act deals with interest. It contains ss 57 to 60. To come within s 58, set out above, the plaintiff must establish that she has recovered a ‘debt or sum certain’ in accordance with s 58(1). In that case a plaintiff as creditor is entitled to interest. By contrast, s 59 permits recovery of damages in the nature of interest in proceedings for trover or trespass concerning goods and s 60 provides damages in the nature of interest in proceedings for recovery of a debt or damages. To the extent that there is overlap between ss 58, 59 and 60, s 60(2)(e) expressly provides that s 60 does not apply to any sum on which interest might be awarded by virtue of s 58 or s 59.
In Dimos v Willetts & Anor,[6] which concerned a dispute as to priorities between a solicitor as mortgagee for a contributory loan and a solicitor as chargee or mortgagee for his costs, Batt JA (with Tadgell and Ormiston JA agreeing), found:
S 58(1) pre-supposes… that the debt or sum certain was payable before the commencement, for it authorises the allowing of interest, unless good cause is shown to the contrary, ‘from the time when the debt or sum was payable’ and, save perhaps in exceptional cases, a debt or sum must be payable before it can be sued for or recovered.[7]
[6](2000) 2 VR 170.
[7]Ibid [109].
Although Batt JA acknowledged that s 58(1) of the Supreme Court Act in the alternative authorises the allowance of interest ‘from the time when demand of payment was made,’ his Honour noted that in almost all circumstances ‘a demand necessarily precedes the commencement of the proceeding’,[8] such that the principle applies to each of the circumstances the provision encompasses.
[8]Ibid.
In Amaca v CSR & Anor (No 2),[9] Macaulay J concluded:
[T]he situations to which s 58 generally apply are those for the recovery of an ascertained sum – being a sum that, of its nature, does not require the bringing of a proceeding to ascertain the amount to be paid – that was due and payable before the initiation of the proceeding.[10]
[9][2015] VSC 605.
[10]Ibid [10], citing The City Mutual Life Assurance Society Ltd v Giannerelli (1977) VR 463, 466 (‘The City Mutual Life Assurance Society Ltd’), Saunders v Nash (991) 2 VR 63, 68; Chong & Neale [2015] VSCA 137, [256].
In Carbone, the majority (Tate and Kyrou JJA), before referring to Macaulay J’s observation, said:
The phrase ‘debt or sum certain’ is not confined to sums whose quantum is agreed. It includes a sum for which, although the precise amount has not been agreed, is capable of ascertainment without valuation or estimation. An amount of compensation will not constitute a debt or sum certain where it is required to be assessed by a court.[11]
[11]Carbone (n 6) [45] citing Giller v Procopets [No 2] (2009) 24 VR 1, 127 [36]; Talacko v Talacko [2009] VSC 579, [7].
The majority then referred to McInerney J’s decision in The City Mutual Life Assurance Society Ltd v Giannerelli,[12] where his Honour considered what constituted a ‘debt’ under the predecessor to s 58 of the Supreme Court Act as follows:
Debt is originally understood as meaning ‘a sum of money due from one person to another’…
Debt lies only for a liquidated sum of money, that is, a pecuniary demand where the amount due is fixed and specific, or where it can readily be reduced to certainly by a mathematical computation.[13]
[12]The City Mutual Life Assurance Society Ltd (n 10).
[13]Carbone (n 5) [46], citing The City Mutual Life Assurance Society Ltd (n 10) 467-8.
The majority then noted:
However, the mere fact that a further calculation is required may not, in the particular circumstances of a case, alter the characterisation of a claim as being one for a debt or sum certain. In the present case, the applicants relied on authorities that have held that the term ‘debt’ in provisions comparable to s 58 of the SC Act can include certain types of claims that require determination of the amount payable by the court.[14]
[14]Carbone (n 5) [47].
The majority concluded:
In order to succeed in their claim for interest under s 58(1) of the SC Act, the applicants had to establish that the compensation sum was:
(a) either a debt or sum certain;
(b) payable before the commencement of the proceeding; and
(c) recovered in the proceeding.[15]
[15]Ibid [85].
Consideration
Lynne did not submit that the further provision was a debt owing to her, but that it was a sum certain. The difficulty with characterising it in this way is twofold. First it is not a sum certain that could be said to be payable prior to the commencement of proceedings. Neither the notification of a potential Part IV claim nor the commencement of proceedings could be considered a demand for a sum certain, even though both might be considered a demand for further payment. It could not be said that an applicant for provision under Part IV is a creditor of the estate as contemplated by s 58(1) of the Supreme Court Act.
Second, the testamentary freedom of a testator is accompanied by ‘moral responsibility of no ordinary importance’ that attaches to the exercise of that right.[16] Claims under Part IV of the Administration and Probate Act permit the Court to encroach on that testamentary freedom and grant discretionary relief if satisfied of certain matters. There can be no sum at all, let alone a sum certain, until such time as the Court is satisfied of the matters in s 91(2) of the Administration and Probate Act and exercises its discretion.
[16]Banks v Goodfellow (1870) LR 5 QB 549, 563.
Whilst clearly a sum certain may not be fixed and require findings of fact or law, the findings would generally go to matters other than ascertaining the sum itself. So, in Carbone, the sum certain was arrived at once the parties both agreed that the amount payable as compensation for the acquisition of land was at least the sum offered and accepted as part payment. There, interest was payable from the time of that agreement on the minimum sum even though the total sum was in dispute.
It is clear, in consideration of the above principles, that s 58 of the Supreme Court Act is confined to situations where the debt or sum certain pre-dates the proceeding, and the proceeding is the mechanism by which the creditor recovers that amount already owing. Although the provision should not be interpreted narrowly, it is not likely to apply to claims giving rise to awards of damages, where a court must assess the appropriate amount of those damages. It is more likely to apply to recovery of amounts that are wholly or partly set and agreed, or the dispute is whether it is owed at all. In those instances, the person who is alleged to be owed the money is properly a creditor, and the person who owes the money is properly a debtor.
It is true that, like s 60 of the Supreme Court Act, the purpose of s 58 is to compensate for the loss of use of the money awarded during the litigation. It is not helpful to suggest that the right to further provision is analogous to damages for breach of contract or tort because there is a clear distinction between the two provisions. Interest under s 60 is awarded as a head of damages but in proceedings for debt or a sum certain, s 58 awards interest not as damages but to a creditor who had a right to payment of a sum.
I agree with Jane’s submissions that the quantum award is properly classified as an order for further provision operating as a codicil to the will. The existence of an order that payment be made by Jane personally does not change the nature of the sum ordered, only the identity of the person liable to meet the payment.
Therefore Lynne has not established that she is entitled to interest under s 58 of the Supreme Court Act.
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