Kirk v Vallant Hooker & Partners
[2000] NZCA 351
•27 November 2000
| IN THE COURT OF APPEAL OF NEW ZEALAND | CA 169/00 |
| BETWEEN | KEITH DAVID KIRK |
| Appellant |
| AND | VALLANT HOOKER & PARTNERS |
| Respondent |
| Hearing: | 22 November 2000 |
| Coram: | McGrath J Doogue J Young J |
| Appearances: | B Rooney for appellant P J Bartlett for respondent |
| Judgment: | 27 November 2000 |
| JUDGMENT OF THE COURT DELIVERED BY DOOGUE J |
This appeal relates to the period for which interest should be awarded and the appropriate rate.
The respondent was the firm of solicitors for the appellant, who was the plaintiff in High Court proceedings settled in November 1993. The settlement payment was delivered to the respondent on 19 November 1993 and paid into its trust account for the credit of the appellant. The respondent deducted its fees from the appellant’s money without his agreement. He disputed the fees. The dispute ultimately found its way to this Court: CA 18/99, 29 February 2000. This Court restored a decision of the Registrar of the High Court, which had held that the appellant had been overcharged by $24,086: HC 148/97, 31 July 1999.
The appellant had in 1995 sought summary judgment against the respondent for its breach of trust in respect of the deduction of the fees. The application was amended in April 2000 to limit the claim to the overcharge of $24,086. That sum was paid shortly before the hearing of the application but the respondent did not pay any interest or costs. The hearing proceeded in respect of those matters only. The interest claim was pursued and dealt with in reliance on s87 Judicature Act 1908 (“the Act”). The Master awarded interest at 7.5% per annum from 31 July 1998, the date of the Registrar’s decision in respect of the respondent’s fees.
The appellant says that he was properly entitled to interest for the full period during which he has been out of his money, that is from the date it was deducted from his money on 19 November 1993. In addition, the appellant says that the Master erred in fixing the rate at which interest is to be awarded. The respondent’s case is that the Master’s decision was correct.
We record: There has been no reliance by the appellant on the rules relating to the award of interest for breach of trust and we have not addressed them: see, for example, Underhill and Hayton: Law of Trusts and Trustees (15th edn) 839. The case has been treated throughout as a claim under s87 of the Act. The respondent has not cross-appealed to challenge the jurisdiction to award interest under s 87 of the Act where moneys owing have been paid prior to judgment, notwithstanding that was a live issue in the High Court. This judgment should not be treated as authority for the proposition that there is such a jurisdiction. There is no dispute that in accord with Day v Mead [1987] 2 NZLR 443, followed in Wilson & Horton Ltd v Attorney-General [1997] 2 NZLR 513, 530, the discretion under s 87 of the Act is to be exercised as the judgment of the case requires.
When should interest run from?
In the High Court the Master accepted, as put to her by both counsel in that court, what was said by Somers J in Day v Mead at 463:
… I would conclude that generally justice may require interest to run from the date the cause of action arose down to judgment, for it is from that date that the plaintiff's entitlement to the debt or damages arises.
The Master adopted, apparently of her own accord, a statement in Halsbury’s Laws of England (4th Edn) Volume 26 page 277 para 553:
… an order for costs to be taxed carries interest from the date of the taxing master’s or registrar’s certificate.
…
… when the effect of an order of the House of Lords is to restore a judgment of the court of first instance which was reversed by an order of the Court of Appeal, the judgment of the court of first instance is expressly restored and remains standing as from the date when it was given.
However, even if that were relevant, the first part of that statement is no longer applicable since the decision of the House of Lords in Hunt v R M Douglas (Roofing) Ltd [1988] 3 All ER 823. Interest on costs does not run from the date of the taxing master’s certificate: see also Halsbury’s Laws of England (4th Edn), 2000 Cumulative Supplement Part 2, which amends the paragraph relied upon by the Master:
Interest on costs runs from the date of judgment rather than from the date of issue of the taxing master’s certificate.
When a plaintiff loses at first instance but recovers judgment in the Court of Appeal, interest only runs from the date of the order of the Court of Appeal unless that court for special reasons decides to ante date its order. Where on an appeal to the House of Lords the decision of the court of first instance and of the Court of Appeal is reversed, and judgment is, for the first time, directed to be entered in favour of any litigant party by the House of Lords, the date which that judgment bears is, in the absence of any direction by the House, the date when the order is made; but, when the effect of an order of the House of Lords is to restore a judgment of the court of first instance which was reversed by an order of the Court of Appeal, the judgment of the court of first instance is expressly restored and remains standing as from the date when it was given.
The Master then purported to apply the passage from Halsbury set out in para [7] above to the present situation, which is entirely different as interest is not being sought upon taxed costs. However, she took the view that the passage applied and that the date from which interest should be paid was, as a result, the date of the decision of the Registrar in respect of the respondent’s costs on 31 July 1998. She said:
The debt at that date was quantified and the jurisdiction of the Court had arisen. [para 14, page 6]
She took the view that it was only then that the appellant had a claim against the respondent.
Understandably, the appellant takes issue with this approach and the respondent endeavours to support it.
The appellant claims that he was kept out of the use of his $24,086 from 19 November 1993 onwards and that interest should run from that date. He submits that the respondent had no right or entitlement to that use.
The respondent attempts to support the Master’s judgment by suggesting that it was entitled to deduct its costs from the appellant’s money and to retain such deduction until the Registrar determined otherwise. The respondent also seeks to obtain some support for its position because part of the amount held to be excessive related to some $9,875 of counsel’s fees. The respondent says that it can hardly be said to have had the “use” of that part of the money. Finally the respondent says that the Master had a discretion and that it was open to her to select the date that she did.
It is quite clear that the Master erred in principle and took into account an irrelevant consideration. She applied an outmoded principle relevant to the award of interest on taxed costs to the entirely different situation of the respondent wrongly converting $24,086 of the appellant’s money to its own use from 19 November 1993. That is when the cause of action arose, however the claim is approached. If the principle expressed by Somers J in Day v Mead is to be applied to this case in the manner agreed by the parties in the High Court, that is the date from which interest should have run, unless there was some other justifiable ground for a different approach. The respondent is unable to articulate a basis for a different approach. The reference to money paid to counsel is something between the respondent and counsel and is not an issue for the appellant. There is and can be no suggestion that the appellant sat on his rights or anything of that nature. The fact that the respondent had rendered a bill did not give it a right to money it was not entitled to charge. It had the use of the appellant’s money. It was proper that the respondent should pay interest for the whole of the period it had that use of the appellant’s money unless there was some reason to the contrary, and none has been shown.
On this issue the appellant must succeed and interest should run from 19 November 1993 and not from 31 July 1998.
What was the appropriate rate of interest?
The Master awarded interest at “the current approximate bank rates of 7.5% and not the 11% as sought originally”.
The case for the appellant is that he should have had interest at the prescribed rate. It is submitted for the appellant, without reference to authority, or evidence, that, since the prescribed rate of 11% per annum was fixed in 1980, deposit rates have almost always been lower, except in a period of high inflation in the late 1980s. It is therefore submitted that the fact that the prescribed rate has not been changed is an indication that there is an intention that successful parties are entitled to an award of interest at a higher rate than deposit rate. Further it is submitted that the respondent would have benefited in reducing the interest that it would have paid on its normal business overdraft rate. The appellant says the case is analogous to Day v Mead, where interest was awarded for most of the period at the prescribed rate. It is submitted, questionably and again without reference to authority or evidence, that for most of the period involved in that case deposit rates would have been well below the prescribed rate.
For the respondent it is submitted that the Master’s decision is entirely consistent with recent decisions of the High Court in respect of s 87 of the Act. There interest rates have been awarded at less than the prescribed rate: see, for example, Topaz Holdings Ltd v Clark and Others (unreported, CP 31/95 Rotorua Registry, 11 August 2000, Williams J) and Alabaster v Parkin and Others (unreported, CP 387/93, Wellington Registry, 3 October 2000, Heron J).
We cannot agree with the argument of the appellant on this issue. The prescribed rate under s87 of the Act is a maximum rate. It is not an indication of the rate that the Court is obliged to award or should award. There is no evidence as to what benefit the respondent received from the appellant’s money.
It has not been shown that the Master erred in principle in awarding what she believed to be the appropriate rate to compensate the appellant in the circumstances of this case under s 87 of the Act. Nothing has been put before the Court to show that she failed to take into account any relevant circumstance or that she took into account irrelevant circumstances under this head. She certainly is not plainly wrong in taking a figure approximating bank deposit rates. This part of the appeal cannot succeed.
Decision
The appeal succeeds to the extent already indicated, namely that the appellant is entitled to interest upon the sum of $24,086 from 19 November 1993 to the date of judgment at the rate fixed by the Master of 7.5% per annum.
Costs
Costs in the High Court will remain undisturbed. Costs in this Court in the sum of $3,000 are awarded to the appellant together with his reasonable disbursements including counsel’s reasonable travel and accommodation costs.
Solicitors
Callaghan & Co, Auckland, for appellant
Bartlett Partners, Wellington, for respondent
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