Watson v Whitehead
[2015] NZHC 739
•17 April 2015
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
CIV-2013-488-000359 [2015] NZHC 739
BETWEEN DENIS ERIC WATSON AND MERYL
JOY WATSON (AS TRUSTEES OF THE SALEM CHARITABLE TRUST)
First Plaintiffs
WATSON & SON LIMITED Second Plaintiff
AND
JOHN EDWARD WHITEHEAD AND ROSALEEN MARIE WHITEHEAD AND EDWARD IVAN WHITEHEAD (AS TRUSTEES OF THE J AND R WHITEHEAD TRUST)
First Defendants
SHILOH CHARITABLE TRUST Second Defendant
Hearing: On the papers Appearances:
K P Sullivan for First and Second Plaintiffs
M C Black for First and Second DefendantsJudgment:
17 April 2015
JUDGMENT OF WYLIE J
This judgment was delivered by Justice Wylie on 17 April 2015 at 11.30 am
pursuant to R 11.5 of the High Court Rules
Registrar / Deputy Registrar
Date…………………...........
Solicitors for 1st and 2nd plaintiffs - Michael Bale, Wellington
Counsel – K P Sullivan
Solicitors for 1st and 2nd defendants – Michael Hockly, Auckland
Counsel – M C Black
WATSON v WHITEHAD [2015] NZHC 739 [17 April 2015]
Introduction
[1] I refer to my interim judgment dated 27 November 2014.1 In that judgment I made various findings as to liability. I requested the parties’ expert accountants to liaise and prepare final calculations in accordance with the interim judgment and I put in place a timetable for that to occur.
[2] Counsel were unable to comply with the timetable. They sought and were granted an extension of time. Memoranda were filed on 2 March 2015. There were difficulties with the memoranda filed. The accountants had not liaised. There were differences between them and various findings made by me in the interim judgment had been ignored in the calculations undertaken. I issued a further minute. I then received further memoranda from counsel. This time there was agreement on many matters, but some aspects of the damages calculations were still unclear and in some respects the expert accountants had, for a second time, failed to calculate damages in accordance with the interim judgment. I therefore convened a telephone conference with counsel. That telephone conference was held on 25 March 2015 and I issued a further minute on the same day. I then received a joint memorandum dated 2 April
2015 detailing the amounts payable pursuant to my interim judgment and also requesting recall of paragraph 268(d) of that judgment, or alternatively, correction of that paragraph pursuant to the slip rule. Separate memoranda dated 2 April 2015 and
10 April 2015 were also filed dealing with the issue of whether or not contract interest is payable after the date of this final judgment.
[3] There are five issues outstanding:
(a) Whether paragraph 268(d) can and should be recalled or corrected.
(b)Whether judgment should be entered against Mr and Mrs Watson personally for the interest payable on the payments due in respect of the third agreement as summarised in paragraph 268(c) of my interim
judgment.
1 Watson v Whitehead [2014] NZHC 2992.
(c) Whether WSL/Mr Watson can set off monies payable by them or either of them pursuant to the agreement for the sale and purchase of honey against monies payable by JRWT to Salem/WSL for rental as summarised in paragraph 268(d), (e), (f) and (g).
(d) Quantum.
(e) Whether the contractual interest agreed between WSL, Mr Watson and JRWT in the agreement for the sale and purchase of honey applies to monies owing under that agreement after the date of this final judgment until actual payment.
[4] Counsel have confirmed that they are happy for me to deal with all of these issues on the papers.
Can and should paragraph 268(d) be recalled or corrected?
[5] I deal first with the joint request made by counsel that I should recall or correct paragraph 268(d) of my interim judgment.
[6] In paragraph 268(d) I recorded that JRWT is liable for interest at the rate of six per cent in respect of the payments of rental due under the second agreement for the hire of hives in May and June 2012, from the dates on which the rental was due to be paid, until 30 July 2012, and at the rate of five per cent from that date through until the date of this judgment.
[7] My interim judgment in this regard was not well expressed.
(a) The rental payment due on 31 May 2012 ($57,500 plus GST) was paid on 31 July 2012. An identical rental payment due on 30 June
2012 was also paid on 31 July 2012. There was no liability to pay interest on these sums thereafter.
(b)The second agreement for the hire of hives also provided for the payment of rental due for the months of April 2011 through to
December 2011 (inclusive) to be deferred until 30 July 2012. It was to be paid in one lump sum on that date. Interest was then payable, calculated on a daily basis from the end of each month through to 30
July 2012. I recorded this in paragraph 217 of my interim judgment but the summary in paragraph 268(d) does not refer to this liability for interest.
[8] In paragraph 268(d), and earlier in my interim judgment, I recorded that the interest rate under the second agreement for the hire of hives was six per cent. It now transpires that I was in error in this regard. The photocopy of the agreement which was made available to me was poor. It appeared to me to record that interest was fixed at the rate of six per cent. I am however advised by counsel, and it is accepted by the parties, that the actual rate of interest was, and was intended to be, five per cent. Presumably this is obvious on the original of the agreement, although this document was not produced in evidence.
[9] Counsel in their joint memorandum suggest that paragraph 268(d) should be amended to record as follows:
JRWT is liable to pay interest at the rate of five per cent in respect of the payments of rental due under second agreement for hire of hives for the months of April to December 2011 from the end of each monthly period up to the date of judgment, and for the months of May and June 2012 from the dates on which the rental was due to be paid until the date of payment. Interest is not to be compounded.
They submit either that the interim judgment should be recalled to incorporate this change, or alternatively that the slip rule, r 11.10, should be invoked.
[10] I am not persuaded that it is appropriate to recall my judgment to deal with these matters.
[11] Recalls are governed by r 11.9. The circumstances in which recall can be appropriate were authoritatively discussed by Wild CJ in Horowhenua County v
Nash (No 2).2 This is not a situation where there has been an amendment to any
2 Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC) at 633; applied in Saxmere Co Ltd v
Wool Board Disestablishment Co Ltd [2009] NZSC 122, [2010] 1 NZLR 76.
relevant statute or regulation or a new judicial decision of relevance. Nor did counsel fail to direct me to a relevant legislative provision or authoritative decision in relation to the matters dealt with in paragraph 268(d). Nor in my view, is there any very special reason such that the interim judgment should be recalled.
[12] I do, however, consider that r 11.10 applies.
(a) The judgment contains an error arising from my reading of a poor photocopy of a document. The correct interest rate was not readily apparent from the photocopy and, as I have noted, counsel have now advised that the interest rate is in fact five per cent. There is an error in the interim judgment resulting from this accidental slip. I am satisfied that it is appropriate to correct paragraph 268(d) of the interim judgment to record that the interest rate payable is five per cent and not six per cent.
(b)The second agreement for the hire of hives provided for the payment of interest at the rate of five per cent on the rental payments due for each of the months from April 2011 to December 2011. The interest was due to be paid on 30 July 2012. I summarised this in paragraph
217 of the interim judgment and found in paragraph 218 that the lump sum payment due on 30 July 2012 was not paid by JRWT and that no interest was paid either. In paragraph 220 I recorded that Salem/WSL were entitled to interest on any payments made late through until 30
July 2012. Paragraph 268(d) does not accurately summarise my findings and it does not confirm what was decided and intended. Liability for this interest is not contested. I have simply omitted to direct its payment in the summary contained in paragraph 268(d).3
It is appropriate to correct the interim judgment by altering paragraph 268(d)
in the manner suggested by counsel and I so direct.
3 This approach was adopted in Hanmore v Ganley (1995) 9 PRNZ 25 (HC) at 27.
Are Mr and Mrs Watson personally liable for the interest payable as summarised in paragraph 268(c) of the interim judgment?
[13] Next I deal with whether judgment should be entered against Mr and Mrs Watson personally in relation to the interest payable on the payments due in respect of the third agreement as summarised in paragraph 268(c) of my interim judgment.
[14] Mr Black for the defendants sought judgment against Mr and Mrs Watson personally. Mr Sullivan for Mr and Mrs Watson argued that given the relatively small sum involved, the personal liability of the trustees was likely to be of little consequence. He submitted that in any event no personal liability should be recorded in this final judgment, arguing that both parties had accepted for the purposes of the hearing, and in their pleadings, that Salem had entered into the transaction and that it was bound.
[15] I do not accept Mr Sullivan’s submissions.
[16] As I noted in the interim judgment, Salem was a party to the first, second, third and fourth agreements. The liability for interest summarised in paragraph
268(c) arises pursuant to the third agreement. Salem had three trustees at the relevant time, Mr and Mrs Watson and their son-in-law, Mr Scarlett. Mr Scarlett was recorded in the intitulement to the third agreement. He did not sign it. It was signed only by Mr and Mrs Watson. As I explained in paragraphs 69 and 71 of the interim judgment, if only two of three trustees have entered into a contract to purchase assets, that contract cannot be enforced against the trust estate, because two out of three trustees have no power to bind cestuis que trust. In such circumstances, the trustees who sign can be personally liable on the contracts into which they enter, unless personal liability is excluded by express stipulation. There is no express stipulation excluding personal liability in the third agreement. It follows that the parties liable are Mr and Mrs Watson personally, and not Salem.
Can WSL/Mr Watson set off monies payable by them or either of them for the supply of honey against monies payable by JRWT in respect of rental?
[17] I now turn to the third issue – can WSL/Mr Watson set off monies due and owing to JRWT for the supply of honey under the agreement for sale and purchase of
honey, against monies due and owing by JRWT to Salem/WSL for rental under the second agreement for the hire of hives, the first and fourth agreements, and the third agreement, as summarised in paragraph 268(d), (e), (f) and (g) of the interim judgment.
[18] Mr Watson and WSL are jointly and severally liable to JRWT for the amounts due for the supply of honey as summarised in paragraph 268(a) of the interim judgment. WSL is liable to JRWT for the amounts due as summarised in paragraph
268(b).
[19] JRWT is liable for the amounts due as summarised in paragraph 268(d), (e), (f) and (g). The second agreement for the hire of hives the subject of paragraphs
268(d) and (e) was between JRWT and Salem. However, Salem assigned its rights and obligations under the agreements to WSL, with the consent of JRWT, pursuant to the assignment of the second agreement for the hire of hives. The first and fourth agreements referred in paragraph 268(f) were between Shiloh and Salem. So was the third agreement referred to in paragraph 268(g). The obligation to pay rental was initially contained in the first agreement for the hire of hives between Salem and JRWT. It was then recorded afresh in the second agreement for the hire of hives between Salem and JRWT and, as I have noted, this agreement was assigned by Salem to WSL.
[20] Set-off can be either legal or equitable. Legal set-off can be maintained where the claims to be set off exist between the same parties and in the same right. Where mutuality is lacking, it may be possible to maintain an equitable set-off, provided the necessary relationship between claim and cross-claim exists. 4 Where a cross-claim for a sum of money is so closely connected with the claim that it goes to impeach the plaintiff’s title to be paid, and raises an equity in the defendant, making it unfair that he or she should pay the plaintiff without deduction, the general rule is that a defendant may deduct the amount of the cross-claim, or raise it by way of equitable
defence when sued. A defendant may set off a cross-claim which so affects the
plaintiff’s claim that it would be unjust to allow the plaintiff to have judgment
4 Laws of New Zealand Set-off and Counterclaim at [35].
without bringing the cross-claim to account.5 It is neither necessary nor decisive that the claim and cross-claim arise out of the same contract, but the link between the two must be such that the two are in effect inter-dependent.6
[21] I dealt with the issue of whether or not the agreements here in issue were interdependent in my interim judgment. At paragraph 151 I found that the contracts were related, but not inter-dependent in the sense of each being dependent on the other if the overall transaction was to be completed. I accepted that there was a degree of correlation between the payment dates and the amounts required to be paid under some of the agreements, and that the intention was to have crosspayments that would provide funds either in whole or in part to assist in completing the various transactions. I did, however, note that the payments required were not conditional on monies being received via one of the other agreements. I expressed the view that the best way to look at it was to consider each of the key agreements as being a separate agreement, but to treat them all as being inter-related.
[22] Given this finding, in my judgment it is appropriate to allow an equitable set- off, where the identity of the parties to the agreements which result in a monetary award is the same. There is a relationship between JRWT’s claims and WSL’s claims. However, before allowing any set-off, the liability of each of the parties under each of the inter-related agreements has to be first calculated. It is not appropriate, as Mr Sullivan suggests, to apply a set-off prior to calculating interest and determining the total sum owing. To do so would be to ignore the separate contracts, the different interest rates, the fact that the subject matter of each of the agreements was different, and the fact that none of the agreements were conditional on one or more of the other agreements being performed. In my view the appropriate course is to calculate the monies including interest owing under each agreement, and then to allow a set-off between the liable parties where their identity
is the same.
5 Laws of New Zealand Set-off and Counterclaim at [25]; Grant v NZMC Ltd [1989] 1 NZLR 8 (CA) at 12 and 13.
6 Grant v NZMC Ltd at 13.
Quantum
[23] I now deal with quantum.
[24] As I have noted there is agreement between the parties as to the sums payable pursuant to paragraph 268(a) to (g) (inclusive) of the interim judgment. I enter judgment as follows:
(a) WSL and Mr Watson are jointly and severally liable to pay to JRWT the sum of $690,694.10 in respect of honey supplied pursuant to the agreement for sale of purchase of honey dated 29 November 2011. In addition they are jointly and severally liable to pay interest on that sum from the date that each payment for honey was due until the date of this final judgment at the rate of 18 per cent. As at 27 November
2014, interest amounted to $301,484.88. Thereafter it continues to accrue at the rate of $340.62 per day. As at the date of this final judgment, the total amount owing on account of interest is
$349,512.30.
(b)WSL is liable to pay to JRWT the sum of $495,912.75 in respect of honey supplied as detailed in invoices 329, 332 and 334. In addition WSL is liable to pay interest on that sum from the date that each payment for honey was due until the date of this final judgment at the rate of five per cent. As at 27 November 2014, interest amounted to
$63,004.63. Thereafter it continues to accrue at the rate of $67.43 per day. As at the date of this final judgment, the total amount owing on account of interest is $72,512.26.
(c) Mr and Mrs Watson are liable to pay to JRWT the sum of $2,754.36 being interest at the rate of four per cent on each of the payments due under the third agreement from the dates fixed for payment until the date of payment.
(d)JRWT is liable to pay to Salem/WSL interest at the rate of five per cent as follows:
(i)$27,346.76 in respect of the rental payments due under the second agreement for the hire of hives for the months of April to December 2011 (inclusive) from the end of each month until
30 July 2012.
(ii)$461.96 in respect of for the rental payments due under the second agreement for the hire of hives for the months of May and June 2012 from the dates on which the rental was due until
30 July 2012.
(e) JRWT is liable to pay to Salem/WSL the sum of $595,125 being rental due under the second agreement for the hire of hives as at 30 July
2012. In addition JRWT is liable to pay interest on that sum from 30
July 2012 until the date of this final judgment at the rate of five per cent. As at 27 November 2014, interest amounted to $69,213.85. Thereafter it continues to accrue at the rate of $81.52 per day. As at the date of this final judgment, the total amount owing on account of interest is $80,708.17.
(f) JRWT is liable to pay to Salem/WSL the sum of $336,553 being rental payable in respect of the 1,400 hives the subject of the first and fourth agreements from 1 August 2012 until 11 April 2013. In addition, JRWT is liable to pay interest on that sum from the end of each month of the renewed term, until the date of this final judgment at the rate of five per cent. As at 27 November 2014, interest amounted to
$32,581.16. Thereafter it continues to accrue at the rate of $46.10 per day. As at the date of this final judgment, the total amount owing on account of interest is $39,081.26.
(g)JRWT is liable to pay to Salem/WSL the sum of $207,000 being rental in respect of the 900 hives the subject of the third agreement, from 1
August 2012 to 31 March 2013. In addition, JRWT is liable to pay interest on that sum from the end of each month of the renewed term, until the date of this final judgment at the rate of five per cent. As at
27 November 2014, interest amounted to $20,182.51. Thereafter it continues to accrue at the rate of $28.36 per day. As at the date of this final judgment, the total amount owing on account of interest is
$24,181.27.
[25] I now turn to Shiloh’s liability for damages as summarised in paragraph
268(h) of the interim judgment. I held that Shiloh was liable for damages for breaching the deed of arrangement and the third agreement by delivering to Salem/WSL 180 hives which were not in good condition. I directed the parties to detail such evidence as was available, and which might assist me to fix the damages payable by Shiloh in this regard.
[26] Mr Sullivan did not point me to any evidence relevant to the costs of putting the 180 hives in good condition. He focussed on the lost income when the hives were out of production. He submitted that there is information available from which the Court could assess the lost income from the 180 hives. He referred me to Mr Gross’ evidence and to the evidence given by Mr Watson. He suggested that I could safely conclude that 25 – 30 kilograms of honey would have been harvested from each hive, and that it would have been sold in the 2014 season at $30 per kilogram. He submitted that it was unnecessary to take into account production costs, given the very large number of hives managed by WSL. He also argued that the costs of cleaning, repairing and re-populating the 180 hives were substantial, and that this would have offset the costs that would have been incurred in siting, managing and extracting the honey. He argued that a conservative estimate of the lost value of honey which should have been harvested from 180 hives in the 2014 season was 180 hives x 28 kilograms of honey x $30 per kilogram – namely $151,200.
[27] Mr Black resisted these submissions. He argued that there is no proper basis on which the Court can confidently make an award of damages for the poor condition of the hives. Further, he noted that neither the plaintiffs’ pleadings, nor the further particulars provided by the plaintiffs in June 2014, claimed lost production. He reminded me that the sum claimed by the plaintiffs was $72,450 (inclusive of GST) based on the assertion that the 180 hives were worthless (see interim judgment, paragraph 63(b) and footnote 3). Mr Black also addressed the available
evidence in relation to putting the 180 hives back into good condition. He noted Mr Daniel Watson’s evidence that extra time was required to clean up and replace a number of the frames in the hives, but that no quantification had been given. He cited Mr Watson’s evidence that WSL ended up “…putting five guys on a team to clean them up and it was taking them four hours just to get through one site so it was taking basically twice as long with extra people on the job to clean them to make them inspectable…”.
[28] I accept to the point raised by Mr Black about the pleadings. As I noted in the interim judgment, at paragraph 46, they were difficult to follow. Damages were not sought for lost production from the 180 hives said in the pleadings to be unusable. The issue of lost production only arose because the evidence at trial did not support the assertion that the hives were unusable. Rather it suggested that they had to be put back into good condition before they could be used. There was no evidence specific to the lost production now sought by WSL. The issue was not put to Mr Whitehead. He could not reasonable have anticipated that it might be raised from the pleadings or evidence pre-circulated. It is simply too late for the plaintiffs to now seek to change the focus of this part of their case. I decline to allow a claim for lost production.
[29] The defendants should however have appreciated that the condition of a number of the hives supplied was in issue, and that the costs of putting them in good condition was a matter which might fall to be addressed.
[30] The plaintiffs pleaded that 20 per cent of the 900 hives supplied were in poor condition. This equates to 180 hives. This figure was broadly supported by Mr Daniel Watson in his evidence and I accept it.
[31] It is difficult to say with any certainly what damages the plaintiffs have suffered as a consequence of having to put the 180 hives back into good condition. Mr Daniel Watson gave evidence that the primary problem with the hives was a build up of wax which had to be cleaned out. He said that it took four hours for five employees to go through “one site” to clean the hives. He said that normally three man teams would get through five to six sites each of 48 hives, a day. It is clear that
Mr Watson, when he used the word “site”, was not referring to each individual hive,
but to a collection of 48 hives.
[32] I suspect that employee apiarists are relatively lowly paid. I assume an hourly rate of $25. It would follow that it cost WSL $500 to have five employees, working for four hours, clean 48 hives – approximately $10.50 per hive. The cost to clean the 180 hives would therefore have been approximately $1,890.
[33] It seems from the evidence that some of the trays in the hives had to be replaced. There was no evidence as to how many trays had to be replaced or as to the cost of a new tray. Mr Gross suggested that a complete hive was worth approximately $300 - $400, depending on the number of trays in it. I assume that the cost of replacing the trays where needed was, say, $50 per hive. The total cost incurred would have been $9,000.
[34] The evidence suggested that some of the hives had to be re-populated with queen bees. There was no evidence as to how many of the 180 hives were missing or needed new queen bees, or the costs of re-populating the hives with new queen bees. I assume that each queen costs $25, and that 50 per cent of the 180 hives had to re-populated. The total cost of re-population would have been $2,250.
[35] I give judgment in favour of WSL against Shiloh in the sum of $13,140 for the cost of putting the 180 hives back in good condition.
Contractual rate of interest – does it merge in this judgment?
[36] I now turn to the final issue – whether or not the contractual rate of interest specified in the agreement for the sale and purchase of honey applies to monies owing under that agreement after the date of this final judgment until actual payment.
[37] Mr Black argued that the agreement is clear, and that it entitles JRWT to interest at the rate of 18 per cent on monies payable under the agreement until actual payment. He submitted that the contract rate should be enforced by the Court. Mr Sullivan referred to r 11.27. He accepted that interest runs from the date when
judgment is given and the amount of the debt or damages is quantified, but argued that the contractual obligation to pay interest on the debt merges in the judgment, and that after judgement, JRWT should not be entitled to the contractual rate of interest, but only to interest at the rate prescribed by s 87 of the Judicature Act 1908.
[38] The starting point is r 11.27. It provides as follows:
Interest on judgment debt
(1) A judgment debt carries interest from the time judgment is given until it is satisfied.
(2) The interest is at the rate prescribed by or under section 87 of the
Act or at a lower rate fixed by the court.
[39] Generally where there is a contractual obligation to pay interest, under the doctrine of merger, the contractual obligation will merge in the judgment, because on judgment, the principal sum becomes owing under the judgment rather than under the contract. The contractual right to interest ceases on judgment being given, and any subsequent right to interest flows from the application of r 11.27(2).7
[40] It is clear however that parties to an agreement can contract out of the doctrine of merger.8 If a contractual provision clearly preserves a right to contractual interest at a specified rate after judgment and until payment, then that provision will be enforced by the courts, unless to do so would be unconscionable.9 If the doctrine of merger is to be excluded, the agreement to pay interest must be clearly expressed so that it does not merge in the judgment for the principal debt. This will be the case
if there is a contract to pay interest so long as any part of the principal sum remains
7 Nottingham v Registered Securities Ltd (in liq) (1998) 12 PRNZ 625 (CA); F M Custodians Ltd v Patullo (2010) 20 PRNZ 691 (HC); Westpac New Zealand Ltd v Wright (2010) 20 PRNZ 786 (HC); ANZ Bank New Zealand Ltd v Unka [2014] NZHC 1320 at [127]; Millbrook Country Club Ltd v SFM Investments Ltd [2014] NZHC 380 at [13]; and see McGechan on Procedure (online looseleaf ed., Brookers) at [HR 11.27.04].
8 Economic Life Assurance Society v Usborne [1902] AC 147 (HL).
9 IFC Securities Ltd v Sewell [1990] 1 NZLR 177 (HC) at 184; FM Custodians Ltd v Patullo, above n 7, at [30]; TTM v JMM [2013] NZCA 671 at [64] - [77]; BFMG Ltd v Speirs [2014] NZHC 2503, (2014) 15 NZCPR 518 at [50]; Westpac New Zealand Ltd v Manetakis HC Auckland CIV-2009-404-4309, 9 December 2011.
due either under the contract or on the judgment, or where the contract uses words to the effect that interest is payable after as well as before any judgment.10
[41] In the present case, the relevant provision in the agreement for the sale and purchase of honey provided that interest was to run at 18 per cent on overdue sums from the due date “until the date of actual payment”.
[42] Words to the effect that interest at the contractual rate runs “until payment” are usually considered insufficient to exclude the doctrine of merger, as they do not expressly refer to the effect of the judgment.11
[43] Here the agreement uses the words “until the date of actual payment”. The provision focuses on payment – not judgment. However, use of the word “actual” can only mean the date on which JRWT receives payment for honey delivered. Otherwise the word is otiose.12 I bear in mind that the agreement for the sale and purchase of honey, along with the deed of arrangement, was only entered into after the less formal arrangements between the parties had broken down, in part as a result
of WSL’s repeated defaults. I recorded this in the interim judgment. The interest rate specified in the agreement for the sale and purchase of honey is much higher than that specified in the other agreements entered into on the same day. In my judgment the parties agreed to recognise past breaches, formalise their ongoing arrangements, and put in place strict obligations to govern their respective rights and obligations. In my judgment the words used in the agreement for the sale and purchase of honey are sufficient to exclude the doctrine of merger.
[44] Further I do not consider that it is unconscionable to enforce the contractual provisions relating to interest. WSL and Mr Watson must have understood the effect of the interest rate covenant. It is clearly expressed. They could not have had any difficulty in understanding it. Nor I suspect would they have thought it unfair at the
time. If their attention had been drawn to the impugned term, they might well have
10 Economic Life Assurance Society v Usborne, above n 8, at 149 to 150; IFC Securities Ltd v
Sewell, above n 9, at 184; and see Sim’s Court Practice (LexisNexis) at [HCR 11.27.4].
11 Nottingham v Registered Securities Ltd, above n 7; Millbrook Country Club Ltd v SFM Investments, above n 7; FM Custodians Ltd v Patullo, above n 7, at [41]; cf. BFMG Ltd v Speirs, above n 9 at [50],
12 See observations in FM Custodian Ltd v Patullo above n 7 at [41] to [42].
been surprised at the need to spell it out, but they would surely not have been surprised by it.13 It is not unconscionable to require parties to abide by their contractual bargain, particularly when they are businessmen who have freely entered into a commercial agreement, with the benefit of, or at least the opportunity to seek, legal advice.
[45] In my judgment, in the circumstances of this case, the words “actual payment” are sufficient to exclude the doctrine of merger and to require that interest be paid at the contract rate after as well as before this judgment, and until actual payment is made by WSL/Mr Watson (as the case may be) to JRWT.
[46] JRWT in its prayer of relief sought interest at the contract rate until the overdue sums were paid – see paragraphs 43 and 45 of the statement of defence and counterclaim.
[47] The view has been taken in some cases that a party seeking interest on a debt at the contractual rate should seek an order of payment of interest falling due post judgment by way of an order for specific performance, and that the Court cannot give a prospective judgment for interest yet to accrue.14 The view has also been taken that the Court has jurisdiction either at common law to award post judgment interest where the contract so provides or to give relief by way of a declaration that the liable party should pay interest at the post judgment interest rate.15
[48] Counsel did not address me on whether or not the court can award post judgment interest, or whether I should simply make a declaration that WSL is liable to pay post judgment interest at the contract rate. While I have considered the relevant authorities, given that counsel did not address the matter, I do not express a concluded view. I prefer to grant JRWT relief in this regard by declaring that WSL/Mr Watson are liable to pay interest post judgment at the rate of 18 per cent on
the monies owing in respect of the supply of honey pursuant to the agreement for the
13 See Director General of Fair Trading v First National Bank Plc [2001] UKHL 52, [2002] 1 AC
481 at 505.
14 Nottingham v Registered Securities Ltd, above n 7; Westpac New Zealand Limited v Wright,
above n 7.
15 F M Custodians Ltd v Patullo, above n 7, at [30] and [31] to [39]; ANZ Bank New Zealand
Limited v Unka, above n 7, at [131].
sale and purchase of honey (as detailed in paragraph 24(a) above) until actual payment is made by WSL and/or Mr Watson.
Costs
[49] Counsel have sought to reserve the issue of costs.
[50] Both parties have had a measure of success in these proceedings, and both have failed in some respects. Financially the judgment favours the defendants.
[51] In the event that agreement cannot be reached, I direct as follows:
(a) Within 10 working days of the date of this judgment, the defendants are to file a memorandum setting out such claim, if any, as they wish to make in respect of costs and disbursements.
(b)Within a further 10 working days, the plaintiffs are to reply to the defendants’ claim, and set out any claim they may wish to make for costs and disbursements.
(c) Within a further period of five working days, the defendants are to file a memorandum in reply addressing any application the plaintiffs may make for costs and disbursements.
[52] I will then deal on the issue of costs on the papers, unless I require the assistance of counsel.
Wylie J
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