FEDERAL COURT OF AUSTRALIA McCarthy v McIntyre [1999] FCA 155 INTEREST – pre-trial interest – date from which interest is to run. Federal Court of Australia Act 1976 (Cth), s 51A Smallacombe v Lockyer (1993) 114 ALR 568 Ferrier v Civil Aviation Authority (1994) 55 FCR 28 RONALD IAN MCCARTHY v NEVILLE MCINTYRE NG 672 OF 1996 JUDGE: BEAUMONT J. DATE: 8 FEBRUARY 1999 PLACE: SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 672 OF 1996 BETWEEN: RONALD IAN MCCARTHY First Applicant MAXWELL MCCARTHY Second Applicant EDLAN NO. 54 PTY LIMITED Third Applicant AND: NEVILLE MCINTYRE First Respondent AURO ROMANO MCINTYRE Second Respondent NEVITORO INVESTMENTS PTY LIMITED Third Respondent AND BETWEEN: NEVILLE MCINTYRE First Cross-Claimant AURO ROMANO MCINTYRE Second Cross-Claimant NEVITORO INVESTMENTS PTY LIMITED Third Cross-Claimant AND: RONALD IAN MCCARTHY First Cross-Respondent MAXWELL MCCARTHY Second Cross-Respondent EDLAN NO. 54 PTY LIMITED Third Cross-Respondent JUDGE: BEAUMONT J. DATE: 8 FEBRUARY 1999 PLACE: SYDNEY REASONS FOR JUDGMENT (No. 3) (ON INTEREST AND COSTS) BEAUMONT J: 1 I will now deal in principle with a number of further matters, most of which arise out of my reasons for judgment given on 11 September 1998. I will not make any formal final orders today pending calculations of interest to which I will refer shortly. I will merely stand the matter over to a date within the next 21 days to be agreed with my associate. I will stand the matter over so that short minutes may be submitted by the applicants recording the orders I propose to make. INTEREST ON THE RIVERVIEW LODGE CLAIM. 2 Edlan Pty Limited ("Edlan") submits that it should be awarded interest on the judgment sum of $505,476.43 against the respondent, Mr Auro McIntyre, on the Riverview Lodge claim from 4 September 1990 either as damages on the principle in Hungerfords v Walker (1989) 171 CLR 125 or pursuant to s 51A of the Federal Court of Australia Act ("the Act"). The respondent submits that no interest should be allowed or, alternatively, that interest should be allowed under s 51A of the Act for the period since 1 December 1997, being shortly after Edlan first demanded repayment of the sum in question. 3 In my view, interest should be allowed under s 51A of the Act from 1 December 1997 at the rate prescribed by the rules of the Supreme Court of New South Wales in accordance with the usual practice of this Court when sitting in this State (see Namol v A.W. Baulderstone Pty Limited (1993) 43 FCR 388). 4 In support of its contention that interest as damages under the general law should not be allowed, it is submitted on behalf of the respondent that this claim was not pleaded or pursued in any substantive sense in the course of the proceedings and that this is a condition precedent to the award of interest under the general law (see, eg, Hobartville Stud Pty Limited v Union Insurance Company Limited (1991) 25 NSWLR 358 at 361 - 366). 5 Although there appears to be some force in the submission, I have come to the conclusion that I need not pursue it because as is frankly acknowledged on behalf of Edlan, the measure of interest to be allowed under s 51A would not differ in any significant sense from the interest that might be awarded under the general law. Under the terms of s 51A interest will be awarded on application unless good cause is shown to the contrary. Although a submission was advanced on behalf of the respondent that such cause has been shown, I cannot accept the submission. 6 The contention was developed on behalf of the respondent at some length in his written submission. I will not attempt to summarise it. In essence, the argument advanced in this behalf really seeks to re-agitate the factual and other dimensions of the Riverview Lodge claim itself. I do not propose to re-enter into that debate nor is it appropriate that I do so. I merely re-state my opinion that nothing that has been put before me in the present connection has persuaded me that I should depart from the presumption exhibited in s 51A. 7 However, a contentious question arises as to the date from which interest to be ordered is to run. There was no demand for the amount in question until November 1997. The statement of claim was not amended relevantly until 3 December 1997 and the amendment was made over the respondent's objection. 8 In those circumstances it is a fair exercise of the judicial discretion conferred by s 51A to order that interest be allowed only from 1 December 1997 (cf. Smallacombe v Lockyer (1993) 114 ALR 568 (at 575); Ferrier v Civil Aviation Authority (1994) 55 FCR 28 at 92-3). 9 I propose then to order that the judgment of $505,476.43 in favour of Edlan on the Riverview Lodge claim carry interest from 1 December 1997 at the rates prescribed by the Supreme Court of New South Wales at the material time. 10 I direct that the solicitors for the parties confer as soon as practicable with a view to agreeing on that calculation, if possible, and agreeing further with the calculation of interest on the cross-claim which I will deal with below. 11 I further direct that in default of agreement between the solicitors within seven days, the matter is to be listed forthwith before a Registrar for this purpose. INTEREST ON THE CROSS-CLAIM 12 On 11 September 1998 I ordered that Edlan pay Nevitoro Investments Pty Ltd ("Nevitoro") "interest in accordance with the terms of the contract". 13 By cl 6.2 of the deed of settlement it is provided that interest shall be payable under the relevant advance for the term of the advance at the rate of 16 per cent per annum provided that if the interest is paid within fourteen days of the due date the rate of interest will be reduced to 13 per cent. 14 It is further there provided that interest will be payable monthly in arrears during the term of the advance, the amount of the principal being repayable on expiry of the term. 15 The deed of charge, which is annexed to the deed of settlement and by common consent is to be treated as part of the relevant and contractual arrangement, provides in cl 17.2 as follows: "Unless the deed of settlement provides otherwise, such interest shall accrue on such amounts from day to day from the due date up to the date of actual payment, before and (as a separate and independent obligation) after judgment at the rate which is applicable following an event of default under the Supreme Court Act, 1970." 16 It follows, in my view, that the matter is thus governed, as I had already ordered, by the terms of this contractual arrangement and not by the provisions of a statutory source of liability to pay interest such as is found in s 51A of the Act. As I have previously foreshadowed, I direct that the solicitors for the parties confer with a view to agreeing on this re-calculation and in default of any such agreement within seven days the matter will be dealt with by a Registrar at that stage. COSTS 17 I have had the benefit of full submissions on the question of costs. 18 I have concluded that on each of the three claims (i.e. the 1993 transaction, the Riverview Lodge claim and the loan claim) and on the cross-claim, there is no sufficient reason for departing from the usual rule that costs follow the event of the disposition of those claims and of that cross-claim. 19 This has been hard fought litigation on both sides and it is not, in my opinion, appropriate to characterise the respondent's conduct in resisting the applicant's primary claim, as the applicant submitted, as a "public wrong by virtue of their misleading and deceptive conduct". 20 These transactions were essentially private and the element of a public wrong is not at all apparent. There were many unsatisfactory aspects of the dealings between the parties to which I drew attention in the course of both my earlier reasons for judgment, and I do not find it possible to single out the conduct of either of them for any particular treatment in the sense discussed in the authorities such as Ritter v Godfrey [1922] KB 47 at 60. Rather, as my earlier reasons indicate, the facts of the litigation exhibit a course of dealings between two experienced parties in which each sought to obtain maximum commercial advantage over the other. 21 Since I have concluded the costs should follow the event, I propose to order that costs be awarded as follows: First, that the applicants pay the costs of the proceedings of the fourth and fifth respondents; secondly, that the applicants pay the cost of the first, second and third respondents of the 1993 transaction; thirdly, that Edlan, as cross-respondent, pay the costs of Nevitoro, as the third cross-claimant, of the cross-claim; fourthly, that the second respondent, Mr Auro McIntyre, pay the costs of Edlan of the Riverview Lodge claim; and fifthly, that the third applicant, Edlan, pay the costs of the first respondent, Mr Neville McIntyre, on its abandoned claim in relation to the alleged loan pleaded in paras 40-45 of the second further amended statement of claim. THE CLAIM FOR A DECLARATION OF A VENDOR'S LIEN 22 No claim for this relief was substantively pursued in these proceedings until after I gave judgment on 11 September 1998. Whether such a claim arises in the cross-vested proceedings, NG 292 of 1998, has not yet arisen for determination. I will deal with this claim, if at all, and if it is appropriate to do so, in that context. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont. Associate: Dated: 8 February 1999 Counsel for the Applicant: Mr M Ashhurst Solicitor for the Applicant: Hunt Partners Counsel for the Respondent: Mr J Stephenson Solicitor for the Respondent: Mr K A Garling Date of Hearing: 8 February 1999 Date of Judgment: 8 February 1999