Supreme Court New South Wales Medium Neutral Citation: WFM Motors Pty Limited v Bar M Pty Limited (No 2) [2022] NSWSC 1752 Hearing dates: 25 November, 2 December 2022 Date of orders: 2 December 2022 Decision date: 02 December 2022 Jurisdiction: Equity Before: Kunc J Decision: Orders made to give effect to principal judgment; ambiguity in principal judgment clarified Catchwords: JUDGMENTS AND ORDERS — Interest — Agreements to pay interest — Appropriate rate of interest where defendants had filed notices acknowledging claim shortly after proceedings commenced but no judgment had been entered in accordance with UCPR Pt 20 r 20.34(3) JUDGMENTS AND ORDERS — Reasons — Clarification of ambiguity Legislation Cited: Civil Procedure Act 2005 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 2) (1998) 29 ACSR 290 WFM Motors Pty Ltd v Bar M Pty Ltd [2022] NSWSC 1500 Category: Consequential orders Parties: WFM Motors Pty Ltd (Plaintiff/Cross-Defendant) Bar M Pty Ltd (First Defendant) Walter Toppi (appointed by order of the Supreme Court of NSW to represent the estate of the late Giovanna Toppi) (Second Defendant/Cross-Claimant) Paola Toppi (Third Defendant) Representation: Counsel: PR Jammy (Plaintiff/Cross-Defendant) NJ Kidd SC (Second Defendant/Cross-Claimant) M Pesman SC (First and Third Defendants) Solicitors: HWL Ebsworth (Plaintiff) Beazley Lawyers (First and Third Defendants) Levitt Robinson Solicitors (Second Defendant/Cross-Claimant) File Number(s): 2020/267822 Publication restriction: Nil EX TEMPORE Judgment (REVISED) INTRODUCTION 1. HIS HONOUR: The Court delivered its principal judgment in these proceedings on 4 November 2022 (WFM Motors Pty Ltd v Bar M Pty Ltd [2022] NSWSC 1500) (the Principal Judgment). These reasons assume familiarity and should be read with the Principal Judgment. Terms defined in the Principal Judgment have the same meaning in these reasons, which resolve various matters in relation to the form of the final orders to give effect to the Principal Judgment. INTEREST ON THE JUDGMENT 1. WFM sought orders which included: "1. Judgment for the Plaintiff against the First, Second and Third Defendants in the amount of $1,118,231.52. 2. The First Defendant, Second Defendant and Third Defendant pay to the Plaintiff interest on Judgment: (a) in the amount of $182,935.64, being 8.5% per annum on $1,118,231.52 from 27 August 2020 to 2 December 2022 inclusive, less $29,424.66 paid to the Plaintiff in reduction of the Loan during that period. …. 4. The sum of $1,301,167.16, being the sum of the Judgment Amount (at 1 above) and Interest (at 2(a) above), be paid forthwith to the Plaintiff from the funds presently held in Court. 5. Upon the sum referred to in order 4 above being paid to the Plaintiff from the funds presently held in Court, the First Defendant indemnify the Second Defendant in respect of that sum by paying to the Second Defendant the sum of $1,182,879.24. … 7. Upon the sum referred to in order 6 above being paid to the Plaintiff from the funds presently held in Court, the First Defendant indemnify the Second Defendant in respect of the amount of the costs subject of the costs order in 3(a) above by paying that amount to the Second Defendant. Notations: 1 The Plaintiff neither consents to nor opposes Orders 5 and 7 above …" 1. Mr M Pesman of Senior Counsel, who appeared for Bar M and Paola, submitted that by reason of his clients having filed notices acknowledging the whole of WFM's claim on 8 October 2020, the effect of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) Part 20 r 20.34(3) and (4) was that that judgment should have been entered as at that date and that any claim for interest up until that date was therefore subsumed into the judgment. That rule provides: "20.34 Defendant may file acknowledgment (1) In proceedings with respect to a liquidated claim, the defendant may file a statement acknowledging the whole of the amount of the claim. (2) Subrule (1) does not apply if the defendant has filed a defence or the plaintiff has, in accordance with these rules, filed an application for a default judgment. (3) On the filing of a statement under subrule (1), judgment is to be entered for the plaintiff for the whole of the amount of the claim. (4) Judgment entered as referred to in subrule (3) fully discharges all of the plaintiff's claims in the proceedings. (5) In proceedings in which a default judgment has been set aside under rule 36.15 or 36.16, the defendant may not file a statement referred to in subrule (1) except by leave of the court." 1. Mr Pesman SC drew to attention paragraph 2 of the statement of claim, which was the claim for interest he submitted was subsumed into the judgment: "2. Interest on the amount of $1,135,879.90 from 27 August 2020 until judgment at a rate of 8.5% per annum." 1. He submitted that the order now sought by WFM impermissibly claimed interest at the higher inter partes contractual rate up to and including today, rather than at Court rates which would have applied had judgment been entered on 8 October 2020 in accordance with r20.34(3) and (4). 2. In my respectful view, interest being claimed up today at the higher contractual rate is the correct outcome. It may be arrived at on more than one basis. However, it seems to me that the most convenient course is to accept for the sake of the argument that judgment could and should have been entered had the Plaintiff sought such a judgment on or shortly after 8 October 2020. Thereafter, at least as against Bar M and Paola, interest would have become post judgment interest. 3. There is no doubt that under s 101 of the Civil Procedure Act 2005 (NSW) (the CP Act) the Court has discretion to vary the rate of post judgment interest from that prescribed by the rules. Clause 3.3 of the relevant loan agreement provides: "3.3 Interest after judgment If a liability of the Borrower becomes merged in a judgment or order, the Borrower, as an independent obligation, must pay interest on the amount of that liability, from (and including) the date of the judgment or order until it is paid in full, at the higher of the rate that applies under the judgment or order and the Default Rule." 1. That clause provides a proper basis for the Court to vary what would otherwise have been the court rate of interest had the judgment been entered on or about 8 October 2020 to reflect the higher contractual rate. As a matter of formality, it is not necessary for me to make any of those orders (e.g. entry of judgment as at 8 October 2020 nunc pro tunc and then varying the post-judgment interest rate) because the way interest has been calculated in the order that I will make gets to that result. But if the matter goes further, I have at least recorded my reasons as to why I accept that figure is the appropriate figure. ORDERS FOR INDEMNITY 1. Giovanna sought orders 5 and 7 set out in [3] above against Bar M. 2. Mr Pesman SC resisted those orders on the basis that no cross‑claim had been filed by Giovanna in the proceedings for the indemnity sought by those orders. He submitted that when moneys were paid out of court in accordance with the orders that I will shortly pronounce, those monies undoubtedly were Giovanna's funds and were being applied in satisfaction of her obligations as guarantor in payment to WFM. While it may be accepted in those circumstances that in the ordinary course there would be an obligation on Bar M to indemnify Giovanna in respect of that sum, that was not a matter that had been before the Court and was subject to any defences that may be available. 3. Mr N J Kidd of Senior Counsel, who appeared for Giovanna, submitted that the Court had jurisdiction, either inherent or derived from s 56 of the CP Act, to make indemnity orders of the kind that were sought. This was because they were, in effect, consequential upon the entry of judgment and the direction that Giovanna's money be paid out of court to satisfy that judgment. 4. Mr Pesman SC submitted in reply that s 56 did not cure the problem that the Court did not have jurisdiction at the moment to deal with the question, because no such claim had ever been advanced by way of cross‑claim in the proceedings. 5. I accept Mr Pesman SC's submission that it would not be appropriate in circumstances where factual and legal issues may need to be investigated in relation to whether or not the indemnity can properly be sought, for this Court, in the heel of the hunt, to deal with parties' substantive rights that were not litigated at all during the course of the proceedings. Such orders could be made if all the relevant parties consented, but that was not this case. 6. I therefore decline to make the indemnity orders sought in paragraphs 5 and 7 of the proposed orders set out in [3] above. However, I record that insofar as Mr Pesman SC's clients have successfully achieved a position where any questions that may arise in relation to the obligation of Bar M to indemnify Giovanna have been put off for another day, Mr Pesman SC on behalf of Bar M has undertaken to the Court that should any enforcement proceedings be commenced in relation to the indemnity, no Anshun point will be taken by Bar M, having regard to the fact that no cross‑claim was brought in these proceedings. GIOVANNA'S GUARANTEE OF THE 2018 LEASE 1. When the proceedings were before me last Friday, Mr Kidd SC provided a note in which he courteously raised a concern that the Court's judgment had accidently omitted the determination of Giovanna's claim about her guarantee of the 2018 Lease. This is referred to as the Neild Avenue Guarantee in Giovanna's cross‑claim, and I will refer to it as such in what follows. Because Mr Kidd SC's attempt to email his note to my chambers in the morning before the hearing convened had apparently been foiled by a technical glitch, I was only made aware of the issue at the hearing and had not had an opportunity to consider the point or review the Principal Judgment. I indicated to the parties that I would do so before today. 2. On reviewing the Principal Judgment, I readily acknowledge Mr Kidd SC was entirely correct to raise this question, because the way in which the Principal Judgment was expressed has led to potential confusion on this point. While I have now been able to satisfy myself that the claim was not overlooked, it is nevertheless appropriate that I provide some short clarification in case these proceedings go further. No orders have yet been made. Mr Kidd SC's note has brought to attention an infelicity of expression or ambiguity at the time short minutes were brought in, which I can, and should, now resolve in accordance with the overriding purpose: see, for example, Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 2) (1998) 29 ACSR 290 per Young J (as his Honour then was). 3. The Neild Avenue Guarantee was not the principal focus of forensic attention during the hearing but was not overlooked. This appears, for example, from Principal Judgment [49], [154], [185] and [186]. One obvious reason for its lesser prominence was, as is recorded at Principal Judgment [154] and [186], that it was not being sued on by WFM. This difference in focus was reflected in the identification of the documents in the non‑exhaustive list in Principal Judgment [45] (which were very much at the centre of the parties' arguments) and dealing with the Neild Avenue Guarantee in the context of the 2018 Lease in Principal Judgment [49]. The connection between the two was, to my mind, as is recorded in Principal Judgment [49], that Giovanna's obligation under the Neild Avenue Guarantee "was also secured by the mortgage she gave over the Property". Despite dividing the documents in the way I had, I proceeded on the basis that the Neild Avenue Guarantee was one of Giovanna's signed transaction documents and formed part of the Transaction. 4. For the avoidance of doubt, I confirm that my reasoning and conclusions were intended to apply to the Neild Avenue Guarantee. This can be most easily clarified if the reference to the third party mortgage in Principal Judgment 45(1) is read as including the Neild Avenue Guarantee (given the former secured Giovanna's obligations under the latter). This makes clear what I intended, namely that the reference to Transaction wherever appearing, but for example, in paragraphs such as Principal Judgment [145], [146], [149], [153], [154], [181] and [182] incorporated the Neild Avenue Guarantee. The conclusion in Principal Judgment [193], that Giovanna's cross‑claim will be dismissed, therefore stands. That is one of the orders I will make today. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 December 2022