Supreme Court New South Wales Medium Neutral Citation: Access Training Group Limited v James Michael Jane & Ors; Access Group Training Limited v Venture Capital Fund Australia Limited (No 2) [2023] NSWSC 1632 Hearing dates: On the papers; written submissions dated 12 and 14 December 2023 Date of orders: 20 December 2023 Decision date: 20 December 2023 Jurisdiction: Equity Before: Nixon J Decision: I make the following orders: In each of proceeding 2019/374869 and proceeding 2020/219022 1. The Court declares that: 1. pursuant to the terms of the Share Sale Agreement between James Jane, Judith Jane, John Goard and Suellen Goard (the AGT Shareholders) and Access Training Group Ltd (Holdings), the AGT Shareholders were obliged to pay, in their respective proportions of 25% each, the amount of $1.7m to Holdings on 17 July 2019, subject to an entitlement to set off against that obligation any debt owing by VCFA to AGT; 2. as at 17 July 2019, Venture Capital Fund Australia Limited (VCFA) was indebted to Access Group Training Limited (AGT) in the amount of $1,834,371.27; and 3. pursuant to clause 5.9 of the Share Sale Agreement, the obligation referred to in paragraph (a) above was set off against the debt referred to in paragraph (b) above as at 17 July 2019. In proceeding 2019/374869 1. The proceeding be dismissed. 2. Each party bear their own costs of the proceeding, subject to any previous interlocutory costs orders. In proceeding 2020/219022 1. Judgment in favour of AGT for $176,971.63. 2. Each party bear their own costs of the proceeding, subject to any previous interlocutory costs orders. Catchwords: COSTS – Interest calculations – Whether interest should apply at Court rates pursuant to s 100 of the Civil Procedure Act 2005 (NSW) and Practice Note SC Gen 16 COSTS – Calderbank offers – Whether costs incurred after the date of the letter of offer are payable on an indemnity basis Legislation Cited: Civil Procedure Act 2005 (NSW) s 100 Cases Cited: Calderbank v Calderbank [1975] 3 All ER 333 Category: Costs Parties: 2019/374869: Access Training Group Limited (Plaintiff) James Michael Jane (First Defendant) Judith Anne Jane (Second Defendant) 2020/219022: Access Group Training Limited (Plaintiff) Venture Capital Fund Australia Limited (Defendant) Representation: Counsel: 2019/374869: P D Gray (Plaintiff) T Crispin (First and Second Defendants) 2020/219022: T Crispin (Plaintiff) P D Gray (Defendant) Solicitors: 2019/374869: Benjafield & Associates Lawyers (Plaintiff) Lloyd & Lloyd Solicitors (First and Second Defendants) 2020/219022: Lloyd & Lloyd Solicitors (Plaintiff) Benjafield & Associates Lawyers (Defendant) File Number(s): 2019/374869; 2020/219022 Publication restriction: Nil Judgment Introduction 1. On 22 November 2023, I handed down my reasons for judgment in this matter: Access Training Group Limited v James Michael Jane & Ors; Access Group Training Limited v Venture Capital Fund Australia Limited [2023] NSWSC 1416 (principal judgment). At that time, I indicated that the parties should confer about the form of final orders having regard to those reasons, including (if those matters could be agreed) in respect of interest and costs. 2. On 7 December 2023, the parties informed the Court that they were unable to agree upon the form of final orders, including as to interest and costs. I then made orders for the parties to serve submissions, and any supporting evidence, in respect of those matters. 3. On 12 December 2023, the plaintiff in the 2019 Proceedings, Access Group Training Holdings Limited (Holdings), and the defendant in the 2020 Proceedings, Venture Capital Fund Australia Limited (VCFA), provided written submissions on those matters. 4. On 14 December 2023, the defendants in the 2019 Proceedings (the AGT Shareholders), and the plaintiff in the 2020 Proceedings, Access Group Training Pty Ltd (AGT), provided submissions in response. Form of orders disposing of proceedings 1. As set out in the principal judgment, the outcome of these related proceedings depended primarily on my findings, first, that the AGT Shareholders were required, pursuant to the terms of the Share Sale Agreement, to repay a deposit of $1.7m to Holdings by 17 July 2019, but were entitled to set off against that obligation any debt owing by VCFA to AGT; and secondly, that there existed a debt owing by VCFA to AGT as at 17 July 2019, which was greater than the amount of the deposit. 2. The result was that, by application of the contractual set off, no amount was owing from the AGT Shareholders to Holdings in respect of the $1.7m deposit, and the balance of the debt owed by VCFA to AGT was reduced by $1.7m. 3. AGT and the AGT Shareholders sought to characterise this as a complete victory, and sought judgment and costs in each set of proceedings. 4. I do not accept that characterisation of the outcome. AGT and the AGT Shareholders contended at trial not only that the AGT Shareholders were entitled to retain the deposit, but also that AGT was entitled to recover its debt from VCFA in full. I rejected this submission. Further, AGT argued that VCFA's debt was comprised not only of certain amounts advanced by way of a loan to VCFA, but also of amounts claimed to be owing under an agreement concerning leased office premises. I rejected the latter claim. In addition, the AGT Shareholders argued that they were entitled to set off against any obligation to repay the $1.7m deposit not only VCFA's debt to AGT in respect of the loan, but also amounts claimed to be owing from Holdings to AGT in respect of the costs of the IPO. I rejected the latter claim. 5. In those circumstances, and having regard to the broad discretion given to the Court on costs and the mixed success of each set of parties, I consider that the appropriate outcome is that which is proposed by Holdings/VCFA, namely, that I should make declarations regarding the amounts owing at the relevant date, and the effect of the contractual set off; give judgment in favour of AGT in respect of the balance remaining after set off, together with interest; otherwise dismiss the proceedings; and make an order that the parties bear their own costs of each set of proceedings. Orders in that form will appropriately reflect the fact that the outcome of these proceedings was, in essence, that each set of parties owed debts of similar size to the other, this being a position for which no party contended. 6. That leaves two issues of substance: namely, what is the appropriate figure for interest in respect of the balance remaining, after set-off, of the VCFA debt to AGT; and whether a different costs order should be made by reason of the terms of an offer made by AGT and the AGT Shareholders prior to the hearing. Interest 1. As regards interest, two issues have arisen. The first concerns the quantum of interest accrued on the VCFA debt as at 17 July 2019, being the date when the contractual set-off under the Share Sale Deed took effect. The second concerns the rate at which interest accrues on the remaining balance of the VCFA debt, after the contractual set-off, from 18 July 2019 to the present date. 2. As regards the first issue, in the principal judgment I calculated the quantum of interest accrued as at 17 July 2019 based on the agreed figures in the deed dated 30 August 2016 (the First Deed). In particular, a schedule to the First Deed specified the quantum of interest as at 30 June 2016 ($105,982.75), and the quantum of interest accruing on each day thereafter ($385.21): see principal judgment at [266]. These figures had been reviewed by Mr Lambert and were in accordance with the interest figures calculated by VCFA's own auditor: see principal judgment at [84], [87]. 3. VCFA contended that, despite those figures being specified in the First Deed which was signed by Mr Jane and Mr Lambert, the Court should re-perform the interest calculation. VCFA provided an alternative figure for interest, which involved applying a simple interest rate of 10% per annum from the date of each separate advance of principal. In this regard, VCFA relied on the terms of the recitals to the First Deed, which stated that interest was payable on the balance of the "Primary Advances": see principal judgment at [77]. Based on the recitals, VCFA contended that interest was payable only on the balance of the outstanding principal from time to time, and was not payable on interest 4. In response, AGT submitted that if any calculation was re-performed, it would not be in VCFA's favour. In that regard, AGT referred to clause 3.4.1 of the First Deed, which provided that interest was payable on the "indebtedness" (see principal judgment at [82]). The "indebtedness" was defined as meaning "the Primary Advances and all interest and costs thereon" (see principal judgment at [80]). That is, AGT contended that under the First Deed, interest was payable on the whole of the outstanding balance, including accrued interest, from time to time. 5. The calculations in the Schedule to the First Deed, which were used in the principal judgment at [266], appear to be prepared on a basis different from that advanced by either set of parties in their respective submissions. 6. The Schedules to the First Deed identify the amounts and dates of the Primary Advances (totalling $1,300,035.00), calculate interest on those Primary Advances up to 30 June 2016 ($105,982.75), and thereby produce a total sum, including accrued interest, owing as at 30 June 2016 ($1,406,017.75). On the basis of those figures, Schedule 2 specifies that interest from 1 July 2016 onwards is accruing at a rate of $385.21 per day. Having regard to the rate of 10% per annum, it is apparent that the amount of $385.21 represents the daily interest accruing, on a simple interest basis, on a sum of $1,406,017.75 (that is, $1,406,017.75 x 10% / 365 = $385.21). That is, from 1 July 2016 onwards, interest is applied not only to the principal outstanding as at 30 June 2016, but also (contrary to VCFA's submission) to the accrued interest as at that date. However, the calculation does not appear (contrary to AGT's submission) to involve any interest payable on interest accruing after 1 July 2016. 7. Having regard to the matters outlined above, I reject VCFA's submission that I should re-perform the interest calculation on a basis different to that set out in Schedule to the First Deed, which was adopted in the primary judgment. The parties were of the view that the figures in that Schedule represented the appropriate basis to determine the extent of VCFA's liability to AGT as at the date of the deed, and thereafter. 8. Accordingly, as set out at paragraph 266 of the principal judgment, the amount of the outstanding principal and interest as at 17 July 2019 owing by VCFA was $1,834,371.27; and therefore the amount owing by VCFA to AGT after the application of the contractual set off was $134,371.27 as at 17 July 2019: principal judgment at [270]. 9. As regards the second issue relating to interest, VCFA contended that the effect of setting off the amount of $1.7m against its debt of $1,834.371.27 was to eliminate the outstanding principal balance (of $1,300,035), and to reduce the quantum of accrued interest as at 17 July 2019 (from $534,336.27 to $134,371.27); and further contended that, since interest was not payable on interest under the First Deed, the interest rate in the First Deed should not apply from 18 July 2019 to the outstanding balance, but instead interest should be applied at Court rates. 10. In response, AGT did not dispute that the set off should be applied first to the advances of principal, and then to interest. However, AGT argued that the issue of interest on the remaining balance of accrued interest had been determined in the principal judgment, and that such interest was payable to the date of these orders at the 10% interest rate specified in the First Deed. 11. I accept VCFA's submissions on this issue. Although I expressed a view in the principal judgment to the effect that the contractual interest rate would apply to the outstanding balance of the loan after set-off, I did so in circumstances where the parties had not addressed me on the allocation of the set-off as between principal and interest, and the calculation of interest on any balance remaining after set off. Further, I indicated that the parties were invited, in the event of any dispute about the calculation of interest, to advance competing calculations as to interest, together with submissions and any supporting evidence, before any award for interest was made. No orders in respect of interest have been made or entered. 12. The position advanced by VCFA reflects the position set out in the Schedule to the First Deed which, as noted above, calculates the interest accruing after 30 June 2016 as accruing on a simple, and not compound, basis. Therefore, if the set off is taken as eliminating the indebtedness starting with the advances of principal, as VCFA submitted (and AGT did not dispute), then the effect of the set off is to eliminate the entirety of the Primary Advances made prior to 30 June 2016 and the interest accrued as at 30 June 2016, and to reduce the quantum of the interest that accrued from 1 July 2016 to 17 July 2019. 13. Therefore, the balance remaining of $134,371.27 represents the balance remaining, after set off, of the interest that had accrued from 1 July 2016 up to the date of set off, namely, 17 July 2019. Since, having regard to the Schedule to the First Deed, no interest is calculated as payable on interest accruing from 1 July 2016 onwards, there is no contractual rate of interest applicable to the remaining balance of accrued interest. 14. It follows that, for the period from 18 July 2019 to the date of these orders, interest should be payable, as VCFA contended, pursuant to s 100 of the Civil Procedure Act 2005 (NSW) and Practice Note SC Gen 16. The application of that methodology to the balance of $134,371.27 produces, as at 20 December 2023, a total accrued interest amount of $42,600.36. Judgment will accordingly be given for the amount of $176,971.63. Costs 1. I have indicated that, having regard to the outcome, each party has had mixed success and each party should bear their own costs of the proceedings. Holdings and VCFA submitted that an order in those terms should be made. 2. However, AGT and the AGT Shareholders relied on the terms of a settlement offer made on 8 September 2023, and contended that, having regard to the terms of that offer, they are entitled to an order that their costs incurred after 8 September 2023 are payable on an indemnity basis. 3. The offer in question was expressed to be made without prejudice save as to costs, and to be made in accordance with the principles articulated in Calderbank v Calderbank [1975] 3 All ER 333. The offer was an offer to compromise and resolve both the 2019 and the 2020 Proceedings on a full and final basis on the following terms: "1. The abovenamed two sets of Proceedings be dismissed. 2. Each party to pay their own costs of the two sets of Proceedings. 3. Terms 1 and 2 to be submitted to the Court as Consent Orders. 4. [Holdings] and [VCFA] pay [AGT and the AGT Shareholders] the amount of $200,000.00 within 28 days. 5. The parties to enter into a Deed of Settlement which includes an obligation for the payment set out in Term 4." 1. The letter of offer then stated: "If our clients achieve a result equal to or better than this offer after the determination of the matters, then our clients reserve the right to rely on this letter for the purpose of making an application for indemnity costs on the basis that it was unreasonable for your clients to not accept the compromise". 1. As matters have transpired, AGT and the AGT Shareholders have not achieved a result equal to or better than the offer made. Accordingly, there is no basis for costs to be awarded on an indemnity basis in respect of costs incurred after the date of the letter of offer. Conclusion 1. For those reasons, I make the following orders: In each of proceeding 2019/374869 and proceeding 2020/219022 1. The Court declares that: 1. pursuant to the terms of the Share Sale Agreement between James Jane, Judith Jane, John Goard and Suellen Goard (the AGT Shareholders) and Access Training Group Ltd (Holdings), the AGT Shareholders were obliged to pay, in their respective proportions of 25% each, the amount of $1.7m to Holdings on 17 July 2019, subject to an entitlement to set off against that obligation any debt owing by VCFA to AGT; 2. as at 17 July 2019, Venture Capital Fund Australia Limited (VCFA) was indebted to Access Group Training Limited (AGT) in the amount of $1,834,371.27; and 3. pursuant to clause 5.9 of the Share Sale Agreement, the obligation referred to in paragraph (a) above was set off against the debt referred to in paragraph (b) above as at 17 July 2019. In proceeding 2019/374869 1. The proceeding be dismissed. 2. Each party bear their own costs of the proceeding, subject to any previous interlocutory costs orders. In proceeding 2020/219022 1. Judgment in favour of AGT for $176,971.63. 2. Each party bear their own costs of the proceeding, subject to any previous interlocutory costs orders. ********** 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: 20 December 2023