WOOLWORTHS LTD v KELLY [No 2] SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, SAMUELS and MAHONEY JJA 11 April 1991, 29 August 1991 [1991] NSWCA 287 PRACTICE — orders — dispute as to — claim for refund of moneys overpaid — formulation of orders — whether entitled to interest under s94 Supreme Court Act 1970 on repayment proper order for costs — held: Orders made to give effect to the judgment of the Court in Woolworths Limited v Kelly, (1991) 22 NSWLR 189. The Commonwealth of Australia vy McCormack (1984) 15 5 CLR 273; Government Insurance Office of New South Wales and Ors v Healey [No 2], Court of Appeal, unreported, 15 March 1991 considered. Supreme Court Act 1970, s94. Kirby P and Samuels JA On 15 March 1991 the Court published its reasons to dispose of the appeal by Woolworths Limited (the appellant) against orders by Cole J in favour of Sir Theo Kelly (the respondent). See Woolworths Ltd v Kelly (1991) 21 NSWLR 189. Decision of the Court and differences as to orders. There was a difference amongst the members of the Court concerning the orders which should be made. Kirby P was in favour of allowing the appeal, setting aside the orders and declarations of Cole J and entering judgment in favour of Woolworths Limited on Sir Theo Kelly's claim. He also favoured various other orders. Samuels JA favoured allowing the appeal in part and dismissing it in part. He proposed that counsel should be directed to bring in short minutes of the orders necessary to give effect to his reasons. Mahoney JA was of the opinion that the appeal should be dismissed with costs. To resolve the differences within the Court and to secure an order of the majority, Kirby P withdrew the orders which he would otherwise have proposed and agreed in the orders proposed by Samuels JA. Those orders therefore became the orders of the Court. Unfortunately, the parties have not been able to agree upon the form of the short minutes of orders necessary to give effect to the reasons of Samuels JA. The Court therefore directed that they bring in written submissions on the terms of the orders which they respectively proposed. Those written submissions have now been received and considered by us. The written submissions disclose that each party has agreed that the appeal be allowed in part and each agrees that the declarations and orders made by Cole J should be set aside. Each has also agreed that a declaration should be made, in lieu of that made by Cole J, concerning the entitlement of Sir Theo Kelly to receive quarterly payments at the annual rate of $8,666 for the year 1979, thereafter increasing annually by a factor equivalent to the consumer price index increase for the preceding year. The parties also agreed that Sir Theo Kelly's entitlement for the 1991 year calculated by this formula, was $22,776.16 and that he had received payment of his entitlement up to and including all payments due prior to 1 May 1991. This, however, is where the agreement between the parties ran out. Their disputes related to: 2 UNREPORTED JUDGMENTS (a) The orders which should be made concerning the sums which Woolworths Limited was entitled to offset, having regard to amounts actually paid to Sir Theo Kelly in the past and to amounts paid to the Commissioner of Taxation by way of PAYE instalments on his behalf; (b) The amount payable by Sir Theo by way of interest upon the sums received by him or paid on his behalf which, pursuant to the order of the Court, must be repaid; and (c) The proper provision as to costs. We now proceed to dispose of these matters of difference. The recoupment of moneys overpaid. As to the amount of reimbursement, it was not disputed by Sir Theo Kelly that Woolworths Limited, having satisfied a judgment for the payment of money, was entitled, on the reversal of the judgment on appeal, to repayment of the money paid by it together with interest. See Commonwealth v McCormack (1984) 155 CLR 273, 276; Government Insurance Office of New South Wales and Ors v Healey [No 2] Court of Appeal, unreported, 15 March 1991. When the solicitors for Woolworths Limited foreshadowed an appeal, Sir Theo Kelly's solicitor proffered an undertaking to them in these terms: "In the event that your client successfully appeals, our client undertakes to refund any moneys properly due to Woolworths Limited out of the moneys to be received by him." It is said that this undertaking does not extend to amounts paid by Woolworths Limited to the Commissioner for Taxation. No evidence was placed before this Court as to the precise amounts which were deducted for such instalments. Nor is it known whether any such amounts have actually been remitted to the Commissioner. It may be assumed that they were but it was not proved. In these circumstances, it was submitted that it would be unjust to require Sir Theo Kelly to refund monies which he did not in fact receive and of which there was no evidence of payment by the appellant. The amount which in fact Sir Theo received is agreed at $134,575.08. It was suggested that it would be more just, and administratively more efficient, for the appellant itself to recoup the amount paid to the Commissioner rather than to require Sir Theo, who never actually received such monies, to expend his time, effort and money in doing so. Although it is true, as Woolworths Limited point out, that the gross amounts constituted Sir Theo Kelly's 'salary or wages" within the meaning of the Income Tax Assessment Act (Cth) 1936, s221A and S221C, and if paid as PAYE were paid for him, for three reasons we do not believe that it would be just to require Sir Theo himself to refund the sums paid by Woolworths Limited to the Commissioner: 1. To do so goes beyond the precise terms of the undertaking which he gave on receipt of the disputed monies; 2. There is no evidence before the Court of the precise amount paid by the appellant and Sir Theo does not admit the amount which Woolworths Limited contends or that it has paid; and 3. It will probably be more efficient for the appellant to recoup the amount it paid to the Commissioner. This it should readily be able to do in the light of the Court's judgment. It may be entitled to do so, as Sir Theo Kelly suggests, simply by deducting the over-payment from its next regular PAYE instalment. We have not considered whether this suggestion is correct. URJ WOOLWORTHS LTD v KELLY [No 2] (Kirby P and Samuels JA) 3 Accordingly, Sir Theo Kelly should repay the sum of $134,578.08 being the agreed nett amount overpaid to him. Sir Theo Kelly should also be directed to cooperate fully with the appellant in the recovery of the PAYE paid by it to the Commissioner on his behalf. Liberty should be afforded to the parties to relist the matter for further orders, should any such orders become necessary. The recoupment of interest So far as interest is concerned, it was conceded for Sir Theo that interest on the amount to be refunded would normally be awarded. So much is borne out by McCormack and Healey (above). It was put for Sir Theo that the rate of interest ought to be less than that prescribed by the Supreme Court Rules. This submission was advanced upon the basis that the amount repayable is not a debt withheld from the appellant but was constituted by payments made to Sir Theo Kelly pursuant to the order of Cole J. He contended that the Supreme Court rates were higher than those which Sir Theo Kelly could have received on the money market. We see no reason why interest should not be ordered pursuant to s94 of the Supreme Court Act 1970. There is no proper material before the Court upon which another, different or lower rate could be ordered. To fix a lower rate would be to indulge in speculation. Sir Theo Kelly suggested that it was preferable, to avoid mathematical disputes about the precise calculation of interest, for the Court merely to order in general terms that interest be paid at the rate specified. We agree that the orders should take that form. Interest should only be paid on the sum actually received by Sir Theo Kelly which was within his disposition. The proper costs orders Finally, as to costs, there were competing contentions concerning the extent to which Woolworths Limited succeeded or failed in the appeal and in the court below. It is difficult now for this Court to assess with precision the amount of time taken up in the various issues upon which the parties each had partial success. We content ourselves by saying that our impression is that each of the parties succeeded in about half of the matters contended for. The order for costs both at trial and in this Court should reflect that assessment. Orders The orders of the Court, for the reasons explained above and in the respective earlier judgments which we have published, should therefore be: 1. Appeal allowed in part; 2. Set aside the declaration and orders made by Cole J; 3. In lieu thereof: (a) Declare that the plaintiff is entitled during his lifetime to receive quarterly payments in advance from the defendant, payable on 1 February, | May, 1 August and 1 November each year, the sum calculated at the annual rate of eisnt thousand six hundred and sixty-six dollars ($8,666) for the year 1979 and thereafter increased annually by a factor equivalent to the Consumer Price Index increase for the preceding year which sum, as at 1 February 1991, is $22,776.1.6; (b) Order that the defendant pay the plaintiff the sums referred to in the preceding declaration; (c) Order that the defendant be entitled to offset against its liability pursuant to O.3(b) hereof its entitlement, pursuant to the declaration referred to in O.3(a) and the obligation of the plaintiff pursuant to O0.3(d) hereof, to recover such amount as was actually received by the plaintiff between June 1988 and May 1989 in the terms of a letter dated 15 June 1988 from the defendant to the plaintiff, being 57 of exhibit A herein; 4 UNREPORTED JUDGMENTS (d) Order that, subject to the set-off referred to in O.3(c) above, the plaintiff pay to the defendant the amount of money actually received by him from the defendant pursuant: to the orders numbers O.4 and O.5 of Cole J and pursuant to declaration number 2; (e) Direct the plaintiff to give any assistance reasonably required by the defendant for the recovery by the defendant from the Commissioner of Taxation of any sums paid to the Commissioner by the defendant on behalf of the plaintiff as PAYE deductions, which sums were not, in consequence of the Court's orders required by law to be paid; (f) Order that the plaintiff pay to the defendant interest on the sum referred to in O.3(c) hereof in accordance with s94 s94 of the Supreme Court Act 1970; and (g) Order the defendant to pay half of the plaintiff's costs of the trial; and 4. Order that each party have liberty to relist the proceedings in the Court for any further orders which are required pursuant to the preceding orders or direction, upon giving two days notice to the solicitor for the other party; 5. Order the respondent to pay half of the appellant's costs of the appeal and to have, in respect of such costs, if so entitled, a certificate under the Suitors' Fund Act 1951. Mahoney JA The orders now proposed by Kirby P and Samuels JA are orders which result from the terms of their judgments given on 15 March 1991. As I then indicated, I am of a view different from that adopted by their Honours. It is therefore not necessary that I express any conclusion as to the matters to which their Honours have referred. ORDERS 1. Appeal allowed in part; 2. Set aside the declaration and orders made by Cole J; 3. In lieu thereof: (a) Declare that the plaintiff is entitled during his lifetime to receive quarterly payments in advance from the defendant, payable on 1 February, 1 May, 1 August and 1 November each year, the sum calculated at the annual rate of eight thousand six hundred and sixty-six dollars ($8,666) for the year 1979 and thereafter increased annually by a factor equivalent to the Consumer Price Index increase for the preceding year which sum, as at 1 February 1991, is $22,776.16; (b) Order that the defendant pay the plaintiff the sums referred to in the preceding declaration; (c) Order that the defendant be entitled to offset against its liability pursuant to O.3(b) hereof its entitlement, pursuant to the declaration referred to in O.3(a) and the obligation of the plaintiff pursuant to O.3(d) hereof, to recover such amount as was actually received by the plaintiff between June 1988 and May 1989 in the terms of a letter dated 15 June 1988 from the defendant to the plaintiff, being page 57 of exhibit A herein; (d) Order that, subject to the set-off referred to in O.3(c) above, the plaintiff pay to the defendant the amount of money actually received by him from the defendant pursuant to the orders numbers O.4 and O.5 of Cole J and pursuant to declaration number 2; (e) Direct the plaintiff to give any assistance reasonably required by the defendant for the recovery by the defendant from the Commissioner of Taxation of any sums paid to the Commissioner by the defendant on URJ WOOLWORTHS LTD v KELLY [No 2] (Mahoney JA) 5 behalf of the plaintiff as PAYE deductions, which sums were not, in consequence of the Court's orders required by law to be paid; (f) Order that the plaintiff pay to the defendant interest on the sum referred to in O.3(c) hereof in accordance with s94 of the Suprene Court Act 1970; and (g) Order the defendant to pay half of the plaintiff's costs of the trial; and . Order that each party have liberty to relist the proceedings in the Court for any further orders which are required pursuant to the preceeding orders or direction, upon giving two days notice to the solicitor for the other party; . Order the respondent to pay half of the appellant's costs of the appeal and to have, in respect of such costs, if so entitled, a certificate under the Suitors' Fund Act 1951. Counsel for Appellant: B Walker with P Brereton and I Jackman Solicitors for Appellant: Speed and Stracey Counsel for Respondent: DP Officer QC and JB Costigan Solicitors for Respondent: Lane and Lane