New South Wales Supreme Court CITATION : MK & JA Roche Pty Ltd & Ors v Metro Edgley Pty Ltd & Ors [2006] NSWSC 970 HEARING DATE(S) : 14/9/06 JUDGMENT DATE : 20 September 2006 JURISDICTION : Equity Division Commercial List JUDGMENT OF : Einstein J DECISION : Order for interest limited to period post accrual of cause of action. CATCHWORDS : Interest - Costs LEGISLATION CITED : Civil Procedure Act 2005 (NSW) MK & JA Roche Pty Limited (ABN 25 076 529 952) (First Plaintiff) Michael Kevin Roche, Christopher John Roche, William Timothy Roche, (Second Plaintiff) PARTIES : Kevin Michael Roche, Gabrielle Mary Roche (Cross Defendants) Metro Edgley Pty Limited (ABN 37 082 440 042) (First Defendant) Multiplex Limited (formerly Multiplex Constructions Pty Limited (ACN 008 687 063) (Second Defendant) FILE NUMBER(S) : SC 50069/04 Mr DJ Hammerschlag SC, Mr VF Kerr (Plaintiffs) COUNSEL : Mr CR Newlinds SC, Ms RS Francois (Defendants) Mr Kunc (Cross Defendants) Lane & Lane (First to Fourth Plaintiffs) SOLICITORS : Baker and McKenzie (Cross Defendants) Clayton Utz (Defendants) THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST EINSTEIN J Wednesday 20 September 2006 50069/04 - M K AND J A ROCHE PTY LIMITED AND ORS v METRO EDGLEY PTY LIMITED AND ORS JUDGMENT The matters remaining for decision 1 Following the delivery of the judgment [2004] NSWSC 744 there remain for decision only questions concerning interest and costs. The terms of the other orders are agreed. The claim for interest 2 The Court has found that Roche is not estopped from relying on the automatic rescission of the Development Contract and Fitout Deed on 31 March 2004 and of the Agreement for Sublease on 31 March 2003. 3 The Court of Appeal held that the effect of automatic rescission is that Roche is entitled to the return of its $2 million deposit. The Court proceeds upon the basis that there was no issue on the pleadings but that the deposit was paid on 26 September 2003. 4 The Court of Appeal did not in terms, remit any question concerning the making of orders in relation to return of the deposit. Nor did the Court of Appeal examine or treat with the subject of the proper approach to the question of interest on the deposit. This notwithstanding, all parties have been at one in urging the Court to determine the question of interest on the deposit. It seems efficient for the Court to accede to these requests. 5 The Development Contract did not include any express provision dealing with the question of whether or not in the event that the deposit required to be refunded to Roche, interest on the deposit would be payable at all or if so, the date from which interest would be payable. 6 Roche's Second Further Amended Summons dated 18 October 2005 claimed interest pursuant to section 100 of the Civil Procedure Act 2005. That section relevantly provides as follows: "(1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit: (a) on the whole or any part of the money, and (b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect." The real issue 7 The real issue may be identified as follows: i. The payment of the deposit was made on 26 September 2003; ii. the material findings are that the Development Contract came to an end on 31 March 2004; iii. clause 2A (b) of the General Conditions of Contract had provided as follows: "This Contract will be deemed to be automatically rescinded and of no force and effect if the condition precedents are not satisfied by 31 December 2003…" iv. In order to determine the issue as to interest it is necessary to determine: a) what is the cause of action in relation to the deposit? b) when did that cause of action arise? v. the Metro Parties contend that: a) until the conditions precedent were either fulfilled or non-fulfilled as at the appropriate deadline , there was no cause of action; b) it follows that Roche cannot obtain any interest under s 100 because that section limits Roche to an entitlement to obtain interest from the date when the cause of action arises in respect of the whole or part of the judgment amount. vi. Roche contends that there is nothing illogical about a party having a cause of action that arises today and attaches to something which happened in the past; vii. Roche contends that their claim is properly characterised as a claim to have moneys which were paid refunded as at the date they were paid ; viii. Roche contends that Metro only ever had some form of contingent entitlement to the deposit monies, which contingency was removed when the conditions were not fulfilled on 31 March 2004; ix. Roche's contention is that in the circumstances by reason of the accepted manner in which the Courts have treated conditions precedent or conditions subsequent, this is a case in relation to which its cause of action accrued on 31 March but in respect of money which the Metro Parties are required to pay back as from 26 September 2003. The decision 8 In the result it seems to me that: i. the only relevant focus for the purposes of the proper application of s 100 of the Civil Procedure Act is upon the time when the cause of action arose; ii. the only interest which s 100 (1) (b) prescribes is interest payable from the time the cause of action arises until the time when the judgment takes effect; iii. the material cause of action arose on 31 March 2004; iv. Roche is entitled to interest on the deposit from 31 March 2004, The claim to indemnity costs 9 The claim by Roche to indemnity costs is resolved by the Court's above set out decision in relation to interest. Roche has not bettered the Offer of Compromise which it made on 8 July 2005 and in consequence has no entitlement to indemnity costs. Roche Parents representation 10 When the remitter proceedings commenced an application was made by the fifth and sixth plaintiffs/cross-defendant's [" the Parent Guarantors"] for leave to be separately represented. The application was granted subject to the question of costs which were to remain at large until after final decision. 11 Counsel for the Parent Guarantors has applied for an order that Metro pay the costs of the separate representation [solicitors and counsel) or, alternatively, pay the costs of their counsel, on an appropriate basis. That application is resisted by the Metro Parties. 12 In my view the application should be dismissed. As the Metro Parties have submitted: i. there was no reasonable basis demonstrated for the separate representation of the Roche Parents with respect to the guarantee issue. This question was raised when the application was made and expressly reserved by the Court (T2.41). ii. no separate case was pleaded as against the Roche Parents and the Roche Brothers. iii. there was no conflict of interest or even "discomfort" (T2.25) between the positions Roche Parents and the Roche Brothers. iv. while there may have been different evidence as to the state of knowledge about the circumstances of the Development Contract in March 2004 of the Roche Parents and the Roche brothers, that evidence did not give rise to a conflict between those parties such that one party might assert something against the interests of the others. v. this is particularly so in a case where the issue had been remitted by the Court of Appeal, the evidence on that topic had closed and no party sought to adduce new evidence. vi. the lack of any appropriate separate interest of the Roche Parents is also demonstrated by: a) the adoption of the Roche parents submissions by the Roche Brothers at the hearing; and b) the basis upon which the issue of the guarantee was addressed by the Court, which turned upon the construction of the contractual terms (at [80] to [84]) and the automatic recision of the Development Contract (at [81]). vii. it was appropriate that the Roche parties be represented by the same legal team. viii. the only distinction between the Roche Parents and the Roche Brothers was the availability of a further "fall-back" position that they had no knowledge of the relevant dealings during 2004 with Metro Edgley. ix. this put the Roche Parents in a potentially better position that the Roche Brothers, but not one that required separate representation. Costs of the issues determined by this judgment 13 Roche is to pay the costs of the Metro Parties with respect to the matters argued on 14 September 2006. 14 There is to be no order as to the costs of the Roche Parents with respect to the matters argued on 14 September 2006. Short Minutes of Order 15 The parties are required to produce short minutes of order to reflect the above decisions. ************* 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.