Lachlan v HP Mercantile Pty Limited (No.2) [2014] NSWSC 1005

Supreme Court New South Wales

Medium Neutral Citation: Lachlan v HP Mercantile Pty Limited (No.2) [2014] NSWSC 1005 Hearing dates: In Chambers Decision date: 25 July 2014 Jurisdiction: Equity Division Before: Darke J Decision: Judgment given for the cross-claimant against the first cross-defendant for $1,270,292.12, such judgment to take effect as of 24 June 2011. Catchwords: JUDGMENTS AND ORDERS - construction of orders - consent orders providing for entry of judgment and payment of interest in certain circumstances - dispute as to appropriate orders to be made Legislation Cited: Civil Procedure Act 2005 (NSW) ss 100, 101 Uniform Civil Procedure Rules 2005 (NSW) rr 36.7, 36.4(3) Cases Cited: Government Insurance Office of New South Wales v Healey [No.2] [1991] NSWCA 103; (1991) 22 NSWLR 380 Lachlan v HP Mercantile Pty Ltd [2014] NSWSC 356 Category: Principal judgment Parties: Graham Lachlan (plaintiff/first cross-defendant)

HP Mercantile Pty Ltd (first defendant/cross-claimant) Tumut River Orchard Management Ltd (second defendant) Treetop Projects Pty Ltd (third defendant) Merilbah Investments Pty Ltd (fourth defendant) File Number(s): 2009/287584 Publication restriction: Nil

Judgment 1In accordance with the judgment of the Court given on 31 March 2014, the first defendant/cross-claimant ("HPM") is entitled to enter judgment on its cross-claim against the plaintiff/first cross-defendant ("Dr Lachlan") in accordance with order 6 made by the Court on 28 June 2011 (see Lachlan v HP Mercantile Pty Ltd [2014] NSWSC 356 at [65]). 2Order 6 is in the following terms: "6. If the plaintiff/cross-defendant defaults under the payment arrangements contained in the Deed and such default entitles the first defendant/cross-claimant under the Deed to commence recovery action against the plaintiff/cross-defendant, the first defendant/cross-claimant is granted leave to immediately enter judgment under its Cross-Claim in these proceedings in its favour as follows: (a) Judgment for the first defendant/cross-claimant against the plaintiff/cross-defendant in the amount of $1,570,292.12 less any payments made by the plaintiff/cross-defendant under the Deed. (b) The plaintiff/cross-defendant to pay to the first defendant/cross-claimant interest on the amount in order 6(a) above at the prescribed Court rate from 24 June 2011. (c) The plaintiff/cross-defendant to pay the first defendant/cross-claimant's costs in these proceedings, including the plaintiff/cross-defendant's application, as agreed or assessed." 3The parties were directed to bring in Short Minutes to give effect to the reasons for judgment, but have been unable to agree on the appropriate orders to be made. They are in dispute as to the amount of the judgment to be given and interest in relation to the judgment. The dispute stems from the fact that the parties differ as to the true construction of order 6. Specifically, the parties are at odds concerning the meaning of the expression "the amount in order 6(a) above" as it appears in paragraph (b) of the order. 4The parties have agreed that the matter may be dealt with on the papers. Written submissions dated 30 June 2014, 14 July 2014 and 21 July 2014 (in reply), have been received and considered. 5Dr Lachlan contends that "the amount in order 6(a) above" is $1,270,292.12, being the amount of $1,570,292.12 minus the $300,000 in payments made by Dr Lachlan under the Deed. 6HPM contends that "the amount in order 6(a) above" is $1,570,292.12, being the specific amount referred to in paragraph (a). 7For the reasons which follow, order 6(b) should be construed in accordance with the construction advanced by Dr Lachlan. 8Dr Lachlan's construction accords with the ordinary meaning of the language of the order. The words "the amount in order 6(a) above" appear to me to be directed to the entirety of the expression "the amount of $1,570,292.12 less any payments made by the plaintiff/cross-defendant under the Deed". It seems to me to be somewhat artificial, and strained, to read "the amount in order 6(a) above" as referring to $1,570,292.12 but not the balance of the expression. The relevant amount for the purposes of paragraph (a) is produced by the operation of the composite expression which takes into account any payments made under the Deed. It is that amount upon which interest is to run in accordance with paragraph (b). If it had been intended that interest should run on $1,570,292.12 regardless of any payments made under the Deed, it would have been very simple to so provide. 9It is true that Dr Lachlan's construction has the effect that interest under paragraph (b) does not run in respect of the $300,000 that was payable under the Deed by instalments. However, viewed in the context of the compromise which is embodied in the orders and the Deed (which does not provide for interest on the amounts to be paid by instalments), I do not think that this is an irrational or anomalous result such as might suggest a different construction. It is certainly no more irrational or anomalous than the construction favoured by HPM which entails interest running on the amount of $1,570,292.12 regardless of any payments made under the Deed. Indeed, HPM apparently accepts that credit must be given for any payments made under the Deed, yet the giving of such credit is not itself reflected in the terms of order 6. 10It therefore seems to me that, in accordance with paragraphs (a) and (b) of order 6, HPM is entitled to enter judgment for $1,270,292.12, with interest payable on that amount "at the prescribed Court rate from 24 June 2011". 11A question arises as to whether such interest should be treated, in effect, as interest up to the date of the judgment to be entered pursuant to order 6, or as interest on the judgment. I think that the latter view is preferable. Paragraphs (a) and (b) of order 6, when read together, indicate that the judgment to be entered is to be in the amount in paragraph (a), and that interest should run "at the prescribed Court rate from 24 June 2011". There is no prescribed rate of interest for the purposes of s 100 of the Civil Procedure Act 2005 (NSW), which deals with interest up to the date of judgment. The only prescribed rate of interest is that prescribed by Uniform Civil Procedure Rules 2005 (NSW) r 36.7 for the purposes of s 101 of the Civil Procedure Act, which deals with interest on judgments. 12In my view, order 6 provides for a judgment to be entered in the amount in paragraph (a), namely, $1,270,292.12, and for interest to run from 24 June 2011 in accordance with s 101 of the Civil Procedure Act. As interest under that section runs from the date on which the judgment takes effect, unless a later date is ordered by the Court, the evident intention is that a judgment entered pursuant to order 6 is to take effect as of 24 June 2011. It is appropriate, and in accordance with the justice of the case, for the Court to make an order under UCPR r 36.4(3) to give effect to that intention (see Government Insurance Office of New South Wales v Healey [No.2] [1991] NSWCA 103; (1991) 22 NSWLR 380 at 387 per Kirby P). 13There was no dispute concerning the other orders to be made to give effect to the reasons for judgment. 14Accordingly, the orders of the Court are: (1)Judgment is given on the First Cross-Claim for the cross-claimant against the first cross-defendant in the sum of $1,270,292.12. (2)Order that such judgment is to take effect as of 24 June 2011. (3)Order that interest is payable in relation to that judgment in accordance with s 101 of the Civil Procedure Act 2005 (NSW) as from 24 June 2011. (4)The plaintiff/first cross-defendant is to pay the first defendant/cross-claimant's costs of the proceedings, including the costs of the notice of motion filed by the first defendant/cross-claimant on 17 January 2014, as agreed or assessed. (5)The notices of motion filed by the plaintiff/first cross-defendant on 4 February 2014 and 18 March 2014 are dismissed. (6)The plaintiff/first cross-defendant is to pay the first defendant/cross-claimant's costs of those motions.