Green v Berry[2000] QCA 133

SUPREME COURT OF QUEENSLAND

1. [1]
   McMURDO P and JONES J: Following the trial of this action, judgment was entered in favour of the respondent in the sum of $172,601.57 plus interest on this amount at 10% per annum from 30 June 1994 together with costs.
2. [2]
   The judgment for damages was satisfied by payment of $259,775.17 on 6 July 1999 after the appellant was unsuccessful in seeking a stay of execution.
3. [3]
   As at 6 July 1999, the appellant remained obliged to pay the respondent’s costs of the trial and the application to stay.  On 14 July 1999, these costs were assessed by an accredited costs assessor at $36,929.82, but that assessment has been neither agreed to nor challenged by the appellant.  Understandably there was no taxation for costs whilst this appeal remained on foot.
4. [4]
   As a consequence of the appellant being partially successful in his appeal, the amount of the respondent’s damages has been reduced and with the result there has been an overpayment of damages to the extent of $123,017.99.  The appellant seeks a judgment in these proceedings so as to be in a position to enforce the repayment of these moneys.
5. [5]
   Not surprisingly, the notice of appeal does not raise this question of relief since the notice was filed prior to the application for a stay.  However, the solicitors for the appellant wrote on 27 October 1999 giving notice of an intention to seek judgment in respect of any overpayment of damages should that be the outcome of the appeal.
6. [6]
   The Uniform Civil Procedure Rules 1999 (“UCPR”) do not expressly provide for such a procedure, but it would seem that where the parties have become joined on this issue and submissions have been taken from each party, it would fall within the inherent jurisdiction of an appellate court to make consequential orders.  This point was made in Nykredit Mortgage Bank PLC v Edward Erdman Group Ltd^[1], where their Lordships were concerned with the question of whether the House of Lords had jurisdiction to award interest on money to be paid as a consequence of an overpayment of damages and costs.  Lord Nicholls said:

3. “The court has no general, inherent power to order the payment of interest.  But the situation now under consideration is not directed at requiring a defendant against whom the plaintiff has a cause of action to pay interest on money to which the plaintiff’s cause of action entitles him.  Nor is it directed at requiring him to pay interest on unpaid costs. Rather, when ordering repayment the House is unravelling the practical consequences of orders made by the courts below and duly carried out by the unsuccessful party.  The result of the appeal to this House was that, to the extent indicated, orders made in the courts below should not have been made.  This result could, in some cases, be an idle exercise unless the House were able to make consequential orders which achieve, as nearly as is reasonably practicable, the restitution which this result requires.  This requires that the House should have power to order repayment of money paid over pursuant to an order which is subsequently set aside.  It also requires that in suitable cases the House should have power to award interest on amounts ordered to be repaid. Otherwise the unravelling would be partial only.

3. This power seems to me to fall squarely within the range of powers which are necessarily implicit if a court of law possessed of appellate functions is to carry out its prescribed functions properly.  It is, as such, a power derived from what is usually referred to as the inherent jurisdiction of the court.  It is a power equally possessed by the Court of Appeal consequential upon orders made by it.  The only surprising aspect of this power is that its existence has not previously arisen for decision.”^[2]

7. [7]
   The statutory provisions relating to liability to pay interest on judgments and cost orders is found in s 48 Supreme Court Act 1995^[3] which provides that interest shall, unless the court otherwise orders, be payable at a prescribed rate from the date of the judgment order on so much of the money as is from time to time paid.  By subsection (2), an exception is made to provide that no interest will ordinarily be payable if costs are paid within 21 days after the ascertainment thereof by taxation or otherwise.
8. [8]
   Having regard to the nature of the task before this court - to make consequential orders which “unravel the consequences of the orders pronounced below” - the statutory provisions do not directly apply but regard should be had to their effect.
9. [9]
   The appellant seeks simply a judgment for the amount of the overpayment together with interest at 10% on that amount for the period from 5 July 1999 to 5 May 2000.
10. [10]
    The respondent counters by submitting that the amount of the assessed costs should be deducted from the overpayment and that the net sum be ordered to be paid but without interest.
11. [11]
    For our part we would agree with the respondent’s submission that interest should not be payable on the whole of the overpayment when there exists in favour of the respondent unsatisfied orders for costs which have been assessed. But there is no reason  why interest should not be payable on the net sum after those assessed costs have been deducted from the overpayment. This approach would, in our view, most closely approximate the situation if the correct decision had been made in the Court below.
12. [12]
    Had the order of this Court been the judgment at trial, costs would still have been assessed according to the same schedule costs used by Monsour Legal Costs Pty Ltd.  One expects that if that independent assessment was not agreed to then soon thereafter costs would have been “ascertained by taxation or otherwise”^[4] For the purposes of the task here, which of necessity is somewhat imprecise, we regard the assessment by Monsour (to which no challenge has been raised) as being equivalent to the ascertained costs.  Any challenge made now to that assessment is unlikely to occasion any significant variation in the quantum of the assessment.
13. [13]
    By virtue of s 48 of the Supreme Court Act 1995, the liability to pay interest on ascertained costs depends on whether the party obliged to pay does so within 21 days.  If payment is not made within that time interest runs from the date of the judgment.  At common law also, interest ran from the date of the judgment as was observed by the House of Lords in Hunt v Douglas (Roofing) Ltd.^[5] In that case, the House of Lords had to determine the question of whether the litigator who had been awarded costs in an action was entitled to interest on the amount of the costs from the date of the judgment (the “incipitur rule”) or from the date of the assessment of the costs (the “allocatur rule”).  The decision turned to some extent on the interpretation of the relevant statutory provisions and rules applicable in the United Kingdom but mainly came down to a choice between the common law rule and the Chancery rule.  In deciding in favour of the incipitur rule, Lord Ackner with whom the other members of the House agreed said as follows:-

3. “I respectfully agree with the observations of the Court of Appeal that a satisfactory result cannot be achieved in every case, but in my judgment the balance of justice favours the incipitur rule for the following reasons.

3. 1.
   It is the unsuccessful party to the litigation who, ex hypothesi, has caused the costs unnecessarily to be incurred.  Hence the order made against him.  Since interest is not awarded on costs incurred and paid by the successful party before judgment, why should he suffer the added loss of interest on costs incurred and paid after judgment but before the taxing master gives his certificate?

3. 2.
     Since, as the Court of Appeal rightly said in the Erven Warnink case [1982] 3 All ER 312 payments of costs are likely nowadays to be made to lawyers prior to taxation, then the application of the allocatur rule would generally speaking do greater injustice than the operation of the incipitur rule.  Moreover, the incipitur rule provides a further necessary stimulus for payments to be made on account of costs and disbursements prior to taxation, for costs to be more readily agreed, and for taxation, when necessary, to be expedited, all of which are desirable developments.  Barristers, solicitors and expert witnesses should not be expected to finance their clients’ litigation until it is completed and the taxing master’s certificate obtained.  If interest is not payable on costs between judgment and the completion of taxation, then there is an incentive to delay payment, delay disbursements and taxation.

3. 3.
   It is common ground between the parties that the unsatisfactory situation illustrated in K v K can be simply dealt with by an express agreement between the solicitor and his client that any interest recovered on costs and disbursements after judgment is pronounced but before the taxing master’s certificate is obtained, which costs and disbursements have not in fact been paid prior to taxation shall as to the interest on the costs belong to the solicitor, and as to the interest on disbursements be held by him for an on behalf of the person or persons to whom the disbursements are ultimately paid.”^[6]

14. [14]
    The task of making consequential orders which are reasonably practicable to restore the parties to the position in which they would have been had the final outcome been achieved at trial is essentially a matter of discretion.  The remarks referred to above appear to us to be relevant to the exercise of that discretion.

15. [15]
    We would therefore make the following additional orders:

3. (1)
   That the costs of the trial and the costs of the application for stay of proceedings in favour of the respondent, failing agreement between the parties, be assessed by the registrar.

3. (2)
   That judgment be entered for the appellant against the respondent for the amount determined by the deduction from the sum of $123,017.99 of the amount of costs agreed or assessed.

3. (3)
   That the respondent pay to the appellant interest on the amount of such judgment at the rate of 10% per annum from 6 July 1999 to the date of payment.

16. [16]
    PINCUS JA: In this case the primary judge gave judgment for the plaintiff/ respondent in a sum which when interest was added amounted to $259,775.17. That was paid on 6 July 1999.  I agree with McMurdo P and Jones J, whose joint reasons I have had the advantage of reading, that the appellant is entitled to a refund of the sum which was overpaid ($123,017.99) with interest at 10%.
17. [17]
    In Idemitsu Queensland Pty Ltd v Agipcoal Australia Pty Ltd [1996] 1 Qd R 26, this Court ordered, in a case of this kind, that interest should be allowed at 8% only, but compounded on monthly rests.  In SMK Pty Ltd v Cramer Full Court of the Federal Court of Australia, 24 October 1995, the Full Court of that Court allowed a rate of 12%.  The proper rate of interest was discussed in the Victorian Full Court in Meerkin & Apel v Rossett Pty Ltd [1999] VSCA 10, in which it was suggested that the order for compound interest in Idemitsu was an unusual one (para 12).  There the rate of interest allowed was 7%.  In the Victorian case the view was adopted, with which I respectfully agree, that statutory provisions dealing with circumstances other than repayment of an amount paid under a judgment should not be treated as giving guidance as to the proper rate of interest on such a repayment (para 6).  In Idemitsu the rate of 8% was fixed without regard to any statutory rate (31, 32, 46, 47, 52).  The objection to allowing 10% in the present case is that, since Idemitsu was decided, interest rates have remained at low levels;  on the other hand, it would seem unfair to the successful appellant to allow interest at less than 10%, when the respondent has the advantage of a 10% rate from 30 June 1994 to 5 May 2000 – almost six years.
18. [18]
    I agree with the orders proposed by McMurdo P and Jones J.