Nortask Pty Ltd v Clarke Energy (Australia) Pty Ltd (No 3)
[2018] QDC 33
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- Unreported Judgment
- Nortask Pty Ltd v Clarke Energy (Australia) Pty Ltd (No 3)[2018] QDC 33
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Nortask Pty Ltd v Clarke Energy (Australia) Pty Ltd (No 3)[2018] QDC 33
Nortask Pty Ltd v Clarke Energy (Australia) Pty Ltd (No 3)[2018] QDC 33
DISTRICT COURT OF QUEENSLAND
CITATION: | Nortask Pty Ltd v Clarke Energy (Australia) Pty Ltd (No 3) [2018] QDC 33 |
PARTIES: | NORTASK PTY LTD v CLARKE ENERGY (AUSTRALIA) PTY LTD |
FILE NO/S: | D179/2013 |
DIVISION: | |
PROCEEDING: | Application after judgment. |
ORIGINATING COURT: | District Court at Brisbane |
DELIVERED ON: | 25 January 2018 |
DELIVERED AT: | Brisbane |
HEARING DATE: | (Submissions in writing) |
JUDGE: | McGill SC, DCJ |
ORDER: | Application to vary judgment dismissed. |
CATCHWORDS: | INTEREST – Contract – interest payable on money payable and unpaid – whether interest recoverable on GST – compound interest – calculation. JUDGMENTS AND ORDERS – Interest on judgments – right under contract – whether interest recoverable on GST component – calculation of compound interest – application to vary judgment dismissed. Basetec Services Pty Ltd v Leighton Contractors Pty Ltd (No. 7) [2016] FCA 1587 – followed. Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 – applied. |
COUNSEL: | (No counsel involved in application.) |
SOLICITORS: | Clifford Gouldson Lawyers for the plaintiff. HopgoodGanim for the defendant. |
- [1]In this matter I gave judgment on 3 November 2017 that the defendant pay the plaintiff $500,666.06, including $148,093.35 by way of interest: [2017] QDC 268. On 30 November 2017 I dealt with the question of costs: [2017] QDC 284. Subsequently submissions were received on behalf of the defendant that my calculation of interest was incorrect, on two bases:
- (a)Interest had been calculated by reference to an amount owing which was inclusive of GST, but interest should not be awarded on the GST component, because this was not something that had actually been paid by the plaintiff.
- (b)In any event, my calculation of compound interest was incorrect.
Interest on GST
- [2]The defendant’s submission in relation to this was that payment of judgment interest is not consideration for a supply for the purposes of A New Tax System (Goods and Services Tax) Act 1999 (Cth), as established by Commissioner of Taxation ruling GSTD 2003/1. It was further submitted that the interest figure could be adjusted pursuant to r 388, and I am prepared to accept that there is power to amend a calculation in a judgment of this nature if, for reasons not ventilated in submissions at the end of the trial, it becomes apparent that the calculation has been made on an incorrect basis.
- [3]In my opinion however, the calculation in the present case was properly made on the GST inclusive amount, so there is no need to exercise this power. This was a case where the contract between the parties provided expressly for the calculation of interest on overdue payments. Clause 42.9 of the Australian Standard Subcontract Conditions AS2545/1993, a copy of which became Exhibit 52 and which were incorporated in the contract between the parties,[1] provided as follows:
“If any moneys due to either party remain unpaid after the date upon which or the expiration of the period within which they should have been paid then interest shall be payable thereon from but excluding the date upon which, or the expiration of the period within which they should have been paid, to and including the date upon which the moneys are paid. The rate of interest shall be the rate stated in the Annexure and if no rate is stated the rate shall be 18 percent per annum. Interest shall be compounded at six monthly intervals.”
- [4]There was a rate stated in the Annexure, namely 4 per cent per annum. For present purposes however what matters is that the clause provides that “interest shall be payable thereon”, which is a reference back to “any moneys due to either party” which remain unpaid. As pointed out in the submissions on behalf of the plaintiff in relation to this matter, Annexure Part B to AS2545-1993, which is included in Exhibit 52 and in Exhibit 13 and was incorporated in the contract, provided expressly in clause 50.1: “All amounts payable under this Sub-contract are expressed to be exclusive of GST. If GST is payable on a Taxable Supply the amount payable for that Taxable Supply will be the amount expressed in this Contract plus GST.”
- [5]For the purposes of the application of that clause, what matters is not whether the interest payment under the contract is a taxable supply but whether the work for which the plaintiff was entitled to be paid under the contract was a taxable supply. There is no doubt that it was, and that pursuant to clause 50.1 GST was properly added to the amount payable to the plaintiff in respect of that work. Hence the amount payable but unpaid was the amount, inclusive of GST, which I have found ought to have been paid to the plaintiff under the contract in respect of the variations. It follows that for the purposes of clause 42.9 the money due under the contract which was unpaid was an amount inclusive of GST. Clause 42.9 therefore provides that interest in accordance with the compounding provision set out in that clause is payable on the GST inclusive amount.
- [6]I note that no submission was made at the trial on behalf of the defendant that if any amount was recoverable by the plaintiff it was a GST exclusive amount, not a GST inclusive amount. The solicitors for the plaintiff have helpfully drawn to my attention a decision in the Federal Court, Basetec Services Pty Ltd v Leighton Contractors Pty Ltd (No. 7) [2016] FCA 1587 where Besanko J came to a similar conclusion on the basis of the somewhat differently worded terms of the contract in that case, which were in substance to the same effect as clause 50.1 in the present contract. The first submission on behalf of the defendant is therefore rejected.
Calculation of interest
- [7]It was also submitted that, on the basis of interest being payable on a GST inclusive figure, the correct calculation of the interest was $148,058.37 rather than $148,093.35, so that my calculation was $34.98 too high. In response a submission on behalf of the plaintiff was to the effect that my calculation was actually too low by an amount of $1,368.14, though the plaintiff did not press for any amendment to the judgment amount. The plaintiff’s calculation was based on the number of days in each six month period, in effect dividing the year into two sets of days, with interest calculated at the daily rate equivalent to 4 per cent per annum for the respective number of days. On the other hand, the defendant’s approach was essentially to calculate for each completed six month period interest at the rate of 2 per cent, on the basis that this was half the annual rate, though it appears that for the final period, which is not a complete period of six months, a daily rate was used.
- [8]My initial approach to the calculation was essentially the same as the defendant’s, except that I rounded off each compounded amount to a round number of cents; if fractions of a cent are taken into account, my calculation agrees with the defendant’s calculation in paragraph 4. In my opinion the more commercially practical interpretation[2] of clause 42.9 is that, when interest is compounded for the whole of the six month period, it can be calculated simply at half the annual rate for that period, and a daily equivalent rate is to be used only when it is necessary to do so, that is, when the calculation must be for a period of less than six months. On the other hand, in my view an interest compounding calculation must be by reference to a real amount, so that the amount by which the principal increases each six months must be an amount to the nearest whole cent. In any case, I suspect that, if there is an error of $34.98 my calculation, the principle of de minimis non curat lex applies.
- [9]Accordingly I am not persuaded that in either respect my calculation of compound interest was incorrect, and do not propose to vary the judgment in this respect. The defendant’s informal application for me to amend the judgment sum is dismissed. The order for costs that I made on 30 November 2017 applies to this application, on the basis that the costs of it are part of the costs of the proceeding.