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Mineralogy Pty Ltd v BGP Geoexplorer Pte Ltd (No 2)  
Unreported Citation: [2018] QSC 42
EDITOR'S NOTE

In this case Jackson J considered whether a judgment debt had been satisfied by the payment of the money into a solicitor’s trust account pending an appeal. His Honour held that the debt was not satisfied in these circumstances. Accordingly, interest continued to accrue on the debt pursuant to s 59 of the Civil Proceedings Act 2011. His Honour also discussed the appropriate rate of interest when a judgment debt is denominated in a foreign currency, holding that a rate other than that prescribed by the relevant Practice Direction should apply in this case.

Jackson J

8 March 2018

Background

On 9 October 2017, Jackson J ordered that the applicant pay the respondent US$17,629,673.68. That judgment debt arose because of the applicant guaranteeing that a subsidiary company would perform its obligations under a contract for services, providing surveys on the potential existence of hydrocarbons in the Gulf of Papua (see [2017] QSC 219 – “the first judgment”). [2].

On 25 October 2017, the applicant commenced an appeal against the first judgment. Subsequently the applicant applied for a stay of enforcement of the orders. However, the application was dismissed on the basis of the respondent’s undertaking that the judgment debt monies would be held by their solicitors on trust pending further order of the court. This undertaking nullified any risk of non-repayment if the appeal was successful. [12]–[15]. On 20 November 2017, the applicant delivered a bank cheque for the judgment debt monies, and the amount was then deposited into a bank account by the respondent’s solicitors. [18]–[19].

The applicant applied for orders which required the court to answer two questions: (1) “whether the money order debt payable under the judgment is satisfied or remains payable” (which would determine whether interest continued to accrue or not); and (2) at what rate post-judgment interest should be payable until the judgment was or is satisfied.

Whether the judgment was satisfied or remained payable

The applicant sought an order declaring that the applicant had paid the money order debt payable under the first judgment. [5]. It contended that the debt was satisfied on 20 November 2017 when the respondent’s solicitors accepted the bank cheque. [31]. In contrast, the respondent contended that the money order debt remained payable notwithstanding the cheque, with the consequence that interest continued to accrue. [33].

Jackson J first gave consideration to the text, context and purpose of s 59 Civil Proceedings Act 2011 (“the Act”), which provides for the payment of interest from the date of a money order, unless the court orders otherwise. His Honour noted that the “mischief leading to and purpose of provisions such as s 59” was to compensate a plaintiff for delay in payment and to thereby afford “full justice”. Another purpose was to “encourage the defendant to pay the outstanding amount of the judgment debt”. [41], [43]. Finally, to reflect the principle that the party wrongfully withholding money ought not to benefit from having it in their possession. [46]. In most cases, a consideration of the position of the plaintiff (wrongfully kept out of money), and of the defendant (wrongfully benefitting by having it), “both point in the one direction” – namely, that the “judgment debtor should compensate the judgment creditor”. However, in this case the considerations pointed in opposing directions, because while the money was being held on trust, neither party had the benefit of it. [47].

His Honour then noted a number of cases which supported the view that post-judgment interest continues to accrue “notwithstanding a payment into court, and notwithstanding an order for payment out of court, until the money is actually received by the judgment creditor”. In particular, the case of Anthony v Tasmanian Alkaloids Pty Ltd (No 2) (2005) 15 Tas R 84 was strongly analogous to the present case. In that case, execution on a judgment was stayed pending an appeal, on condition that money be held in a solicitor’s trust account. After the appeal was dismissed, it was apparent that the interest accrued on the money was less than that prescribed under the statutory provision for post-judgment interest. Blow J (as his Honour then was) concluded that the judgment debtor was obliged to pay the difference, as the money being paid into trust “did not extinguish the judgment debt”. [51]–[52]. The applicant did not submit that Anthony was wrongly decided, but submitted that it was distinguishable due to the terms of the different statutes. [54]. However, Jackson J found that “neither the text, context, nor purpose” of s 59 of the Act required the conclusion that the judgment debt had been satisfied. That being the case, and in the absence of any order providing otherwise, interest had continued to accrue and was payable from the date of the money order. [56]–[57].

Whether the rate of interest should be decreased

Practice Direction 7 of 2013 fixed the presumptive rate of post-judgment interest in this case at 7.5% per annum. However, under s 69 of the Act, this prescribed rate was subject to the Court ordering otherwise. [6], [58]. The applicant submitted that the court should order that the interest rate be 3.5%. [5]. In the first judgment, Jackson J had ordered that the pre-judgment interest should be lower than the rate prescribed, on the basis that, because the money order was denominated in US dollars, the interest should “be calculated at rates relevant to that currency” (quoting State Bank of New South Wales Ltd v Swiss Bank Corporation (1995) 39 NSWLR 350, per Giles J). His Honour agreed that the same reasoning applied here. [62].

The parties provided no evidence as to the appropriate interest rate. However, his Honour concluded that in the exercise of a “broad discretion”, he should award a rate of interest determined by reference to the amount he awarded as pre-judgment interest in the first decision. In the first decision the rate selected was that provided for in the contract for late payment. [68]. However, his Honour increased the rate to reflect a higher rate of interest for post-judgment interest (to encourage payment, discussed earlier and reflected in the applicable rates in Practice Directions). Secondly, there was a reduction in the margin of increase (from 2 percent to 1 percent) to recognise that the applicant did not have the benefit of retaining the money. In the result, his Honour ordered that the interest on the judgment debt be 4.5% per annum (see Order 1). [69].

W Isdale