Balanced Securities Ltd v Thomas [2010] QDC 355

DISTRICT COURT OF QUEENSLAND CITATION: Balanced Securities Ltd v Thomas [2010] QDC 355 PARTIES: BALANCED SECURITIES LIMTIED (ACN 083 514 685) (plaintiff) v DAVID LIONEL THOMAS (defendant) FILE NO/S: DC 1453 of 2010 DIVISION: Civil jurisdiction PROCEEDING: Application for interest and costs ORIGINATING COURT: Brisbane DELIVERED ON: 22 September 2010 DELIVERED AT: Brisbane HEARING DATE: Written submissions JUDGE: Dorney QC, DCJ FURTHER ORDERS: 1. The plaintiff is awarded interest in the sum of $1,772.70 (at the rate of 10 per centum per annum on the judgment sum of $113,115.37 from 8 July 2010 until 3 September 2010). 2. The defendant is to pay to the plaintiff the plaintiff’s costs of the proceeding, including costs of and incidental to its application for summary judgment and the defendant’s application for summary judgment, to be assessed on the standard basis. CATCHWORDS: INTEREST – COSTS – whether costs on standard or indemnity basis for particular guarantee – whether discretionary order should be exercised (even if indemnity basis) COUNSEL: P. Travis for the plaintiff M. Lyons for the defendant SOLICITORS: Elliott May Lawyers for the plaintiff Piper Alderman Lawyers for the defendant -- 1 of 4 -- 2 Introduction [2] On 3 September 2010, besides there being judgment that the defendant pay to the plaintiff the amount of $113,515.37, I ordered that the plaintiff have liberty to apply to seek interest on the judgment sum and the defendant have liberty to respond by submissions filed by 10 September 2010. I also ordered that the defendant’s application be dismissed and that the parties have liberty to file submissions with respect to costs on both applications by 10 September 2010. [3] The plaintiff has applied for interest on the judgment sum by application filed 7 September 2010, the defendant has filed written submissions on such interest and both parties have filed written submissions on the costs in a timely manner. Interest on judgment sum [4] The relevant provision, section 47(1) of the Supreme Court Act 1995, states that the court may order that there shall be included in the sum for which judgment is given interest at such rate as it thinks fit. There is no reason why that discretion should not be exercised in this case. [5] Nevertheless, the provision does permit a further discretion as to the time for which interest should run, being the whole or any part of the period between the date when the cause of action rose and the date of the judgment. [6] The defendant has submitted that in enforcing a liability against a surety there must be a demand before the action is brought, relying upon MS Fashion Ltd & Ors v Bank of Credit and Commerce International SA (in liquidation) & Ors [1993] Ch 425 per Dillon LJ at 447. The defendant further submits that the making of a demand in this case was, at the least, an implied term of the guarantee contained in the Facility Agreement and that, accordingly, the cause of action against the defendant did not arise until the demand was made for payment by the defendant pursuant to the guarantee, particularly in circumstances where a demand could not have been made for any definite sum until the costs were assessed against the borrower, and the actual extent of liability thus ascertained. The submission further contended that, since there is no evidence before the District Court of a demand being made on the defendant prior to the service of the claim and the statement of claim in this proceeding, the claim in the proceeding for costs should be held to be the relevant demand, with the result that the discretion to award interest should only be exercised from the date when the claim and the statement of claim were likely served. [7] I accept that the arguments made by the defendant have traction in this particular case. After all, what has been sought by the plaintiff here is simply an amount of a costs judgment against the relevant “borrower”, whose liability for such the court has found that the defendant guaranteed. It matters not for present purposes whether the demand is a requirement of an implied term or a pre-condition to enforcing liability. A proper demand could not have been made until 6 May 2010 in any event. -- 2 of 4 -- 3 [8] Since there has been no evidence led before me by the plaintiff as to the date of service of the originating documents in this proceeding, I take the date of the Notice of Intention to Defend as the appropriate starting date. At least there is certainty about it, and not speculation. That date is 8 July 2010. As to the rate to be applied, in the absence of any evidence being led by either party as to any other appropriate interest rate, I adopt the rate applicable to interest on default judgments set out in Practice Direction No 6 of 2007, namely 10 per cent per annum. Thus, for the 57 days to 3 September 2010 at a daily interest rate of $31.10, the interest calculation yields $1,772.70. Costs [9] Although the plaintiff’s written Outline of Argument on costs submits that the plaintiff and defendant had agreed by way of the Facility Agreement that the plaintiff was entitled to its costs on an indemnity basis under circumstances that include this proceeding, I hold that that has not been established. To this end, I accept, in general terms, the written submissions of the defendant in relation to the issue of costs, at least insofar as they are concerned with the costs being on the standard, rather than the indemnity, basis. [10] By r 681(1) of the Uniform Civil Procedure Rules the costs of an application in a proceeding are in the discretion of the court but follow the event unless the court orders otherwise. There is absolutely no basis upon which the court should order otherwise in this case where the relevant events are, first, the successful application by the plaintiff for summary judgment and, secondly, the unsuccessful application by the defendant for summary judgment. [11] The real issue here is the basis for assessed costs. Clause 5.2(a)(ii) of the Facility Agreement is relied upon by the plaintiff, as it must, if it wishes to recover legal costs and expenses on a “full indemnity basis”. But, as pointed out by the defendant, that particular provision depends upon a “demand” being made by the plaintiff on the relevant borrower (Joelco Pty Ltd). In turn, because of the way this proceeding has been conducted, there has been no evidence of a demand by the plaintiff on Joelco for the costs incurred by the plaintiff in this proceeding. Joelco was simply not a party to this proceeding. And the plaintiff has not sought any costs against Joelco with respect to this proceeding. This has the consequence that there is no liability pursuant to Clause 5.2(a)(ii), with the consequent effect that there are no “Moneys Hereby Secured” within the meaning of Clause 1.1 from that source. [12] The construction of the Facility Agreement does not, in my view, allow a claim to be made on an indemnity basis by the plaintiff against the defendant in this particular proceeding. If, nevertheless, I were to be wrong about that conclusion, since any contractual right is simply one factor to be considered in the exercise of the relevant discretion, I conclude that it is appropriate in these particular circumstances that, were such a contractual right to exist, since the contractual right would be derived by a very indirect process, it should not be exercised in this case: cf Mid Australia Pty Ltd v Around Australia Pty Ltd [2004] QSC 091 at [22]-]23]. [13] Thus, the defendant should pay the plaintiff’s costs of and incidental to each application, and of the proceeding, on the standard basis. -- 3 of 4 -- 4 Orders [14] Pursuant to the conclusions reached: 1. The plaintiff is awarded interest in the sum of $1,772.70 (at the rate of 10 per centum per annum on the judgment sum of $113,115.37 from 8 July 2010 until 3 September 2010). 2. The defendant is to pay to the plaintiff the plaintiff’s costs of the proceeding, including costs of and incidental to its application for summary judgment and the defendant’s application for summary judgment, to be assessed on the standard basis. -- 4 of 4 --