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TAKE YOUR TIME AND PAY THE FINE

25 October 2012

Taylor v Company Solutions (Aust) Pty Ltd [2012] QSC 309

On 10 October 2012, His Honour Douglas J considered whether settlement monies paid within the time allowed by an order for sanction could still be subject to interest under s 48 of the Supreme Court Act 1995 (Qld) (the Act).

 

Background

An action for damages for personal injuries was compromised but required the Court's sanction because the Plaintiff was a "person under a legal disability".  Douglas J made the order for sanction on 12 July 2011.

The order for sanction specified that the compromise sum, less statutory clearances, must be paid to the Plaintiff's trustee "within twenty-one (21) days of the date of the hearing and determination of this application or of the defendant's receipt of the last of any statutory clearances or charges in relation to the damages (whichever is the later to occur)...".

The clearance from Centrelink was not forthcoming until 19 January 2012, over six months after the order for sanction.

The second Defendant paid $909,367.48 to the trustee on 2 February 2012 which was within 21 days after receipt of the final clearance.  The third Defendant paid $187,500.00 to the trustee on 15 March 2012 which was well outside the 21 day period after receipt of the last clearance.

Section 48 of the Supreme Court Act 1995 (Qld) provided as follows:

48 Interest on debt under judgment or order

  1. Where judgment is given or an order is made by a court of record for the payment of money in a cause of action that arose after the commencement of the Common Law Practice Act Amendment Act 1972, interest shall, unless the court otherwise orders, be payable at the rate prescribed under a regulation from the date of the judgment or order on so much of the money as is from time to time unpaid.
  2. Notwithstanding anything contained in subsection (1)-

a) where the court directs the entry of judgment for damages and the damages are paid within 21 days after the date of the direction-interest on the damages shall not be payable unless the court otherwise orders;

b) ....

(emphasis added)

 

The Plaintiff contended that both Defendants were obliged to pay interest pursuant to s 48 of the Act for the period of time running from the date of the sanction order and that such interest "shall... be payable" "unless the court otherwise orders".   

Reliance was placed on the decision of Judge McGill QC in Flinn v The Maryborough Sugar Factory Limited [2003] QDC 446 in which His Honour found that section 48 interest was payable on a judgment sum where payment was not made within 21 days of the date of judgment.  The 21 day concession period provided for by s 48(2)(a) of the Act was legislative recognition of the fact that the judgement sum is unlikely to be capable of discharge on the day of judgment.  If, however, payment falls outside the 21 day period, interest is payable from the date of judgment unless the Court otherwise orders.

The defendants argued that Flinn was not applicable as the sanction order of Douglas J related to a compromise rather than a judgment.  It was contended that the obligation to pay the compromise sum did not arise until receipt of the last of any statutory clearances and that the settlement monies could not be considered "unpaid" until that occurred.

 

Decision

Douglas J held that relief from an obligation to pay settlement monies pending receipt of clearances, as mandated by Commonwealth legislation, did not lead to relief from liability to pay s 48 interest.  The obligation to pay settlement monies arose on the date of the sanction order.  This obligation did not disappear pending receipt of clearances and the settlement monies remained "unpaid" during this period.    

The parties in this case had made no agreement in relation to s 48 interest and it was not addressed in the sanction order.  Interest of approximately $64,000.00 was therefore payable by the defendants.     

 

Comment

The delay in this case was substantially caused by an entity, Centrelink, which was not liable to compensate the Plaintiff for the monetary effects of that delay.  Relevant case authorities state that the Plaintiff should not be penalised for this delay.  As the Defendant has retained the use of the monies during the period of delay, the Defendant must compensate the Plaintiff in the form of post-judgment interest.  (Note that s 48 of the Act has been re-enacted as s 59 of the Civil Proceedings Act 2011 (Qld) as from 1 September 2012.  The language of the provision has been simplified but its legal effect has not changed.)

Defendants should note that liability for post-judgment interest can be dealt with expressly in the Court's order such as occurred in the decision of Yun Hee Choi v City of Sydney Council [2007] NSWSC 65 ("Interest is not to run until 21 days after the second defendant has received from the Plaintiff a completed Health Insurance Commission form and a Centrelink clearance.").  The issue of post-judgment interest should be addressed when the terms of the sanction order are negotiated prior to the sanction hearing.

Both s 48 and the new s 59 of the Civil Proceedings Act 2011 (Qld) apply to orders of the Court for payment of damages and will not therefore apply to a normal compromise where there is no requirement for a Court order.

For further information, please contact:

Cameron Seymour | Partner
Mullins Lawyers
t +61 7 3224 0360
f +61 7 3224 0333
cseymour@mullinslaw.com.au

Daniel Sullivan | Associate
Mullins Lawyers
t +61 7 3224 0358
f +61 7 3224 0333
dsullivan@mullinslaw.com.au

 

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