Locke v Bova & Anor

[2009] NSWSC 408

CITATION:	Locke v Bova & Anor [2009] NSWSC 408 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	17 November 2008
JUDGMENT DATE :	19 May 2009
JURISDICTION:	Common Law
JUDGMENT OF:	Adams J at 1
DECISION:	Interest in respect of the amounts paid by Mrs Locke on account of costs to be paid by the respondents to the extent that they comprise party/party costs. Liberty to apply on three days’ notice, such notice to be given on or before 28 May 2009. The respondents to pay costs.
CATCHWORDS:	Procedure - costs - interest on paid costs - whether payable when matter settled by terms of settlement in conventional terms of judgment following trial - interpretation of terms of settlement
LEGISLATION CITED:	Civil Procedure Act 2005 S 101 Supreme Court Act 1970 S 95
CATEGORY:	Procedural and other rulings
CASES CITED:	Australian Development Pty Ltd v White Constructions (ACT) Pty Ltd (in liq) [2002] NSWSC 280 Grogan v Theiss Contractors Pty Limited [2000] NSWSC 1101
PARTIES:	Carolyn Locke (Plaintiff) Colin Bova (First defendant) South Western Sydney Area Health Service (Second defendant)
FILE NUMBER(S):	SC 20259/01
COUNSEL:	Mr D Ash (Plaintiff) Mr G B Evans (Defendants)
SOLICITORS:	McLaughlin & Riordan Solicitors (Plaintiff) David Ian Brown (Defendants)
LOWER COURT JURISDICTION:	Supreme Court
LOWER COURT JUDICIAL OFFICER :	Adams J
LOWER COURT DATE OF DECISION:	17 November 2008

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

ADAMS J

19 May 2009

20259/01 LOCKE v BOVA & ANOR

JUDGMENT (on costs)

1 HIS HONOUR: Mr and Mrs Locke were successful plaintiffs against the respondents in a professional negligence claim. On 12 September 2003 Mrs Locke and the respondents settled her action and, on 16 September 2003, the terms of settlement were filed. Those terms, stated to be “By consent” provided –

“1. Verdict and judgment for the first plaintiff against the first and second defendants in the sum of $640,000 plus costs to be agreed or assessed.”

Terms 2 and 3 made conventional and necessary provision for refunds of payments for social services, health services and the like whilst term 4 provided that interest would not be payable in respect of the judgment sum if it were to be paid within twenty-eight days of certain (conventional) specified events. As it happened, judgment was not entered at the time and, the parties agreeing, I entered judgment formally as and from 12 September 2003 in accordance with the terms of settlement.

2 For reasons which do not presently matter the costs have only recently been assessed. In the meantime, Mrs Locke paid her solicitor the solicitor/client costs owing to him some years ago. Mrs Locke seeks an order that interest be paid on the party/party component of the costs already paid by her.

3 It is agreed that, if the terms of settlement are to be read in the same way as a conventional judgment following trial, an order for the payment of interest on unpaid costs may be made pursuant to s 101 of the Civil Procedure Act 2005 or s 95 of the Supreme Court Act 1970, depending on the relevant date. Since it is sought to invoke the Court’s powers at the present time, albeit in respect of a judgment operating from 12 September 2003, I think that the former provision applies. However, nothing turns on this since in respect of the present controversy there is no material difference between the provisions. Section 101 relevantly provides as follows –

“(1) Unless the court orders otherwise, interest is payable on so much of the amount of a judgment (exclusive of any order for costs) as is from time to time unpaid.
(2) Interest under subsection (1) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from:
(a) the date on which the judgment takes effect, or
(b) such later date as the court may order.
(3) Despite subsection (1), interest is not payable on the amount of a judgment if the amount is paid in full within 28 days after the date on which the judgment takes effect, unless the court orders to the contrary.
(4) The court may order that interest is to be paid on any amount payable under an order for the payment of costs.
(5) Interest under subsection (4) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from:

(a) the date or dates on which the costs concerned were paid, or
(b) such later date as the court may order.

4 It will be seen that interest on outstanding costs is payable only when a specific order in that regard is made by the Court. It has been held that the discretion to award such interest will be enlivened where the party has already paid legal costs during the course of litigation or, I think, otherwise than before final assessment or agreement has occurred. This is the case here. Generally speaking, where it is appropriate to order interest, it should be calculated as due from the dates upon which the costs were previously paid: Australian Development Pty Ltd v White Constructions (ACT) Pty Ltd(in liq) [2002] NSWSC 280; Grogan v Theiss Contractors Pty Limited [2000] NSWSC 1101.

5 It is conceded by the respondents that had judgment been given in the language of the terms of settlement following a trial, in the circumstances here an order for interest on the costs paid by the first plaintiff could well be appropriate. It is argued, however, that the language is part of agreed terms of settlement which means that, as a matter of contractual interpretation, the omission of any reference to interest on costs – where specific provision is made relating to interest on the judgment sum – means that there is no obligation in the respondents to pay any such interest: in short that the terms are to be construed as a contract not as a judgment. The respondents submit that, otherwise, the obligations accepted by parties in their position would be left uncertain when the very point of a settlement on terms is to precisely define their liabilities. It is argued on behalf of Mrs Locke that use of the conventional language of judgment in which the outcome of the case in her favour in the terms of settlement is cast implies that the condition should be interpreted in the same way as a conventional judgment following a trial.

6 The argument as to certainty is not without merit but it is somewhat weakened. where the costs themselves are left to be agreed or assessed so that the extent of liability with respect to them is not known either as to amount or date of payment.

7 I am persuaded that, on balance, the contention put forward on Mrs Locke’s behalf is correct. The language of the terms of settlement is so conventional that it seems to me very likely, if not certain, that it was intended to imply or carry the usual incidents attending such language in the ordinary case, namely where verdict and judgment is given following trial. In my view, therefore, an order for the payment of interest in respect of the amounts paid by Mrs Locke on account of costs should be paid by the respondents to the extent that they comprise party/party costs.

8 I understand that there is no dispute as to the date upon which various sums were paid by Mrs Locke to her solicitor and, accordingly, the amount of interest should be capable of simple calculation. In the event that the parties are not agreed, I give liberty to apply on three days’ notice, such notice to be given on or before 28 May 2009. Mrs Locke must have the costs of the notice of motion.

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25/05/2009 - Amended hearing date - Paragraph(s) Coversheet