Wane v Benwest Investment Services Pty Limited

1. [1]

   HIS HONOUR: By a notice of motion filed on 22 October 2019, the plaintiff seeks orders for judgment against the defendants for US$871,503 pursuant to s 90 of the Civil Procedure Act 2005 (NSW) and r 36.1 of the Uniform Civil Procedure Rules 2005 (NSW) (“the UCPR”), together with an order for interest and an order for costs. Alternatively, the plaintiff seeks an order for summary judgment pursuant to r 13.1 of the UCPR.

Background

1. [2]

   In 1996, the plaintiff, Louis Wane, a French national who resides in Tahiti, invested US$2,500,000 (“the principal amount”) with the first defendant, Benwest Investment Services Pty Limited, which is a company incorporated in Australia. The second defendant, Anthony Bennett, is the sole director of the first defendant.

2. [3]

   The principal amount was lost as a result of the actions of the defendants. By letter dated 4 October 1996, the defendants agreed to repay the plaintiff the principal amount (“the 1996 Agreement”). The 1996 Agreement has since been lost.

3. [4]

   Between November 1997 and December 1998, the defendants paid the plaintiff US$151,515.56 by way of five instalments. It is unclear whether the instalments were made in accordance with the 1996 Agreement. In any event, the defendants did not comply with its terms by failing to repay the principal amount in full.

4. [5]

   On 29 September 1999, the plaintiff and the defendants signed a Deed of Settlement (“the First Deed”) in which the defendants agreed to pay the plaintiff the balance of the principal amount owing, referred to as the “Balance of the Settlement Sum”, being US$2,348,484.44, in the following five prescribed instalments set out at Schedule 4:

5. [6]

   Clause 5 of the First Deed provided that, if the defendants defaulted on any of the instalments by the due dates provided for in Schedule 4, “the Balance of the Settlement Sum shall immediately become due and payable” and the plaintiff shall be at liberty to:

6. [7]

   Pursuant to cl 9 of the First Deed, the plaintiff was entitled, at his discretion, to:

7. [8]

   Clause 11 provided as follows:

8. [9]

   The defendants defaulted on the second instalment payment listed in Schedule 4 by failing to make a payment of US$550,000 on 31 July 2000 and remained in default over all of the subsequent scheduled payments. In accordance with cll 5 and 9 of the First Deed, the plaintiff filed a statement of claim in this Court on 25 July 2012 seeking the outstanding balance of the principal amount of US$2,042,773.94, plus interest of US$2,277,818.26 and costs (“the initial proceedings”).

9. [10]

   The plaintiff pleaded in the statement of claim that the amount that had been paid by the defendants at the time of the First Deed, when converted into United States currency at the rate applicable as at the date of the First Deed, was the equivalent of US$151,515.56, so that the first instalment pursuant to Schedule 4 of the First Deed should have been US$128,484.44.

10. [11]

    The particulars to the statement of claim noted that additional amounts had been paid by the defendants by the date the statement of claim was filed, being the equivalent of US$305,710.50 in 21 ad hoc instalments beginning on 24 December 1999 and ending on 12 July 2012. As only the first of those payments complied with Schedule 4, being a payment of US$128,740 on 24 December 1999, the plaintiff pleaded that the debt fell due in full on 1 August 2000, the day after the second instalment payment was due, together with interest calculated from that date, in accordance with cl 9 of the First Deed.

11. [12]

    The plaintiff’s solicitor wrote to the defendants’ solicitor on 21 May 2014, stating that he had been instructed to apply for default judgment against the defendants.

12. [13]

    By letter dated 2 June 2014, the defendants’ solicitor provided the plaintiff with an affidavit setting out the defendants’ assets and liabilities. In that letter, the defendants’ solicitor stated that he:

13. [14]

    Between June and October 2014, the defendants proposed repayment schedules with a view to an agreed schedule being formalised in a second deed. A proposed repayment schedule was subject to further amendments in August and September 2014 at the request of the defendants’ solicitor to “ensure payments could be made”.

14. [15]

    On 30 October 2014, the parties signed a second Deed of Settlement (“the Second Deed”) in which the defendants agreed to pay an amount which, as a matter of construction of the deed, is in dispute, in 11 irregularly-spaced instalments commencing on or before 7 November 2014, with the last instalment falling due on or before 31 July 2017.

15. [16]

    The plaintiff contended that a correct construction of the Second Deed discloses that the amount to be paid was the outstanding balance of the principal amount at the date the Second Deed was signed, being US$1,881,074.44, plus interest calculated from the date of default of the First Deed, being 1 August 2000, pursuant to the terms of the First Deed. In addition, interest would be payable on any late payments of the instalments set out in the Second Deed.

16. [17]

    The defendants submitted that the amount to be paid by the instalments was US$1,915,850.94, which comprised both the outstanding balance of the principal and an agreed portion of the interest accrued from the default of the First Deed, in full satisfaction of the debt.

17. [18]

    The recitals of the Second Deed were as follows:

18. [19]

    The payments were itemised in cl 2.1, as follows:

19. [20]

    In their written submissions, the parties agreed that, although not stated, the instalments set out at cl 2.1(c) were expressed in Australian currency. On that basis, the instalments totalled AU$3,100,000.

20. [21]

    Clause 2.2 provided that if the defendants failed to “pay any amount payable by them at or before the due date specified in the Instalments set out in clause 2.1(c)”, an “Event of Default” would arise and, pursuant to cl 2.3(a), the total outstanding amount would become “immediately due and payable” and the plaintiff would then be entitled to exercise his rights under cl 3.2(c). Clause 3 relevantly provided:

21. [22]

    Clause 14 of the Second Deed provided:

22. [23]

    In accordance with cl 3.1 and in the terms set out at Annexure A of the Second Deed, the parties filed consent orders in this Court on 5 November 2014 (“the Consent Orders”), which relevantly provided as follows:

23. [24]

    The plaintiff contended that the defendants defaulted on the first instalment payment set out at cl 2.1(c)(i) of the Second Deed. By letter dated 18 November 2014, the plaintiff’s solicitor notified the defendants’ solicitor of the alleged default, stating that the plaintiff reserved his rights under cll 2.3 and 3.2(c) of the Second Deed to enter summary judgment against the defendants.

24. [25]

    The plaintiff calculated that the defendants made 21 ad hoc instalments totalling US$2,325,467.52 between 30 October 2014 and 2 November 2017. The plaintiff’s case was that the first 19 instalments were made towards the principal amount, which was finally paid on 10 February 2017, and that the final two instalments were made towards the interest that had accrued on the principal amount. No further payments were made after 2 November 2017.

25. [26]

    By letter dated 9 August 2018, the plaintiff’s solicitor informed the defendants’ solicitor that the defendants’ failure to pay “the outstanding balance” of US$868,634 on or before 31 July 2017 constituted an Event of Default “under the terms of [the Second Deed]”. Further, if it was not paid by 24 August 2018, the plaintiff would apply to this Court for default judgment pursuant to order 1(b)(ii) of the Consent Orders.

26. [27]

    In his response to the plaintiff’s solicitor, by letter dated 14 August 2018, the defendants’ solicitor attached a schedule of 18 payments made by the defendants to the plaintiffs between 7 November 2014 and 24 August 2017 that came to a total of AU$2,590,256, being the equivalent of US$1,995,118.99. The letter continued as follows:

27. [28]

    The plaintiff’s solicitor replied by letter dated 30 August 2018, informing the defendants’ solicitor that the defendants had made more payments than they had included in their schedule and that some of the payments that were included were understated. I note that a comparison between the figures in the schedule attached to the defendants’ solicitor’s letter and figures provided in an affidavit of the plaintiff read at the hearing demonstrates that the plaintiff concedes that the defendants had made an additional payment in the period covered by the schedule and two further payments after the last table entry. Further, four of the United States currency equivalent amounts of payments included in the table were understated.

28. [29]

    As to the substantive issue, the plaintiff’s solicitor explained in the letter as follows:

29. [30]

    The plaintiff’s solicitor wrote to the defendants’ solicitor on 11 July 2019 asserting that the defendants owed the plaintiff the sum of US$871,503 (“the disputed amount”). The letter stated:

30. [31]

    Further, they said:

The parties’ submissions

1. [32]

   The plaintiff submitted that, pursuant to the terms of the First and Second Deeds and consent orders, and making an appropriate allowance for the quantum and timing of payments made by the defendants since the signing of the Second Deed, the defendants owe accrued interest in the sum of US$871,503.

2. [33]

   The plaintiff submitted that the question of whether the disputed amount has accrued in the plaintiff’s favour under the First and Second Deeds can be divided into the following four sub-issues. Those sub-issues are reproduced below together with the plaintiff’s submissions on each.

3. [34]

   The defendants defaulted on the second instalment under the First Deed on 1 August 2000 and over the following three years, on the remaining three instalments. Pursuant to cl 9 of the First Deed, the plaintiff was entitled to charge interest on the unpaid amounts of those instalments and interest would not stop accruing “until full payment of the Settlement Sum has been made”.

4. [35]

   Interest was calculated by the plaintiff on the basis that payments were applied first in reduction of principal, which the defendant accepted as an appropriate basis. As to the calculation of the disputed amount, the plaintiff relied upon an affidavit affirmed on 15 October 2019 by Daniel Heywood, a Chartered Accountant and Forensic Accounting Specialist, and read at the hearing (“Mr Heywood’s affidavit”), although I note that the figure he calculated was US$30 more than the amount sought by the plaintiff pursuant to this notice of motion, being US$871,533.56. Exchange rates utilised by Mr Heywood for the calculation of interest were the United States prime rates as recorded in The Wall Street Journal and, for the United States currency equivalent of payments made by defendants in Australian currency, the Reserve Bank of Australia’s historical listing of exchange rates of the Australian currency to the United States currency. A second affidavit affirmed by Mr Heywood on 21 January 2020 outlined his compliance with the “Expert witness code of conduct” set out at Sch 7 of the UCPR, which was not challenged.

5. [36]

   The plaintiff relied upon the definition of the term “Settlement Payment” at Recital G of the Second Deed, submitting that it included interest that had accrued pursuant to cl 9 of the First Deed, up until 30 October 2014.

6. [37]

   In relation to the reference to “Settlement Payment” in cl 2.1(a) of the Second Deed, the plaintiff submitted:

7. [38]

   The plaintiff noted that the United States currency equivalent of AU$3,100,000 as at the exchange rate prevailing in October 2014 was US$2,703,851. If the Settlement Payment was not intended to include accrued interest amounts under the First Deed, the rescheduled amounts would have totalled US$1,881,074.44.

8. [39]

   Clause 14 of the Second Deed expressly preserved the operation of the First Deed. The Second Deed did not contain a provision as to how interest is to be charged or calculated. The terms of the Consent Orders required the defendants to pay the plaintiff “in accordance with both the First and Second Deeds”. It is apparent from the Recitals to the Second Deed that its purpose was only to “reschedule” the payment dates of the balance of the Principal Amount and accrued interest payable under the First Deed as recorded in the Second Deed, being quarterly payments which were set out at cl 2.1(c):

9. [40]

   Consistently with this interpretation, the last payment was unascertainable as at the date of the signing of the Second Deed, since interest would continue to accrue on the balance of the principal outstanding. In addition, it would be “an affront to common sense” that the plaintiff would agree to the defendants having until 2017 to repay the remainder of the amount owed which had been outstanding since 1996 without requiring that they pay interest if they defaulted on the agreed repayments.

10. [41]

    The Principal Sum was not repaid until 10 February 2017. Simple interest on the amounts unpaid from 1 August 2000 until 13 February 2017 were calculated by Mr Heywood, relying on records provided by the defendants together with certain bank statements. The calculations were set out in annexures to his affidavit.

11. [42]

    The plaintiff submitted that the resolution of issues (1) to (3) above turn on the contractual construction of the First and Second Deeds.

12. [43]

    The defendants submitted that cl 11 of the First Deed was preserved in the Second Deed by cl 14, so that they were required to only repay the sum of US$1,250,000 and that they paid well in excess of that amount.

13. [44]

    Alternatively, the defendants contended that they were obliged by the Second Deed to pay a sum of combined unrepaid principal and accumulated interest of US$1,915,850.94, which is the amount specified in cl 2.1(a) of the Second Deed, but had in fact paid US$2,132,859.67, which was an overpayment of US$217,008.73.

14. [45]

    The defendants further submitted that the plaintiff has elected to hold the defendants to the terms of the Second Deed. Additionally, or alternatively, the plaintiff waived reliance on the First Deed or is estopped from reliance on it in these proceedings.

15. [46]

    The plaintiff read the affidavit of Mr Heywood and the affidavits sworn by the plaintiff, subject to certain agreed deletions and one paragraph that I ruled to be inadmissible. The defendants read the affidavit of the second defendant, subject to certain parts being limited pursuant to s 136 of the Evidence Act 1995 (NSW), so that they were admitted as submissions, rather than as evidence of what was stated.

16. [47]

    The plaintiff submitted that the figure of US$1,915,850.94 in cl 2.1(a) was an error. To the extent that the meaning of this aspect of the Second Deed was unclear, since the figure was unexplained and at odds with the figure at recital G and cl 2.1(e) of US$1,881,074.44, the plaintiff relied upon extrinsic material in the form of an email from the defendants’ solicitor to the plaintiff’s solicitor, dated 17 October 2014, on the subject of negotiations concerning the drafting of terms of the Second Deed (“the 17 October 2014 email”), to demonstrate that the figure in recital G was the correct amount. In that email, the defendants’ solicitor stated that:

17. [48]

    I note the figure of US$1,881,074.44 was arrived at by deducting the two amounts in paras (2) and (3) of the email, together with the total of the amounts that the defendants had paid to the plaintiff by the time the First Deed was signed, namely, US$151,515.56.

18. [49]

    On the same basis, the plaintiff referred to an email exchange between the parties’ solicitors in June and August 2014 concerning the proposed schedule of instalments, in order to demonstrate that both parties understood that interest would continue to accrue on the unrepaid principal and that the scheduled instalments in cl 2.1(c) were intended to be an approximation of the combined unrepaid principal and interest owing as at the date that the Second Deed was signed.

19. [50]

    In an email dated 13 June 2014, the defendants’ solicitor requested a proposed repayment schedule.

20. [51]

    The plaintiff’s solicitor responded on 25 June 2014, noting that the defendants owed, at that time, the balance of principal of US$2,005,329.44 and US$1,394,790.18 of “total interest”, being a total of US$3,400,119.62. The plaintiff’s solicitor continued: “Accordingly, we propose the following schedule for repayment of the balance (some $2,800,119.62 plus the interest accruing during that period)”. They proposed a series of 12 remaining payments of amounts varying between $50,000 and $400,119.62, the latter figure being the last payment to be made, “plus the remaining accrued interest by 30 September 2015”. The defendants’ solicitor replied on 15 August 2014, with a proposal that there be 14 remaining payments, the last being “The payment of $300,000 plus the remaining balance and accrued interest by 31 July 2017”.

21. [52]

    The defendants reiterated at the hearing their written submission that cl 11 of the First Deed should be interpreted to mean that once the defendants had paid half of the principal amount, being US$1,250,000, they were to be released from the debt. Further, cl 14 of the Second Deed, by preserving the First Deed, had the effect of maintaining that provision, so that the defendants had in fact grossly overpaid their debt to the plaintiff.

22. [53]

    Counsel for the defendants conceded that subsequent correspondence between the parties, leading up to the finalisation of the terms of the Second Deed, did not disclose any change to the interest calculation, or to the concept of there being the “remaining accrued interest” that appears in the email of 25 June 2014.

23. [54]

    The defendants submitted that the 17 October 2014 email supported their case, since the figure of US$1,915,850.94 at cl 2.1(a) of the Second Deed was included despite the defendants’ solicitor having drawn the plaintiff’s solicitor’s attention to the sum of US$1,881,074.44 as the correct balance of the principal amount. Accordingly, the amount at cl 2.1(a) could not have been an oversight. This supports the defendants’ submission that it must represent the balance of the principal amount, being US$1,881,074.44, plus an amount of interest.

24. [55]

    However, the defendants did not suggest that they knew how the amount of US$1,915,850.94 was arrived at, accepting that it could not reflect what the defendants owed by way of the balance of the principal amount and interest at that stage, and there was no evidence of it having been the subject of communications between the parties in the negotiating phase of the Second Deed.

25. [56]

    The defendants acknowledged that the aggregation of the instalments at cl 2.1(c) of the Second Deed significantly exceeded the amount specified in cl 2.1(a), but then submitted that the AU$3,100,000 was also apparently intended by the parties at the time as an agreed amount comprising the unrepaid principal and the accrued interest pursuant to the First Deed up to 30 October 2014. This represented a shift from the defendants’ earlier position that the figure in cl 2.1(a) was the agreed debt of a combination of the unrepaid principal and interest that had accrued until 30 October 2014.

26. [57]

    I note that the parties accepted that the US currency equivalent of AU$3,100,000 as at the time the Second Deed was signed was US$2,703,851. This submission had two consequences: the figure of US$1,915,850.94 in cl 2.1(a) was without any apparent purpose or explanation and, since the parties accepted that the US currency equivalent of AU$3,100,000 as at the time the Second Deed was signed was US$2,703,851, the second defendant’s calculation that the defendants had overpaid their debt was no longer viable.

27. [58]

    Accordingly, the defendants withdrew their submission that they had overpaid the plaintiff. Their modified position was that the defendants had paid AU$3,019,981.15 since 30 October 2014, being AU$80,018.85 short of the total of the instalments at cl 2.1(c) of AU$3,100,000. The defendants said that interest arising from the late payment of the instalments, calculated to the date of the second day of the hearing, being 21 April 2020, was AU$43,007.37, yielding a total liability by the defendants to the plaintiff of AU$123,025.85.

28. [59]

    On the second day of the hearing, the plaintiff moved from his earlier position that had coincided with the defendants’ position, that the figures in cl 2.1(c) were meant to be in Australian currency. The plaintiff submitted that, in light of the June and August 2014 correspondence between the parties’ solicitors, it appeared that it was understood by them at the time that the Second Deed was signed that the figures in cl 2.1(c) were in US currency.

29. [60]

    In addition, a letter from the plaintiff’s solicitor to the defendants’ solicitor dated 24 October 2014 had attached to it a draft of the Second Deed, setting out cl 2.1(c) the instalments in identical terms to the final version, except that the date for payment of the first instalment was a week earlier than in the final version. In the covering letter, the writer said:

30. [61]

    The plaintiff submitted that it was therefore open to the Court to find on the evidence that the amounts in cl 2.1(c) of the Second Deed were expressed in either Australian or United States currency. Counsel for the plaintiff submitted that if the Court found that the amounts were in United States currency, the recalculated amount owed by the defendants to the plaintiff was US$838,109.09, being US$33,393.91 less than the amount sought in his notice of motion. The defendants submitted that, although it opposed the plaintiff’s application to amend the notice of motion to include the alternative amount, it was not disadvantaged by the late notice of the change in the plaintiff’s position.

31. [62]

    I granted leave to the plaintiff to amend order 1 sought in the notice of motion to read:

32. [63]

    Counsel conceded that, in correspondence following the defendants’ default on the first instalment pursuant to the Second Deed, the plaintiff’s solicitor referred to the relevant amounts as being in Australian currency. However, counsel submitted that post-contractual conduct was not relevant to the interpretation of the Second Deed: Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57 at [35].

33. [64]

    The plaintiff submitted that it was open to the Court to reject the interpretations of cl 2.1 offered by both parties and, pursuant to ss 73 and 90 of the Civil Procedure Act, arrive at the Court’s “preferred construction”.

34. [65]

    The defendant maintained its position that the figures in cl 2.1(c) were in Australian currency.

The relevant law and legal principles

1. [66]

   The principles to be applied in consideration of a motion for summary judgment are not in dispute. Rule 13.1 of the UCPR relevantly provides:

2. [67]

   In Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87; [1983] HCA 25, the Court said, at 93:

3. [68]

   In Charub Pty Ltd v Triandafyllou [2019] NSWSC 487 at [13], Davies J said:

4. [69]

   The plaintiff also relied on s 90 of the Civil Procedure Act and r 36.1 of the UCPR to give judgment in the case generally, in light of the evidence of the terms of the First and Second Deeds and the defendants’ default in payment of the money owed. As noted, the plaintiff submitted that it was open to the Court to interpret the Deeds in a manner that neither party has advanced, pursuant to s 73 of the Civil Procedure Act, which provides as follows:

5. [70]

   As to the principles applicable to the interpretation of certain clauses of the Deeds which are in contention, I have had regard to the following statements of principle that, in my view, have relevance.

6. [71]

   In Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337; [1982] HCA 24 Mason J observed, at 352, in relation to the use of extraneous material as an aid to the interpretation of a contract:

7. [72]

   In Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7, French CJ, Hayne, Crennan and Kiefel JJ said, at [35]:

8. [73]

   See also Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407 in which Allsop P said, at [14]:

9. [74]

   I also note that in Agricultural and Rural Finance Pty Ltd v Gardiner Gummow, Hayne and Kiefel JJ reiterated, at [35]:

Consideration

1. [75]

   As noted, the Consent Orders provided that if an “Event of Default” occurred, as that expression was defined at cl 2.2(a) of the Second Deed, the total amount outstanding under the First Deed became immediately due and payable, so that the plaintiff could apply for default judgment, and the defendants would consent to it being entered: cl 1(b). The terms of the Consent Orders were consistent with cl 3.2(c) of the Second Deed, which also provided that the plaintiff may make an application for summary judgment and/or default judgment if there was an Event of Default.

2. [76]

   The defendants advanced a submission which, if accepted, would mean that there had not been an Event of Default. They submitted that, pursuant to cl 11 of the First Deed, the only obligation upon them was to repay half of the principal amount, being US$1,250,000, which would then relieve them of responsibility for further repayment pursuant to either Deed. An insurmountable impediment to this interpretation, however, is the phrase “but for this Deed” in cl 11. The defendants submitted that the phrase “enforce[s] the primary obligations set out in the first two lines of that clause”, those lines referring to the agreement of the parties to mutually release each other upon payment of half of the principal amount. However, as a matter of grammatical construction, although inelegantly expressed, the phrase has the effect of relieving them of all obligations relating to, or arising from, their relationship other than those obligations arising under the First Deed.

3. [77]

   I am fortified in that view by the observation that, taking the document as a whole, there would have been no point otherwise to its provisions that required the defendants to repay the whole of the principal amount and to subject the defendants to interest payments if they did not comply with that obligation according to the timetable set out at Schedule 4 of the First Deed.

4. [78]

   That submission aside, the defendants thus do not resist the proposition that there was an Event of Default, so that the only remaining matter in dispute is the quantum of the debt. That being so, and in view of the defendants not having filed a defence to the statement of claim and having signed consent orders which they had agreed to being filed upon an Event of Default, I am satisfied that the high bar that is set for summary judgment by Fancourt v Mercantile Credits and General Steel Industries is met.

5. [79]

   The dispute between the parties as to quantum arises from their competing constructions of the two deeds. The plaintiff submitted that the Second Deed is a re-scheduling of the instalment payments of the debt that was the subject of the First Deed and otherwise expressly preserves its terms, pursuant to cl 14 of the Second Deed, so that interest continued to accrue on it in the same fashion as it did under the First Deed, until the principal amount of US$2,500,000 was fully repaid.

6. [80]

   The plaintiff’s calculation of the debt was set out in the affidavit of Mr Heywood. It was based on a calculation of simple interest at the prevailing US prime bank rate, pursuant to cl 9 of the First Deed, from the date of the first default on 1 August 2000 until the principal amount was paid in full on 10 February 2017, which was US$1,315,896. The sub-totals of interest that accrued up to 30 October 2014 was US$1,252,320 and from then until 10 February 2017 was US$63,577. Payments made by the defendants after 10 February 2017 reduced that interest bill to US$871,503, which is the sum sought in the plaintiff’s notice of motion, as filed.

7. [81]

   The defendants submitted that the Second Deed consolidated the balance of the principal that was owed and the accumulated interest as at 30 October 2014, so that references in the Second Deed to the payment of interest referred only to interest that may accrue on any late payments of the instalments itemised at cl 2.1(c). As noted, during the course of the hearing, the defendants calculated their indebtedness on this basis as AU$123,025.85, being the shortfall on the total payments that were due pursuant to cl 2.1(c) of AU$3,100,00 (AU$80,018.85) and interest for late payment of some of those instalments (AU$43,007).

8. [82]

   The plaintiff submitted that the amount specified in cl 2.1(a) was an error and should have been US$1,881,074.44, being the outstanding principal amount. I am of the opinion that the amount specified in cl 2.1(a) was included by way of an error, and that the intended quantum was the amount specified in recital G, which is US$1,881,074.44. I am persuaded to that conclusion by the following combination of factors.

9. [83]

   Accordingly, I find that the figure in cl 2.1(a) was intended to be US$1,881,074.44 and that the meaning of the clause is that the defendants were liable to repay that amount together with the accrued interest on the unrepaid principal.

10. [84]

    I am of the opinion that the Second Deed provided that interest would continue to accrue until the principal amount of US$2,500,000 was fully repaid, for the following reasons.

11. [85]

    In my opinion, the relevance of the currency of the instalments in cl 2.1(c) is only to the quantum of the outstanding balance of the defendants’ debt, in terms of the accrued interest calculation; it is of no consequence to the defendants’ liability. I conclude that, at the time the Second Deed was signed, the parties understood that the instalments were in US currency, for the following reasons.

12. [86]

    During the hearing, the plaintiff recalculated the defendants’ judgment debt in the event that the Court finds that the instalment payments were understood to be in United States currency. Leave was granted to the plaintiff to amend the notice of motion to reflect this alternative figure, which is US$838,109.09. I am surprised that this figure is less than that which would apply if the instalments expressed in cl 2.1(c) were in Australian currency. However, on the basis that the calculation was advanced by the plaintiffs, that it was not contested by the defendants and that it is less than the amount in the notice of motion as filed, I accept it as the appropriate quantum of the amount owing, as a consequence of the finding that the instalments were expressed in Australian currency.

13. [87]

    My findings of fact have been made without recourse to the extraneous material, being the correspondence between the parties which pre- and post-dated the signing of the Second Deed. I consider that the correspondence that post-dated the signing of the Second Deed cannot assist in the interpretation of the Deed: Agricultural and Rural Finance Pty Ltd v Gardiner at [35]. As to the preceding correspondence that occurred in the context of the negotiating of the Second Deed, it is difficult to discern what statements reflect “objective background facts which were known to both parties”, as opposed to “actual intentions and expectations”, which are not receivable for the purposes of interpretation: Codelfa Construction v State Rail Authority at 352. However, if I am wrong in that regard and recourse could have been had to the parties’ correspondence between June and October 2014, it is material that supports my conclusions, in any event.

14. [88]

    An order for interest pursuant to s 100 of the Civil Procedure Act is appropriate. The commencement date of that order will be the day after the date of the last payment by the defendants, which was on 2 November 2017.

15. [89]

    I make the following orders:

    1. (1)

       Judgment for the plaintiff in the amount of US$838,109.09;

    2. (2)

       Pursuant to s 100 of the Civil Procedure Act 2005 (NSW), interest on the amount of the judgment be paid by the defendants to the plaintiff at the maximum rate that is prescribed, from 3 November 2017 up to and including today’s date;

    3. (3)

       The parties to provide, by email to chambers, short minutes calculating the amount in order (2) within a period of 14 days of the date of these orders. In default, direct each party to prepare a one-page calculation of the relevant amount, within a period of 14 days of the date of these orders;

    4. (4)

       The defendants to pay the costs of the proceedings.