Zhang v Zhang (No 2)

1. [1]

   HIS HONOUR: On 12 July 2022 I delivered reasons for judgment in relation to a dispute regarding terms of repayment of a loan in which I found for the plaintiff (Ran) on her claim: Zhang v Zhang [2022] NSWSC 924 (principal judgment).

2. [2]

   These reasons assume a familiarity with the principal judgment and will adopt its abbreviations.

3. [3]

   Issues remained in relation to:

   1. (1)

      calculation of interest on the loan; and

   2. (2)

      the appropriate order for costs in the proceedings.

4. [4]

   I directed the parties to bring in short minutes of order, including submissions as to what interest rate applies after the term of the loan and submissions on costs, to be provided by 4:00 PM on 15 July 2022.

5. [5]

   The parties have provided submissions.

6. [6]

   These reasons address the two issues regarding interest rate and costs and also issues raised, or at least seemingly raised, in the submissions of Jing regarding what share is to be paid on the judgment in favour of Ran and issues regarding the cross claim.

7. [7]

   I address these issues as follows.

Interest

1. [8]

   In the principal judgment I accepted that a rate of 3.95% was agreed between the parties. However, there was an issue regarding the duration of the application of the interest rate: principal judgment at [524].

2. [9]

   Mr Reynolds on behalf of Ran in submissions dated 14 July 2022 has submitted that Ran does not seek to further agitate the proposition that the UCPR rate of interest should apply after the conclusion of the loan term. Nor, as I understand it, does he seek to argue that the UCPR rate applies from the date of the sale of the property.

3. [10]

   Mr Reynolds has prepared a calculation of interest on the loan at the contractual rate of 3.95% per annum applicable from 31 August 2018 to 22 July 2022.

4. [11]

   The interest calculation is $35,734.75 and has been incorporated into draft short minutes of order proposed by Ran.

5. [12]

   Jing in an email to my Associate dated 15 July 2022 setting out her submission indicates that she does not know what she can say about interest rates.

6. [13]

   Mr Gao on behalf of Jian jian provided submissions on 15 July 2022 and has indicated that he makes no submissions as to the interest payable, however agrees to the form of calculation provided for in Ran's written submissions.

7. [14]

   The issue of doubt regarding interest was the duration of application of the rate of 3.95%.

8. [15]

   There is a question as to what date the interest is calculated from and what date it is calculated to.

9. [16]

   The answer to that question (dates from and to) depends upon the particular circumstances of each case and the answer differs depending upon whether statutory provisions apply or general law provisions apply.

10. [17]

    It was said by the House of Lords (the judgment of their Lordships was delivered by Lord Devlin) in distinguishing discount (being a deduction from the price fixed once and for all at the time of payment) from interest stated that “Interest postulates the making of a loan and then it runs from day to day until repayment of the loan, its total depending on the length of the loan”: Hong v Choong Fah Rubber Manufactory [1962] AC 209 at 217.

11. [18]

    There are some statements regarding interest on loans which present a clear picture.

12. [19]

    In Re James; Ex parte Carter Holt Harvey Roofing (Aust) Pty Ltd (1993) 46 FCR 183 at 187-188 Hill J made particular observations regarding the timing from which interest is calculated. His Honour observed as follows:

13. [20]

    However, the position at common law whilst in a number of legal texts and judgments is asserted to be clear is not always regarded as clear. Mason P observed in Heydon v NRMA (No 2) (2001) 53 NSWLR 600; [2001] NSWCA 445 at [13] “Notwithstanding statements by the highest courts that the common law does not allow interest on recovery of money in claims for debt or damages … there are many cases of undoubted authority where this has happened”. His Honour referred to his decision in National Australia Bank Ltd v Budget Stationery Supplies Pty Ltd (NSW Court of Appeal, 23 April 1997, unrep) to the effect that “The common law's attitude to interest on debts is confused and largely negative”.

14. [21]

    Commercial life generally addresses the issue specifically and does not leave the answer to guesswork.

15. [22]

    Thus, loan agreements commonly provide whether the interest calculation includes the date of advance: Hollister Developments Pty Ltd v Custom Credit Corporation (Federal Court, French J, 16 November 1994, unrep) BC9406596 at 22 (interest included both the date of advance and date of repayment); Capital Securities XV Pty Ltd (in liquidation) v Calleja [2020] NSWSC 301 at [44] (interest included the date of advance but excluded date of repayment).

16. [23]

    In this case, I note that the funding provided by BC Securities was on printed terms that the Honeymoon Margin would apply commencing on settlement date: Ex D2.

17. [24]

    Statutory provisions provide a flexible approach as to the dates of computation. In relation to pre-judgment interest, Civil Procedure Act 2005 (NSW), s 100(1) provides that:

18. [25]

    If there are no agreed terms as to interest payable the Court will ordinarily make an order for payment of interest on money lent: see Falkner v Bourke (1990) 19 NSWLR 574 at 576A-B.

19. [26]

    The Court of Appeal has observed that the time at which the cause of action arises will often provide an appropriate date from which interest should run, as it is on that date that the successful party is taken to have had a legal entitlement to the judgment sum and is therefore kept out of their money in the relevant sense: Maestrale v Aspite (No 2) [2014] NSWCA 302 at [8].

20. [27]

    In the present case, the date of running of interest was not expressly addressed. However, it is clear that the interest rate was discussed by reference to the arrangements that Ran had with the ANZ. In particular I note that Ran stated that the rate of 4% was used as the funds she planned to loan to the defendants was the amount then currently deposited in her home loan offset account with ANZ, offsetting the interest she was then paying to ANZ at the rate of 3.95%: principal judgment at [294].

21. [28]

    The critical conversation giving rise to the arrangement was as follows (principal judgment at [295]):

22. [29]

    The funds were advanced by Ran on 31 August 2018 by causing a bank cheque to be issued from ANZ from the funds held in her ANZ account, which cheque Ran delivered to Amy Cheng of GJ Fong & Co, solicitors acting for the defendants on the purchase to enable completion of the purchase of the property that day: principal judgment at [306]-[307].

23. [30]

    I indicated in the principal judgment that I had the impression that the proper construction of the interest term is that interest was to be repayable at the particular rate identified until the loan was repaid: principal judgment at [562].

24. [31]

    As noted, the conversation did not expressly address the issue of whether interest would commence on the day of the advancement of funds. Nonetheless, given that Ran was being charged interest, to my mind it was implied that interest would be charged commencing on and from the date of advancement of the funds.

25. [32]

    If I am wrong about that and there is no agreement about when interest would be paid as distinct from the rate of interest, and accordingly no right to interest, then pursuant to s 100(1) Civil Procedure Act, I accept the submission of Mr Reynolds and permit interest, at the agreed rate, payable from and including the date of advancement of the funds.

26. [33]

    In those circumstances, I accept the submission of Mr Reynolds on behalf of Ran and his calculation of pre-judgment interest rate (which includes up to and including today) will be incorporated into the orders for judgment.

27. [34]

    Where interest is allowed up to and including the date of judgment, the charging order in relation to the post-judgment interest on the sum of $264,530.25 held by Jing in the National Australia Bank account in her name will carry interest accruing from and including the day after judgment, namely 23 July 2022, pursuant to s 101 of the Civil Procedure Act.

Costs

1. [35]

   Ran seeks an order that Jing pay Ran's costs of the proceedings as agreed or assessed, calculated on the ordinary basis.

2. [36]

   Mr Gao on behalf of Jian jian seeks an order that Jing pay Jian jian's costs of the proceedings as agreed or assessed, calculated on an ordinary basis.

3. [37]

   I addressed the principles regarding costs in In the matter of Black Tie Holdings Pty Ltd (No 2) [2022] NSWSC 856 (Black Tie Holdings Pty Ltd (No 2)).

4. [38]

   In Black Tie Holdings Pty Ltd (No 2) I stated at [44]–[49], [51]:

5. [39]

   Mr Reynolds submits that Ran has in a practical sense achieved a success in relation to the relevant event (being her claim) noting that the Court found in favour of Ran in relation to three key aspects of her claim, namely the principal sum advanced, the interest and a charge.

6. [40]

   He submits that the general rule that costs followed the event ought to apply.

7. [41]

   In relation to interpretation costs, Ms Reynold notes that the reasons of the Court at [84]-[173] address the issue of those costs in the first instance.

8. [42]

   He submits that no special costs order regarding the costs of interpretation are sought by Ran. Rather, he states that Ran bore all of the costs of the interpreter in the first instance in the proceedings and, having been successful in the event, relies upon the general order to recover those costs on the ordinary basis.

9. [43]

   Jing in her written submission does not expressly address the question of costs.

10. [44]

    Rather, she has made some submissions in relation to some findings I made in relation to the dispute in the proceedings in respect of a conversation said to have taken place on 29 August 2019.

11. [45]

    In particular Jing referred to my findings in the reasons for judgment at [533] and at [534].

12. [46]

    She submits that if the Court accepted her evidence, it can be proved that Ran's affidavit is false.

13. [47]

    My findings in relation to the disputed conversation in the principal judgment did not doubt Ran's evidence that a conversation had taken place, rather the doubt was as to the dating of that conversation.

14. [48]

    In this respect, I stated at [527]–[531]:

15. [49]

    The above findings do not give a reason to depart from the general costs order.

16. [50]

    In relation to the interpretation costs, Mr Reynolds’ submissions correctly identifies that my comments regarding the bearing of interpretation costs were principally directed to the bearing of those costs in the first instance, rather than the ultimate liability for such costs.

17. [51]

    In the circumstances of this case, I see no reason to depart from the general position that the interpretation costs also ought to follow the event such that Jing will be responsible to bear those costs and the costs of the proceedings in respect of Ran's claim on the ordinary basis.

18. [52]

    In the circumstances, I propose to make the costs order as sought by Mr Reynolds.

19. [53]

    In support of the claim by Mr Gao that Jing pay Jian jian's cost of the proceedings, Mr Gao’s submissions were as follows:

20. [54]

    There is no issue on Ran’s statement of claim in respect of costs as between Jian jian and Jing.

21. [55]

    After Jian jian consented to default judgment in favour of Ran, there was no obvious need for Jian jian to be specifically involved in the proceedings on Ran's statement of claim, to the extent that those proceedings continued against Jing.

22. [56]

    There is, in my view, no reason to make any order for costs as between Jian jian and Jing of the proceedings on Ran’s statement of claim and I decline to do so.

23. [57]

    Ran's involvement in the proceedings and in listings before me, both in respect of pre-trial directions and listings and hearing itself, were exclusively or at least principally directed to the issue of the cross-claim.

24. [58]

    That claim remains to be determined, as I note below. I reject Jian jian's claim for an order that Jing pay Jian jian's costs of the proceedings on Ran’s statement of claim.

The judgment and double recovery

1. [59]

   Jing in her email made a number of submissions regarding the cross-claim of Jian jian against her and also in relation to payment of Ran's money.

2. [60]

   In relation to payment of Ran's money, Jing’s submission is as follows:

3. [61]

   Jing’s submission that “If it is decided, the first defendant and I need to pay the plaintiff's money. I only bear half”, potentially raises a question regarding entry of judgment and recovery in respect of judgments.

4. [62]

   Equity will by injunction restrain a plaintiff receiving double satisfaction upon execution of a plurality of judgments which have been recovered by the plaintiff: see Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574 at 608; [1996] HCA 38 per Gummow J citing Morris v Robinson (1824) 3 B & C 196 at 205-206; 107 ER 706 at 710.

5. [63]

   The authorities in this regard have been recently considered by the Court of Appeal in James v Australia and New Zealand Banking Group Ltd (2018) 97 NSWLR 663; [2018] NSWCA 41.

6. [64]

   Judgment has already been given in favour of Ran against Jian jian as I mentioned in the principal judgment at [15]–[16].

7. [65]

   There will be as I note below judgment in favour of Ran against Jing for payment of the money.

8. [66]

   The judgment will be for the full amount claimed.

9. [67]

   The principles against double recovery or double satisfaction of judgments will, if applied, prevent Ran from recovering more than is properly due to her in respect of the loan monies.

10. [68]

    What, if any, rights of contribution that Jian jian and Jing have against one another in respect of the judgments obtained by Ran against them remain to be seen and might well be impacted upon, in respect of the proceedings on the cross-claim.

The cross claim

1. [69]

   Jing for her part made a number of submissions concerning the cross-claim.

2. [70]

   Her submissions were as follows:

3. [71]

   The hearing was part heard on 22 June 2022. On 29 June 2022 at a directions listing prior to the recommencement of the hearing on 30 June 2022, I made the following directions:

4. [72]

   Those directions were made in a context in which Jian jian and Jing had prepared amended documents. The clear expectation was that the documents would be filed prior to the listing before the Registrar on 7 July 2022.

5. [73]

   Jian jian has not yet filed any such amended form of cross-claim. Jing has complained, with some justification, that Jian jian has delayed in respect of the prosecution of the cross-claim.

6. [74]

   Ultimately, the Registrar on 11 July 2022 made specific orders for the filing and serving by Jian jian of an (amended) cross-claim by 18 July 2022 and for Jing to file and serve any defence to such claim by 15 August 2022.

7. [75]

   I set out at length in the reasons for judgment procedural issues arising in respect of Jian jian's cross-claim. In particular, see the principal judgment at [23]–[51].

8. [76]

   The cross-claim is yet to be determined. A significant part of the reason for that is the delay in Jian jian in formulating an amended form of cross-claim.

9. [77]

   However, as I noted in the principal judgment Parker J on 3 June 2022 made an order that the cross-claim by Jian jian against Jing be heard after the hearing of Ran’s claim against Jing.

10. [78]

    That was an order for separate determination of the proceedings on the cross-claim: r 28.2 Uniform Civil Procedure Rules 2005 (NSW).

11. [79]

    In those circumstances, I do not embark upon or make any specific finding in relation to the matters raised by Jing against Jian jian regarding divorce and monetary issues as between them as submitted by Jing.

12. [80]

    Further, as I have noted above, there is no issue in respect of Ran’s statement of claim of costs as between Jian jian and Jing. I expressly do not make any finding in respect of costs or other rights as between Jian jian and Jing in respect of Ran’s statement of claim. The rights as between one another in the claims rising on the cross-claim remain to be determined.

Orders

1. [81]

   The orders of the Court will be substantially in accordance with the short minutes of order as proposed by Mr Reynolds which are as follows:

   1. (1)

      Judgment for the Plaintiff against the Second Defendant in the sum of $264,530.25, being:

   2. (2)

      Declare that:

   3. (3)

      Order that the Second Defendant pay the Plaintiff’s costs as agreed or assessed, together with interest on costs, calculated on the ordinary basis.