Taking the Penalty out of the Penalty Interest Rates Act ||| MTECC News edition 19.7
Taking the Penalty out of the Penalty Interest Rates Act
In a decision on the interest and costs payable in relation to the Lacrosse ACP-cladding case (Owners Corporation No.1 of PS613436T v Lu Simon Builders Pty Ltd (No. 2) (Building and Property)  VCAT 468), Judge Woodward, sitting as Vice President of the VCAT, has given reasons in relation to the appropriate rate for ‘damages in the nature of interest’ in domestic building matters.
Section 53(3) of the Domestic Building Contracts Act 1993 (Vic) permits the Tribunal to base the rate of interest for an award of damages in the nature of interest under the Penalty Interest Rates Act 1983 (Vic) (PIR Act) ‘or on any lesser rate it thinks appropriate’, provided any such rate ordered is ‘fair.’
His Honour observed that section 53(3) required considering, first, whether an entitlement to interest was fair, and second, the appropriate rate to be applied. In relation to both enquiries, the best evidence would be of the actual loss suffered by a successful party, such as their actual interest costs, in the absence of which, the Tribunal would infer an appropriate rate. Once an entitlement to interest was established, addressing the second enquiry, the Tribunal will assess the rate of interest under the PIR Act, unless the circumstances of the case dictated a lesser rate was appropriate. Considerations relevant to the appropriate rate include: the relative strengths of the parties’ claims, their success relative to amounts claimed, and whether any party was caused delay or acted unfairly.
In the present case, there was no delay or unfair conduct and the only evidence submitted of an appropriate rate was that of commercial interest rates submitted by LU Simon. The Tribunal observed that the rates fixed by the PIR Act – between 9.5% and 10% – would include a significant penal component over the cost of commercial interest rates. Accordingly, the Tribunal selected the mid-point between commercial rates, being 2% per annum, as being the appropriate rate of interest.
Congratulations to 9 MTECC members recognised in Doyles Guide 2019
The following MTECC members have been recognised in Doyles Guide 2019:
In the ‘Leading’ category for senior counsel in Victoria:
- Hugh Foxcroft QC (and ‘Recommended’ Australia-wide)
- Richard Manly QC
- Francis Tiernan QC
- Michael Whitten QC (and ‘Recommended’ Australia-wide)
In the ‘Recommended’ category for senior counsel in Victoria:
- David Levin QC
- Tim Margetts QC
- Martin Scott QC
In the ‘Leading’ category for junior counsel in Victoria:
- Andrew Downie
In the ‘Recommended’ category for junior counsel in Victoria:
- Roman Rozenberg
Congratulations to the above MTECC members for the recognition.
MTECC member book
MTECC member Laina Chan has published a book with John Carter titled ‘Contract and the Australian Consumer Law’. Details of the book are here.
MTECC member article
MTECC member Laina Chan has published an article in BCL, cited as Insuring Risk in Construction Projects (2018) 34 BCL 378. A summary of the article follows:
Construction projects are inherently risky in terms of cost, time and quality. Part of the risk is managed by insurance. The article identifies the types of insurance that are typically available on construction projects and focuses upon Contractors All Risks Insurance and Professional Indemnity Insurance only. Both are forms of liability policies. Some of the key issues that can arise in considering the scope of coverage and indemnity under each type of policy are highlighted and discussed.