Compensation – where Appellants awarded compensation
for reduction in value of their land as a result of planning scheme
amendment – Interest – Where Respondent submits that
the Court's practice of applying the default judgment rate
should not be followed, and that commercial rates should apply
– Delay – Where appeal lodged against refusal of claim
for compensation and no steps taken for four years – where
leave to proceed given only after Court initiated activation of
file – whether in all the circumstances the delay was
Facts: This was an application for interest on
a sum of $350,000 which the Court had ordered Council to pay the
Appellants for injurious affection pursuant to s. 5.4.2 of the
Integrated Planning Act 1997 (IPA) as
being the reduction in value of the Appellants' land at 92
Memorial Drive, Eumundi resulting from amendments to the
Respondent's planning scheme which came into effect on 7 May
The Appellants had originally appealed against Council's
refusal of their development application for Sunday markets. That
appeal was dismissed on 25 November 2005.
A claim for compensation in the amount of $1,635,000 was then
made to Council on 24 May 2006. That claim was refused, and the
appeal against that refusal was filed on 8 September 2006.
No formal step was taken in the compensation appeal until it was
brought on for review by the Court in 2010. An order was
subsequently made granting leave to the Appellants to proceed,
notwithstanding the failure to take any step for a period in excess
of two years.
The Court's Judgment in relation to the amount of
compensation payable was made on 16 December 2011.
It was common ground that the Court had a broad discretion to
award interest on unpaid monies, and that s. 47(1) of the
Supreme Court Act 1995 applied.
The Appellants conceded at hearing that interest was to be
calculated from the date the Court dismissed the original appeal
against Council's refusal of their development application (25
However, it was argued by Council that the Appellants had
"unreasonably delayed" the compensation appeal such that
the interest component should be calculated for only 2.5 years of
the six years between the date of the Court's dismissal of the
original appeal and the Court's Judgment in the compensation
appeal on 16 December 2011. The Appellants filed an affidavit
setting out reasons for the delay, which was unchallenged by
In relation to the rate of interest to be applied, the
Appellants submitted that the Court should follow the practice
adopted by previous Courts in applying the rate applicable to
default judgments when judgment is given. This would mean applying
interest rates of 9 per cent up to 30 June 2007 and 10 per cent
Council submitted that the Court should allow interest at 5.5
per cent being the average rate since 2006 by reference to the ten
year Government Bond Rate published by the Reserve Bank of
Australia, on the basis that the Appellants were entitled to
interest as part of "reasonable compensation".
Decision: The Court held that:
Mere delay was not enough to lead to a reduction in the time
over which interest was to be paid; it was only if the
circumstances permit of the description "unreasonable
delay" that a Court might (not must) reduce the period of
A careful analysis of the circumstance that pertained during
the four year period characterised as an unreasonable delay by the
Council was persuasive that the delay in all the circumstances was
not unreasonable. It followed that the Appellants were entitled to
interest for the whole period from 25 November 2005 to Judgment on
16 December 2011.
No case could be found, or had been referred to by the parties,
in which the rate of interest to be applied seemed to be in
dispute. It seemed to have been accepted that the default judgment
interest rate applied without any analysis as to why in a
particular case that should be so.
The default interest rates throughout the relevant period were
well above the commercial rate. Taking into account that generally
bank term deposit rates were higher than Bond yields, and inferring
that the Appellants would have re-invested the monies for another
three years prior to the significant drop in term deposit rates in
late 2008 consequent upon the Global Financial Crisis, a rate of
7.5 per cent per annum to be applied throughout the relevant period
was just and fair.
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