In a long-wnded way, I tentatively suggest that, so long as the applicant has the sense to invoke s. 108 of the Fair Trading Act, 1999, then penalty interest is available under the Supreme Court Act, 1986, just like in the Supreme Court, so long as the dispute is a consumer-trader dispute. That is, a dispute between a purchaser or potential purchaser and a supplier or potential supplier of goods and services, broadly defined. There are some causes of action which come with specific interest provisions too, like the one attached to costs disputes under the Legal Profession Act, 2004.
I was giving an advice about whether to bring a simple but high value ($200,000) professional negligence claim in VCAT or a court and had to look up whether post-proceedings interest was available. By post-proceedings interest, I mean the kind of interest which begins to accrue at the penalty interest rate —11% to 12% in recent times — from the date of demand in a claim for a debt, and from the date of the institution of the proceedings in a claim for damages. My hunch was that VCAT wasn’t empowered to award such interest. I didn’t recall seeing anything about interest in the VCAT Act, 1998 (and that is because there isn’t anything). And though I knew that the Supreme Court Act, 1986 applies to courts other than the Supreme Court, I was not confident that it applied to VCAT. That is the statute which is usually referred to when people pop ‘interest pursuant to statute’ into their prayer for relief (whether they understand that or not). But the answer does not lie in the VCAT Act, 1998. It lies in the enabling enactments which give VCAT its jurisdiction. At least 2 of VCAT’s jurisdictions of interest to this blog specifically empower VCAT to award interest.
First, s. 108(2)(b)(ii) of the Fair Trading Act, 1999 says VCAT may ‘order the payment of a sum of money – (ii) by way of damages (including exemplary damages and damages in the nature of interest )’ in consumer-trader disputes. But does that mean Hungerfords damages (i.e. damages for the loss of the use of money) or the common garden variety interest which is a feature of every compensation claim? According to Deputy President Steel, this provision read with the Supreme Court Act, 1986 allows VCAT to award common garden variety interest at the penalty interest rate. And that is what he did in CIMA Office Services (Vic) Pty Ltd v Hession  VCAT 585 at  to , a rather ugly little stoush between a Melbourne solicitor and his stationer in which the solicitor’s abject failure against the unrepresented stationer is not a very good advertisement for his services. There is no correlative provision which applies to causes of action under the Fair Trading Act, 1998 such as for misleading or deceptive conduct, but where such a claim is brought by a purchaser or prospective purchaser of goods or services against a supplier or potential supplier of goods and services, s. 108 may well be available, if invoked by the claimant.
Secondly, in that kind of a civil complaint under the Legal Profession Act, 2004 called a ‘costs dispute’ a successful lawyer is entitled to an order for the client to pay the disputed fees, and for interest at the penalty interest rate or a lesser rate: s. 4.3.17(1)(b) Legal Profession Act, 2004. By suing successfully for fees, therefore, a solicitor might actually get more interest than she was entitled to on the bill under the Act, since bills carry interest now only at the Reserve Bank cash target rate + 2%. There is no correlative provision in relation to that kind of civil complaint known as a pecuniary loss dispute, i.e. a professional negligence claim for up to $25,000. But again, a canny claimant who had invoked the Legal Profession Act, 2004 might invoke s. 108 as an overlay on the Legal Profession Act, 2004 cause of action and seek interest. I do not know whether such an attempt would succeed, but this decision is probably relevant.
- Section 108 Fair Trading Act, 1999 and chains of suppliers
- Will clients be entitled to seek itemised bills within 7 days under the Australian Consumer Law, 2010?
- Unconscionability in the Fair Trading Act 1999 explored
- The new r. 3.4.3, Legal Profession Regulations, 2005 (Vic.)
- From when can solicitors claim interest on an unpaid bill?