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Pacific International Trust Company Ltd v Kazacos [2001] VUCA 9; Civil Appeal Case 12 of 2001 (24 October 2001)

IN THE COURT OF APPEAL OF
THE REPUBLIC OF VANUATU
(Appellate Jurisdiction)

CIVIL APPEAL CASE No.12 of 2001

BETWEEN:

PACIFIC INTERNATIONAL TRUST COMPANY LIMITED
Appellant

AND:

Dr. M. KAZACOS
Respondent

Coram: Justice Bruce Robertson
Justice John von Doussa
Justice Daniel Fatiaki
Justice Roger Coventry

Counsel: Mr. R. A. Parsons for the Appellant
Mr. G. Blake for the Respondent

Hearing date: 23 & 24 October 2001
Judgment date: 24 October 2001

JUDGMENT

There was listed before this session of the Court of Appeal an appeal and a cross-appeal against Orders made by the Chief Justice on 7 May 2001.

The Court took the opportunity to discuss with counsel some fundamental problems which existed for each of them in this matter. We were concerned that in the determination of both the appeal and the cross-appeal no resolution was going to be achieved which would finally conclude all outstanding issues which existed between the parties. We stood the matter down for sensible commercial discussions to take place.

The Court were delighted eventually to learn that common sense and commercial utility had at last terminated all outstanding problems and that an accommodation had been reached which settled all outstanding litigation between these parties.

Once Orders were made in the Supreme Court by consent the appeal and cross-appeal were each withdrawn, all matters were brought to a conclusion with each party bearing their own costs.

At the final moment, an issue arose with the regard to a sum which has been held in the Supreme Court Trust Fund since October 1998. The Order of the Court made at that time was:

“1. That the defendant, PITCO shall pay into to the Supreme Court Trust Fund the amount of AUD$105,000 within 7 days as from today 7^th October 1998 failing which the status quo regime be automatically cancelled/vacated and the amount of AUD$105,000 be paid immediately to the plaintiff forthwith.”

AUD$105,000.00 was paid within the stipulated time to the Supreme Court pursuant to the Order. It translated into a sum of 8,319,150 VT when it was banked.

No one appears to have turned their minds as to how this money should be treated or dealt with during what had now been a period of three years.

Clearly each party is concerned to the get the best of the circumstances which they now have discovered they have created. But the Court’s concern is simply with the proper legal position.

The Order required a payment of AUD$105,000.00.

It is our view that the amount which the parties are entitled to receive back from the Court was AUD$105,000.00. The vagaries of the international money market means that the Australian dollar sum could today be acquired for approximately 7.917.000 VT.

As the Court held the money as trustee, it can not as matter of law or principle receive any benefit. Therefore the parties to this litigation will be entitled to receive back the initial Vatu amount. It will mean that a substantial capital gain has been acquired on the initial AUD$105,000.00.

It should be noted however that if the position had been otherwise and the fluctuation had been in the opposite direction then the fact that the parties took no steps to protect how the money was being invested or the applicable terms would have meant that there could have been an equally substantial loss.

The legal profession generally needs to be vigilant to protect against these problems. They must ensure that when monies are paid into a trust account, they are properly dealt with and all contingencies are provided for. Counsel cannot assume that the Court will be involved in protecting the position unless the parties initiate necessary action.

The second issue is the question of interest. As a matter of law and principle a trustee is not entitled to obtain a benefit. If any interest has accrued on this money in the three years that has been in the Supreme Court Trust Fund then the parties to this litigation are entitled to receive it.

We direct the Registrar to have the Bank provide certification as to the interest rates which have applied from time to time on the relevant account. An amount equivalent to the net sum received is to be paid to the parties. The parties are not entitled to some theoretical interest rate which was not earned but to the interest which actually accrued.

Further to the Orders which were made by the Chief Justice at the request of the parties, we accordingly now direct that forthwith 8,319,150 VT is to be paid to the respondent Dr. Kazacos and as soon as it can conveniently be arranged a further sum is to be paid to Dr. Kazacos which represents to the net interest which has been earned.

DATED at PORT-VILA, this 24^th DAY of OCTOBER, 2001

BY THE COURT

B. ROBERTSON J
J. von DOUSSA J
D. FATIAKI J
R. COVENTRY J