Kellas-Sharpe & Ors v PSAL Limited

[2012] QCA 371

Queensland Court of Appeal

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For Australian Law.

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Interrogate

Catchwords

1. Contract
2. › Construction and interpretation of contracts
3. › Penalties and liquidated damages
4. › Interest rate provisions in loan agreements
5. › Whether concessional rate of interest for prompt payment attracts penalty doctrine
6. › Whether intermediate appellate court should depart from well-established rule
1. Contract
2. › Construction and interpretation of contracts
3. › Penalties and liquidated damages
4. › Distinction between increased rate for default and concessional rate for prompt payment
5. › Whether distinction preferring form over substance should be abolished
1. Practice and Procedure
2. › Precedent
3. › Intermediate appellate courts
4. › Whether intermediate appellate court may depart from decisions of other intermediate appellate courts
5. › Whether rule plainly wrong

Quick Take

Dual interest rate provisions in loan agreements should be structured as a higher standard rate with a concessional reduction for prompt payment (rather than a lower rate with an increase for default) to avoid the penalty doctrine, which remains binding despite judicial criticism.