JCP Holdings Pty Ltd v Ulrich Pty Ltd

1. [1]

   The present proceedings concern a loan from the plaintiff to the first defendant.

2. [2]

   The defendants do not dispute that on or about 30 September 2024, the plaintiff paid to the first defendant an amount of money just shy of $350,000 and that those monies have not been repaid. It is also not in dispute that a loan contract constituted by several documents - was entered into by the parties on or about 27 September 2024.

3. [3]

   The plaintiff sues to recover those monies from the first defendant as borrower and the second defendant as guarantor, together with default interest which the plaintiff contends is owing pursuant to the loan contract.

4. [4]

   Notwithstanding that the monies have not been repaid, the defendants’ primary case is that the proceedings should be dismissed.

5. [5]

   The proceedings were heard on 15 and 16 July 2025. Mr C Bolger of counsel appeared for the plaintiff and Mr M Fernandes of counsel for the defendants.

6. [6]

   Each party read a number of affidavits, and a number of documents were tendered. The paragraphs read, and the number of documents tendered, was substantially less than what had previously been included in the court book by reason of the narrowing of issues at the commencement of the hearing. No witness was required for cross examination. In the end, there was very little factual dispute between the parties.

7. [7]

   For the reasons set out below, I have determined that the loan contract is not void for uncertainty but the default interest is unenforceable as a penalty. The parties should seek to agree orders to give effect to these reasons with any remaining issues to be determined on the papers.

The issues

1. [8]

   Whilst a plethora of issues were raised by the defendants in their defence, and the second defendant’s cross claim, the issues substantially narrowed at the commencement of the hearing. A number of the pleaded issues were abandoned by counsel for the defendants. The defendants also added at the commencement of the hearing what became the primary basis for contending that the proceedings should be dismissed - namely that the entire loan contract was void for uncertainty.

2. [9]

   The plaintiff also sought at the commencement of the hearing to expand its case so as to claim for administrative costs purportedly incurred by reason of the defendants’ default under the loan contract. This was based on an affidavit filed by the plaintiff dated 7 July 2025, setting out the alleged administrative work carried out. I refused leave to the plaintiff to amend the relief in the manner sought. I set out later in these reasons, my reasons for so refusing.

3. [10]

   In the end, the parties agreed that five issues arose:

4. [11]

   By the conclusion of the closing addresses, the issues had narrowed further. The last set of issues set out above in (e), fell away. The defendants accepted that the appropriate time for considering whether the second caveat should be ordered to be removed was when there was an actual refinancing proposal capable of acceptance. That position had not yet been reached. Further, the plaintiff accepted that in circumstances where it had not joined to the proceedings the admitted first mortgagee, the claim for judicial sale of the Darling Point property was no longer pressed.

Factual overview

1. [12]

   The following factual summary suffices for determining the issues in dispute.

2. [13]

   The second defendant is a solicitor and the principal of the first defendant. He acted as solicitor for himself and the first defendant in the proceedings.

3. [14]

   As at late September 2024, the second defendant was in the process of purchasing a property located at X Eastbourne Road, Darling Point (Darling Point property). He had entered into a contract to purchase that property in February 2022 for $14 million and paid a $2.1 million deposit in three instalments of $700,000 each, in 2022, 2023 and 2024. He occupied the property from June 2022 onwards, and paid the seller rent during the period of occupancy.

4. [15]

   The original completion date for the purchase of the Darling Point property was 1 August 2024. On 15 August 2024, the vendor issued a notice to complete. By deed, the vendor and the second defendant resolved the issues in dispute and subsequently agreed to extend the completion date to 27 September 2024, with time to be of the essence.

5. [16]

   The second defendant arranged for finance to enable him to complete the purchase of the Darling Point property. This was by way of two loans which were for a term of three months, scheduled to mature on 31 December 2024. The second defendant contends that in preparation for settlement of the purchase of the Darling Point property, he was advised by the primary lender that the estimated funds available at settlement would be approximately $1 million less than the amount required to complete the purchase and payable to the vendor. The second defendant sought assistance from his finance broker, Mr Anthony Del Baglivo (Mr Del Baglivo), to obtain funds to meet the settlement shortfall. With Mr Del Baglivo’s assistance and through his own resources, the second defendant was able to obtain approximately $650,000, leaving a shortfall of approximately $350,000.

6. [17]

   It was in these circumstances that the loan between the first defendant as borrower, and the plaintiff as lender was entered into. It is perhaps of some relevance to observe that the funding was obtained on short notice, and in circumstances where it would appear that no other sources of funding were available to the defendants.

7. [18]

   I set out below the relevant documents constituting the loan contract, between the plaintiff and defendants including the relevant terms relied upon. It is not in dispute that the loan documents were executed by the parties on 27 September 2024.

8. [19]

   It should be observed at this juncture that the original draft terms of the loan documents were drafted by the second defendant and provided to the plaintiff. At this time the plaintiff does not appear to have had separate legal representation but separate representation was arranged shortly thereafter. The plaintiff’s solicitor made handwritten amendments to the documentation that had been provided by the second defendant and the relevant loan documents were executed by the plaintiff and the plaintiff’s solicitor and retransmitted to the second defendant. The loan documents, with the handwritten amendments made by the plaintiff through its solicitor, were then executed on behalf of the defendants.

9. [20]

   On 30 September 2024, the plaintiff transmitted to the first defendant an amount of $347,300, made up of the sum of $350,000 less certain fees set out in the loan contract.

10. [21]

    On 4 October 2024, the plaintiff lodged a caveat on the Darling Point property.

11. [22]

    The defendants did not repay the monies as advanced within the intended repayment period of two months, that is by 30 November 2024. Apart from the sum of $15,000, which I refer to below, no repayments have been made by the defendants.

12. [23]

    On 4 December 2024, the plaintiff served a notice of default on the defendants.

13. [24]

    On 4 December 2024, after the service of the default notice, the plaintiff received a payment of $15,000 from the defendants as a part payment of the monies due.

14. [25]

    The defendants then sought further time to pay.

15. [26]

    It is not in dispute that on or about 23 December 2024, a further agreement was entered into whereby the defendants agreed to pay a further $120,000 to the plaintiff to remove the caveat on the Darling Point property on refinance of the defendants’ loan and in consideration of the plaintiff not taking any further action or steps before 20 January 2025 to enforce its rights or recover the monies due and payable under the loan agreement.

16. [27]

    No further monies were repaid by the defendants.

17. [28]

    On 21 February 2025, the plaintiff received a lapsing notice in respect of the caveat.

18. [29]

    On 11 March 2025, the proceedings were commenced by way of summons, seeking relief that included the extension of the caveat on the Darling Point property.

19. [30]

    On 13 March 2025, orders were made by Richmond J that included granting leave to the plaintiff to lodge a further caveat on the Darling Point property and for the proceedings to continue by way of pleadings.

The Loan Contract

1. [31]

   The loan contract (Loan Contract) is constituted by the following documents:

2. [32]

   The operative provisions of each of the documents may be summarised as follows.

3. [33]

   Dealing first with the Loan Offer:

4. [34]

   Turning now to the Loan terms, the following clauses assumed significance in the arguments advanced by the parties:

5. [35]

   The document entitled “Loan Agreement” relevantly provided as follows:

6. [36]

   The Commercial Details assumed considerable importance in the arguments advanced by the parties. I extract immediately below the entirety of the “Commercial Details”:

7. [37]

   A number of documents were also annexed to the Loan Agreement and completed by the parties at the time of execution. Relevantly, a “General Authority” was completed by the defendants to the following effect:

8. [38]

   Independent Solicitor’s certificates were also prepared to the effect that the transaction documents were relevantly explained to the second defendant both in his personal capacity as a guarantor and in his capacity as director of the first defendant.

The Void for Uncertainty Argument

1. [39]

   As set out above, the contention that the entire Loan Contract was void for uncertainty was added by way of an amendment made on the first day of the hearing. The amendment had first been foreshadowed in the written submissions of the defendants filed the Friday before the hearing.

2. [40]

   The substantive amendment was the insertion of a new paragraph 12A in the cross claim. The Particulars to paragraph 12A neatly encapsulate the argument advanced. The new paragraph and the Particulars are in the following terms:

3. [41]

   The relevant principles were not in dispute between the parties.

4. [42]

   A provision of a document is uncertain when, having regard to the applicable principles of construction, the language is incapable of any precise and definite meaning. There are two main reasons a provision will be uncertain. The first (not relevant here) is where the language used is devoid of any meaning. The second, relevant in the present case, is where a provision is open to multiple meanings and it is impossible for the court, applying the relevant principles of construction, to select which meaning is the applicable one: see Herzfeld and Prince, Interpretation (3rd ed, 2024, Thomson Reuters) (Interpretation) at [19.130].

5. [43]

   Courts do not lightly find uncertainty and strive to avoid the conclusion that a provision is uncertain. Ambiguity is not uncertainty, and apparent uncertainty will commonly be resolved by the process of construction, including the reconciliation of inconsistencies and the application of the principles concerning the correction of mistakes: Interpretation at [19.140].

6. [44]

   In this latter respect, reliance was placed by the defendants on what was recently said by Kirk JA (with whom Payne JA and Price AJA relevantly agreed) in Zhong v Guan [2024] NSWCA 300 at [23] to [38] as follows:

7. [45]

   As Kirk JA makes clear, the issue is one of construction.

8. [46]

   It is also clear where, as here, the agreement is constituted by several documents, each of the provisions of the relevant documents must be read together and construed with the others, so as to render, as far as is possible, the provisions harmonious with each other: Toohey v Gunther (1928) 41 CLR 181; [1928] HCA 19 at 196 per Isaacs J; Belrose RB1 Pty Ltd v Oldfield [2025] NSWSC 603 at [137]-[138] per McGrath J.

9. [47]

   Where, however, a harmonious construction cannot be rendered because different parts are truly inconsistent, effect must be given to that part which is calculated to carry into effect the real intention of the parties as gathered from the instrument as a whole, and that part which would defeat it must be rejected: see, for example, Taylor v Dexta Corporation Ltd (2006) 14 ANZ Insurance Cases 61-712; [2006] NSWCA 310 (Taylor v Dexta) at [1] per Beazley JA, at [66] per Santow JA, and at [89] per Ipp JA.

10. [48]

    There are various presumptions that are often employed to resolve inconsistencies – see Interpretation at [22.110]ff. At the end of the day the quest is to ascertain the true intention of the parties.

11. [49]

    If uncertainty exists, the issue is whether the uncertain provision can be severed. If it can, it is simply struck out and ignored. If it cannot be severed, the entire agreement will be void for uncertainty.

12. [50]

    Various tests have been formulated for when a provision may be severed. The present case is not the occasion for a detailed discussion of the tests. They are helpfully summarised in Interpretation at [19.160].

13. [51]

    The defendants emphasised the test is whether the invalid promise is so material and important for a provision in the whole bargain that there should be inferred an intention not to make a contract without it.

14. [52]

    For the reasons set out below, I do not accept that the Loan Contract is uncertain in any of the respects contended by the defendants.

15. [53]

    The alleged uncertainties are extracted above in 12A of the amended pleading.

16. [54]

    The first alleged uncertainty concerns whether the repayment date is two months or three months after the advance. In my view, the repayment date is two months and there is no relevant uncertainty.

17. [55]

    The Loan Offer clearly states that the term of the loan is two months. The “Repayments” section of the Loan Offer also refers to the loan being a two month loan. Clause 6 of the Loan terms refers back to the term of the loan being as specified in the table – which is a reference to the Loan Offer – being two months.

18. [56]

    Clause 3.1 of the Loan Agreement requires the Borrower to repay the balance outstanding of the debt to the Lender on the Repayment Date, which is defined in schedule 1 by reference to the Reference Section (being the Commercial Details section). The Commercial Details section defines Repayment Date as, in effect, two months after the Interest Commencement Date which is relevantly the date of the advance of monies. A statement to similar effect is set out on page 1 of the Commercial Details next to “Interest Rate and repayments” which clearly states that repayment is due on the date that is two months after the date on which the monies were advanced. The “Repayment method” in the Commercial Details also clearly states that the “Borrower must repay the outstanding Debt on the Repayment Date”.

19. [57]

    The defendants’ uncertainty argument in this regard is premised on a section of the Commercial Details dealing with “Interest Rate and repayments”. The section relied on states:

20. [58]

    This section deals in my view, quite clearly, with when it is that default interest will be charged, rather than arguably creating a different date for repayment of the loan. This emerges most clearly, in my view, from the words used in the section. The conclusion is reinforced when the words used are construed in context, most importantly, appearing as they do immediately after a statement that deals with the repayment date of two months, which is the same as the definition of Repayment Date on the next page of the Commercial Details. The effect of this section is that if the loan is not paid by the two month repayment date, then there is a grace period of one month, with default interest only commencing if repayment in full has not been made by three months from the advance date. During the one month period of grace, no additional interest is payable.

21. [59]

    The second alleged uncertainty concerns whether the second month of term interest (of $50,000) is due on advance, or due on a monthly basis - that is at the end of the first month after advance?

22. [60]

    In my view the Loan Contract, properly construed in this regard, requires only the first month of interest to be payable on advance, with the second month being due at the end of the first month after advance.

23. [61]

    The starting point in this regard is the handwritten amendments to both the Loan Offer and the Commercial Details section. The handwritten amendments to both clearly state that interest is $50,000 monthly in advance.

24. [62]

    The Interest Payment Date in the Commercial Details section refers to the first month’s interest being payable on the Advance Date and thereafter interest is payable on the last day of each month for the term of the loan. The Repayment Method is to a similar effect, with interest for the first month of the term being payable on the Advance Date, with interest monthly thereafter paid in advance on the Interest Payment Date.

25. [63]

    There is nothing in these provisions that require the second month’s interest to be paid on advance.

26. [64]

    The defendants’ uncertainty argument in this respect relies on what is said in the Loan Offer next to the heading “Method of calculation of interest payments” – being “Calculated and payable in advance each month for the term of the loan with the exception of interest for the two (2) months of the loan in the sum of $50,000 being deducted and paid in advance on draw down”. It is of some significance, in my view, that in this section the amount of interest for the two months of the loan is said to be $50,000. This reflected what was set out in the Loan Offer prior to it being amended in handwriting by the plaintiff’s solicitor, signed by the plaintiff and the plaintiff’s solicitor, and then executed by the defendants. The effect of the amendments in handwriting was to replace what was previously said in the Loan Offer, of $50,000 in interest for the entire two months of the loan, with a provision requiring $50,000 per month to be paid in interest in advance. The inconsistency between the section relied upon by the defendants, and the handwritten amendments, is in my view clearly resolved in favour of the handwritten amendments.

27. [65]

    These handwritten amendments, together with the other provisions that I have extracted above, clearly evince, in my view, an objective intention that interest for the first month is payable on advance, with interest for the second month due at the end of the first month after advance. That is the real intention of the parties gathered from the instruments as a whole: Taylor v Dexta.

28. [66]

    The third uncertainty is related to the second alleged uncertainty - namely whether the interest for the two month term was $100,000 or $50,000? This uncertainty allegedly arises by the reference to $50,000 in the “Method of calculation of interest payments”. This is inconsistent with the handwritten amendments. The inconsistency is, in my view, clearly resolved in favour of the handwritten amendments. Most importantly, the Commercial Details states in handwriting against “Minimum Interest Amount”, “$100,000 (Being 2 mths interest)”. The real objective intention, in my view, could not be clearer.

29. [67]

    Insofar as reliance is placed by the defendants concerning the second and third alleged uncertainties on the fact that only $350,000 was apparently paid on drawdown with the Loan Amount being $450,000, this does not assist the defendants. The “General Authority” dated 27 September 2024, executed by the second defendant on behalf of the first defendant and on his own behalf, clearly directs that surplus (which would likely be the $50,000 interest for month two), to be paid into the trust account of the defendants’ lawyers. In any event, care must be taken not to conflate what in fact occurred in giving effect to the Loan Contract, with the terms of the Loan Contract. The terms are clear

30. [68]

    I accordingly reject the defendants’ contention that the terms of the Loan Contract are uncertain in the respects alleged.

Is the default interest clause a penalty?

1. [69]

   I have set out the default interest clause above. As I have construed the Loan Contract, it applies on and from the third month and requires default interest to be paid at the rate of 8% per month on the balance of the loan outstanding, capitalised monthly.

2. [70]

   The defendants contend that the clause is void as a penalty. The particular focus of the defendants’ contention was on the fact that the default interest was capitalised. The plaintiff contended that the default interest clause is not a penalty and should be given effect to. The default interest claimed from 30 December 2024 to 30 July 2025 was $389,938.48.

3. [71]

   It is convenient to begin by setting out the relevant principles. Not unsurprisingly, there was little dispute between the parties as to the relevant principles. Rather, the area debate was as to the application of those principles to the facts in the present case, with each of the parties relying upon different decisions to support their position.

4. [72]

   The relevant principles were usefully summarised by McDougall J (with whom Gleeson JA relevantly agreed) in Arab Bank Australia Ltd v Sayde Developments Pty Ltd (2016) 93 NSWLR 231; [2016] NSWCA 328 (Arab Bank) at [69]-[76] in the following terms:

5. [73]

   The defendants placed principal reliance on the decision of Robb J in Bellas v Powers [2023] NSWSC 1198 (Bellas), which in turn relied heavily on the decision of Meagher JA (sitting at first instance) in Aquamore Credit Equity Pty Ltd v Hung [2021] NSWSC 1681 (upheld on appeal – see Hung v Aquamore Credit Equity Pty Ltd [2022] NSWCA 272).

6. [74]

   Bellas concerned a Facility Agreement which contained a Standard Rate of interest of 9.75% per 30 days, and a Discounted Rate of 1.75% per 30 days: see Bellas at [38]. The Agreement provided that interest was payable at the Standard Rate provided that if no Event of Default has occurred or remains subsisting, the Financier shall accept interest at the Discounted Rate. The Agreement also provided for any unpaid interest to be capitalised monthly and for default interest to be paid at the Standard Rate, capitalised monthly.

7. [75]

   At [56], Robb J observed that the Discounted Rate of 1.75% per 30 days annualised to 21.3% per annum. At [57], Robb J observed that the Standard Rate of 9.75% per 30 days annualised to 118.6% per annum, but when the effect of monthly capitalisation is recognised, the effective rate for the first year would be approximately 200% per annum, greater than 600% during the second year, and so on exponentially.

8. [76]

   Having set out the relevant principles from McDougall J’s judgment in Arab Bank, Robb J stated at [64] to [67]:

9. [77]

   At [71] and following, Robb J considered whether the imposition of the Standard Rate is a penalty in that case. Appreciating that the circumstances of each case must be carefully considered (see the remarks of Lord Dunedin in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79 at 86-87), the following paragraphs from Robb J’s judgment are of some relevance in the present case:

10. [78]

    Bearing in mind the argument advanced by the plaintiff, it is useful to set out what Robb J said at [94] as follows:

11. [79]

    The plaintiff placed considerable reliance on the decision of Henry J in Commercial N Pty Ltd v Huang [2024] NSWSC 23 (Commercial N). That case concerned a Lower Rate of Interest of 0.35% per week and a Higher Rate of Interest of 1.36% per week: see Commercial N at [2]. Interest was payable at the Lower Rate but if not paid on the date for payment interest was payable at the Higher Rate, compounded monthly (clause 5.12). The defendant borrower held that clause 5.12 operated as a penalty and was thus void. Separately, the defendant borrower contended that the plaintiff lender engaged in unconscionable conduct in relation to the Higher Interest Rate being compounded or capitalised monthly.

12. [80]

    At [225], Henry J concluded that the defendants had failed to make good their claim that the plaintiff’s claim for interest based on the Higher Interest Rate is a penalty and unenforceable. At [221], her Honour determined that the contractual clauses in the case before her were not unenforceable as contractual penalties as the provisions clearly provided for the lower rate to be payable as a discount. Reliance in this regard was placed on Kellas-Sharpe v PSAL Ltd [2013] 2 Qd R 233; [2013] QCA 371 (Kellas-Sharpe) and like authorities. Her Honour then went on to state at [222] to [225]:

13. [81]

    At [283] to [307], her Honour considered the unconscionable conduct claim in relation to the Higher Interest Rate, concluding that the plaintiff lender had engaged in unconscionable conduct insofar as the Higher Interest Rate was capitalised or compounded monthly. At [302], her Honour stated:

14. [82]

    Her Honour stated at [305] that the Higher Interest Rate with capitalisation was “utterly crushing”. In the year to October 2022 the default annual rate of interest was effectively 417% per annum against simple interest of 70.72% per annum.

15. [83]

    The defendants placed principal reliance on Robb J’s analysis in Bellas and the similarities to the present case.

16. [84]

    The plaintiff placed reliance on the fact that the defendants have the onus of establishing a penalty and had not satisfied their onus.

17. [85]

    In particular, it was contended that:

18. [86]

    For the reasons set out below, the default interest is a penalty and unenforceable.

19. [87]

    As a starting point I am conscious that the default interest provision was freely included in the Loan Contract. As Sackville AJA observed in Arab Bank at [7]:

20. [88]

    I am also conscious of the circumstances in which the Loan Contract was entered into and in particular that it could be said that the plaintiff was providing bridging finance of last resort. Like Robb J in Bellas, at [74], I am prepared to infer that there is a market for the provision of bridging finance for short periods at rates up to the monthly rate payable for the two months of the loan.

21. [89]

    Although the defendants bear the ultimate onus of demonstrating that the clause is a penalty, this is a case like that considered by Robb J in Bellas and Robb J in First Cash Flow Solutions Pty Ltd v Saad [2023] NSWSC 686 where the contract itself is evidence that is capable of establishing a sufficient basis for the Court to find that a particular term is a penalty so as to cast an evidentiary burden on the plaintiff to call evidence to explain why it is not: see also Bay Bon Investments Pty Ltd v Selvarajah [2008] NSWSC 1251 at [51] per White J.

22. [90]

    In the present case, the effect of the capitalisation of the rate of 8% per month is an annual rate in year one of something in the order of 151% and in year two of approximately 382%. Interest for year one would be approximately $683,000 and approximately $1.7 million in year two.

23. [91]

    No evidence was adduced by or on behalf of the plaintiff as to the interests of the plaintiff that the clause was intended to protect. That evidence was obviously entirely within the knowledge of the plaintiff. The evidence simply established that the plaintiff has had dealings with the broker, Mr Del Baglivo, over the past one and a half years and he has assisted the plaintiff, or those behind it, with several private lending arrangements and opportunities.

24. [92]

    Some evidence was also led on behalf of the plaintiff to the effect that if the first defendant had repaid on time, the monies would have been used by those standing behind the plaintiff to pay the ongoing interest payable by another company in relation to monies it had borrowed. Counsel for the plaintiff accepted that this evidence was not relevant to the question of penalty.

25. [93]

    Commercial N does not provide support for the plaintiff. Nor do the decisions referred to by Henry J at [302] of her Honour’s judgment. It appears that the primary basis on which her Honour held that the relevant clause was not a penalty was based on the drafting of the clauses in question and the decision in Kellas-Sharpe and like decisions.

26. [94]

    Henry J’s reliance on other decisions such as Guardian Mortgages Pty Ltd v Miller (2004) 12 BPR 22,833; [2004] NSWSC 1236, HomeSec Finance Express Pty Ltd v Richardson (2012) 8 BFRA 347; [2012] NSWSC 1375 and First Mortgage Capital Pty Ltd v Westpac Banking Corp Ltd [2021] NSWSC 1143 was principally on the separate issue of whether the capitalisation component of the default interest clause was unconscionable. As Robb J observed in Bellas at [94] (extracted above) those cases are not penalty but rather unconscionable conduct cases.

27. [95]

    Having regard to the exorbitant effect of the capitalisation in the present case, and absent the identification by the plaintiff of any legitimate interest of the plaintiff that the clause is designed to protect, I am driven to the conclusion that the predominant purpose of the clause is to punish the defendants for breach, and thus compel performance.

28. [96]

    For completeness, I also reject the plaintiff’s submission that the clause is not a penalty because the defendants proposed the interest rates, including the default rate. In the absence of ambiguity, the rule against receiving extrinsic evidence in relation to the party who proposed the clause applies: see JD Heydon, Heydon on Contract: The General Part (2019, Thomson Reuters) at [26.1190]. Accordingly, reliance cannot be placed on the context of which party proposed the clause when considering objectively whether the clause is unenforceable as a penalty. In any event, regard to such a matter would not alter any conclusion set out above that the default interest rate clause is a penalty.

What amount is owing?

1. [97]

   The next issue is what amount is owing by the defendants to the plaintiff.

2. [98]

   Having determined that default interest is not payable because it is unenforceable as a penalty, I did not understand there to be a dispute between the parties. The amount owing is:

3. [99]

   There was no dispute that costs under the Loan Contract should be added. The proposed costs order sought was in the following terms:

4. [100]

   I did not understand the defendants to dispute costs being paid on an indemnity basis in accordance with sub paragraph (a) above. The defendants otherwise indicated that they wished to exercise their statutory right to have the costs assessed.

5. [101]

   An order should be made to the effect sought with sub paragraph (b) deleted.

6. [102]

   In circumstances where I have found that no default interest is payable it sems to me that the plaintiff is entitled to simple interest at Court rates under s 100 of the Civil Procedure Act 2005 (NSW). If there is any dispute about this, it can addressed as part of the regime I propose to order for the parties to agree orders to give effect to these reasons. Otherwise, simple interest at Court rates should be included in the judgment sum.

Is the Darling Point property the only security for the Loan?

1. [103]

   The defendants contend that the Darling Point property is the only security for the loan whereas the plaintiff contends that the security extends to any other property owned by either the Borrower (first defendant) or Guarantor (second defendant).

2. [104]

   It was not in dispute that the first defendant owned two units in Glebe Point Road, Glebe – which were sold in April 2025 – and still owns the land comprised in folio identifier X/X, being the property known as unit X/X Macquarie Street, Sydney (the Macquarie Street Unit). The second defendant owns the Darling Point property.

3. [105]

   The dispute between the parties concerns, again, the proper construction of the Loan Contract.

4. [106]

   In my view, the Loan Contract is quite clear – all real property is charged.

5. [107]

   Clause 13(a) of the Loan Terms (extracted above) clearly states (emphasis added) that each of “the Borrower, the Mortgagor and any Guarantor (in any capacity) … hereby charges all its assets including but not limited to any real estate including the security named herein with the repayment of any money owing, under this agreement.” The “security named herein” is obviously the Darling Point property.

6. [108]

   Clause 11.2 of the Loan Agreement is to similar effect – charging all real property, not just the Darling Point property.

7. [109]

   The plaintiff is thus entitled to the declaratory relief sought in paragraph 6 of the statement of claim in relation to the Macquarie Street Unit.

Plaintiff’s application to amend

1. [110]

   As set out above, at the commencement of the hearing, the plaintiff sought to claim for administrative costs of $90,550 said to be payable under the Loan Contract. The defendants objected to the plaintiff being entitled to make this claim. After hearing argument, I refused leave to the plaintiff to make this claim.

2. [111]

   I did so because I was not satisfied that it was in the interests of justice to permit this to occur. The claim had not been pleaded as it should have been. Whilst the statement of claim made a reference to all monies due under the agreement and all other monies, costs, charges, damages and expenses are due and payable, there was nothing to suggest that a claim for administrative work was being made. Further, the evidence quantifying the claim was not served until 7 July 2025, well after it should have been and only shortly prior to the commencement of the hearing.

3. [112]

   There was no real suggestion that the defendants should have been in a position to deal with the claim at the hearing. They would be entitled to an adequate opportunity to investigate the claim including disclosure from the plaintiff.

4. [113]

   The plaintiff suggested that the issue should be dealt with by the Court referring out the quantum of the claim. The suggestion was that the claim was similar to an assessment of legal costs. I do not agree. One of the issues on the claim would have been whether the alleged work was in fact done. Another issue would likely have been a legal one as to what costs are in fact recoverable. These are issues ordinarily dealt with by the Court.

5. [114]

   Given the quantum of the additional claim – less than $100,000 – I was not satisfied that the hearing should be adjourned to be concluded at a later date. No reason was put forward as to why the claim and the evidence in support could not have been put on well before the hearing to enable it to be dealt with at the hearing.

6. [115]

   For these reasons, I refused leave for the plaintiff to claim administrative costs.

Conclusion and orders

1. [116]

   The parties should seek to agree orders to give effect to these reasons. Any remaining issues should be determined on the papers.

2. [117]

   The orders of the Court are:

   1. (1)

      Direct the parties to confer and seek to agree final orders to give effect to these reasons, including as to costs.

   2. (2)

      Direct the parties to provide any agreed orders, or competing orders, to my Associate by no later than 5pm on 22 August 2025.

   3. (3)

      In the event there is no agreement, including as to costs, direct the parties to provide to my Associate by no later than 5pm on 22 August 2025 any submissions and supporting material, such submissions not to exceed 3 pages.

   4. (4)

      Direct the parties to provide to my Associate by no later than 5pm on 29 August 2025 any submissions and supporting material in reply, such submissions not to exceed 3 pages, whereupon the remaining issues will be determined on the papers.