JCP Holdings Pty Ltd v Ulrich Pty Ltd (No 2)

File Number(s): 2025/00095645

Publication restriction: Nil

JUDGMENT

1. I gave judgment in these proceedings on 15 August 2025: see JCP Holdings Pty Ltd v Ulrich Pty Ltd [2025] NSWSC 911 (Primary Judgment or PJ). These reasons assume familiarity with, and maintain the same abbreviations as in the Primary Judgment.

2. In the Primary Judgment I held that the Loan Contract was not void for uncertainty and that the default interest claimed by the plaintiff was unenforceable as a penalty. I also determined that all real property owned by the defendants, and not only the Darling Point property was charged with payment of the loan.

3. I directed the parties to seek to agree orders to give effect to the reasons, failing which I would determine any remaining issues on the papers.

4. No substantive agreement was reached. The defendants sought, and were granted, a series of extensions to make submissions on the outstanding issues, principally costs. This has led to a delay in the finalisation of the matter.

5. These reasons determine the outstanding issues.

Amount owing under the Loan and entry of Judgment

6. At [98] of the PJ, I held that the amount outstanding under the Loan Contract was $578,450. Having held that the claim for default interest was unenforceable as a penalty I stated at PJ [102] that simple interest was payable on the amount outstanding. The parties were unable to agree on the interest calculation.

7. The principal difference between the parties was when the interest should run from. The plaintiff contended 1 December 2024 being the date of default. The defendants contended that it should be one month later, relying on the provisions set out in the Loan Contract to the effect that there was a period of one month’s grace before default interest commenced.

8. On 9 September 2025, I entered judgment for the plaintiff against the first and second defendants in the sum of $597,443.29.

9. Essentially, I accepted the plaintiff’s contention that the one month grace period set out in the Loan Contract before default interest commenced was irrelevant in circumstances where the default interest provision had been held to be unenforceable as a penalty.

10. Simple interest should therefore run from the date of default, being 1 December 2024. The judgment entered on 9 September 2025 included interest calculated on this basis.

What Property is charged?

11. The second issue which divided the parties concerned the properties owned by the defendants which are charged with the payment of the judgment monies.

12. At PJ [103]-[109], I rejected the defendants’ contentions that it was only the Darling Point property that was charged with repayment of the Loan. I determined that all real property of the defendants was charged.

13. At the time of the conclusion of the hearing, the only property which the plaintiff contended should be subject to a charge was the Macquarie Street Unit owned by the first defendant, two other properties owned by the first defendant in Glebe Point Road, Glebe having recently been sold.

14. Come the time of final orders, the plaintiff then sought declarations that a further four properties owned by the second defendant be charged with repayment of the monies.

15. The defendants oppose declarations in respect of these four additional properties. This is on the basis that the plaintiff is bound by its statement of claim and relief not pleaded should not be granted. It was asserted by the defendants that the relief now advanced was never pleaded in the statement of claim, nor squarely raised at trial, and the defendants would have conducted their case differently had the relief been raised earlier.

16. I propose to grant the additional relief sought by the plaintiff, charging the four additional properties sought by the plaintiff.

17. The issue litigated at trial was whether the security in the form of a charge was confined to the Darling Point property or extended to all other property owned by the defendants. The relief claimed in respect of that issue was crafted only by reference to the three additional properties which the plaintiff contended were owned by the defendants, being the two Glebe properties and the Macquarie Street Unit. The issue was, however, the broader one.

18. On 11 July 2025, the defendants filed and served a late affidavit disclosing that the first defendant had sold the two Glebe properties and that the second defendant was the owner of the four additional properties. The fact that the affidavit was directed at responding to relief for judicial sale not ultimately pressed by the plaintiff is not to the point.

19. The second defendant is the owner of the four additional properties and the Court determined that all properties were charged. I do not accept that the defendants would have conducted the case any differently had they been aware that the four properties were sought to be charged. The defendants’ contention was that only the Darling Point property was charged, not that only some of the properties were charged.

20. The charging and related orders sought by the plaintiff should be made.

Costs

21. At PJ [99], I stated:

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

1. The First defendant and second defendant pay the plaintiff’s costs of and incidental to the proceedings, including the default in the Loan Agreement and the steps taken to enforce the Loan Agreement, as agreed or assessed.

a. on an indemnity basis and with the rate of charge for professional costs capped at $550 per hour (ex GST), or

b. in the alternative to (a) on an ordinary basis.

22. This was based on an express acknowledgment on instructions by counsel appearing for the defendants at the hearing.

23. The plaintiff maintained that this was the appropriate costs order.

24. The defendants were granted several extensions to put on submissions on the basis that the case raised complex issues on costs and new counsel was being retained to advise and make submissions as to the appropriate costs order.

25. Submissions were provided by new counsel dated 19 September 2025. None of the foreshadowed complexity emerged.

26. In those submissions the defendants contended that the appropriate costs order was as follows:

If orders are made in relation to issues, the Defendants seek the following orders:

(a) The Defendants pay the Plaintiff’s costs of the Plaintiff’s claim on an indemnity basis and with the rate of charge for professional costs capped at $550 per hour (ex GST) other than the claim in relation to the judicial sale issue and the claim for administrative costs of the plaintiff;

(b) The Cross-Defendant pay 50% of the Cross-Claimants’ costs of the Cross-Claim on the ordinary basis;

(c) The Cross-Claimants pay 50% of the Cross-Defendant’s costs of the Cross-Claim on the ordinary basis.

27. Underlying this position were the following propositions:

(a) a contractual right to costs does not oust the Court’s discretion as to costs and a contractual right can be lost or curtailed by a number of factors, including an improper defence; (b) the relevant contractual provisions must be construed to determine if they cover the claims made in the proceedings. In the present case, clause 10(c) applies to “enforcement or recovery action or a default” – which is not apt insofar as the plaintiff sought to recover interest which was found to be a penalty. Properly construed, the clause would not extend to the unsuccessful defence of the cross claim on the penalty issue and a significant amount of hearing time was taken up on this issue; (c) the plaintiff should not be permitted to recover costs of the claim for relief by way of a judicial sale given that the proceedings were never properly constituted to obtain that relief.

28. In response, the plaintiff maintained its position that the appropriate costs order is that recorded at PJ [99]. Reliance in this regard was placed on the general principles in determining what is the event for costs purposes and the circumstances in which it is appropriate to apportion costs. The plaintiff asserted it was successful in obtaining the primary relief sought being the judgment of the principal sum due, although it was unsuccessful in obtaining default interest. It was further contended that the defendants’ submissions as to the relative success of the parties was not accurate.

29. I propose to make the costs order foreshadowed at PJ [99] on the indemnity basis, but only as to 90% of the plaintiff’s costs, the 10% reduction reflecting in a broad brush way the issues the plaintiff did not succeed on.

30. The starting point is clause 10(c) of the Loan Terms annexed to the Loan Offer, which is in the following terms:

c) Should the Lender and/or its Lawyers be required to action any request of the Borrowers or if any enforcement or recovery action is required or a default occurs or the Lender is required to enforce their rights, the Borrower shall be liable to pay the Lender’s costs and outlays and the Lender’s Lawyer’s professional costs on a Lawyer and own client/indemnity basis being $550.00 per hour (excluding GST), together with any outlays, court filing fees or Barrister’s fees, process servers fees in serving any court documents, any real Estate agent’s commission on the sale of the mortgaged property and any advertising and other expenses, all of which are presently unascertainable. Any unpaid costs are added to the loan balance.

31. The usual principles of construction apply to construction of the clause.

32. Costs remain in the discretion of the Court and are not ousted by provisions such as clause 10(c): see Goldstein v Shyzi Pty Ltd (No 2) [2017] NSWSC 543 at [12] per Darke J. However, where a contractual provision clearly stipulates that costs are to be paid on a particular basis, the Court ordinarily exercises its discretion to give effect to the contractual provision: see Kyabram Property Investments Pty Ltd v Murray [2006] NSWSC 54 at [17]-[18] per Campbell J.

33. In my view, the ordinary meaning of the words used in clause 10(c) are broad enough to cover the entirety of the claims made in the proceedings. I do not accept the defendants’ contentions to the contrary. The penalty interest issue is part of the plaintiff’s enforcement of its rights, a default having occurred.

34. The more significant issue is whether, having regard to the issues litigated, and the relative success of each of the parties there should be a reduction in the costs to be awarded to the plaintiff. I am conscious of the well understood principles in this regard: see relatively recently Access Training Group Ltd v Jane [2024] NSWCA 204 at [164] to [188] per Ward P, and [217] to [230] per Basten AJA.

35. The plaintiff obviously succeeded in upholding the Loan Contract but failed to recover the default interest which it sought. The claim for judicial sale was abandoned during the hearing and the claim for administrative costs was not permitted to be run due to late service of evidence.

36. The defendants wholly failed, save for establishing that the default interest claimed was unenforceable as a penalty. The myriad of pleaded defences were abandoned at the start of the hearing and a new defence substituted – void for uncertainty – which failed.

37. I am conscious that the hearing lasted a little more than a day. Many issues were previously pleaded but not pressed/abandoned. The penalty interest issue was, however, a substantial one on which the plaintiff failed. The costs order should reflect this.

38. Taking all of these matters into account, it is appropriate to reduce the plaintiff’s costs by 10%. This is intended to reflect, in a broad brush way, the proportion of the total costs devoted to the issues on which the plaintiff failed, principally the penalty interest issue.

Conclusion and orders

39. Having regard to the matters set out above, in addition to the judgment entered on 9 September 2025, the Court makes the following orders.

40. Order the first defendant and second defendant pay 90% of the plaintiff’s costs of and incidental to the proceedings, including the default in the Loan Contract and the steps taken to enforce the Loan Contract, as agreed or assessed on an indemnity basis and with the rate of charge for professional costs capped at $550 per hour (ex GST) (the Costs).

41. Declare that the land comprised in folio identifier X/XXX, being the property known as X Eastbourne Road, Darling Point NSW 2027 (Darling Point Property) is charged by the second defendant for the plaintiff with the payment of the monies in the order made on 9 September 2025 and the order in 1 above.

42. Declare that the land comprised in folio identifier X/X, being the property known as X Keppel Road, Ryde NSW (Ryde Property) is charged by the second defendant for the plaintiff with the payment of the monies in the order made on 9 September 2025 and the order in 1 above.

43. Declare that the land comprised in folio identifier X/X, being the property known as X Therry Street, Avalon Beach NSW (Avalon Beach Property) is charged by the second defendant for the plaintiff with the payment of the monies in the order made on 9 September 2025 and the order in 1 above.

44. Declare that the land comprised in folio identifier X/SPX, title reference: X, being the property known as X Violet Street, Redcliffe, QLD being the land comprised in folio identifier Lot X in SP X (Redcliffe Property) is charged by the second defendant for the plaintiff with the payment of the monies in the order made on 9 September 2025 and the order in 1 above.

45. Declare that the land comprised in folio identifier Lot X in SP X, being the property known as X Dalmeny Avenue, Rosebery NSW (Rosebery Property) is charged by the second defendant for the plaintiff with the payment of the monies in the order made on 9 September 2025 and the order in 1 above.

46. Declare that the land comprised in folio identifier X/SPX, being the property known as unit X/X Macquarie Street, Sydney, NSW, 2000 (Macquarie Street Property) is charged by the first defendant for the plaintiff with the payment of the monies in the orders made on 9 September 2025.

47. Charge for the plaintiff each of the Darling Point Property, Ryde Property, Avalon Beach Property, Redcliffe Property, Rosebery Property and the Macquarie Street Property separately with the payment of the monies in the order made on 9 September 2025 and the order in 1 above.

48. Restrain the first defendant from dealing with the Macquarie Street Property otherwise than in accordance with the directions of the plaintiff or until the monies in the order made on 9 September 2025 and the order in 1 above are paid.

49. Restrain the second defendant from dealing with the Darling Point Property, Ryde Property, Avalon Beach Property, Redcliffe Property and the Rosebery Property otherwise than in accordance with the directions of the plaintiff or until the monies in the order made on 9 September 2025 and the order in 1 above are paid.

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