Wanis v Lifestyle Residences Hobsons Bay Pty Ltd

JUDGMENT

1. In February or March 2019 (the precise date is unclear) the plaintiff entered into a Loan Agreement and General Security Agreement ("GSA") to lend $150,000.00 to Millers Road Custodians Pty Limited. That company subsequently changed its name to Lifestyle Residences Hobsons Bay Pty Ltd, and as such is sued under that name as the first defendant. The loan was secured by a registered caveat over a property in Millers Road, Altona North, Victoria. The loan was also guaranteed by the second defendant, Peter Van and the third defendant, Dale Harrison. The second and third defendants were not only parties to the Loan Agreement as guarantors but they separately signed a Deed of Guarantee and Indemnity ("the Guarantee") in respect of the loan to the first defendant. The second and third defendants are hereinafter referred to as "the guarantors".
2. The due date of repayment of the loan was the earlier of the settlement of the sale of the property in respect of which security had been taken, and 31 March 2020. In the event, the loan became due and payable on 31 March 2020.
3. The loan was not repaid by that date or thereafter, resulting in demands being made in June or July 2021 (again, the dates are unclear), but the loan remained unpaid.
4. The plaintiff commenced proceedings against the first defendant and the guarantors on 9 June 2022. The statement of claim named as the fourth defendant, ACapital Finance No 3 Pty Ltd, which subsequently became the first registered mortgagee of the land, and as the fifth defendant, Immuto Fleur Nominees Pty Ltd, which subsequently became the second registered mortgagee of the land. Neither of those defendants has taken an active part in the proceedings.
5. On 16 September 2022 a receiver was appointed to the first defendant by the fourth defendant.
6. The present iteration of the statement of claim is an amended statement of claim filed 31 October 2022. The first defendant has never filed a defence in the proceedings. The guarantors filed a defence on 30 November 2022.
7. In a judgment on a notice of motion by the plaintiff for the determination of certain separate questions, Schmidt AJ helpfully summarised the defence of the guarantors as follows (Wanis v Lifestyle Residences Hobsons Bay Pty Ltd [2023] NSWSC 1066 at [20]): [20] What the defence pleads includes, in summary, relevantly: 1. an admission that the loan agreement on which Mr Wanis relies was entered by Mr Van and Mr Harrison as guarantors on 8 March 2019; 2. admissions of various pleaded terms of the loan agreement; 3. a denial that the claimed security is given by the loan agreement, or that various of its terms have the effect Mr Wanis claims; 4. claims that some provisions of the loan agreement, including as to interest, are void for uncertainty and unenforceable, as well as penal in nature; 5. the foreshadowed cross-claim under the Contracts Review Act; 6. that the date for repayment of the loan has passed and that it is repayable; 7. that Mr Wanis had any right to register caveats over the property as he did is not admitted; 8. that the caveats are defective; 9. that the claimed breaches of the loan agreement caused the loss or damage claimed and that Mr Wanis is entitled to orders for repayment of the loan or interest claimed are denied; and 10. as to the deeds of guarantee: "Save that they say this if (which is not admitted) they signed Deeds of Guarantee, they did so by Deed dated 8 March 2019. They otherwise deny the allegations contained in paragraph 22."
8. No cross-claim has been filed by the guarantors.
9. Acting Justice Schmidt also made an order pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) that the following questions were to be determined separately from any other questions in the proceedings and before the trial of the other questions in the proceedings: a. Is the plaintiff entitled to a declaration that the second and third defendants (by reason of the Facility Agreement and General Security Agreement dated on or about 22 February 2019 and Deeds of Guarantee executed by each of them on 19 February 2019) are pursuant to that Deed of Guarantee jointly and severally liable to the plaintiff for the repayment by the first defendant of all monies owing to the plaintiff pursuant to the Facility Agreement and General Security Agreement. b. Is the plaintiff entitled to judgment with costs against the second and or third defendants jointly and severally in such amount that is owing to the plaintiff pursuant to the Facility Agreement, the General Security Agreement and the Deeds of Guarantee executed by the first and or second and third defendants on or about 19 February 2019.
10. The determination of those questions came before Wright J who gave judgment on 20 March 2024: Wanis v Lifestyle Residences Hobsons Bay Pty Ltd [2024] NSWSC 274. His Honour's orders were these: (1) The answer to question (a), Is the plaintiff entitled to a declaration to the effect that, pursuant to the Deeds of Guarantee executed by each of the second and third defendants, they are jointly and severally liable to the plaintiff for the repayment by the first defendant of all monies owing to the plaintiff pursuant to the Loan Agreement and the General Security Agreement? is: Yes. (2) The answer to question (b), Is the plaintiff entitled to judgment with costs against the second defendant and the third defendant, jointly and severally, pursuant to the Deeds of Guarantee executed by each of the second and third defendants for such amount as is owing to the plaintiff by the first defendant pursuant to the Loan Agreement or the General Security Agreement? is: Yes. (3) A declaration that, pursuant to the Deed of Guarantee executed by the second defendant on 8 March 2019 and the Deed of Guarantee executed by third defendant on 8 March 2019, each of those defendants is liable, jointly and severally with the other, to the plaintiff for the repayment by the first defendant of all monies owing to the plaintiff pursuant to the Loan Agreement executed on 8 March 2019 and the General Security Agreement executed on 8 March 2019. (4) Judgment for the plaintiff against the second and third defendants, jointly and severally, in sum of $150,000.00. (5) Order (4) is without prejudice to the plaintiff's rights to claim further sums from the second and third defendants under the Deeds of Guarantee executed by each of the second and third defendants on 8 March 2019 in respect of other liabilities or obligations of the first defendant under the Loan Agreement executed on 8 March 2019 and the General Security Agreement executed on 8 March 2019 in addition to the liability to repay the principal sum advanced of $150,000.00. (6) The second and third defendants are to pay the plaintiff's costs of the notice of motion dated 2 May 2023 in addition to the costs already ordered to be paid by Schmidt AJ by order (2) made on 5 September 2023. (7) Otherwise, the notice of motion dated 2 May 2023 is dismissed.
11. It is clear from Wright J's judgment at [41] and [42] that the reference to the "Facility Agreement" was a reference to the Loan Agreement.
12. In his judgment, Wright J said: [51] Given the provisions of each Deed of Guarantee and the circumstances of the present case, in my view, the obligations guaranteed by each of Mr Van and Mr Harrison include the repayment of the principal advanced by Mr Wanis to Lifestyle pursuant to the Loan Agreement and any other amounts which Lifestyle is liable to pay to Mr Wanis pursuant to the Loan Agreement, whatever on the proper construction of that agreement those other amounts might be. Further, the obligations guaranteed also include the obligations arising under the General Security Agreement between Mr Wanis and Lifestyle. … [55] For the reasons already given above, in my view, Mr Van and Mr Harrison are liable to Mr Wanis under cl 2.1(a) and (b) of the Deeds of Guarantee in respect of any amount for which Lifestyle would be liable as a result of any failure to comply with its obligations to Mr Wanis under either the Loan Agreement or the General Security Agreement, in accordance with the proper construction of the relevant clauses of those agreements which are found to be to valid and binding upon Lifestyle. … [59] Accordingly, I answer question (b) (understood as set out above): Yes. In other words, Mr Wanis is entitled [to] judgment with costs against Mr Van and Mr Harrison, jointly and severally, in such amount as is found to be owing to Mr Wanis by Lifestyle pursuant to the Loan Agreement and the General Security Agreement.
13. Following Wright J's judgment, the plaintiff obtained default judgment against the first defendant in an amount of $1,570,897.02 made up of the loan amount of $150,000.00, interest of $1,420,879.02, filing fees of $1,169 and solicitor's fees of $1,596.
14. The plaintiff now seeks judgment for additional amounts said to be due by the first defendant totalling $417,881.78 and also to amounts said to be owing by the guarantors totalling $1,991,525.45. It will be noted from Wright J's judgment that the judgment he gave against the guarantors for $150,000.00 was without prejudice to the plaintiff's rights to claim further sums from the guarantors under the Guarantee.
15. Although the guarantors appeared by solicitor and counsel at the hearing of the notice of motion before Schmidt AJ, and although the guarantors' solicitor has not ceased to act for them in the proceedings subsequently, the only step taken by the guarantors subsequent to the judgment of Schmidt AJ was the filing on 3 October 2023 of a Notice of Intention to Appeal against the judgment of Schmidt AJ. No such appeal (it would in any event need to be an application for leave to appeal) has been filed, and the guarantors have not appeared subsequently, either before Wright J or at directions hearings before the Registrar on 7 May 2024 and 24 June 2024.
16. On 24 June 2024, the Registrar made orders for the filing of evidence in the remainder of the proceedings and fixed the hearing of the remainder of the proceedings on 12 September 2024. No affidavits have been filed or served by the guarantors, nor have emails from the solicitor for the plaintiff to the solicitor for the guarantors been acknowledged or responded to.
17. On 25 June 2024 the solicitor for the plaintiff sent an email to the solicitors for all of the defendants setting out the orders and directions made by the Registrar including the fixing of the matter for hearing on 12 September 2024.
18. At the hearing before me on 12 September 2024 there was no appearance for the first, second, third or fourth defendants. I am satisfied from the affidavit of Christopher Chang of 12 July 2024 that the solicitors for all of the defendants were informed of the hearing date.
19. On 28 August 2024 a costs assessor's certificate was issued in the sum of $50,115.91 in relation to the costs incurred by the plaintiff in respect of the hearings before Schmidt AJ and Wright J.

Claim against the first defendant

1. The plaintiff seeks the following additional amounts against the first defendant: (a) Legal costs and expenses incurred in seeking and enforcing payment of monies due under the loan agreement on a solicitor and client basis (Loan Agreement clause 17.2; GSA clause 8.8): $246,601.31 (b) Interest on legal costs and expenses (Loan Agreement schedule item 6(3): $277,432.90 (c) Post judgment interest 7 May 2024 to 5 July 2024 (on judgment of $1,573,644.02): $26,700.45 (d) Post judgment interest on judgment sum less payment of $150,000 ($1,423,664.02) from 6 July 2024 to 12 September 2024: $27,778.56 (e) Additional costs and expenses incurred (Loan Agreement clause 17.2; GSA clause 8.8, 8.9 and 20.1(b)): $44,783.72 (f) Total: $623,296.84

1. From that amount there should be deducted costs as assessed of $50,115.91 and amounts totalling $155,299.15 paid by the second defendant on or about 5 July 2024. The amount claimed against the first defendant is, therefore, $417,881.78.
2. As noted above, when the plaintiff obtained default judgment against the first defendant, costs were limited to filing fees of $1,169 and solicitor's fees of $1,596. That limitation derived from cl 24 of the Legal Profession Uniform Law Application Regulation 2015 (NSW) ("the Regulation") and Sch 1 Pt 1 to the Regulation. Clause 24 was made pursuant to the power set out in s 59 of the Legal Profession Uniform Law Application Act 2014 No 16 (NSW) ("the Uniform Law"). Section 59(2) provides: A law practice is not entitled to be paid or recover for a legal service an amount that exceeds the fair and reasonable cost fixed for the service by the regulations under this section.
3. The plaintiff pointed to cl 17.2 of the loan agreement and cl 8.8 of the GSA in support of his application to obtain indemnity legal costs against the first defendant. Clause 17 of the Loan Agreement relevantly provides: In the event that the Borrower defaults in making a payment due under this Loan Agreement as set out in the Schedule, the Lender will be entitled to: 17.1 … 17.2 charge against the account of the Borrower all legal costs and expenses (on a solicitor own client basis) paid or incurred by the Lender in any way directly or indirectly related to this Loan Agreement including but not limited to all legal costs and expenses in seeking and enforcing payment of monies due under this Loan Agreement.
4. Clause 8.8 of the GSA relevantly provides: The grantor indemnifies the secured party against liability, loss, charges, costs and expenses (including legal costs and expenses on a full indemnity basis or solicitor and own client basis, whichever is greater) to, by or of any person (including the grantor) in respect of or arising because of actions, proceedings, claims, demands, costs or expenses in connection with this Deed or the Charged Property including without limitation, those arising in connection with: The exercise, purported exercise, delay in exercising or failure to exercise any right, power or remedy under this Deed; …
5. The plaintiff submitted that s 98 of the Civil Procedure Act 2005 (NSW) ("the CPA") provides a discretion to the Court in relation to costs. The plaintiff pointed to what was said by Ward JA (as her Honour then was) in Tonab Investments Pty Ltd v Optima Developments Pty Ltd (2015) 90 NSWLR 268; [2015] NSWCA 287 at [42], that no costs were payable in the Small Claims Division of the Local Court, notwithstanding s 98, because Sch 1 to the Uniform Civil Procedure Rules 2005 (NSW) expressly excluded the operation of s 98 in the Small Claims Division of the Local Court. The plaintiff submitted, therefore, that since s 98 is not excluded in Sch 1 for any civil proceedings in this Court, the Court's general discretion to award costs is preserved and that costs, other than scale costs, could be ordered. The plaintiff also pointed to such an order made by Kunc J in Saade v Rahme [2024] NSWSC 645.
6. The plaintiff pointed to sub-cl (5) of cl 24 of the Regulation which provides: This clause does not fix the costs payable for obtaining a judgment in contested matters and, in that case, only the costs payable for the enforcement of the judgment are fixed. The plaintiff submitted that these were contested proceedings because the guarantors filed a defence, and the plaintiff's right to a judgment against them was determined before Wright J.
7. Section 101 of the CPA provides: 101 Interest after judgment (cf Act No 52 1970, section 95; Act No 9 1973, section 85; Act No 11 1970, section 39) (1) Unless the court orders otherwise, interest is payable on so much of the amount of a judgment (exclusive of any order for costs) as is from time to time unpaid. (2) Interest under subsection (1) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from - (a) the date on which the judgment takes effect, or (b) such later date as the court may order. (3) Despite subsection (1), interest is not payable on the amount of a judgment if the amount is paid in full within 28 days after the date on which the judgment takes effect, unless the court orders to the contrary. (4) Unless the court orders otherwise, interest is payable on an amount payable under an order for the payment of costs. (5) Interest on an amount payable under an order for the payment of costs is to be calculated, at the prescribed rate or at any other rate that the court orders, as from the date the order was made or any other date that the court orders. (6) This section does not authorise the giving of interest on any interest payable under this section. (7) In this section, a reference to the prescribed rate of interest is a reference to the rate of interest prescribed by the uniform rules for the purposes of this section.
8. In my opinion, the plaintiff is not entitled to costs beyond the scale costs in respect of the default judgment obtained against the first defendant. That is because the plaintiff's solicitor is not entitled to be paid or recover costs beyond the scale costs provided in the schedule to the Regulation. Although s 98 of the CPA gives the Court a wide discretion concerning costs, the Uniform Law, enacted subsequently to the CPA, expressly gave power by Regulation to limit legal costs in defined situations. Further, the prohibition in s 59(2) of the Uniform Law must be seen as a limitation to the width of the power in s 98.
9. In the light of s 59 of the Uniform Law and cl 24 of the Regulation, there is no basis for inferring that, because there is no exclusion of s 98 in Sch 1 to the UCPR, s 98 operates to override s 59 of the Uniform Law. The operative provision is cl 24 of the Regulation as empowered by s 59.
10. It does not appear that Kunc J was referred to s 59 and cl 24 in the application made in Saade. In any event, there is a significant difference between those proceedings and the present proceedings. In Saade, the defendant against whom default judgment was obtained, had earlier filed a defence to the claim. It was only following the striking out of that defence that default judgment was given in open court. The proceedings were "contested" within the meaning of cl 24(5).
11. The present proceedings against the first defendant are not, and have never been, contested proceedings. While a notice of appearance was filed on behalf of the first defendant, no defence was ever filed. The plaintiff could have obtained a default judgment against the first defendant from at least September 2022. The proceedings before Schmidt AJ and Wright J did not involve the first defendant.
12. The provisions of the Uniform Law and the Regulation also prevent the plaintiff from obtaining a lump sum costs order, because such an order assumes that costs generally are recoverable by assessment or agreement.
13. The plaintiff is not entitled to costs against the first defendant other than scale costs.

(b) Interest on legal costs and expenses

1. It follows that the plaintiff is entitled only to interest on the scale costs allowable pursuant to the Regulation against the first defendant.
2. It must next be determined whether the Court should make an order under s 101(5) for payment at any rate other than the prescribed rate.
3. The plaintiff points to item 6 in the Schedule to the Loan Agreement which relevantly provides: 3. Should any monies remain unpaid following the Due Date (and thereby the Borrower being in default) then all outstanding monies shall accrue interest at 50% per annum, compounded monthly until all monies payable by the Borrower to the Lender are paid.
4. There is no bar by reason of r 36.16(3A) on the basis that the application for interest on costs is made more than 14 days after the judgment (in the present matter, it is far from clear, in any event, when the application was first made by reason of the way this matter has come before me): Grace v Grace (No 9) [2014] NSWSC 1239 at [28]-[56]; Gray v Richards (No 4) [2017] NSWSC 1714 at [25].
5. At the present time, by virtue of s 101(4) interest is payable at the prescribed rate on the costs incurred. The plaintiff seeks, however, to have the Court order a different rate under sub-s (5) by reason of para 3 of item 6. In my opinion that item is dealing only with monies due under the Loan Agreement in contradistinction from costs.
6. The borrower only becomes liable for costs and expenses pursuant to cl 17 "in the event that the borrower defaults in making a payment due under this loan agreement". It is only pursuant to para 3 of item 6 of the Schedule, if "any monies remain unpaid following the due date (and thereby the borrower being in default)", that interest accrues at 50% on "all outstanding monies". The "monies" referred to in para 3 are the principal and interest payable pursuant to the Loan Agreement. The costs are not outstanding monies at the time of the default. When that default occurs, then the Lender will be entitled to charge the legal costs etc. It follows that para 3 does not deal with costs.
7. I can see no other provision in the Loan Agreement which entitles the Lender to charge interest on the costs. In that way, the plaintiff is only entitled to interest on costs at the prescribed rate pursuant to s 101(5).

(c) and (d): Post judgment interest

1. In a similar manner to interest on costs, it is clear that, in the absence of any order, interest is payable on the judgment pursuant to s 101(1). However, that is interest at the prescribed rate unless the Court otherwise orders. What the plaintiff seeks is post-judgment interest at the rate referred to in para 3 of item 6 of the Schedule to the Loan Agreement.
2. Item 6 para 3 provides for contractual interest on outstanding monies at 50% per annum compounded monthly.
3. Subsection 101(6) of the CPA provides: This section does not authorise the giving of interest on any interest payable under this section.
4. Equity and Admiralty have long provided for interest but the common law has resisted the approach in those jurisdictions: Hungerfords v Walker (1989) 171 CLR 125 at 148-150 (Mason CJ and Wilson J); see also Brennan and Deane JJ at 152. The judgment of Mason CJ and Wilson J noted (at 150) that, The disdain of the common law for interest, especially compound interest, is a "relic from the days when interest was regarded as necessarily usurious". The Court in Hungerfords (Dawson J dissenting) modified that reluctance of the common law in a claim for damages where a party has been deprived of the use of the money.
5. It is likely, therefore, that a creditor suing for a debt is only entitled to interest on a judgment by virtue of s 101; that is, there is no common law right to interest on a judgment. Section 101 would now appear to be the governing provision for the award of post-judgment interest, at least in a claim of debt. That means that any interest on the judgment, whether automatically at the prescribed rate or at some other rate if ordered, is payable under section 101, with any limitations that section imposes. The result is that subs (6) prohibits interest on interest in all cases. In those circumstances the Court cannot make an order that the interest is to be "compounded monthly" because that would "authorise the giving of interest on any interest payable".
6. The plaintiff is entitled to simple interest only on the judgment at 50% per annum.

(e) Additional costs and expenses

1. The additional costs and expenses arise from the appointment of the plaintiff's solicitor, Christopher Chang, as the authorised officer and attorney of the borrower under cl 18 of the GSA. This appointment was made in a letter to the plaintiff dated 28 June 2021.
2. The additional costs and expenses claimed at $44,783.72 are effectively legal fees not billed to the first defendant, as appear in the costs assessment.
3. For the reasons given above, the plaintiff is not entitled to additional costs and expenses by reason of the Uniform Law and the Regulation.

Claim against the guarantors

1. The plaintiff seeks the judgment sum of $1,573,644.02 plus the amount of $417,881.78, making a total $1,991,525.80.
2. The Loan Agreement relevantly provides: 2. The parties agree that all references hereto to the Borrower will refer to mean and be interpreted as meaning the party described under the heading of the Borrower in Item 3 of the Schedule. Guarantor/Guarantors shall be interpreted to mean the party/parties described in Item 8 and will be at all times jointly and severally responsible for the obligations commitments undertakings and liabilities of the Borrower hereunder. … 15. The Guarantors jointly and severally guarantee the Borrower's obligations under this Loan Agreement and specifically covenant and agree to pay any monies which the Borrower is obligated to pay to the Lender and each Guarantor will enter into separate Deeds of Guarantee with the Lender.
3. The Guarantee relevantly provides: 2.1 Obligations guaranteed The Guarantor unconditionally guarantees to the Lender: (a) the faithful and continued performance by the Company under the Contract; and (b) the due and punctual observance and performance by the Company of all its other liabilities, obligations and agreements (whether monetary or non-monetary, present or future, actual or contingent) to the Lender pursuant to or in connection with any agreement, security or instrument. 2.2 Result of non-payment If the Company defaults in the due and punctual performance of any Obligation referred to in clause 2, the Guarantor must perform that Obligation. 2.3 Result of non-performance If the Company defaults or fails in the due and punctual performance of any of its liabilities, Obligations and agreements referred to in clause 2 the Guarantor must indemnify the Lender immediately against all losses, liabilities, damages, costs and expenses (including legal expenses on a full indemnity basis) which may be incurred (directly or indirectly), by the- Lender by reason of that default or failure, 2.4 Continuing guarantee This Guarantee is a continuing guarantee and remains in full force until the Company's Obligations have been paid and performed in full. 2.5 Joint and several Any condition or agreement under this Guarantee by or in favour of two or more persons is deemed to bind them jointly and severally, or be in favour of each of them severally. If the Guarantor comprises more than one person the Lender may at any time, and from time to time, proceed against any or all of them in respect of the Guarantor's Obligations as the Lender may choose in its absolute discretion, and the Lender is not to be obliged to make any claim against all the persons comprising the Guarantor. ... 6.1 Indemnity in respect of the Company's Obligations Notwithstanding anything in this Guarantee, if the whole or any part of the Company's Obligations are not recoverable by the Lender from the Company for any reason whatever, including by reason of: (a) any legal limitation, disability or incapacity of or affecting the Company personally or in the capacity in which it is purporting to act; (b) any of the transactions relating to the Company's Obligations being void from the beginning or being subsequently avoided (whether or not any of the matters or facts relating to them have been, or ought to have beery within the knowledge of the Lender); (c) whether or not the Lender knew or should have known any of the relevant matters or facts; or (d) any other fact, matter or thing, as a result of which the whole or any part of the Company's Obligations are not recoverable from the Guarantor as surety, the Guarantor as a separate and severable liability under this Guarantee unconditionally and irrevocably indemnifies the Lender in respect of: (i) the amount of moneys (either actual or contingent) which, if the Company's Obligations had been recoverable, would be due to the Lender by the Company: and (ii) all actions, claims, demands, liabilities, losses, damages, costs and expenses of whatever nature (either actual or contingent) suffered, incurred or sustained by the Lender; and the Guarantor must shall (sic) pay to the Lender immediately on demand that amount. The terms of this Guarantee apply as far as possible, to this indemnity. … 7.4 Costs and expenses In addition to all other liabilities of the Guarantor under this Guarantee, the Guarantor must also pay to the Lender immediately on demand all costs and expenses (including legal and out-of- pocket expenses] which may be incurred in, or in connection with, the negotiation, preparation, execution and stamping of this Guarantee and the exercise or purported or attempted exercise of any right, authority or remedy conferred on the Lender under or by virtue of this Guarantee and all stamp duty (including financial institutions duty, duty passed on to the Lender by any bank or financial institution and fines for late payment or non-payment) levied on or in connection with this Guarantee, any transaction contemplated by this Guarantee or any payment or the receipt of any payment under this Guarantee.
4. The GSA relevantly provides: 8.8 Indemnity The Grantor indemnifies the Secured Party against liability, loss, charges, costs and expenses (including legal costs and expenses on a full indemnity basis or solicitor and own client basis, whichever is greater) to, by or of any person (including the Grantor) in respect of or arising because of actions, proceedings, claims, demands, costs or expenses in connection with this Deed or the Charged Property including without limitation, those arising in connection with: (a) the exercise, purported exercise, delay in exercising or failure to exercise any right, power or remedy under this Deed; or (b) the use or occupation of or the presence of any person on the Charged Property. 8.9 Expenses of Agent Without limiting clause 8.8, the Grantor agrees to pay to the Secured Party on demand an amount equal to any liability, loss, charges, costs or expenses of the nature referred to in that clause incurred by any Receiver, Attorney or employee, officer, consultant, agent or contractor of the Secured Party.

(a) Judgment sum

1. The calculation of the amount owing under the Loan Agreement is set out in the affidavit of the plaintiff of 3 April 2024, and the updated figure is found in the affidavit of the plaintiff of 11 July 2024. Default judgment was entered in the sum of $1,573,644.02. The plaintiff is entitled to that sum from the second and third defendants pursuant to cl 15 of the Loan Agreement and cls 2.2, 2.3 and 6.1 of the Deed of Guarantee.
2. There must be deducted from that figure the amounts paid by the second defendant totalling $155,299.15. There should be judgment for $1,418,344.87 against the guarantors.

(b) Legal costs and expenses

1. The plaintiff is not restricted to scale costs against the guarantors because the proceedings against them were contested. A defence was filed, and that led to the application for the hearing of separate questions to determine the guarantors' liability in principle to the plaintiff. The evidence of these expenses is contained in the annexures to the plaintiff's affidavit of 11 July 2024. Exhibit C is a summary of those costs and expenses.
2. The costs assessor assessed the recoverable costs at $50,115.91. That should be deducted from the total of the legal costs and expenses (because it is separately registrable as a judgment) leaving a balance owing of $196,485.40.

(c) Interest on legal costs

1. For similar reasons as concerned the first defendant, there is nothing in the Loan Agreement or the GSA entitling the plaintiff to interest on costs. Further, cl 7.4 of the Guarantee entitles the plaintiff all costs and expenses, but says nothing about interest on costs. The plaintiff is therefore entitled only to interest at the prescribed rate as s101(1) and (5), and no order is necessary.

(d) and (e) Post-judgment interest

1. Post-judgment interest at the rate set out in paragraph 3 of item 6 of the Schedule to the Loan Agreement is claimed against the guarantors.
2. The amount is calculated in two tranches. The first tranche is from the date of the default judgment, 7 May 2024 to 5 July 2024. The latter date is when the second defendant paid the sum of $150,000.00. The second tranche is the period from 6 July 2024 to the date of hearing, 12 September 2024. The plaintiff is, further, entitled to post-judgment interest up to the date of this judgment.
3. The limitation in s 101(6) applies, so that simple interest at 50% per annum is payable.

(f) Additional costs and expenses

1. Clause 20.1 of the GSA relevantly provides: (a) The grantor indemnifies the secured party against any liability, loss, cost or expense…caused or contributed to by: i. Any failure or delay of the grantor to comply with any obligation under this Deed; ii. Any Event of Default; iii. The exercise or attempted exercise of any right by the Secured Party, any Receiver or any Attorney under this Deed; or iv. … (b) The grantor must indemnify each Receiver and Attorney and their respective representatives and representatives of the secured party against liability, loss, cost or expense…caused or contributed to by anything the secured party is indemnified against under this clause and a secured party holds the benefit of this clause upon trust of those persons.
2. As noted above at [47]-[48], these additional cost and expenses are effectively unbilled legal costs incurred by the plaintiff's solicitor acting as the Attorney pursuant to his appointment under cl 18 of the GSA. Clause 20.1 of the GSA makes the first defendant and the guarantors liable for such costs and expenses. For reasons given earlier, the first defendant is not liable for them because legal costs against him are limited by the Uniform Law and the Regulation. The guarantors are, however, liable for such costs and expenses.

Gross sum costs order

1. The plaintiff seeks a gross sum costs order in respect of the legal costs and expenses. That includes what have been described as "additional costs and expenses".
2. The principles for ordering a lump sum costs order are well known and are found in such cases as Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 at [21]-[22]; Hamod v State of New South Wales [2011] NSWCA 375 at [813]-[820] and Bobb v Wombat Securities Pty Ltd & Ors (No 2) [2013] NSWSC 863 at[6]-[8]. The principles have been helpfully summarised by the Court of Appeal (Beazley P, Meagher and Payne JJA) in Bechara trading as Bechara and Company v Bates [2016] NSWCA 294 as follows: [12] The power to award a lump-sum should only be exercised when the Court considers that it can do so fairly between the parties and where an appropriate sum can be determined from the available materials: Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 at 742-723 [21]-[22]; Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 123. [13] The power may also be exercised where a party's conduct has unnecessarily contributed to the costs of the proceedings, especially where the costs incurred have been disproportionate to the result of the proceedings: Hamod v New South Wales [2011] NSWCA 375 at [818] per Beazley JA (Giles and Whealy JJA agreeing). [14] A "broad brush" approach is appropriate. To require the same or similar level of detail as in a formal costs assessment would defeat the purpose of the lump sum order: Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1; [1999] FCA 673 at 5 [16]; Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [7]. [15] The courts have typically applied a discount in assessing costs on a gross sum basis: Hamod v New South Wales at [814].
3. The extent of the discount referred to at [15] in Bechara is ordinarily in the range of 20% to 30% (see a detailed list of discounts provided in Ritchie's Uniform Civil Procedure NSW at [98.65.1]).
4. Although the application for a gross sum costs order was not made until a supplementary submission was lodged with leave after the hearing, r 36.16 does not apply to limit such an application being made within 14 days of any costs order earlier made: Beau Timothy John Hartnett trading as Hartnett Lawyers v Anthony Robert Bell as Executor of the Estate of the late Mabel Dawn Deakin-Bell (No 2) (2023) 113 NSWLR 381; [2023] NSWCA 311 at [21].
5. In my opinion, the proceedings are appropriate for making a gross sum costs order. Although a defence was filed, the guarantors failed to file a cross-claim to which the defence had made reference. Despite still having a solicitor on the record, the guarantors did not appear before Wright J. They have not appeared thereafter before the Registrar nor before me, and emails to their solicitor have gone unanswered. That makes it likely that co-operation will not be received to agree on amounts for costs, and the plaintiff will be put to extra delay and expense in having the further costs assessed.
6. In the present case, the plaintiff is entitled to indemnity costs against the guarantors, and detailed information is provided about those costs in the document prepared by the costs consultant for the purposes of the costs assessment.
7. In Hancock v Rinehart (Lump sum costs) [2015] NSWSC 1640, Brereton J (as his Honour then was) said: [57] While it is undoubtedly the usual practice of the court when making a lump sum costs order to apply a discount for the reasons mentioned, that does not mean that the Court must apply a percentage discount to the sum sought by the successful party, and the Court "must be astute not to cause an injustice to the successful party" by applying "an arbitrary 'fail safe' discount on the costs estimate submitted to the court". Thus if the court can be confident that there is little risk that the sum includes costs that might be disallowed on assessment, the case for a discount is seriously undermined. [58] Where a gross sum is assessed on an indemnity basis, and there is no evidence of unreasonableness, it may be inappropriate to apply any discount, although one may nevertheless be appropriate if there is evidence that the successful party "errs on the side of excessiveness [as in excessive use of legal services]. (citations omitted & emphasis added)
8. I must have some regard to the fact that the costs were assessed in the sum of $50,115.91 on a total claim of $186,761.23. That might suggest that the plaintiff's claim has "erred on the side of excessiveness". In all the circumstances, I consider that a discount of 25% is appropriate.
9. The total of the legal costs and expenses together with the additional costs and expenses is $291,385.03. From that must be subtracted the figure assessed by the costs assessor of $50,115.91 leaving an amount outstanding for costs and expenses in the sum of $241,269.12.
10. The plaintiff is entitled to a gross sum costs order of $180,951.84 together with interest on costs at the prescribed rate.

Conclusion

1. The plaintiff should bring in short minutes to reflect these reasons. The plaintiff should also separately provide calculations of the amounts leading to the figure for judgment against the first defendant and the figure for judgment against the guarantors. That will involve calculating the interest on the scale costs, the interest on the gross sum costs order and post-judgment interest, all up to the date of judgment. A daily rate for each sum should also be provided.

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