Supreme Court New South Wales Medium Neutral Citation: Australia and New Zealand Banking Group Limited v Giannaklis (No 3) [2020] NSWSC 1271 Hearing dates: On the papers Decision date: 17 September 2020 Jurisdiction: Common Law Before: Rothman J Decision: (1) The defendant pay the plaintiff's costs of and incidental to the proceedings; (2) The foregoing costs are assessed on an indemnity basis; (3) The foregoing costs are fixed in the sum of $107,790.20; (4) Otherwise proceedings are dismissed. Catchwords: COSTS – indemnity costs – right under contract – also otherwise payable as more appropriate compensation of plaintiff. Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), r 42.5. Cases Cited: Australia and New Zealand Banking Group Limited v Giannaklis (No 2) [2020] NSWSC 148 Australia and New Zealand Banking Group Limited v Giannaklis [2019] NSWSC 32 Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 Ristic v Greater Building Society Ltd [2002] NSWCA 266 Seller v Jones [2014] NSWCA 19 Category: Costs Parties: Australia and New Zealand Banking Group Limited (Plaintiff) Peter Giannaklis (Defendant) Representation: Counsel: N M Bender (Plaintiff) Solicitors: Thomson Geer Lawyers (Plaintiff) Vizzone Ruggero Twigg Lawyers (Defendant) File Number(s): 2018/88502 Judgment 1. HIS HONOUR: On 28 February 2020, the Court issued Reasons for Judgment, the effect of which was to give judgment for the plaintiff, Australia and New Zealand Banking Group Limited ACN 005 357 522 (hereinafter "ANZ"), and direct the plaintiff to file a short minute of order. On 9 April 2020, judgment was entered, in Chambers, in the sum of $913,822.71 plus interest from 10 April 2020 to judgment at the rate of $156.87 per day. The parties were granted liberty to file any application for costs together with any evidence upon which such party intended to rely within 14 days thereof. 2. On 5 May 2020, the plaintiff filed a Notice of Motion seeking indemnity costs and fixing the sum at $96,191.25. The Court issued directions requiring the plaintiff to file and serve any submissions in support by 15 May 2020 and the defendant to file and serve any submissions in reply by 22 May 2020. The plaintiff filed submissions, as directed, but the defendant has filed no submissions in reply. 3. The Court has sought submissions and made it clear to the defendant that any submissions received will be taken into account, notwithstanding the lateness of those submissions. Notwithstanding that urging, the defendant has not filed submissions. 4. The plaintiff relies on the Affidavit of Kimberley Wells, sworn 5 May 2020, and the Exhibit (Exhibit KW) to that Affidavit. The plaintiff further relies on the Affidavit of Kimberley Wells, sworn 20 May 2020. 5. The underlying facts of the substantive proceedings are set out in the Reasons for Judgment on the merits, [1] which should be read in conjunction with these reasons and provides the background to the application for costs. 6. In very brief terms, the proceedings relate to default on a loan in which the monies were advanced by the plaintiff to the defendant's company and which loan was guaranteed by the defendant. The loan was a Home Loan Agreement entered into on 25 September 2013 and also related to a business loan to the defendant's company, Trojan King Pty Ltd, which loan was executed on 26 October 2015. 7. The plaintiff had already obtained an order for possession of property from the Court, per judgment of Davies J. The procedural history to the order for possession is described in the judgment of Davies J. [2] 8. There were significant difficulties with the Defence that was filed. An Amended Defence was sought to be filed with which there were also difficulties including that the defendant's solicitor had received advice from counsel to the effect that the Proposed Amended Defence did not raise an arguable cause of action or defence. [3] 9. On 31 January 2019, Davies J issued summary judgment, on the application of the plaintiff by Motion on notice filed 18 January 2019. His Honour issued orders only in relation to the possession and adjourned the hearing in relation to the money claims and the business loan. Notwithstanding that Davies J considered the adjournment of the proceedings in relation to the business loan and the money claim an indulgence that might not otherwise have been appropriate, his Honour allowed the adjournment. 10. The defendant advised the Court that he intended to obtain a second opinion from counsel, or an opinion from a second counsel, as to the arguability of the Proposed Amended Defence, notwithstanding that there had been multiple occasions on which the defendant had sought and obtained leave to file an Amended Defence. 11. The Court, as presently constituted, heard the proceedings on 23 and 24 April 2019. As earlier stated, these Reasons for Judgment should be read in conjunction with the earlier Reasons for Judgment. In particular, the plaintiff, on this Motion, relies on the comments I made at [81], [90], [91] and [94] in those Reasons. 12. The plaintiff refers to the terms of the Guarantee upon which it relied for its proceedings against the defendant and, in particular, cl 2.2(a)(ii), cl 15.2(e) and cl 15.3. The effect of those clauses is that there is a contractual liability for the defendant (being the guarantor of the loan) to pay the costs of enforcement of rights or remedies under the Guarantee on "a full indemnity basis". 13. Similarly, the mortgage itself secures the obligations owed by the defendant, which, expressly, include fees, costs, charges and expenses, and amounts payable under cl 9, which, in turn, expressly refers to legal fees "on a full indemnity basis". 14. In those circumstances, the plaintiff has a contractual right to be indemnified for its legal costs. The entitlement to be indemnified under a contract should be determined by the Court having regard to the terms of the contract in question. [4] 15. Costs, as determined in the exercise of the Court's discretion, are compensation; not a punishment. An order for costs by the Court is intended to compensate the successful party for the costs of enforcing its rights or defending any alleged liability. [5] The effect of costs on an indemnity basis, leaving aside for present purposes a right created by contract, is to compensate more fully or adequately the successful party to the disadvantage of the unsuccessful party. [6] 16. An order for indemnity costs is an order that all costs be paid other than those that have been unreasonably incurred or appear to be of an unreasonable amount. [7] 17. In this case, the defendant was advised that his Proposed Amended Defence was unarguable. The fundamental fact is that monies were borrowed for a business and figures were provided by the defendant, on behalf of the business, showing a profit that could well afford the interest and principal repayments. The defendant guaranteed the loan, knowing all the circumstances. 18. Not only was there no arguable defence to the claim for the repayment of the money and interest, the defendant sought a number of indulgences that were inappropriate and unreasonable. 19. Apart from the contractual right to indemnity costs, on its face, it would seem that the plaintiff is entitled to indemnity costs on the application of principle as to the appropriate method of assessment of costs. 20. Lastly, I have examined the costs claimed, a schedule of which is attached to the Affidavit upon which the plaintiff relies, and I consider that none of the costs there charged appear to have been unreasonably incurred or appear to be of an unreasonable amount. Ordering fixed costs, as requested by the plaintiff, would obviate further legal costs for each of the plaintiff and the defendant. This is particularly apposite in circumstances where it is or may be unlikely that the defendant will be able to meet the liability of the order now made, in any event, or the costs of any assessment that may ultimately need to be undertaken if costs were to be assessed. 21. The costs that are fixed will include the costs of this application, which are $11,598.95, together with costs earlier incurred of $96,191.25. 22. On the foregoing basis, the Court issues the following orders: 1. The defendant shall pay the plaintiff's costs of and incidental to the proceedings; 2. The foregoing costs are to be assessed on an indemnity basis; 3. The foregoing costs are to be fixed in the sum of $107,790.20; 4. Otherwise proceedings are dismissed. ********** Endnotes 1. Australia and New Zealand Banking Group Limited v Giannaklis (No 2) [2020] NSWSC 148, at [8]-[43]. 2. Australia and New Zealand Banking Group Limited v Giannaklis [2019] NSWSC 32 3. Australia and New Zealand Banking Group Limited v Giannaklis [2019] NSWSC 32, at [17]. 4. Ristic v Greater Building Society Ltd [2002] NSWCA 266 at [40]. 5. Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [67]. 6. Oshlack, ibid, at [44]; Seller v Jones [2014] NSWCA 19 at [58]; Latoudis v Casey (1990) 170 CLR 534 at 567; [1990] HCA 59. 7. Uniform Civil Procedure Rules 2005 (NSW), r 42.5. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 September 2020