Supreme Court New South Wales Medium Neutral Citation: Australian Secured & Managed Mortgages Pty Ltd v Horizon Hotels Pty Ltd [2022] NSWSC 1647 Hearing dates: 14 and 15 July 2022 Date of orders: 06 December 2022 Decision date: 06 December 2022 Jurisdiction: Equity Before: Henry J Decision: See [175] Catchwords: CONTRACTS – construction and interpretation – whether precondition for payment of fees to the second plaintiff under Introducer Mandate Agreement satisfied – where precondition provided for payment of fees if offer of finance within 10% of indicative interest rate (of 2% per month) – where loan did not proceed – where Loan Offer provides for standard and concessional interest rates – whether fees are payable to the first plaintiff under Loan Offer – fees payable to first and second plaintiffs EQUITY – estoppel by convention – whether plaintiffs estopped from enforcing contractual entitlement to payment of fees based on common assumption relating to security – no common assumption – claim fails EQUITY – declaratory relief – form of declarations – whether declarations should be made that defendant's land charged for payment of fees – declarations made REAL PROPERTY – caveats – equitable charges – where Introducer Mandate Agreement and Loan Offer grant equitable charges over defendant's land to secure payment of fees – whether caveats should be extended until payment of fees or further order of the Court – caveats extended Legislation Cited: Civil Procedure Act 2005 (NSW) Real Property Act 1900 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Abigroup Ltd v Sandtara Pty Ltd [2002] NSWCA 45 Abou-Hamad v Darwish [2012] NSWSC 231 Andrews v Australia & New Zealand Banking Group Ltd [2012] HCA 30; (2012) 247 CLR 205 Australian Secured & Managed Mortgages Pty Ltd v Horizon Hotels Pty Ltd [2021] NSWSC 1715 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 266 Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 Electricity Generation Corp v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 Ell v Ell [2015] NSWCA 38 Iaconis v Lazar [2007] NSWSC 1103 Jones v Dunkel (1959) 101 CLR 298 Kellas-Sharpe v PSAL Ltd [2012] QCA 371 Kowalczuk v Accom Finance Pty Ltd (2008) 77 NSWLR 205; [2008] NSWCA 343 Kyabram Property Investments Pty Limited and Anor v Murray and Anor Murray and Anor v Kyabram Property Investments Pty Limited and Anor [2005] NSWCA 87 Michelangelo Alfredo Mascarello & Anor v Registrar-General of New South Wales [2018] NSWSC 284 Miller Heiman Pty Ltd v Sales Principles Pty Ltd (2017) 94 NSWLR 500; [2017] NSWCA 106 Moratic Pty Ltd v Gordon [2007] NSWSC 5 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65 Taouk v Assure (NSW) Pty Ltd [2017] NSWSC 534 Toll (FGCT) Pty Ltd v Alphapharm (2004) 219 CLR 165; [2004] HCA 52 Wu v Dardeneliotou [2008] NSWSC 1319 Category: Principal judgment Parties: Australian Secured & Managed Mortgages Pty Ltd (First Plaintiff) Craig Highmore (Second Plaintiff) Horizon Hotels Pty Ltd (Defendant) Representation: Counsel: J Foley (First and Second Plaintiffs) B Nolan (Defendant) Solicitors: Bransgroves Lawyers (First and Second Plaintiffs) Green & Associates (Defendant) File Number(s): 2021/00369459 Publication restriction: Nil Judgment 1. In these proceedings, the plaintiffs, Australian Secured & Managed Mortgages Pty Ltd (ASMM) and Craig Highmore, seek to recover around $70,000 from the defendant, Horizon Hotels Pty Ltd (Horizon Hotels), which they claim is payable pursuant to an Introducer Mandate Agreement that appointed Mr Highmore to source an offer of finance and a Letter of Offer of Second Mortgage (Loan Offer) from ASMM in relation to a loan of $1,100,000 to Horizon Hotels. 2. ASMM and Mr Highmore contend that, on the proper construction of the Introducer Mandate Agreement and the Loan Offer, the amount of $54,450 (comprising Establishment and Brokerage Fees) is payable to them jointly and severally and a further amount of $15,023.99 (comprising Administration, Commitment and Legal Fees) is payable to ASMM, even though no loan was ever advanced to Horizon Hotels. They also contend that the amounts claimed as payable are secured by charges over two properties in Potts Point, NSW, that are owned by Horizon Hotels and that the caveats they have lodged over the properties should be extended until the amounts secured by the charges have been paid by Horizon Hotels. 3. Horizon Hotels denies that the amounts claimed are payable and says that the caveats do not secure any interests in the properties. 4. The main arguments advanced by Horizon Hotels are that the precondition for the payment of fees under the Introducer Mandate Agreement was not triggered, ASMM was not the 'Lender' under the Loan Offer and has not established it has incurred the fees claimed, and the parties operated under a common assumption that gives rise to an estoppel that precludes any entitlement to the payment of fees to Mr Highmore or ASMM. Factual background and summary of evidence 1. The following is a summary of the relevant facts based on the evidence. 2. ASMM read affidavits from Suzanna Asciak, a director of ASMM, sworn 30 December 2021 and Angela Simonetta, a loans manager of ASMM, sworn 3 March 2022. Mr Highmore read two affidavits he swore on 18 January 2022 and 7 March 2022. 3. Horizon Hotels read two affidavits from Darren Barkas, an accountant and financial advisor to Horizon Hotels, dated 15 February 2022 and 23 March 2022. 4. Ms Asciak, Ms Simonetta and Mr Highmore were cross examined. No issues of credit were raised, and I accept their evidence. 5. Mr Barkas was also cross-examined. ASMM and Mr Highmore submit that the Court would not find Mr Barkas to be a credible witness. They also submit that the Court should draw an inference pursuant to Jones v Dunkel (1959) 101 CLR 298 from the failure to call Greg Magree, the sole director and secretary of Horizon Hotels. I deal with those submissions below. At this point, it will suffice to say that I did not find Mr Barkas to be an impressive witness and I consider that an adverse inference should be drawn from the fact that Horizon Hotels did not adduce evidence from Mr Magree. 6. Most of the factual matters are not in dispute. To the extent there are disputes, the following should be taken to be my findings unless otherwise indicated. 7. ASMM is in the business of providing mortgage finance for borrowers. Mr Highmore is a mortgage broker who arranges finance for borrowers. 8. In around August 2021, Horizon Hotels, was interested in obtaining finance in the sum of $1,100,000 for the purpose of refinancing existing loans and for working capital. At that time, the two Potts Point properties owned by Horizon Hotels, contained in Folio Identifier 1/SP78890 (Unit 1) and Folio Identifier 2/SP78890 (Unit 2) (together the Properties), were subject to first registered mortgages to the National Australia Bank Limited (NAB) and registered leases to Holey Moley Australia Pty Ltd. 9. According to Mr Barkas' evidence, Mr Magree asked Mr Barkas to contact Roy Costigan to 'sort' a short-term loan for about $1,100,000. He says that Mr Magree said that he wanted Mr Barkas to take charge and be his 'agent', although Mr Magree would sign the documents, and that Mr Magree said he would not pay any fees unless and until loan funds were guaranteed at $1,100,000 and interest was 2% per month or less, give or take 10%. 10. Mr Barkas contacted Mr Costigan, who then contacted Mr Highmore. On 24 August 2021, Mr Highmore sent an email to Mr Costigan that stated: 'Broad details are as follows. If you can sell these numbers let me know & I will prepare a Mandate straight away & I will have a formal Letter of Offer within 24 hours. Again, these are the terms & there will not be any variations. Not sure if 8 month term is enough. I may have to see if this can be nine if this is a deal killer. Let me know. Loan Amount: $1,100,000 Interest rate: 2% per month (24% p.a) Term: 6-8 months Interest basis: Capitalised / pre-paid ($176,000 - 8 months) Security: Registered caveat with an unregistered 2nd Mortgage over both properties in Kings Cross with personal guarantees. Fees: Establishment Fee @ 3.30% inclusive GST (Lender) - $36,300.00 Brokerage @ 1.10% inclusive GST (my referrer & I) - $14,100.00 Legals - To scale (I will get this firmed up once we are committed) Valuation: TBA Conditions All current caveats must be fully withdrawn at settlement Lender must have settlement completed prior to 2nd September Must be pre-paid interest Must be minimum six month term' 1. On 25 August 2021, Mr Costigan sent an email to Mr Barkas and Mr Magree, copied to Mr Highmore, advising that Mr Highmore would send over a mandate and letter of offer that day, the lender would be ASMM, and certain documents would need to be provided, including the Current NAB Loan Statement. 2. Later that morning, Mr Highmore sent his Introducer Mandate Agreement document to Mr Costigan, who forwarded it to Mr Magree (copied to Mr Barkas), with an email advising that the 'Mandate' needed to be signed and sent back to Mr Highmore and a letter of offer would then be issued, at which point a $2,500 Commitment Fee was payable. 3. On 25 August 2021, Mr Barkas sent an email to Mr Costigan, copied to Mr Magree, in relation to Mr Highmore's Introducer Mandate Agreement document, stating 'we have reviewed [it] in detail' and identifying some concerns and proposed changes, which relevantly include the following: 'Cl 3.3 Application/origination fees are $54,450 is payable: 'the app/icant/s [sic] agrees to pay the application/origination fee to Craig Steven Highmore within 2 business days of Craig Steven Highmore procuring a written offer of finance from a lender for an amount broadly in accord with the preferred loan amount and for the preferred term.' Our preference is to have this term amended to: 'procuring an accepted written offer' If this is not agreeable then we will need to have it amended to: 'procuring a written offer of finance from a lender for an amount within 10% of the preferred loan amount, interest rate and the preferred term (unless otherwise agreed in writing).' Cl 3.8 Application/origination fees are $54,450 is payable: 'irrespective of whether or not the terms of any offer of finance sourced are acceptable to the applicant/s, as long as the offer of finance is for an amount broadly in accord with the preferred loan amount and for the preferred term' Our preference is to have this term removed or stuck out. If this is not agreeable then we will need to have it amended to: 'irrespective of whether or not the terms of any offer of finance sourced are acceptable to the applicant/s, as long as the offer of finance is within 10% of the preferred loan amount, interest rate and the preferred term (unless otherwise agreed in writing).' 1. Later that day, Mr Barkas sent an email to Mr Highmore that attached the requested documents, including the 'Signed Mandate', in which Mr Barkas noted that cll 3.3 and 3.8 of the Introducer Mandate Agreement had been amended 'to have 10% variation conditions'. Shortly after, Mr Highmore forwarded the email and documents received from Mr Barkas to Ms Simonetta at ASMM. The Introducer Mandate Agreement 1. The 'Signed Mandate' attached to Mr Barkas' 25 August 2021 email is the Introducer Mandate Agreement relied on by Mr Highmore. 2. The Introducer Mandate Agreement identifies Horizon Hotels, as Borrower, Mr Magree, as Guarantor, and them both as the 'Applicant/s', and states that they 'hereby appoint to (sic) Craig Highmore to source an offer for finance broadly in accord with the preferred loan amount and the preferred term on the terms set out in this Agreement which comprises this terms sheet and the following Terms'. 3. The first page of the Introducer Mandate Agreement provides for a 'Preferred Loan Amount' of $1,100,000; a 'Preferred Term' of 8 months; 'Security Offered' as a 'Registered caveat'; 'Security Type' as an 'Unregistered 2nd Mortgage' in relation to the Properties; an 'Exclusivity Period' of 2 weeks; and an Indicative Interest Rate of the 'Unregistered 2nd Mortgage' of '2.00% per calendar month'. 4. Under the section headed 'Our Fees', the following is specified: Valuation and Lenders Fees As advised by the lender (ASMM) Commitment Fee of $2,500 for land & bankruptcy searches and ancillary costs. As advised by the lender (ASMM) Application/Origination Fee Procuration Fee @ 3.00% + GST ($36,300.00 inclusive GST) Brokerage Fee @ 1.50% + GST ($18,150 inclusive GST) 1. Clause 2, which deals with the 'Terms of Any Offer of Finance', provides that the 'the indicative interests rates are indicative of minimum interest rates only and any funding will be at a higher rate' (cl 2(b)) and that the 'ultimate interest rate will be subject to the lender assessing the credit risk associated with the transaction' (cl 2(c)). 2. Clause 3 deals with 'Fees and Charges' and provides that the 'applicant/s agrees to pay the search and administration costs to [Mr Highmore] within 2 business days of signing…' (cl 3.1) and that the 'search and administration costs are not refundable under any circumstances' (cl 3.2). It also provides: 3. Fees and Charges … 3.3 Subject to clause 6.3, the applicant/s agrees to pay the application/origination fee to Craig Steven Highmore within 2 business days of Craig Steven Highmore procuring a written offer of finance from a lender for an amount within 10% of the preferred loan amount, indicative interest rate and preferred term. Craig Steven Highmore may, in its sole discretion, defer the time for payment of the application/origination fee until the day the loan is funded … 3.5 The applicant/s acknowledges that the application/origination fee is a fee payable in respect of the work done and investigations undertaken with a view to sourcing an offer of finance as detailed in the terms sheet. 3.7 Collectively, the search and administration costs and the application/origination fee are referred to as the 'fees' 3.8 The applicant/s acknowledges and understands that it will be liable to pay the application/origination fee to Craig Steven Highmore: irrespective of whether or not the terms of any offer of finance sourced are acceptable to the applicant/s, as long as the offer of finance is for an amount within 10% of the preferred loan amount, indicative interest rate and preferred term; even if an offer of finance once accepted does not proceed to settlement within a reasonable time, or at all due to a change in circumstance to the borrower or its guarantors any outstanding amounts for application/ origination/ legal and administration fees will increase and accrue based on the daily rate of higher interest applied to the outstanding fees applicable from any offer produced and signed by the borrower; in the circumstances contemplated in clause 6.3. 1. Clause 5 deals with 'Charge and Security' and relevantly provides: 5. Charge and Security 5.1 The applicant/s hereby charges and mortgages to and in favour of Craig Steven Highmore the applicant's interest in any and all assets and real property owned by the applicant/s individually or jointly (including the security offered) to secure payment by the applicant/s to Craig Steven Highmore of the fees and any and all other monies due to Craig Steven Highmore by the applicant/s including all amounts that Craig Steven Highmore may incur in connection with the enforcement and/or preservation of its rights under this agreement. 5.2 If requested by Craig Steven Highmore, the applicant/s agrees sign a mortgage over any real property owned by the applicant/s and deliver it to Craig Steven Highmore to better secure payment of the fees. The applicant/s acknowledges that, subject to applicable laws, Craig Steven Highmore is entitled to lodge a Caveat over any real property owned by the applicant/s to secure and to give notice of its interest in the real property created under the instrument of charge and mortgage contained in this clause. 5.3 The applicant/s agrees that Craig Steven Highmore is entitled to enforce all of its rights under this agreement, including the rights granted in sub-clause 2 above notwithstanding that any offer of finance made differs from the details set out in the terms sheet (except where any offer made is not broadly in accord with the preferred loan amount and the preferred term) or that any such offer once made and/or accepted does not proceed to funding for any reason. 5.4 The charge/mortgage created under this clause also secures any monies owing by the applicant/s to Craig Steven Highmore, determined in accord with the provisions of clause 6 .5.' 1. The final page of the Introducer Mandate Agreement contains the signature blocks that are completed by Mr Magree on behalf of Horizon Hotels and himself and dated 25 August 2021, and the following wording above the signature blocks: I/We the applicant's agree that this terms sheet accurately reflects my/our instructions to you and agree to the terms of this Agreement. Issuance of Loan Offer 1. At 11:24pm on 25 August 2021, Ms Simonetta sent an email to Mr Highmore advising that she had prepared a letter of offer, 'we will be able to settle on a caveat…', and given recent experiences, ASMM will need to be able to contact a bank person to be able to confirm the amount owing and that they will register a second mortgage. Mr Highmore forwarded that email to Mr Barkas and asked him to provide an up-to-date loan balance. 2. On 25 or 26 August 2021, Ms Simonetta sent an email to Mr Barkas that referred to her assisting Mr Highmore to obtain finance which had been 'secured in the sum of $1.1m by way of [a] second mortgage' and asked Mr Barkas to advise why Horizon Hotels had not made any payments to NAB for the period 1 October 2020 to 2 March 2021. 3. On 26 August 2021, Mr Barkas sent an email to Mr Costigan in relation to ASMM's requests regarding NAB which stated that Mr Barkas could contact NAB and get an updated balance and that: 'We do not want them contacting NAB. We do not want a second mortgage registered.' 1. Further emails were exchanged between Mr Costigan and Mr Highmore. In an email from Mr Highmore, sent at 6:05pm on 26 August 2021, Mr Highmore stated that the 'Lender' knows that consent could not be obtained from NAB, but that did not mean 'they won't take an unregistered second mortgage', which he described as an 'insurance policy' should the loan go into default. 2. On 26 August 2021, ASMM issued a letter of offer of finance to Horizon Hotels (the Loan Offer). The Loan Offer was sent by Mr Highmore to Mr Costigan on 27 August 2021 with a request for 'Greg' to complete and to pay the $2,500 Commitment Fee to Mr Highmore. Mr Costigan forwarded that email and the Loan Offer to Mr Barkas, copied to Mr Magree, and recommended that they hold off paying the $2,500 and ensure the letter of offer was altered to 'take out the NAB contact'. 3. On 27 August 2021, Mr Barkas sent an email to Ms Simonetta (responding to her email described at [28] above) in which he advised that the NAB had granted COVID deferrals on loan repayments, provided an update on the NAB loan balance and (in bold) stated 'Please do not contact NAB unless you have HHT's express consent to do so.' 4. On 30 August 2021, Mr Barkas sent an email to Mr Costigan, copied to Mr Magree, in relation to the Loan Offer. Mr Barkas' email refers to: 1. the requirement that the first Mortgagee consent to the registration of a subsequent mortgage in favour of the lender, and states 'there will be no consent from NAB for 2nd mortgage and we do not want NAB contacted in regard to this loan'; 2. the fees and charges for which Horizon Hotels and Mr Magree would be responsible and states 'Roy, you mentioned in another email that a $2,500 Commitmnet [sic] Fee is payable on application. Craig Highmore's Introducer Mandate Agreement states $2,500. Is the Letter of Offer incorrect?'; and 3. the special conditions in relation to the withdrawal of caveats and states that 'Aqualand was removed months ago - Lender may have old Title Search - a new search as of today will be provided by me… Greg is dealing with the removal of Chase Caveat. Guardian [w]ill be removed on settlement of their new loan proceeds'. 1. On or around 30 August 2021, Mr Magree signed the Loan Offer on behalf of Horizon Hotels and himself together with a declaration under the National Consumer Credit Protection Regulations that identified the purpose of the loan as being for business expenses and sale of property and the Properties as the 'Security Offered'. ASMM received the signed Loan Offer that day. The Loan Offer 1. The Loan Offer is dated 26 August 2021 and is addressed to Mr Magree, as director of Horizon Hotels, from ASMM that states that ASMM acknowledges receipt of Horizon Hotels' application and that: our lender is prepared to advance the sum of $1,100,000 or 67.5% of the sworn valuation over the abovementioned security property [Units 1 and 2] on the following terms and conditions. 1. The first page of the Loan Offer provides that Horizon Hotels, as trustee for the Horizon Hotels Trust, is the 'Borrower' and Mortgagor, Mr Magree is the 'Guarantor', the 'Loan Advance – 2nd Mortgage' is for $1,100,000 or 67.5% of the sworn valuation, the maximum and minimum term is 8 months and that 'Security' includes 'Registered first and second mortgages' over Unit 1 and Unit 2. 2. Pausing here, in cross-examination, Mr Highmore gave evidence that the Loan Offer should not have referred (on page one) to a registered first and second mortgage over the Properties, the reference to a first mortgage looked 'like a typo' and the second mortgage should be unregistered. 3. The first page of the Loan Offer also provides for the following: Interest Only Rate – 2nd Mortgage 24% per annum (concessional rate) and 30% per annum (standard rate). Interest payable The Mortgagor must pay the Mortgagee interest monthly in advance calculated at the 'Standard Rate', however, the Mortgagee will accept interest calculated at the 'Concessional Rate' in lieu of interest calculated at the 'Standard Rate' if the Mortgagor pays interest calculated at the 'Concessional Rate' within 7 days of the date interest is due to be paid and no Event of Default has occurred. Provided the 'Standard Rate' applies, interest is calculated on the total of the secured amount for the period when the payment was due. Repayments: Unless advised to the contrary the Borrower is to pay the Lender eight (8) months' interest in advance at settlement representing the sum of $176,000. Interest commences on the first day from the date of settlement. 1. Clause 3 of the Loan Offer states: Subject to the current first mortgagee consenting to the registration of a subsequent mortgage in favour of the Lender , also producing a Deed of Priority on behalf of all parties and making the title available at the Titles Office, the Borrower gives an undertaking to ensure that the current mortgagee complies. 1. Clauses 8 and 9, which deal with fees and charges, relevantly provide: 8. Fees and charges that you are 'responsible for' are: (a) Administration Fee of $660; (b) Commitment Fee of $550; (c) Establishment Fee of $36,300; (d) Brokerage Fee of $18,150; and (e) Legal costs estimated at $6,600 plus disbursements. 9. All fees (together with GST) including all costs and disbursements incidental to procuring the loan and registering all security documents are to be deducted from the loan proceeds unless otherwise stated in this Letter of Offer. 1. Clause 11 states: Other matters 11. If this loan facility does not proceed for any reason, the Borrower and Guarantor will be liable to pay all valuation fees, legal fees or any fees incurred by the lender (collectively the 'Costs') together with interest payable thereon at the rate set down by Section 2 of the Penalty Interest Rates Act 1983 and any GST and the Borrower and any other party signing the acceptance of this offer hereby charge all their right, title and interest, whether held now or in the future, in any real estate with the due payment of the Costs and acknowledge that this charge creates an estate or interest in any real estate owned by them entitling the Lender or the Lender's solicitor to lodge either now or in the future, a caveat to secure the payment of the Costs. 1. The Special Conditions on page 3 of the Loan Offer state that the loan is to be used for business or commercial purposes and identifies nine things that need to be provided if Horizon Hotels wishes to proceed with the loan application, which relevantly include: 1. The original of this Letter of Offer. 2. Completed and signed Application Form. … 4. Copy NAB loan statement showing current balance of $9.7m as at 26 August 2021. 5. Letter from National Australia Bank or contact details of NAB relationship manager for Horizon Hotels Pty Ltd. 6. Details of who to contact in relation to the withdrawal and payout of each caveat. 7. Withdrawal of Caveats by Aqualand Developments Pty Ltd AP90648, AP337433, AP90649 & AP337324 that currently appear on lots 1 and 2. 8. Withdrawal of Caveats by Chase Property Investments Pty Ltd AP986813 & AP986814 that currently appear on lots 1 and 2. 9. Withdrawal of Caveats by Guardian Wealth Mortgage Managers Pty Ltd AQ152685 & AQ152687 that currently appear on lots 1 and 2. 1. The final page of the Loan Offer contains the signature blocks, which are signed by Mr Magree for and on behalf of Horizon Hotels and on his own behalf, after which the Loan Offer states as follows: I/We hereby accept the above terms and conditions and I/we agree to proceed with the loan application. I/We undertake to pay such expenses as are incurred in relation to this loan application whether or not the Title to the subject security be accepted and further acknowledge that should this transaction not be completed for any reason whatsoever, I/We shall indemnify the Lender and ASMM against all proper costs and charges involved as well as any Procuration and legal fees which but for the fact that this transaction is not completed would be payable. I/We hereby charge my/our interest, whether held now or I the future, in any real estate with the due payment of such costs, charges and fees and acknowledge that this charge creates an estate or interest in the said real estate entitling the Lender, ASMM or the Lender's solicitor to lodge a caveat on any real estate I/We own, to secure such payment. 1. In these reasons, I refer to this as the Further Term. 2. On 31 August 2021, ASMM issued a tax invoice to Horizon Hotels for payment of an Administration Fee of $660, Commitment Fee of $550, Establishment Fee of $36,300 and Brokerage Fee of $18,150, totalling $55,660 (inclusive of GST). Revised offers of finance 1. On 31 August 2021, Mr Barkas and Ms Simonetta discussed the availability of an extra $120,000 finance for Horizon Hotels and a new letter of offer of finance. After the discussion, Mr Barkas sent an email to Ms Simonetta, copied to Mr Highmore, Mr Magree and Mr Costigan, in which Mr Barkas stated that he had spoken and had Mr Magree's instructions and that Horizon Hotels was happy to accept the additional $120,000 provided there would be no increase in set up costs (referring to cl 8 of the Loan Offer) but they understood that the interest amount would increase. 2. Ms Simonetta replied by email that day advising that the Establishment Fee and Brokerage Fee would increase if a loan amount of $1,200,000 was advanced, to which Mr Barkas advised that he had Mr Magree's instructions and that the '[r]evised fees' were 'accepted'. 3. On 31 August 2021, HWL Ebsworth (HWLE), acting for a group of companies, Jefti Pty Ltd, Southside Industries (Aust) Pty Ltd, Stanby Nominees Pty Ltd, West Beach Operations Pty Ltd, Trustworthy Nominees Pty Ltd and Nat Lees No2Pty Ltd (referred to in the email as 'the Lenders'), sent an email to Mr Barkas and Ms Simonetta attaching a revised letter of offer dated 31 August 2021 (31 August Revised Offer) from ASMM to Mr Magree, as director of Horizon Hotels for a loan in the sum of $1,220,000.00 or 68.25% of the sworn valuation of the security property. The Loan Offer and the 31 August Loan Offer are in the same terms, save for that the 31 August Revised Offer refers to a Loan Advance of $1,220,000, an advance interest payment of $195,200, an Establishment Fee of $40,260, a Brokerage Fee of $20,130 and removes items 4 and 5 of the list of required items relating to NAB (as described at [42] above). The email from HWLE also refers to other documents being attached that required execution by Horizon Hotels, including a Facility Agreement, General Security Deed, Guarantee and Indemnity and Mortgage of Land over the Properties (which documents are not in evidence). 4. On 1 September 2021, HWLE sent an email to Mr Barkas that asked for contact details for NAB in relation to obtaining their consent to register 'our mortgage'. Mr Barkas responded by email, copied to Mr Magree, that stated there would be no registration for the second mortgage and that NAB must not be contacted regarding the loan, which Mr Barkas asserted had been made clearly known to the 'lender's broker' from the outset. 5. On 1 September 2021, Mr Barkas sent an email to Ms Simonetta, copied to Mr Magree, referring to a phone call they had that afternoon about Horizon Hotels' security position, the lenders wanting more than a caveat and that they were going to insist on a registered mortgage. Mr Barkas' email states that they are aware that NAB's consent to the registration of a second mortgage was required but that consent would only be required if either of the loans from NAB or ASMM were in default, in which case it was fully expected that NAB's consent would be given to the registration of a second mortgage. Mr Barkas' email also states that Horizon Hotels and Greg Magree would support any request and would petition NAB for consent, which Mr Barkas hoped would provide the comfort required regarding NAB, but that NAB was not to be contacted concerning the loan, which he said was made clear from the beginning of the loan process, and asked to please proceed with the loan on that basis. 6. Ms Simonetta deposes to a conversation with Mr Barkas on 3 September 2021, in which she advised that ASMM was going to need the consent of NAB to make sure the mortgage would ultimately be able to be registered and to confirm how much was owed, and that Mr Barkas said, 'I understand'. Mr Barkas disputes this and says that he told Ms Simonetta that NAB was not to be contacted and there would be no consent. Ms Simonetta says that, on 6 September 2021, she spoke to Mr Barkas again about needing to 'at least speak with NAB about the debt' and Mr Barkas told her, 'I do not want you to. I do not want you to contact NAB at all'. 7. On 6 September 2021, Ms Simonetta received confirmation from her 'investors' that the loan could proceed protected by caveat but the amount owing to NAB needed to be confirmed and the interest rates would need to increase slightly. 8. On 8 September 2021, HWLE sent an email to Horizon Hotels' lawyer, copied to Mr Barkas, that attached a revised letter of offer dated 6 September 2021 (6 September Revised Offer) in relation to a loan in the sum $1,220,000 and amended loan documents, noting that the 'parameters of the loan had changed'. The 6 September Revised Offer is in the same terms as the 31 August offer save that it provides for the following: an 'Interest Only Rate – 2nd Mortgage' at '30.0% per annum (concessional rate) 35.0% per annum (standard rate)'; an advance interest payment of $244,000; a new condition 5 that states that 'you will provide a copy of the National Australia Bank loan statement as and when requested by the lenders in this second mortgage'; and increases the Commitment Fee to $770 and the Brokerage Fee to $26,840. 9. It is common ground that Horizon Hotels did not sign the 31 August Revised Offer or the 6 September Revised Offer, and the loan for $1,100,000 in accordance with the Loan Offer did not proceed. As events transpired, Horizon Hotels sourced finance from an alternative lender, Guardian Wealth Management, in around mid-September 2021. Lodgement of the Caveats and events leading to these proceedings 1. On or about 27 October 2021, ASMM and Mr Highmore lodged the caveats on the title to the Properties that are the subject of dispute in these proceedings. ASMM lodged caveat AR561491 in relation to Unit 1 and caveat AR561493 in relation to Unit 2. Mr Highmore lodged caveat AR561492 in relation to Unit 1 and caveat AR561494 in relation to Unit 2. I refer to these four caveats collectively as the Caveats. 2. The Caveats lodged by ASMM are in the same terms. They claim an estate or interest in the Properties as a 'Charge' by virtue of an Agreement between ASMM and Horizon Hotels. The details supporting the claims refer to the fees pursuant to the Letter of Offer dated 26 August 2021 (the Loan Offer) and executed by the Registered Proprietor on 30 August 2021. 3. The Caveats lodged by Mr Highmore also claim an interest in the Properties as a 'Charge' but by virtue of an Agreement between Mr Highmore and Horizon Hotels and refers to the fees pursuant to the Introducer Mandate Agreement executed by the Registered Proprietor on 25 August 2021 (the Introducer Mandate Agreement), as the details supporting the claim. 4. It appears that, on or about 17 September 2021, Mr Highmore lodged other caveats, caveat AR436246 over Unit 1 and caveat AR436222 over Unit 2. Caveat AR436246 claimed an interest as a Mortgage by virtue of a Loan Agreement dated 25 August 2021 between Mr Highmore and Horizon Hotels. As it was lodged at around the same time, it seems reasonable to assume that caveat AR436222 was in the same terms (a copy of that dealing is not in evidence). These caveats were the subject of lapsing notices served by Horizon Hotels on or about 13 December 2021 and, as no orders were made extending their operation, they lapsed. The most recent title searches of the Properties (Exhibit D and E) indicate that these caveats are no longer on title. 5. The evidence also discloses that, on or about 14 September 2021, caveat AR424885 was lodged on Unit 1 by Willow Grange Pty Ltd, West Beach Operations Pty Ltd & Trustworthy Nominees Pty Ltd (the Group) claiming an interest as a Charge by virtue of an Agreement between the Group and Horizon Hotels, referring to a Letter of Offer dated 26 August 2021. The most recent title search of the Properties indicates that this caveat is no longer on title. 6. On 17 November 2021, Bransgroves Lawyers, acting for the Group, ASMM and Mr Highmore, demanded payment to Mr Highmore of $18,150 pursuant to the Introducer Mandate Agreement and $70,860 to the Group and ASMM (which amount includes the Brokerage Fee of $18,150 payable to Mr Highmore) and noted that the Caveats would be withdrawn upon payment of those amounts. These proceedings and issues for determination 1. The genesis of the proceedings was the service in December 2021 of lapsing notices by Horizon Hotels in relation to the Caveats. 2. On 30 December 2021, ASMM and Mr Highmore commenced the proceedings, by Summons filed that day. At an urgent ex parte hearing on 31 December 2021, the Court made interim orders that extended the Caveats until 5.00pm on 17 January 2022: Australian Secured & Managed Mortgages Pty Ltd v Horizon Hotels Pty Ltd [2021] NSWSC 1715. 3. On 14 January 2022, by consent orders made that day, the Caveats were extended until further order of the Court. Directions were made for the parties to serve their evidence and the matter was set down for final hearing before me commencing on 14 July 2022 with an estimate of two days. 4. At the hearing, ASMM and Mr Highmore moved on the Summons as filed, which sought orders, by way of final relief, for the Caveats to be extended until further order of the Court, for Horizon Hotels to pay ASMM the sum of $69,480 or, if costs are ordered on an indemnity basis, the amount of $52,710, that Horizon Hotels pay Mr Highmore the sum of $18,150, and costs on an indemnity basis. 5. There were no pleadings other than the Summons. The way in which the case for ASMM and Mr Highmore and Horizon Hotels' defence was put is set out in the parties' written submissions received prior to the hearing, as supplemented by oral submissions and the defendant's speaking notes in relation to closing submissions. It is appropriate to record that, in view of the various issues raised (as set out below), this was a matter that should have proceeded by way of pleadings. 6. One of the issues raised by Horizon Hotels' written submissions was the nature of the final relief sought. This issue was raised in the context where the Summons lacked pleas for declarations of charge. 7. At the start of the hearing, the Court also noted that the Summons failed to claim any final substantive equitable relief that sought to establish or vindicate the nature of the proprietary interest in the Units which ASMM and Mr Highmore asserted in the Caveats. In my view, in a case such as this, where it was apparent that the basis for enforcing the asserted charges would be contested, some form of final relief that claimed an interest in the Properties over which the Caveats were lodged was required. The substantive relief that will determine whether ASMM and Mr Highmore have a caveatable interest in the Properties, and any entitlement to orders extending the Caveats, is the existence of a charge or mortgage over the Properties, not the entitlement to payment of the amounts claimed: Abou-Hamad v Darwish [2012] NSWSC 231 at [50]-[51]; Wu v Dardeneliotou [2008] NSWSC 1319 at [2]; Iaconis v Lazar [2007] NSWSC 1103 at [22]. 8. In response to this issue, on the second day of the hearing, ASMM and Mr Highmore sought and were granted leave, by consent, to file an Amended Summons that seeks the following final relief: 1. orders that the operation of the Caveats be extended until further order of the Court; 2. declarations that: 1. the sum of $54,450 (or alternatively, some lesser amount) is owed by Horizon Hotels, jointly and severally, to ASMM and Mr Highmore, which sum is secured by way of charge over the Properties in favour of ASMM and Mr Highmore; 2. the further amount of $15,023.99 is owed by Horizon Hotel, to ASMM, which sum is secured by way of charge over the Properties in favour of ASMM; 3. the amount of the costs incurred by ASMM and Mr Highmore in relation to the proceedings are owed by Horizon Hotels, and that such costs are secured by way of charge over the Properties; 1. orders that Horizon Hotels pay to ASMM the sum of $69,480 (or, alternatively, $52,710) and the sum of $18,150 to Mr Highmore, or such amounts that the Court determines are owed; and 2. costs on an indemnity basis. 1. ASMM's and Mr Highmore's cases are put as follows. 2. Mr Highmore contends that the Introducer Mandate Agreement is a binding contract between he and Horizon Hotels, having been signed by Mr Magree and sent to Mr Highmore on 25 August 2021. He says that, even though the loan did not proceed, he is entitled to payment of the Application/Origination Fee of $54,450 (comprising the Procuration Fee of $36,300 and the Brokerage Fee of $18,150), as he procured an offer of finance (namely, the Loan Offer) from a lender for the amount of $1,100,000, at an interest rate of 24% and for an eight month term, which were within 10% of the 'preferred loan amount, indicative interest rate and preferred term', in accordance with cll 3.3 and 3.8 of the Introducer Mandate Agreement. 3. Mr Highmore also says that, by cl 5.1 of the Introducer Mandate Agreement, the Properties are charged with payment of the Application/Origination Fees and the costs of these proceedings, the Caveats he has lodged should be extended until those amounts have been paid, and by cl 5.1, he is entitled to costs on an indemnity basis. 4. In relation to ASMM's claim, it contends that the Loan Offer was capable of being and was in fact accepted by Horizon Hotels and is a binding agreement between ASMM as Lender and Horizon Hotels as Borrower. It submits that, in circumstances where the loan did not proceed, cl 11 of the Loan Offer operated so that Horizon Hotels became obliged to pay the Legal Fees and other fees incurred by ASMM (the Costs) or, alternatively, the Further Term (referred to at [43] above) operated so that Horizon Hotels became liable to pay those amounts pursuant to its undertaking to pay expenses and to indemnify ASMM against all proper costs and charges involved, including, the Procuration and Legal Fees. ASMM submits that on the proper construction of the Loan Offer, the fees set out in cll 8(a) to (e) of the Loan Offer are costs, expenses and other fees that are payable by Horizon Hotels to ASMM, although it accepts that the Establishment and Brokerage Fees (totalling $54,450) are payable by Horizon Hotels to either ASMM or Mr Highmore. 5. ASMM also submits that by cl 11, or alternatively the Further Term, the Properties are charged with payments of the amounts claimed to the extent they remained outstanding and that the Caveats should be extended until such time as they have been paid. 6. Horizon Hotels does not dispute that it entered into the Introducer Mandate Agreement or that it accepted the Loan Offer. Nor does it dispute that cl 5.1 of the Introducer Mandate Agreement and cl 11 or the Further Term in the Loan Offer take effect as charging clauses, or that the charges would take effect on the Properties. Rather, the dispute is about what, if any, fees are payable and the subject of any charges. 7. In written submissions and during oral submissions at the hearing, Horizon Hotels raised a number of arguments to support their contention that Mr Highmore and ASMM have no entitlement to the payment of the fees claimed and the Caveats do not secure any interest in the Properties, which can be summarised as follows: 1. the Loan Offer procured an interest rate of 30% per annum, which equates to 2.5% per month and in excess of 10% of the indicative interest rate of 2% per month (being, 12.5% greater) and, thus failed to meet the necessary precondition for payment of the fees under cll 3.3 and 3.8 of the Introducer Mandate Agreement; 2. ASMM was not the 'Lender' for the purposes of the Loan Offer and, in any event, has not established that it requires indemnification for any fees; and 3. ASMM and Mr Highmore are estopped from otherwise relying strictly on the terms of the Introducer Mandate Agreement and the Loan Offer relating to the payment of any fees because the parties had a common assumption as to the terms of their legal relationship, namely that any loan would be secured by a registered caveat over the Properties with an unregistered second mortgage, and departure from that assumption would occasion detriment to Horizon Hotels. 1. Horizon Hotels' written submissions had also contended that the Caveats are infected by a failure to seek leave under s 74O of the Real Property Act 1900 (NSW), but this contention was not pressed after some debate at the hearing. This concession was appropriate, in my view, given the Caveats lodged by Mr Highmore do not claim the same estate or interest as the caveats he lodged in September 2021 (which claimed an interest as a Mortgage based on a Loan Agreement) and Mr Highmore is a different caveator to ASMM and the Group. 2. Finally, Horizon Hotels says that the declaratory relief sought is bad in form and there is no proper basis to extend the Caveats until further order. 3. Thus, the issues in dispute depend, in the main, upon the proper construction of the Introducer Mandate Agreement and the Loan Offer, and whether any estoppel arises in the circumstances of this case. Construction issues 1. The principles applicable to questions of construction of a written commercial agreement are well-established. 2. The meaning of a term is to be determined objectively, by what a reasonable businessperson, placed in the position of the parties, would have understood the terms to mean, and not by determining the subjective beliefs or understandings of the parties about their rights and liabilities. Consideration is to be given to the language used by the parties, the surrounding circumstances known to them and the commercial purpose or object to be secured. A commercial contract is to be construed as a whole, so as to render all the terms harmonious and avoid making commercial nonsense or commercial inconvenience: Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 at [16]-[17]; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [46]-[52]; Electricity Generation Corp v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35]; Toll (FGCT) Pty Ltd v Alphapharm (2004) 219 CLR 165; [2004] HCA 52 at [40]. Are fees payable to Mr Highmore under the Introducer Mandate Agreement? 1. It is common ground that cll 3.3 and 3.8 of the Introducer Mandate Agreement set out the preconditions to the payment of fees claimed by Mr Highmore, namely the Application/Origination Fees of $54,450, consisting of the Procuration Fee of $36,300 and the Brokerage Fee of $18,150 (Introducer Fees). 2. Relevantly, under cl 3.3, Horizon Hotels agreed to pay the Introducer Fees within 2 business days of Mr Highmore procuring a written offer of finance from a lender for an amount 'within 10% of the preferred loan amount, indicative interest rate and preferred term'. Under cl 3.8, Horizon Hotels acknowledged that it was liable to pay the Introducer Fees to Mr Highmore, irrespective of whether or not the terms of any offer of finance were acceptable to Horizon Hotels, so long as the offer was for an amount 'within 10% of the preferred loan amount, indicative interest rate and preferred term', and even if an offer of finance once accepted did not proceed. 3. It is also common ground that the Loan Offer which Mr Highmore procured was a written offer of finance for an amount within 10% of the preferred loan amount ($1,100,000) and the preferred term (8 months) and relevantly satisfied those preconditions to payment. 4. The first issue raised by the submissions is whether, on a proper construction of the Introducer Mandate Agreement, the Loan Offer met the precondition of being within 10% of the indicative interest rate of 2% per month (24% per annum). That issue arises as the Loan Offer refers to two interest rates, a concessional rate of 24% per annum and a standard rate of 30% per annum, with only the former, and not the latter, being within 10% of the indicative interest rate of 2% per month. 5. The second issue raised by Horizon Hotels during the course of oral closing submissions is whether the Loan Offer was from 'a lender'. 6. Dealing with the second issue first, I do not accept Horizon Hotels' submission that the Loan Offer does not meet the precondition for payment of fees because it was from ASMM for its lender (who was later revealed to be the entitles referred to at [48] above and/or the Group) and not from ASMM itself. 7. The Loan Offer is, I accept, drafted in a way that provides that the Lender entity would be other than ASMM itself. It refers to 'our lender' [being] prepared to advance the sum, indemnification of the 'the Lender and ASMM' and an entitlement of 'the Lender, ASMM or the Lender's solicitor to lodge a caveat'. In her evidence, Ms Asciak also referred to procuring 'lenders' to provide the funding (Ms Asciak's affidavit at [14(a)]) and the Group as the 'investors' and the entities that were going to lend the money (T42.50-T43.6). 8. Irrespective of whether or not ASMM was 'the Lender' under the Loan Offer, the obligation on Mr Highmore under the Introducer Mandate Agreement was to procure a 'written offer of finance from a lender'. In my view, a reasonable and commercially sensible construction of that phrase and the word 'lender' would include a letter of offer sent by ASMM, as it consisted of a written offer to advance a sum of money to Horizon Hotels that was sent from an entity that was in the business of providing mortgage finance, had a Australian Credit License, was a full member of MFAA (the Mortgage and Finance Association of Australia). 9. As to the interest rate precondition, Mr Highmore and ASMM submit that, on a sensible commercial construction of the Introducer Mandate Agreement, Mr Highmore would be paid the Introducer Fees if he procured a loan offer with a 'non-default rate' within 10% of the indicative interest rate (of 24% per annum). He says that the Loan Offer met that condition as it provided for an interest rate of 24% to be payable if Horizon Hotels complied with its obligation to pay interest monthly in advance, with the 30% per annum interest rate only applying on default and notwithstanding the use of the term 'standard' in the Loan Offer to describe that higher rate. 10. Horizon Hotels submits that the Loan Offer should be construed as having procured an offer of finance at a standard interest rate of 30% per annum. In support of this construction, Horizon Hotels referred to Kowalczuk v Accom Finance Pty Ltd (2008) 77 NSWLR 205; [2008] NSWCA 343, where Campbell JA referred at [162] (with whom Hodgson and McColl JJA agreed) to the conventional view that a properly drafted mortgage containing higher and lower rates does not attract the law of penalties where a borrower agrees to pay a particular rate of interest but the lender agrees to accept a lower rate in full satisfaction of the borrowers obligation to pay interest at that particular rate provided that the lower rate of interest is paid timeously (although I note that Campbell JA expressly did not decide on the correctness of that view: at [164]). 11. While Horizon Hotels acknowledges that this rationale may require re-expression to accommodate the decision of the High Court in Andrews v Australia & New Zealand Banking Group Ltd [2012] HCA 30; (2012) 247 CLR 205, which affirmed (at [67] and [68]) that application of the penalty doctrine is not limited to penalties imposed upon breaches of contract, it submits that the explanation of the operation of such clauses has otherwise not been doubted. It contends that the Court should extend this reasoning to the present case and find that the indicative rate secured by the Loan Offer was 30% per annum. It submits that the fact that the Mortgagee also indicated that it would accept a lower rate of interest in full satisfaction of the Mortgagor's obligation to pay interest at that particular rate provided the concessional rate was paid timeously, does not derogate from that condition. 12. I accept that the 30% per annum interest rate provision in the Loan Offer might be characterised as a primary obligation under the Loan Offer that is reducible to the concessional rate of 24% per annum as an incentive for payment in compliance with the Loan Offer. Such a characterisation follows from the structure of the 'Interest payable' provision (set out at [38] above), which provides that Horizon Hotels must pay interest at 30% per annum but the Mortgagee promises to accept the concessional rate in lieu of the higher rate if the interest is paid (at the concessional rate) within 7 days of the date for payment and no Event of Default has occurred. The provision was no doubt drafted in that way with a view to avoid any claim that the higher, standard interest was penal: Michelangelo Alfredo Mascarello & Anor v Registrar-General of New South Wales [2018] NSWSC 284 at [393] – [395]; Kellas-Sharpe v PSAL Ltd [2012] QCA 371 at [41] – [42] (Gotterson JA). 13. That said, I am not persuaded by Horizon Hotels' contention that the relevant interest rate secured by the Loan Offer is the standard rate of 30% per annum, such that the interest precondition in the Introducer Mandate Agreement has not been met. 14. Turning to the language used in the Introducer Mandate Agreement, it may be observed that there appears to be some words missing from cll 3.3 and 3.8, in so far as they relate to the indicative interest rate precondition (and the preferred term), given the clauses refer to an offer of finance for an amount (in this case, the amount of $1,100,000) within 10% of the indicative interest rate that is expressed as a percentage. To make commercial sense of the clauses, they must be construed as conditioning the payment of the Introducer Fees on Mr Highmore procuring an offer of finance for an interest rate (and not 'an amount') within 10% of the indicative interest rate in the Introducer Mandate Agreement. 15. The Introducer Mandate Agreement does not refer to or differentiate between a standard or concessional interest rate, a default and non-default interest rate or require there be only the interest rate in the offer of finance. It simply refers to an indicative interest rate of 2% per month and conditions the payment of fees on, amongst other things, the offer of finance providing for an interest rate within 10% of that indicative interest rate. The question is then, does an offer of finance that provides for an interest rate of 24% per annum as well as an interest rate of 30% per annum, meet the precondition for payment of fees for the purposes of the Introducer Mandate Agreement? In my view, it does in this case. 16. The 30% interest rate in the Loan Offer may be expressed as the 'standard rate' and, in the 'Interest payable' provision, as the rate that Horizon Hotels agrees that it 'must pay'. But it is the interest rate of 24% per annum that is payable by Horizon Hotels, as the borrower, if it complies with its obligation under the Loan Offer to pay interest monthly in advance, with the higher standard rate of interest only payable in the Event of Default or if payment is not made within seven days of the date interest is due to be paid. I accept Mr Highmore's and ASMM's submission that the commercial effect of the 30% standard rate is that it operates under the Loan Offer as a 'default' rate only and the 24% concessional rate applies as non-default rate for the Loan Offer. 17. The Introducer Mandate Agreement is to be given a businesslike interpretation that is commercially sensible having regard to the language used and having regard to the object and purpose of the contract. In my view, objectively construed, a reasonable businessperson would understand the Introducer Mandate Agreement to mean that the interest rate precondition in cll 3.3 and 3.8 would be satisfied if the written offer of finance procured by Mr Highmore provided that the effective, non-default interest rate was within 10% of the of indicative 2% per month interest rate, which it was in this case at 24% per annum, even though the Loan Offer also provided for a higher default rate of 30% per annum that was more than 10% higher than the indicative interest rate. 18. I consider that this construction is supported by the object and purpose of the transactions in question and other provisions of the Loan Offer. 19. The apparent object and commercial purpose of the Introducer Mandate Agreement was to obtain and document a written offer for a loan at $1,100,000, with an interest rate of 2% per month over an 8 month term, with all interest to be capitalised and pre-paid. Consistent with that purpose, the Loan Offer provided for an effective non-default rate of interest at 2% per month (24% per annum). Further, the 'Repayments' term of the Loan Offer (as described at [38] above) provided that Horizon Hotels, as borrower, was to pay 8 months interest in advance at settlement of the loan, in the amount of $176,000, which was calculated applying the 24% per annum interest rate. In other words, the applicable interest rate under the Loan Offer in respect of all the interest payable over the 8 month loan term was the non-default rate of 24% per annum. 20. In support of the construction, Mr Highmore and ASMM also referred to the fact that no objection or issue taken by Horizon Hotels with the interest rate before or after the Loan Offer was signed, which they submitted was contrary to the assertion contained in Mr Barkas' 15 February 2022 affidavit that he raised the issue of the 30% per annum interest rate (which he noted was '25% higher than the 2% per month' in the Introducer Mandate Agreement) with Mr Costigan. They also pointed to Mr Barkas' evidence in cross-examination where he accepted that this aspect of his affidavit evidence was false (T66.38-41) and that he understood, when he read the Loan Offer, that the higher rate of 30% per annum (or 2.5% per month) would only apply if there was some default under the loan, that the practical effect was that the interest rate was 2% per month and that Horizon Hotels was happy with a 2% monthly interest rate. 21. I do not consider that the absence of any issue or objection being raised about the interest rate of 30% per annum or Mr Barkas' subjective understanding of the Loan Offer assists with the proper construction of the Introducer Mandate Agreement or with what the Loan Offer provides. As the principles above make clear, the proper construction of the Introducer Mandate Agreement and whether the Loan Offer complied with cll 3.3 and 3.8 is determined objectively, and not on what Mr Barkas says he understood it to mean. That said, I accept ASMM's and Mr Highmore's submission that Mr Barkas' evidence during cross-examination regarding the falsity of that part of his affidavit evidence undermines the credibility of his evidence more generally. In particular, it has led me to conclude that Mr Barkas' affidavit evidence has to be treated with caution, particularly where it is uncorroborated, and I prefer the evidence given by others where there is a conflict between the two accounts and no evidence points to the likelihood of Mr Barkas' account being correct. 22. For these reasons, I find that on a proper construction of the Introducer Mandate Agreement, the Loan Offer procured by Mr Highmore was an offer of finance by a lender for an interest rate within 10% of the indicative interest rate of 2% per month, namely an interest rate of 24% per annum. It follows that, as a matter of contract, I am satisfied that Mr Highmore has established an entitlement to be paid the Introducer Fees by Horizon Hotels. Are fees payable to ASMM under the Loan Offer? 1. ASMM claims to be entitled to the payment of all the cl 8 fees (described at [40] above) from Horizon Hotels pursuant to cl 11 of the Loan Offer or alternatively, pursuant to the Further Term. 2. Under cl 11, Horizon Hotels is liable to pay all valuation, legal and other fees incurred by 'the Lender'. 3. Under the Further Term, Horizon Hotels undertakes to pay expenses incurred in relation to this loan application and to indemnify 'the Lender and ASMM' against all proper costs and charges involved as well as any Procuration and Legal Fees which but for the fact that the transaction is not completed would be payable. 4. During oral submissions, ASMM contended that it is the 'Lender' for the purposes of the Loan Offer, or alternatively, that the Lender was ASMM's nominee, and, irrespective of whether ASMM is the Lender or not, the offer is made by ASMM and forms a binding agreement between ASMM and Horizon Hotels for ASMM to either lend money or cause its nominee to lend money. 5. I am not persuaded by ASMM's submission that ASMM should be construed as 'the Lender' for the purposes of the Loan Offer. This is primarily for the reasons outlined at [87] above. In particular, the references in the Loan Offer to a sum to be advanced by 'our (ASMM's) lender' and 'the Lender and ASMM' (in the Further Term) support a construction that it was intended that the Lender would be a separate and distinct entity to ASMM and was in fact so. 6. I do not accept Horizon Hotels' submission that there is no binding contract between ASMM and Horizon Hotels as ASMM is not specified as 'the Lender'. In my view, the better construction of the Loan Offer is that it formed a binding agreement between ASMM and Horizon Hotels pursuant to which ASMM would procure its nominee (the Lender) to provide a loan on the terms set out. 7. That said, I am not satisfied that ASMM, even as a party to the Loan Offer, has established that it has an entitlement to recover the fees claimed from Horizon Hotels pursuant to cl 11 of the Loan Offer. 8. Clause 11 of the Loan Offer is set out at [41]. I consider that, as cl 11 refers to 'other fees', it is capable of capturing a broad scope of fees, that could include fees and charges of the type referred to in cl 8. However, any entitlement to recover fees under cl 11 is qualified by the requirement that the fees were 'incurred by the Lender'. In my view, the words 'incurred by' mean that it must be shown that the Lender became liable to or had a legal obligation to pay the fees claimed, as an expense or some other loss. In other words, I consider that cl 11 does not give rise to a liability on the part of Horizon Hotels to pay the cl 8 fees without more. 9. Ms Asciak gives evidence that in reliance on the Loan Offer, she coordinated and procured lenders to provide funding, the lenders held aside their funds for settlement, she instructed ASMM's loan solicitors (HWLE) to document the loan and that security documents were issued. The security documents that were issued are not in evidence, although I would infer that Ms Asciak is referring to the security documents attached to the email sent to Horizon Hotels' solicitor on 31 August and 8 September 2021, as referred to at [48] and [53] above. 10. Ms Asciak evidence also states that 'the lenders' have incurred the fees set out in cl 8 of the Loan Offer, as well as further legal costs. In relation to the fees and costs, Ms Asciak exhibits the invoice from ASMM for the Administration Fee, Commitment Fee, Establishment Fee and Brokerage Fee, as referred to at [45] above; says that the Brokerage Fee of $18,150 is a fee payable to Mr Highmore which she says ASMM can collect and pay to Mr Highmore or Horizon Hotels can pay to him directly pursuant to his Introducer Mandate Agreement; and that the lenders have incurred more than the cl 8(e) estimate of Legal Fees of $6,600, and exhibits an invoice issued to the Group from HWLE dated 23 December 2021 in the amount of $8,800 (GST exclusive) and deposes that the 'lenders/ASMM have incurred' costs of $5,019.99 with Bransgroves Lawyers, which is referrable to handling the caveats but does not include the costs of dealing with the lapsing notice and making this claim. Ms Asciak deposes that she did not exhibit those invoices as she did not wish to waive privilege over matters that may be detailed in the time entries. 11. Horizon Hotels submits, and I accept, that ASMM has not demonstrated that the Lender under the Loan Offer has incurred, and ASMM is therefore entitled to claim, under cl 11, the Commitment Fee (of $550), the Establishment Fee (of $36,300) or the Brokerage Fee (of $18,150). In my view, Ms Asciak's evidence does not establish that the relevant Lender (whether it be ASMM or its nominee, such as the Group) has incurred these fees, in the sense that the Lender became liable or obliged to pay them, or has in fact paid them. ASMM may have demanded payment of the Commitment, Establishment or Brokerage Fees and they may be payable to ASMM or the Lender under cl 8, but in my view, they are not fees that have been shown to be otherwise 'incurred' by the Lender. 12. As to ASMM's claim for legal costs under cl 11, the difficulty is that on its face, the invoice exhibited to Ms Asciak's affidavit lacks any clear indicia to connect it to the issuance of security documents in late August and early September 2021. It is dated 23 December 2021, refers to 'Professional Services' in relation to an 'Extension Letter', and is addressed to the Group only, rather than the entities that were identified as the 'Lenders' when the 31 August Revised Offer was issued. 13. As for ASMM's claim for costs with Bransgroves Lawyers, to the extent that those costs relate to the handling of 'the caveats', it is not clear whether that includes the caveat lodged by the Group or is limited to the Caveats lodged by ASMM that are the subject of these proceedings. Without further details regarding those costs, I am not satisfied the claim has been properly substantiated by ASMM. In any event, it is difficult to see how Legal Fees incurred in relation to a caveat lodged by the Group that has lapsed or been withdrawn or the Caveats lodged by ASMM (not the Lender), could be recoverable as fees 'incurred by the Lender', for the purposes of cl 11. 14. As to ASMM's alternative claim that relies on the Further Term (which is set out at [43] above), I am satisfied that ASMM is contractually entitled to payment of some (but not all) of the cl 8 fees and charges claimed pursuant to the indemnity that is contained in the Further Term. The indemnity in the Further Term is provided by Horizon Hotels and is expressed to be in favour of ASMM (and the Lender) for all proper costs and charges involved, including any Procuration and Legal Fees that are payable, despite the loan not proceeding. 15. In my view, the Administration fee, Commitment fee, Brokerage Fee and Establishment Fee are all fees that fall within the meaning of 'proper costs and charges', as they are fees and charges that are payable under the Loan Offer pursuant to cl 8. I also consider that the Administration fee, Commitment fee and Establishment Fee would fall within the meaning of 'Procuration' fees, as they relate to the loan application and approval process and obtaining the loan. Relevantly, the term 'Procuration Fee' is used in the Introducer Mandate Agreement to describe the fee payable and calculated at '3% +GST' ($36,300 inclusive of GST), which is the amount of the Establishment Fee in the Loan Offer. 16. As to the claim for Legal Fees, for the reasons set out at [113] – [115] above, I am not satisfied that ASMM has established that the legal fees subject to the HWLE invoice and the Bransgroves costs are proper costs or charges or legal fees which, but for the fact that the transaction has not completed, would be payment to ASMM. In that regard, I note that the security documents (in respect of which the HWLE invoice is claimed to have been issued), were seemingly issued in relation to the 31 August and the 6 September revised offers, and not in respect of the Loan Offer. Further, Ms Asciak's evidence does not satisfy me that the legal costs relating to the 'caveats' are Legal Fees that would be payable to ASMM but for the fact that the transaction did not complete. 17. In summary, I am satisfied that Horizon Hotels is liable to pay to ASMM the Administration, Commitment, Brokerage and Establishment fees, (which totals $55,660) pursuant to the Further Term under the Loan Offer, noting that, the Brokerage and Establishment Fees (which together total $54,450) are also payable to Mr Highmore. 18. It follows that, as a matter of contract and subject to the estoppel claim, ASMM has an entitlement to be paid $54,450, on a joint and several basis with Mr Highmore, and an additional amount of $1,210, pursuant to the Further Term in the Loan Offer. Estoppel issue 1. In its submissions, Horizon Hotels refers to and relies on the principles of estoppel by convention, which is a form of estoppel founded upon an assumed state of affairs by the parties, whether as to a matter of fact or a matter of legal effect which both are estopped from denying: Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 266; [1986] HCA 14 at [22]. 2. The assumed state of affairs takes as a given the terms of the contract as known to and understood by the parties but from which the parties have departed for the purpose of the furtherance of their relationship under the contract: Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65 at [194] (Ryledar v Euphoric); Taouk v Assure (NSW) Pty Ltd [2017] NSWSC 534 at [82] – [90]. 3. The elements of conventional estoppel were set out by Brereton J (as His Honour then was) in Moratic Pty Ltd v Gordon [2007] NSWSC 5 at [32], as approved in Ryledar v Euphoric at [200] and Miller Heiman Pty Ltd v Sales Principles Pty Ltd (2017) 94 NSWLR 500; [2017] NSWCA 106 (Miller Heiman v Sales Principles) at [42] – [44], as follows: In common law conventional estoppel, it is necessary for a plaintiff to establish (1) that it has adopted an assumption as to the terms of its legal relationship with the defendant; (2) that the defendant has adopted the same assumption; (3) that both parties have conducted their relationship on the basis of that mutual assumption; (4) that each party knew or intended that the other act on that basis; and (5) that departure from the assumption will occasion detriment to the plaintiff. 1. To establish conventional estoppel, it must also be shown that the parties' conduct is plainly, if not unequivocally, explicable on the mutual assumption contended for. Conventional estoppel is not established if the parties' course of dealing is referrable to some other equally plausible assumption: Miller Heiman v Sales Principles at [41]. 2. Not only must the common assumption contended for be able to be articulated (Ell v Ell [2015] NSWCA 38 at [35]), it must also be shown to have been adopted by each of Horizon Hotels, Mr Highmore and ASMM and that they each conducted their relationship on the basis of the common assumption, they each knew or intended that the other would do so, and that the departure from it would cause Horizon Hotels detriment. 3. The way in which Horizon Hotels articulated the common assumption and its conventional estoppel case changed during the course of the hearing. As it was ultimately put, the common assumption that is alleged to have been adopted is that Horizon Hotels, by its agent Mr Barkas, understood that the fee payment obligations in cll 3.3 and 3.8 of the Introducer Mandate Agreement operated only if the Loan Offer met the terms of the Introducer Mandate Agreement, specifically the requirement that there be an unregistered second mortgage (as set out in 'cell 2') and the preconditions relating to the loan amount, indicative interest rate and preferred loan term (Fee Assumption). 4. Horizon Hotels submits that the parties dealt with each other on the basis of the Fee Assumption since the inception of the relevant transaction and did not depart from it, as evidenced by the following: 1. the terms of Mr Highmore's 24 August 2021 email (at [14] above), which was described as an invitation to treat to Horizon Hotels and the only basis on which Mr Barkas entered into the Introducer Mandate Agreement; 2. Mr Barkas' evidence that he understood that no fees would be payable at all, and no broker would have recourse, unless the Loan Offer had terms congruent with the Introducer Mandate Agreement which, he said, included the caveat-only loan and an unregistered second mortgage; 3. Mr Highmore's evidence that he understood the reference to a first registered mortgage in the Loan Offer to be a 'typo', as referred to at [37] above; 4. the emails and communications that followed after the Loan Offer and 31 August Revised Offer, where Mr Barkas said there would be no registration for a second mortgage and it would be unregistered (see, for example, at [29], [30] and [49] above); and 5. the procurement of a caveat-only loan on 6 September 2021, albeit with an increased interest rate, as referred to at [53] above. 1. Horizon Hotels also contends it would suffer detriment if Mr Highmore or ASMM were permitted to depart from the Fee Assumption as it is clear on Mr Barkas' evidence that he has not deviated from his position that the caveat was the means of registration on title and that NAB would not be contacted. It says that had Mr Barkas (or Horizon Hotels) known the Fee Assumption was incorrect or challenged, he would have sought to clarify it, and if it had not been clarified, he would not have agreed to the terms of the Introducer Mandate Agreement nor the Loan Offer, such that Horizon Hotels should not be held to contracts it would not have made. 2. As was put by Horizon Hotels' counsel during oral submissions, although ASMM and Mr Highmore had strict legal rights and obligations, the parties were operating on the underlying tenet (namely, that there would be an unregistered second mortgage) that was so fundamental to the agreement that it could not be ignored and, therefore, consideration does not pass and so Mr Highmore and ASMM are estopped from enforcing their rights to payments of the fees. 3. ASMM and Mr Highmore raised the following points in response. 4. First, they submit that there is no evidence of a common assumption to the effect that no fees or other amounts would be payable by Horizon Hotels, unless a loan offer was procured which had, as its only security, an unregistered second mortgage with a registered caveat; 5. Second, and while accepting that statements were made at some time, most likely after the Introducer Mandate Agreement was entered into, to the effect that Horizon Hotels would not agree to a loan which had security by way of a registered second mortgage, an acceptable loan (with a registered caveat and unregistered second mortgage) was not a precondition for payment of fees to Mr Highmore; 6. Third, the Court should not find that Horizon Hotels held the Fee Assumption at the time of the Introducer Mandate Agreement in the absence of any evidence from Mr Magree. They submit that the Court cannot place much weight on Mr Barkas' evidence, particularly as there is not even hearsay evidence as to what Mr Magree did or did not tell Mr Barkas (and vice vera) about this issue; 7. Fourth, and in response to the agency contention, they submit that there is a lack of evidence about the scope of Mr Barkas' authority but, in any event, the available evidence from Mr Barkas is that he did not have authority to bind Horizon Hotels to either the Introducer Mandate Agreement or the Loan Offer, which inference can be drawn from the fact that neither were signed by him; 8. Fifth, they say that the evidence indicates that Horizon Hotels was desperate for funding and a desperate party is less likely to hold the Fee Assumption. In that context, and in circumstances where Mr Magree has not given any evidence, they submit that the Court would not infer that any assumption was held by Horizon Hotels that it would only agree to a loan offer on the certain security-related terms, or more importantly, that it would only agree to pay fees if a loan offer was procured on those terms; and 9. Sixth, they submit that there is no proper basis to conclude that ASMM or Mr Highmore holds the alleged Fee Assumption, noting that nothing was put to the witnesses for the plaintiffs in cross-examination about the assumptions they held in relation to the preconditions. 10. In my view, Horizon Hotels has not established the existence of the claimed estoppel. This is primarily for the reasons contended by Mr Highmore and ASMM. 11. In particular, I am not persuaded that Horizon Hotels has established that Mr Highmore, ASMM or Horizon Hotels itself ever adopted the Fee Assumption it has articulated, which relevantly is to the effect that fees would not be payable under the Introducer Mandate Agreement (or Loan Offer) unless the Loan Offer provided for a loan with an unregistered second mortgage. 12. The evidence indicates that Mr Highmore and ASMM were aware that Horizon Hotels wanted a loan with an unregistered second mortgage. That evidence includes the terms of Mr Highmore's 24 August email, his evidence at [37] above, the emails and communications referred to at [127(d)] above), and Ms Simonetta's evidence in cross-examination that she understood that Mr Barkas had indicated that Horizon Hotels was looking for an unregistered second mortgage which could be secured by caveat and was very firm about not wanting ASMM to contact 'the bank'. However, awareness of Horizon Hotels' requirement for an unregistered second mortgage does not, in my view, establish knowledge of the Fee Assumption propounded, which relevantly requires knowledge and adoption an assumption that fees would not be payable unless the loan provided for an unregistered second mortgage. 13. There is no direct evidence from Mr Highmore or anyone from ASMM that they were aware of or adopted the Fee Assumption and its existence was not put to them during cross-examination. In that regard, I do not accept Horizon Hotels' submission that Mr Highmore's evidence (at [37] above) is indicative of his state of mind and understanding of the nature of the agreement struck between he and Mr Barkas and shows that he shared the Fee Assumption alleged. 14. There is also no good reason why Mr Highmore, ASMM or Horizon Hotels should have adopted the Fee Assumption and the evidence outlined above, does not support a finding that they did. This is especially as Horizon Hotels signed the Introducer Mandate Agreement after negotiating its terms, and which relevantly is inconsistent with the Fee Assumption, and then signed the Loan Offer, which included a reference to a registered second mortgage and the need to contact NAB. 15. Horizon Hotels relies, in large part, on Mr Barkas' evidence in cross-examination that he understood that no fees would be payable and that no broker would have recourse unless the Loan Offer met the terms congruent with the Introducer Mandate Agreement which, he said, included the caveat only loan and an unregistered second mortgage, and that he assumed that this was part of the agreement. I do not accept Horizon Hotels' submission that Mr Barkas cannot be doubted on that evidence because it was the very basis upon which the parties proceeded with the transaction (T95.13-15). This is particularly as there is no evidence that Mr Barkas communicated his understanding about the payment of fees being conditioned on the offer of finance providing for an unregistered second mortgage. 16. I also find Mr Barkas' evidence about his understanding and assumption difficult to accept in the context where his 25 August 2021 email to Mr Costigan states that they had 'reviewed in detail' the terms of the Introducer Mandate Agreement, Mr Barkas specifically negotiated cll 3.3 and 3.8 relating to the circumstances in which the fees would became payable to include the references to 'within 10%', the 'interest rate' and 'preferred term' but did not include a reference to the unregistered second mortgage, and Mr Barkas accepted in cross-examination that there was nothing in cll 2, 3.3 and 8 of the Introducer Mandate Agreement that would have led him to an understanding that the Application/Origination Fee would not be payable unless a loan offer was issued on terms wholly consistent with the schedule on the front page. As Mr Highmore and ASMM submit, if Horizon Hotels was operating under the alleged Fee Assumption, it is to be expected that it could and would have included that assumption regarding the unregistered second mortgage as a precondition to payment of the fees in the Introducer Mandate Agreement. I also accept their submission that Mr Barkas did not provide a plausible explanation as to why he did not seek to include a term to that effect prior to or at the time of entry into the Introducer Mandate Agreement. 17. In any event, and for the reasons set out at [139] – [141], in my view, the evidence does not support a finding that the basis on which Mr Highmore and ASMM proceeded with the transaction was that no fees would be payable unless the Loan Offer contained the security terms acceptable to Horizon Hotels. 18. Even if Mr Barkas adopted the Fee Assumption, I am not persuaded that the evidence establishes that Mr Barkas' state of mind and knowledge should be imputed to Horizon Hotels on that issue. As to Mr Barkas' claim to be Horizon Hotels' agent, he may have been working to assist Horizon Hotels to arrange the offer of finance. However, the evidence makes clear that it was Horizon Hotels' sole director, Mr Magree, who signed the Introducer Mandate Agreement and Loan Offer on Horizon Hotels' behalf and that Mr Barkas was required to obtain instructions from Mr Magree about matters relating to the terms of the loan that was being negotiated (as evident from Mr Barkas' emails at [46] and [47] above). 19. In my view, it is to be expected that Mr Magree could have given evidence about his knowledge of the circumstances in which fees would be payable by Horizon Hotels to Mr Highmore and ASMM, the basis on which he signed the documents in issue and the extent of Mr Barkas' authority. The fact that he did not do so means that I can more comfortably draw inferences, which I consider are available from the documents and Mr Barkas' evidence, that Mr Barkas did not discuss the Fee Assumption with Mr Magree, that Mr Barkas' assumption at the time cannot be imputed to Horizon Hotels, and that Mr Magree, and by extension Horizon Hotels, did not have knowledge of or hold the Fee Assumption, at any relevant time. 20. As to the other matters raised, there is no evidence that would support the conclusion that the parties conducted their relationship on the basis of a mutually adopted Fee Assumption, noting that, on 31 August 2021, ASMM issued an invoice for the fees, an act that could not be considered to be referrable to the claimed assumption. 21. Finally, I am not persuaded that Horizon Hotels has shown that it would be placed in a position of significant disadvantage if departure from the Fee Assumption was permitted. For similar reasons to those set out at [146] and [147] above, and in circumstances where it is common ground that Horizon Hotels was desperate for finance, I do not accept that Mr Barkas' evidence establishes that Horizon Hotels entered into the Introducer Mandate Agreement and signed the Loan Offer in reliance on the Fee Assumption or that Mr Magree (or Mr Barkas) would have sought to clarify the position or would not have signed the documents in circumstances where it knew that the Fee Assumption was incorrect. 22. For these reasons, Horizon Hotels' contention that Mr Highmore and ASMM are precluded from enforcing their rights to claim payments of fees based on an estoppel by convention fails. Relief and costs 1. As noted at [74], there is no dispute that cl 5.1 of the Introducer Mandate Agreement and the Further Term in the Loan Offer are sufficient to create equitable charges over the Properties to secure repayment of any fees that the Court finds are owing to Mr Highmore and ASMM. Horizon Hotels also accepts, appropriately in my view, that the charges give rise to equitable interests in the Properties. 2. The charging clauses, which are not dissimilar, are expressed in terms that 'hereby charges' any real property/estate owned by Horizon Hotels to secure payment of fees and other amounts under the relevant agreements to Mr Highmore and ASMM. Although the charging clauses are not specific about the property to which they were intended to apply, there is no dispute that Units 1 and 2 fall within their scope. 3. It follows from this and my earlier findings that, I am satisfied the amount of $54,450 that is payable to Mr Highmore is secured by charges over the Properties under cl 5.1 of the Introducer Mandate Agreement, and the amount of $55,660 that is payable to ASMM is secured by charges over the Properties under the Further Term of the Loan Offer. Further, the equitable charges also provide the bases for the Caveats lodged over the Properties by Mr Highmore and ASMM. 4. Mr Highmore and ASMM seek declaratory relief in the terms set out at [68] above. 5. Horizon Hotels submits that the Court should refuse to grant the declaratory relief sought as they were 'bad in form' as they lacked specification of the contract, the clause, the meaning of the clause, the nature of the interest and the date on which the contact was entered into ('and the like'), such that there was insufficient precision necessary to quell the controversy. 6. I am not persuaded that the Court should refuse to grant declaratory relief in this case. In my view, such relief is appropriate as it will assist in quelling the real issues in dispute between the parties, namely whether Mr Highmore and ASMM have equitable charges over the Properties and, if so, the amounts that are owing and secured by those charges. That said, I accept that the declarations to be made as to the existence of the charges and refer to the contractual foundations for those charges, as well as declarations that the amounts owing are secured by the charges. I propose to grant declaratory relief to the effect that Mr Highmore and ASMM have equitable charges over the Properties based on the Introducer Mandate Agreement and the Loan Offer and make declarations in the terms sought by the Amended Summons, to the effect that the amounts owing are secured by the charges. 7. I am also satisfied that it is appropriate in this case to make orders as sought by ASMM and Mr Highmore (at [10] and [11] of the Amended Summons) but updated to reflect my findings as to what is payable that Horizon Hotels pay the amount of $18,150, representing the Brokerage Fee, to Mr Highmore, and for the amount of $37,510 to be paid to ASMM, representing the Establishment, Administration and Commitment fees. 8. The next issue to determine is whether the Court should grant orders extending the Caveats. 9. By the Amended Summons, ASMM and Mr Highmore seek orders extending the Caveats until further order. At the hearing, their counsel clarified that the Caveats should only remain on title until the amounts secured by the charges are paid. 10. Horizon Hotels submits that the Court cannot make orders extending the Caveats until the amounts owing are paid, as the declarations of charge would be the security. As was put, the charging clause would work under the declaration and remains good to assert priority and the caveats would fall away. I do not accept that submission. 11. As ASMM and Mr Highmore submits, the Caveats serve a fundamentally different purpose to the declarations. The declarations by themselves would not provide the effective protection that the Caveats provide. 12. In this case, I have found that Horizon Hotels is liable ASMM and Mr Highmore sums of money, the payment of which are secured by equitable charges over the Properties that gave rise to caveatable interests. No issue is taken that the Caveats do not adequately describe the nature of the proprietary interests claimed. It is common ground that the monies the Caveats were lodged to secure remain outstanding. No offer has been made to provide some alternative form of security and there is no evidence before the Court that there is some particular prejudice flowing to Horizon Hotels as a result of the continued lodgement of the Caveats. 13. In those circumstances, I am satisfied that it is appropriate to make an order extending the Caveats until the amounts of the secured monies have been paid, or until this Court orders otherwise. 14. By their Amended Summons, ASMM and Mr Highmore seek costs on an indemnity basis. 15. At the hearing, ASMM and Mr Highmore submitted they had a contractual entitlement to indemnity costs. Mr Highmore relies on cl 5.1 of the Introducer Mandate Agreement which, it submits, obliges Horizon Hotels to pay all amounts, including costs on an indemnity basis, that Mr Highmore incurs in relation to the enforcement of his rights, and not some lesser amount. 16. On the issue of costs, Horizon Hotels submits that, as the dispute involved a relatively straightforward case about liability for fees and Horizon Hotels had consented to orders extending the Caveats until further order, there was no reason why the fee controversy could not have been dealt with in the Local Court. It submits that these proceedings were misconceived, that ASMM and Mr Highmore were too quick to file the Summons, noting that it did not seek final equitable relief, and that these were powerful reasons why the Court should not adopt the usual rule that costs follow the event (if the plaintiffs were successful) and should apply Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.34. No submission was advanced in relation to the claim for indemnity costs. 17. Rule 42.34 of the UCPR applies to proceedings (other than defamation proceedings) where a plaintiff has obtained a judgment in an amount of less than $500,000 and would be otherwise entitled to an order for costs. Rule 42.34(2)(a) of the UCPR provides that: (2) An order for costs may be made, but will not ordinarily be made, unless the Supreme Court is satisfied that: (a) … the commencement and continuation of the proceedings in the Supreme Court, rather than the District Court, was warranted … 1. It is fair to say that the main issues in the case were about whether the amounts claimed were due and owing. The sums of money claimed were also significantly less than $500,000 and within the jurisdiction of the Local Court. In the context where lapsing notices had been issued, the proceedings had to be commenced in this Court. ASMM and Mr Highmore may have chosen to transfer their money claims to the Local Court while the Caveats were stayed in operation, but I am not persuaded that the continuation of the proceedings in this Court was unwarranted given that the final relief sought orders for the Caveats to be extended and, by the Amended Summons, declarations to the effect that the Properties are charged for the payment of the amounts found to be payable. 2. As to Mr Highmore's claim for indemnity costs, there is no clause in the Introducer Mandate Agreement, such as cl 3 (which deals with Fees and Charges), that provides that Horizon Hotels is obliged to pay Mr Highmore's legal costs on a full indemnity basis in connection with the agreement or its enforcement. Clause 5.1, which Mr Highmore relies on, is the charging clause and relevantly grants a charge in favour of Mr Highmore to secure payment of the fees and 'any and all other monies due'. Although the 'other monies due' is stated to include 'all amounts that [Mr Highmore] may incur in connection with the enforcement and/or preservation of its rights under this agreement', in the absence of any clause that renders Mr Highmore liable to pay legal costs on an indemnity basis, I am not persuaded that cl 5.1 clearly gives rise to a contractual entitlement to recover indemnity costs in this case. 3. As to ASMM, no submissions were advanced as to the terms in the Loan Offer which are said to give rise to a contractual entitlement to indemnity costs. Presumably it relies on cl 11, which refers to a liability to pay 'any fees' incurred by the Lender or, alternatively, the Further Term, which includes an agreement to 'indemnify the Lender and ASMM against all proper costs and charges involved as well as any … legal fees'. For the reason set out above, I do not consider that ASMM is the Lender under cl 11. In the absence of any submissions on the issue, I am also not satisfied that the Further Term gives rise to a contract entitlement to indemnity costs on the part of ASMM. 4. Where a party has a contractual right to costs on an indemnity or solicitor/client basis, the prima facie right to costs on a party/party basis under the UCPR may be displaced. However, a Court is not bound to give effect to the terms of a contract when exercising its discretion to award costs: Kyabram Property Investments Pty Limited and Anor v Murray and Anor. Murray and Anor v Kyabram Property Investments Pty Limited and Anor [2005] NSWCA 87 at [14]-[17]; Abigroup Ltd v Sandtara Pty Ltd [2002] NSWCA 45 at [9]. 5. The award of costs is a matter within the Court's discretion: Civil Procedure Act 2005 (NSW) (CPA), s 98(1). While the Court's discretion is broad, it must be exercised judicially and consistently with the overriding mandate provided for in ss 56-60 of the CPA. 6. The general rule is that costs follow the event unless it appears to the Court that some other order should be made: UCPR, r 42.1. 7. Even if I were to accept that cl 5.1 of the Introducer Mandate Agreement and the terms of the Loan Offer give rise to a contractual entitlement to claim indemnity costs, I am not persuaded that I should exercise my discretion and award costs on an indemnity basis pursuant to those clauses. This is particularly as ASMM and Mr Highmore failed to seek final equitable relief until the Amended Summons was filed on the second day of the hearing and the main issues in the case concerned whether the sum of around $70,000 was due and owing by Horizon Hotels. 8. As ASMM and Mr Highmore have succeeded on their claims and obtained final relief after a contested hearing, I consider that it is appropriate to apply the general rule in this case, with the result that Horizon Hotels should pay costs on an ordinary basis. Orders 1. For these reasons, I make the following orders: 1. Declare that the defendant granted equitable charges over land at Folio Identifier 1/SP78890 (Unit 1) and land at Folio Identifier 2/SP78890 (Unit 2) in favour of the first plaintiff to secure payment of monies payable to the first plaintiff under a letter of offer of finance dated 26 August 2021 and executed by the defendant on 30 August 2021. 2. Declare that the defendant has granted equitable charges over Unit 1 and Unit 2 in favour of the second plaintiff to secure payment of monies payable to the second plaintiff under an Introducer Mandate Agreement executed by the defendant on 25 August 2021. 3. Declare that the amount of $54,450 is owed by the defendant, jointly and severally, to the first and second plaintiffs, and that the amount of $54,450 is secured by way of the equitable charges over Unit 1 and Unit 2 in favour of the first and second plaintiffs, as referred to at Orders 1 and 2 above. 4. Declare that a further amount of $1,210 is owed by the defendant to the first plaintiff, and that the amount of $1,210 is secured by the charges in favour of the first plaintiff over Unit 1 and Unit 2, as referred to at Order 1 above. 5. Order the defendant to pay to the first plaintiff the amount of $37,510. 6. Order the defendant to pay the second plaintiff the amount of $18,150. 7. Order that the operation of Caveat AR561491 lodged in relation to Unit 1 be extended until payment of the amounts referred to in Orders 3 and 4, or until further order of the Court (whichever is earlier). 8. Order that the operation of Caveat AR561492 lodged in relation to Unit 1 be extended until payment of the amount referred to in Order 3, or until further order of the Court (whichever is earlier). 9. Order that the operation of Caveat AR561493 lodged in relation to Unit 2 be extended until payment of the amounts referred to in Orders 3 and 4, or until further order of the Court (whichever is earlier). 10. Order that the operation of Caveat AR561494 lodged in relation to Unit 2 be extended until payment of the amount referred to in Order 3, or until further order of the Court (whichever is earlier). 11. The defendant to pay the first and second plaintiffs' costs of the proceedings on an ordinary basis, as agreed or assessed. ********** 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: 06 December 2022