NK NSW Recoveries Pty Ltd v First Debenture Project No. 5 Pty Ltd [2017] NSWDC 163

District Court New South Wales

Medium Neutral Citation: NK NSW Recoveries Pty Ltd v First Debenture Project No. 5 Pty Ltd [2017] NSWDC 163 Hearing dates: 11 and 12 May 2017; 20 June 2017 Date of orders: 04 July 2017 Decision date: 04 July 2017 Jurisdiction: Civil Before: Gibson DCJ Decision: (1) First plaintiff's claim against the defendants dismissed. (2) Judgment for the second plaintiff against the second defendant for the sum of $75,000 plus interest calculated from 1 March 2013 pursuant to s 100 Civil Procedure Act 2005 (NSW). (3) The parties are to bring in Short Minutes of Order reflecting the mathematically agreed calculation of interest. (4) The second defendant is to pay 80% of both the plaintiffs' costs of the proceedings. (5) All previous costs orders vacated. (6) Second defendant's application for a stay refused. (7) Liberty to restore in relation to interest and costs. (8) Exhibits retained until further order. Catchwords: GUARANTEE – director of company in financial difficulties obtains urgent company loan on condition he provides a guarantee – terms of loan are a two-week interest-free period followed by 48% compound interest – borrower company never makes any payments and goes into liquidation – proceedings commenced by the lender against the guarantor seeking payment of the principal and interest, the latter either under the terms of the contract or pursuant to s 100 Civil Procedure Act 2005 (NSW) - defence under s 7 Contracts Review Act 1980 (NSW) pleaded – whether the interest provision amounts to a penalty – whether, if the 48% compound interest amounts to a penalty, interest may alternatively be awarded under s 100 Civil Procedure Act 2005 (NSW) as sought in the statement of claim – whether lender or guarantor the successful party – "broad axe" costs order of 80% made in favour of the lender Legislation Cited: Civil Procedure Act 2005 (NSW), ss 56 – 62 and 100 Commercial Agents and Private Inquiry Agents Act 2004 (NSW), s 4 Contracts Review Act 1980 (NSW), ss 6 and 7 Conveyancing Act 1919 (NSW), s 12 Uniform Civil Procedure Rules 2005 (NSW), r 42.1 Cases Cited: Clydebank Engineering and Shipbuilding Co Ltd v Don Jose Ramos Yzquierdo y Castaneda [1905] AC 6 Delaware North Marine Experience Pty Ltd v The Ship "eye-spy" [2017] FCA 708 Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd [1915] AC 79 Esanda Finance Corporation Ltd v Plessing (1989) 166 CLR 131 Heath v Goodwin (1986) 8 NSWLR 478 Jones v Dunkel (1959) 101 CLR 298 King Mortgages v Satchithanantham; Cash King v Satchithanantham [2006] NSWSC 1303 Kowalczuk v Accom Finance Pty Ltd (2008) 77 NSWLR 205 Metlife Insurance Ltd v Visy Board Pty Ltd and 25 Ors (Costs) [2008] NSWSC 111 Multiplex Constructions Pty Ltd v Abgarus Pty Ltd (1992) 33 NSWLR 504 Paciocco v Australia and New Zealand Banking Group Limited [2016] HCA 28 Re Chapman's Ltd (No 3) [2015] NSWSC 2082 Re Elsmore Resources [2016] NSWSC 856 Reid v Brett [2005] VSC 18 Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656 Riz v Perpetual Trustee Australia Ltd [2007] NSWSC 1153 Roache v News Group Newspapers [1998] EMLR 161 Saler v Danell [2017] FAMCA 161 Smith v New South Wales Bar Association (1992) 176 CLR 256 Toscano v Holland Securities Pty Ltd (1985) 1 NSWLR 145 Texts Cited: R. Parkes QC, A. Mullis, G. Busuttil, A. Speker & A. Scot, Gatley on Libel and Slander (Sweet & Maxwell, United Kingdom, 12th ed.) Spigelman CJ, "Truth and the Law" (The 2011 Sir Maurice Byers Lecture, 26 May 2011) Category: Principal judgment Parties: First Plaintiff: NK NSW Recoveries Pty Ltd Second Plaintiff: Ghassan Dib First Defendant: First Debenture Project No. 5 Pty Ltd Second Defendant: James Photios Representation: Counsel: Plaintiff: Mr D Allen Defendant: Mr A Friedlander