Advance Business Finance Pty Ltd v Zip Zap Pty Ltd (No.2)

In *Advance Business Finance Pty Ltd v Zip Zap Pty Ltd (No.2)*, heard by Judge Burnett in the Federal Court of Australia, the dispute concerned the calculation of damages arising from a loan agreement. The Applicant, Advance Business Finance Pty Ltd, sought to recover losses from the Respondent, Zip Zap Pty Ltd, following a default under the loan.

The central legal issue before the Court was how to apportion repayments made by the Respondent after default between capital and interest for the purpose of calculating the Applicant's loss under the *Trade Practices Act 1974* (Cth). This involved determining the extent to which the Applicant had suffered a loss of capital. The Court was also required to consider the basis upon which costs should be awarded.

Judge Burnett reasoned that where a borrower defaults on a loan, and subsequent repayments are made, those repayments should first be applied to discharge the outstanding capital. Only after the capital has been fully repaid can any further payments be attributed to interest. This principle was applied to calculate the Applicant's loss of capital. The Court ordered judgment for the Applicant against the Respondent in the sum of $348,922.62, with interest to be calculated from 1 July 2009 to 26 May 2014. The Court further ordered that the Respondent pay the Applicant's costs, on a party and party basis until 19 February 2013, and thereafter on an indemnity basis, with certification that it was reasonable for the Applicant to engage counsel.