Barclay Pearce Capital Management Pty Ltd v Barclay Pearce Capital Corporate Pty Ltd

Case •

[2025] NSWSC 288

•

31 March 2025

No judgment structure available for this case.

Supreme Court


New South Wales

  • Amendment notes
Medium Neutral Citation: Barclay Pearce Capital Management Pty Ltd v Barclay Pearce Capital Corporate Pty Ltd [2025] NSWSC 288
Hearing dates: 10 March 2025
Decision date: 31 March 2025
Jurisdiction:Equity - Commercial List
Before: Stevenson J
Decision:

Plaintiff entitled to judgment against first and second defendants in relation to its claim for unpaid Monthly Fees and the Staff Payments; plaintiff not entitled to judgment in relation to its claims on the Loan Agreement, including its claim for interest and indemnity under the terms of that agreement; plaintiff entitled to its costs on party/party basis.

Catchwords:

CONTRACTS – breach – claim by financial services licensee against corporate authorised representative – claim for unpaid monthly fees, expenses, and indemnity for costs under terms of corporate authorised representative agreement – whether individual representative personally liable for authorised representative’s obligations

CONTRACTS – construction – where parties entered into “loan agreement” for repayment of compromised pre-existing debt under corporate authorised representative agreement – where terms of loan agreement refer to the payment of a loan in future – no alternative claim or claim for rectification brought – court not at liberty to rewrite the terms of the loan agreement

CONTRACTS – construction – contractual indemnity – whether indemnity extends to costs other than party/party costs – principles relevant to construing purported indemnity

Legislation Cited:

Corporations Act 2001 (Cth)

Cases Cited:

Apparel Group Pty Ltd v Bettina Liano Pty Ltd [2014] NSWSC 670

Chen v Kevin McNamara & Son Pty Ltd [2012] VSCA 229

Commonwealth Bank of Australia v Usalj [2010] NSWSC 1105

Damjanovic v Maley (2002) 55 NSWLR 149; [2002] NSWCA 230

Dymocks Franchise Systems (NSW) Pty Ltd v Chapter Three Pty Ltd [2022] NSWSC 35

Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12

Euphoric Pty Ltd v Ryledar Pty Ltd [2006] NSWSC 2

Fitzgerald v Masters (1956) 95 CLR 420; [1956] HCA 53

Hannaford v Commonwealth Bank of Australia [2013] NSWCA 472

Hutchinson v AD Securities America LLC [2021] NSWSC 1573

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37

Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (In liquidation) (2019) 99 NSWLR 317; [2019] NSWCA 11

Texts Cited:

K Lewison and D Hughes, The Interpretation of Contracts in Australia (2nd ed, 2025, Thomson Reuters)

P Herzfeld and T Prince, Interpretation (3rd ed, 2024, Thomson Reuters)

Category:Principal judgment
Parties: Barclay Pearce Capital Management Pty Ltd (Plaintiff)
Barclay Pearce Capital Corporate Pty Ltd (First Defendant)
Timothy Raymond Edward Wilson (Second Defendant)
Representation:

Counsel:
M Taylor (Plaintiff)

Solicitors:
HWL Ebsworth (Plaintiff)
First and Second Defendant (self-represented)
File Number(s): 2023/290308

JUDGMENT

  1. The plaintiff, Barclay Pearce Capital Management Pty Ltd (“Management”) holds an Australian Financial Services Licence. It provides a range of financial services. It does so by authorising representatives to provide specified financial services on its behalf. [1]

    1. See Corporations Act 2001 (Cth), s 916A.

  2. Management had a number of authorised corporate representatives, each of which was responsible for providing different kinds of services on Management’s behalf. One of these was the first defendant, Barclay Pearce Capital Corporate Pty Ltd (“Corporate”).

  3. Corporate’s sole director and secretary, at the relevant time, was Mr Timothy Wilson, the second defendant.

  4. Corporate’s authorisation was recorded in a Corporate Authorised Representative Agreement (“the CAR Agreement”) that it and Management entered into on 2 July 2021 and varied on 1 July 2022. By the CAR Agreement, Corporate agreed to pay Management certain fees in consideration for its authorisation as Management’s representative and for the ability to use Management’s intellectual property in providing the relevant financial services.

  5. Management’s claims in these proceedings relate to monies said to be outstanding under the CAR Agreement, as varied, and a document entitled “Loan Agreement” entered into by Management and Corporate on 1 July 2022 (“the Loan Agreement”). Management also seeks an indemnity from Corporate for certain expenses it incurred, as well as for its legal costs and expenses. Management contends that Mr Wilson is personally liable for some of these amounts.

  6. Although they had been legally represented at the time of the filing of their Commercial List Response, Corporate and Mr Wilson were not legally represented at hearing. Mr Wilson appeared for himself and Corporate with the assistance of a McKenzie friend. [2] Mr Taylor of counsel appeared for Management.

    2. For the role of a McKenzie friend, see, for example, Damjanovic v Maley (2002) 55 NSWLR 149; [2002] NSWCA 230.

The CAR Agreement

  1. By the CAR Agreement, Management authorised Corporate to provide financial services, defined as the “Authorised Services”, [3] on Management’s behalf. [4] In particular, Management authorised Corporate to provide general financial product advice and to deal in certain classes of financial products, including basic deposit products, derivatives, interests in managed investment schemes, securities, standard margin lending facilities, and superannuation. [5]

    3. CAR Agreement, cl 1.1.

    4. CAR Agreement, cl 2.1(a).

    5. CAR Agreement, Sch 1.

  2. The agreement also provided that Management would grant Corporate “a non-exclusive non-transferrable licence”, defined as the “Intellectual Property Licence”, [6] to use various of Management’s intellectual property, including, among other things, its logo, name, website, branding, documentation, marketing materials and policies and procedures, defined as the “BP Intellectual Property”. [7]

    6. CAR Agreement, cl 1.1.

    7. CAR Agreement, cl 13.1.

  3. In return, Corporate agreed to pay Management:

  1. a monthly fee of $70,000 plus GST (“the Monthly Fee”); and

  2. a monthly fee equal to 15% of gross revenue generated by Corporate for that month, plus GST (“the Revenue Fee”). [8]

    8. CAR Agreement, cl 5.1. Clause 5.1 also provided for payment of a number of other fees which, for reasons I will explain, were not ultimately pressed by Management in these proceedings.

  1. It is common ground that by an email from Mr Richard Warner, a director of Management, to Mr Wilson of 24 May 2022 (“the 24 May 2022 Email”), the Monthly Fee was varied to $30,000 plus GST.

  2. Although Management made a claim in its Commercial List Statement against the defendants in respect of the Revenue Fee, that claim was abandoned during the hearing.

  3. Management agreed to provide administrative services to Corporate during the term of the CAR Agreement, including general business administration services, accounting, human resources, payroll and finance support services, information technology support, use of office premises, and access to software packages. [9]

    9. CAR Agreement, Sch 4.

  4. Corporate otherwise agreed that it would be responsible for its costs and expenses associated with providing the Authorised Services. [10]

    10. CAR Agreement, cl 7.8.

  5. Clause 4 of the CAR Agreement contained a mechanism by which Corporate could “sub-authorise” a natural person, defined as the “Individual Representative”, [11] to provide the Authorised Services on its behalf. [12] Appointment of an Individual Representative was to occur by the entry into a “letter agreement” in the form of a document set out in Schedule 2 to the CAR Agreement. [13]

    11. CAR Agreement, cl 1.1.

    12. See Corporations Act, s 916B.

    13. CAR Agreement, cl 4.3.

  6. On 9 August 2021, Mr Wilson signed a document appearing at Schedule 2 to the CAR Agreement, being a letter from Corporate addressed to him which appointed him as an Individual Representative to act on Corporate’s behalf (“the Individual Representative Letter”).

  7. The Individual Representative Letter provided, relevantly:

“Barclay Pearce Capital Trading Pty Ltd [sic] … is an authorised representative of the licensee (the Authorised Representative) pursuant to a Corporate Authorised Representative Agreement dated on or about the date of this letter (the CAR Agreement). The Authorised Representative has, with the consent of the Licensee, agreed to appoint you as an Individual Representative to act on its behalf on the condition that you agree to be bound by the terms and conditions of the CAR Agreement.

…

You undertake to [Management] that you will ensure and procure that the Authorised Representative complies with its obligations under the CAR Agreement …

Clause …10 … of the CAR Agreement appl[ies to] this letter mutatis mutandis …

Please sign and return this letter to record your agreement to be bound by the terms of the CAR Agreement and this letter as an Individual Representative of the Authorised Representative.” (Bolded emphasis in original.)

  1. Management submitted, and I accept, that the reference to “Barclay Pearce Capital Trading Pty Ltd” at the beginning of the Individual Representative Letter is an obvious error of the kind discussed in Fitzgerald v Masters,[14] and should be read as a reference to Corporate.

    14. (1956) 95 CLR 420 at 426-427 (Dixon CJ and Fullagar J); [1956] HCA 53.

  2. Clause 10.1 of the CAR Agreement contained an indemnity in favour of Management from the Authorised Representative, that is, Corporate, and the “Individual Representative”, being Mr Wilson.

  3. Thus, cl 10.1 provided, relevantly:

“[Corporate] and [Mr Wilson] jointly and severally agree to continuously indemnify [Management] … from and against and in respect of any claim, action, damage, loss, liability, cost, charge, expense, outgoing or payment (including … legal costs & expenses) … arising out of or in connection with ….

…

(b)    any breach of this agreement by [Corporate] or [Mr Wilson].”

  1. The CAR Agreement had no fixed term and would continue from commencement until termination by either party as provided for in cl 15.1. Relevantly, it could be terminated by Management with immediate effect if Corporate “or any Individual Representative” committed a “material breach” of the agreement, and, where that breach was capable of remedy, it had not been remedied “to the satisfaction of” Management within 20 business days of Management providing notice of the breach. [15]

    15. CAR Agreement, cl 15.1(c)(ii).

Events after entry into the CAR Agreement

  1. Although Corporate entered into a number of agreements with clients from 15 July 2021 for the provision of financial services in relation to capital raises, its business did not prosper.

  2. By May 2022, Corporate had fallen into default of its payment obligations under the CAR Agreement and had failed to pay a number of invoices issued to it by Management between 31 July 2021 and May 2022.

  3. It is now agreed that on 24 May 2022 the CAR Agreement was varied as I have set out at [10] above.

Entry into the Loan Agreement

  1. On 1 July 2022, Management and Corporate executed the Loan Agreement.

  2. That document described Management as the “Lender” and Corporate as the “Borrower” and recited that Management “has agreed, at the request of [Corporate], to provide a loan to [Corporate]”. [16]

    16. Loan Agreement, recital A.

  3. It provided that, subject to the “prior and continuing satisfaction” of specified conditions precedent, and “on request by” Corporate, Management would provide the “Loan Amount” of $150,000 to Corporate on the “Loan Date”, defined, unhelpfully, as “the date on which the Loan Amount is paid to [Corporate]”. [17]

    17. Loan Agreement, cll 1.1, 3.

  4. One of these conditions precedent, on which Management’s obligation to provide the loan was “subject to and conditional”, was Management being satisfied that Corporate had “validly entered into, and become bound by” the Loan Agreement. [18]

    18. Loan Agreement, cl 2.1(a).

  5. Another was Management being satisfied that Corporate had entered into and become bound by “the terms of the Security”, a term which features in other clauses in the agreement but is not defined or otherwise dealt with. [19]

    19. Loan Agreement, cl 2.1(b).

  6. The other conditions precedent were Corporate “having made the payments to [Management] as being payable on or before the Loan Date”, [20] no event of default having occurred, [21] Corporate’s “representations and warranties … being true and correct on the Loan Date”, [22] and no change of circumstance having occurred. [23]

    20. Loan Agreement, cl 2.1(c).

    21. Loan Agreement, cl 2.1(d).

    22. Loan Agreement, cl 2.1(e).

    23. Loan Agreement, cl 2.1(f).

  7. Clause 2.2 provided that “if each of the conditions precedent set out in cl 2.1 has not been fulfilled, fully satisfied or expressly waived in writing on the Loan Date, [Management] will not be under any obligation to make the Loan Amount available to [Corporate]”.

  8. Corporate was to “repay and finally discharge” the loan on the “Repayment Date”, [24] defined as the “30th of the month or another date” agreed between Management and Corporate. [25] Aside from the definition of “Monthly Loan Repayment Amount”, defined to mean $12,500 per month, [26] and a schedule annexed to the Loan Agreement setting out a timetable for monthly repayments of $12,500 from July 2022 to June 2023, there is no reference in the terms of the Loan Agreement to repayment in instalments.

    24. Loan Agreement, cl 6.

    25. Loan Agreement, cl 1.1.

    26. Ibid.

  9. Mr Taylor accepted that the Loan Agreement provides “expressly that the money [that is, the loan amount of $150,000] would be provided to [Corporate]”, and that this appeared to be “wrong” and something that the parties agreed did not occur.

  10. Mr Taylor submitted that the loan referred to in the Loan Agreement was in fact the debt referred to in the 24 May 2022 Email as follows:

“Moving forward you [Mr Wilson] will have 100% company ownership of [Corporate], please organise all share transfer forms to be prepared for signing for all parties to allow the 100% ownership to be you only.

Also as discussed previously with you all [Management] and BPC [27] will need [is] 50% of all outstanding invoices paid prior to June 30th [2022] and we will write off the other 50%.”

27. Evidently a reference to Barclay Pearce Capital Pty Limited, then a wholly owned subsidiary of Management.

  1. As at June 2022, Corporate owed Management around $302,677.27 in relation to unpaid invoices rendered by Management for fees under the CAR Agreement. [28] The 24 May 2022 Email envisaged an arrangement for the payment of around $150,000 by Corporate to Management as a compromise of and in satisfaction of that debt.

    28. Affidavit of Richard Warner sworn 31 July 2024 at [22].

  2. Corporate paid Management at least $60,000 pursuant to the arrangement purportedly recorded in the Loan Agreement. Mr Wilson contended that Corporate had paid $7,500 more than this.

  3. I return to this below.

Staff Payments

  1. It is common ground that between 2 July 2022 to 21 April 2023, Management made payments to staff of Corporate, including Mr Wilson, in respect of expenses, wages and superannuation (“the Staff Payments”).

  2. On 1 March 2023, Management issued an invoice to Corporate for $63,445.63 including GST for reimbursement of the Staff Payments. However, at the hearing, Management contended that the true amount of those payments was $56,159.63.

Termination

  1. On 31 March 2023, Management wrote to Corporate terminating the CAR Agreement with immediate effect, citing breaches of various terms of that agreement.

Management’s claims

  1. At the hearing, Mr Taylor abandoned a number of Management’s pleaded claims.

  2. What remains are Management’s claims against Corporate for:

  1. unpaid Monthly Fees from 1 August 2022 to 13 June 2023, in the amount of $297,000;

  2. $90,000, being the balance said to be outstanding under the Loan Agreement, plus interest of 10% per annum “on outstanding amounts”;

  3. indemnity, pursuant to cl 10.1 of the CAR Agreement, for $56,159.63 in respect of the Staff Payments; and

  4. indemnity, under cl 10.1 of the CAR Agreement and cl 5.2 of the Loan Agreement, for Management’s costs and expenses (including legal costs and expenses on a solicitor and client basis).

  1. Management also contends that Mr Wilson is personally liable for (1), (3) and (4) above by reason of cl 10.1(b) of the CAR Agreement and the Individual Representative Letter.

Monthly Fees

  1. Between 1 August 2022 and 13 June 2023, Management issued nine invoices for Monthly Fees under the CAR Agreement, in respect of which it claims $297,000, set out in the table below.

Invoice Number

Date

Amount

0103

1 August 2022

$33,000

0110

1 September 2022

$33,000

0114

1 October 2022

$33,000

0117

1 November 2022

$33,000

0119

1 December 2022

$33,000

0127

16 January 2023

$33,000

0134

1 February 2023

$33,000

0141

1 March 2023

$33,000

0176

13 June 2023

$33,000

TOTAL

$297,000

  1. Mr Wilson disputed the last two of these invoices: those issued on 1 March 2023 and 13 June 2023 respectively.

  2. Mr Wilson submitted that Corporate had no liability for these last two invoices because:

  1. it had lost access to its premises and no longer had the benefit of Management’s administrative services from in or about March 2023; and

  2. Management did not render an invoice for the July 2022 Monthly Fee at the time.

  1. I do not accept these submissions.

  2. As to the first, the CAR Agreement was terminated on the last day of March 2023, and there is no evidence before me that Corporate’s use of premises or administrative services was interfered with before that date.

  3. As to the second, that contention is not consistent with the defendants’ Commercial List Response, which pleads a variation of the CAR Agreement from 1 July 2022, involving a reduction of the Monthly Fee payable under the CAR Agreement to $30,000 plus GST. In the Commercial List Response, the defendants did not dispute Management’s entitlement to claim the revised Monthly Fee from July 2022.

The Loan Agreement

  1. As I have explained, Management’s case is that the “loan” described in Loan Agreement is really the amount referred to in the passage of the 24 May 2022 Email set out at [33] above, being a little less than half of the money that Corporate owed Management under the CAR Agreement as at 30 June 2022.

  2. Mr Taylor submitted that the purpose of the Loan Agreement was to “convert” that debt into a loan and that payments subsequently made by Corporate of $60,000 [29] should be seen as repayments of that loan.

    29. Mr Wilson contended it was $67,500.

  3. Mr Taylor submitted that, although the Loan Agreement was “poorly phrased”, or “wrong” in that it referred to the provision of money to Corporate, and had been inaccurately described in Management’s Commercial List Statement, there was no dispute between the parties “as to what the loan agreement attempted to do” and “no serious defence [was] mounted” in response to Management’s claim under the Loan Agreement.

  4. Management’s pleaded case about the Loan Agreement is as follows:

“[16] Between about 31 July 2021 and July 2022, [Corporate] failed or refused to pay [Management] monies owing to [Management] pursuant to the CAR Agreement.

[17] By contract in writing titled ‘Loan Agreement’ made on or about 1 July 2022 …, [Management] as ‘Lender’ agreed to lend to [Corporate] as ‘Borrower’ a sum of money pursuant to the terms and conditions of the Loan Agreement for the purposes of [Corporate] being able to set off the amounts referred to in the preceding paragraph.

[18] At all material times, the express terms of the Loan Agreement included that:

(a) the Loan Amount was $150,000 …;

(b) [Management] would, on the request of [Corporate], provide the Loan Amount to [Corporate]…”

  1. The defendant’s Commercial List Response, prepared at a time when the defendants were legally represented:

  1. accepted that “any loan to be made by [Management] to [Corporate] pursuant to the Loan Agreement was of the sum of $150,000 being the amount that [Management] agreed with [Corporate and Mr Wilson] in May and June 2022 and or represented to them, [sic] would be the compromise amount that [Corporate] would be liable to pay [Management] pursuant to the CAR Agreement up to 30 June 2022”; [30]

  2. asserted that Corporate paid Management $7,500 on 1 August 2022, “pursuant to the Loan Agreement”; [31]

  3. admitted that Corporate paid Management $19,000 on 15 September 2022, $10,000 on 16 November 2022 and $27,000 on 19 December 2022 “under the Loan Agreement”. [32]

    30. Commercial List Response, [C4(b)].

    31. Ibid, [C21(b)].

    32. Ibid, [C21(a)] and [C22].

  1. But the defendants also contended:

“…that any loan to be made by [Management] to [Corporate] pursuant to the Loan Agreement was to be made by Electronic Transfer which did not occur.” [33]

33. Ibid, C[4(c)].

  1. Before me, Mr Wilson did not dispute the existence of an underlying debt owed by Corporate to Management. His only contention was that the amount owing was not $90,000 but, rather, $82,500. [34]

    34. Taking into account the $7,500 referred to at [35] above.

  2. However, the claim made by Management is one based on the terms of the Loan Agreement; not a claim in relation to the compromise reached regarding Corporate’s obligation to Management under the CAR Agreement.

  3. The Court’s task is one of construction, to ascertain the true meaning of the Loan Agreement, objectively, with reference to its text, context, and purpose, and without regard to statements of the parties’ actual or subjective intentions. [35]

    35. Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [46]-[50] (French CJ, Nettle and Gordon JJ).

  4. As has been correctly stated: [36]

“… the only relevant meaning is that which the text conveys. This follows from the need to ascertain the intention expressed in the document. Although ... context and purpose are relevant, ultimately the court must attribute meaning to the words actually used.” (Italicised emphasis in original.)

36. P Herzfeld and T Prince, Interpretation (3rd ed, 2024, Thomson Reuters) at [19.60].

  1. The terms of the Loan Agreement are clear. They provide for the making by Management of a loan of $150,000, by electronic transfer on a particular day, on request by Corporate, subject to the satisfaction or waiver of the conditions precedent. That the Loan Agreement envisages payment or provision of the Loan Amount in the future, or at least after the agreement is entered into, is apparent from the language of cl 3, which states that Management “will … provide the Loan Amount on the Loan Date” subject to the “prior and continuing satisfaction of the conditions precedent”, one of which is execution of the Loan Agreement by Corporate.

  2. The issue here is not one of ambiguity or multiplicity of constructional choices. Nor is it one of an obvious error which the Court can somehow cure as a matter of construction, as contended for by Management.

  3. It is well established that the Court can supply, omit or correct words in a document if it is satisfied, to a high level of conviction, that the literal meaning of the contractual words is an absurdity and it is self-evident what the objective intention must have been. [37]

    37. See [17] above and such authorities as Hutchinson v AD Securities America LLC [2021] NSWSC 1573 at [15] (Ward CJ in Eq, as the President then was) and Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (In liquidation) (2019) 99 NSWLR 317; [2019] NSWCA 11 at [10] (Leeming JA, Payne and White JJA agreeing).

  4. Mr Taylor submitted that the Court should construe the Loan Agreement “strictly in accordance with its terms”, save for:

  1. in the definition of “Loan Date” (i.e., “the date on which the Loan Amount is paid to the Borrower”), reading “paid” as “provided”; and

  2. omitting the final sentence of cl 3 (i.e., “The Loan Amount will be provided to the Borrower by way of Electronic Transfer”).

  1. I am not persuaded that these “corrections” can, or should, be made.

  2. First, the “corrections” are not, to adopt the language of Dixon CJ and Fullagar J in Fitzgerald v Masters,[38] “clearly necessary in order to avoid absurdity or inconsistency”. The “absurdity” Management complains of relates to the fact that its terms provide for a transaction that did not occur, rather than any absurdity arising from the terms of the Loan Agreement itself. A mistake as to the legal effect of a document may be corrected by rectification, not by the process of construction. [39]

    38. (supra) at 426-427.

    39. K Lewison and D Hughes, The Interpretation of Contracts in Australia (2nd ed, 2025, Thomson Reuters) at [9.03].

  3. Second, even if the contended changes were made, the Loan Agreement could not bear the meaning which Management urges upon it. It would still refer to the provision of a loan of $150,000, on a particular day, on request by Corporate, subject to the prior satisfaction of the conditions precedent. The language of the Loan Agreement is intractable, and by no stretch of language or syntax can it be construed to relate to the payment of a debt which Corporate already owed to Management before it entered into the Loan Agreement. Management may have had a rectification suit, but it does not have a construction suit. [40]

    40. Euphoric Pty Ltd v Ryledar Pty Ltd [2006] NSWSC 2 at [32]-[33] (Palmer J).

  4. In so far as Management says that the Loan Agreement was intended to reflect an agreement between the parties set out in the 24 May 2022 Email, that email may reveal Management’s actual or subjective intention. But that is something to which the Court cannot have regard under the objective theory of contract. And, in any event, that email refers to an agreement different to that which Management says it intended in the Loan Agreement: that is, payment of 50% of outstanding invoices before 30 June 2022, not in instalments after 30 June 2022.

  5. To give the terms of the Loan Agreement the meaning contended for by Management would be to redraft the Loan Agreement to accord with Management’s actual, subjective intention: something the Court cannot do. As explained by Nettle J in Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd: [41]

“Unless the Anglo-Australian objective theory of contract is now to be cast aside, the commercial approach to construction is not a licence to alter the meaning of a term that is “clear and fairly susceptible of one meaning only” to achieve a result that the court may think to be reasonable. The court is not authorised under the guise of construction to make a new contract for the parties at odds with the contract to which they have agreed. Where, as here, all things considered, the words of a clause are fairly susceptible of only one meaning, they must be given that effect.” (footnotes omitted.)

41. (2017) 261 CLR 544 at 581; [2017] HCA 12 at [98] (in dissent as to the outcome, but the passage has been approved on subsequent occasions).

  1. I have set out Management’s pleading in relation to the Loan Agreement above at [52]. Even that pleading does not accurately describe what Management now says it intended to achieve through the Loan Agreement. No alternative claim is brought in relation to the underlying debt, and no claim for rectification is made.

  2. Management’s claim on the Loan Agreement must fail, including its claim for interest and indemnity under the terms of that agreement.

Contractual indemnity

  1. Management claims indemnity from Corporate, pursuant to cl 10.1(b) of the CAR Agreement, the terms of which are set out at [19] above, for the Staff Payments of $56,159.63 and for its legal costs on an indemnity basis.

Staff Payments

  1. Management contends that it is entitled to indemnity under cl 10.1(b) of the CAR Agreement for the payments because:

  1. they were payments that Corporate was required, but failed, to make; and,

  2. Corporate’s failure to make the payments was a breach of cl 7.8 of the CAR Agreement, which provided that Corporate “will pay all of the costs and expenses [it] incurs in relation to providing the Authorised Services”, unless agreed otherwise in writing.

  1. Whether Corporate was contractually obliged to make the payments depends on whether the payments were costs and expenses incurred by Corporate in relation to the provision of the Authorised Services. Aside from those in respect of wages, the precise nature of the payments is not apparent; they are described in Management’s “List of Costs & Expenses” simply as “expenses”. Mr Warner deposed that Management no longer has access to bank statements evidencing the payments. However, in circumstances where the payments were made to or on behalf of staff of Corporate, and where the evidence reveals complaints of non-payment by employees of Corporate, it is reasonable to infer that those payments related to costs incurred by Corporate in connection with the provision of the Authorised Services, such that Corporate’s failure to meet those costs reflected a breach of cl 7.8.

  2. It is true that the CAR Agreement did not impose a contractual obligation on Management to meet Corporate’s obligations to its staff. Indeed, cl 4.4(b) provided that Management was not responsible for paying the wages or any other entitlements of staff of Corporate “including the Individual Representative”. But it was reasonable for Management to have made those payments in circumstances where Corporate was operating under the administrative umbrella of Management’s group of companies and was providing services to clients on Management’s behalf; the interests of Management and Corporate were aligned, so far as the payment of Corporate’s staff and the continuation of Corporate’s business was concerned.

  3. Corporate was obliged to make the Staff Payments. It was reasonable for Management to make them in view of Corporate’s failure to do so. The Staff Payments were thus payments “arising out of or in connection with” breach of the CAR Agreement by Corporate. Management is entitled to indemnity in respect of the payments.

  4. There is a discrepancy between, on the one hand, the amount claimed by Management for these expenses, $56,159.63, and, on the other, the amount previously invoiced, $63,445.63, and the sum of the items in the List of Costs & Expenses, $86,630.63. However, the amount claimed is less than both of those amounts.

  5. I am satisfied that Management is entitled to indemnity from Corporate for the Staff Payments of $56,159.63.

Costs

  1. Management claims indemnity for its legal costs under cl 10.1(b), as agreed or assessed on an indemnity basis.

  2. The power to award costs, including indemnity costs, is at the discretion of the Court, notwithstanding contractual provisions like cl 10.1 here. However, where there is a clear contractual right to indemnity costs, the Court’s discretion will generally be exercised to reflect that right, unless there is some other discretionary consideration that militates against the making of such an order. [42]

    42. See the authorities set out in my judgment in Dymocks Franchise Systems (NSW) Pty Ltd v Chapter Three Pty Ltd [2022] NSWSC 35 at [28]-[29]; see also Chen v Kevin McNamara & Son Pty Ltd [2012] VSCA 229 at [8] (Redlich JA, Maxwell P and Robson AJA agreeing).

  3. Whether the clause in question confers a right to payment of costs on a special basis is a matter of construction. Ordinarily, an agreement to pay costs will be construed as an agreement to pay costs on a party/party basis, unless it is plain from its terms that costs are to be paid on some other basis. [43]

    43. Chen v Kevin McNamara & Son Pty Ltd (supra) at [8] (Redlich JA, Maxwell P and Robson AJA agreeing); Apparel Group Pty Ltd v Bettina Liano Pty Ltd [2014] NSWSC 670 at [19] (Ball J) and cases there cited.

  4. I am not satisfied that the terms of cl 10.1 clearly or unambiguously express an obligation on the part of Corporate to pay Management’s legal costs on an indemnity basis. It contains no language which might signify that the costs contemplated were solicitor/client or indemnity costs. Had Management wished to be fully indemnified for all legal expenses incurred by it in relation to any breach of the CAR Agreement, it could have done so by clear and express words. [44]

    44. Hannaford v Commonwealth Bank of Australia [2013] NSWCA 472 at [84] (Gleeson JA), referring to Commonwealth Bank of Australia v Usalj [2010] NSWSC 1105 at [11]-[13] (McDougall J).

  5. Management is entitled to indemnity from Corporate, pursuant to cl 10.1, for its legal costs of these proceedings, but on a party/party basis, as agreed or assessed.

Personal liability of Mr Wilson

  1. The final question is whether, through the terms of the Individual Representative Letter, Mr Wilson is personally liable for Management’s claim for unpaid Monthly Fees, the Staff Payments, and for costs under cl 10.1(b) of the CAR Agreement.

  2. As shown in the passage set out at [16] above, the purpose of that letter was to appoint Mr Wilson, with Management’s consent, as an Individual Representative to provide financial services on Corporate’s behalf.

  3. The net effect of the relevant provisions is that:

  1. by the Individual Representative Letter, Mr Wilson agreed that he would “be bound by the terms and conditions of the CAR Agreement” and in particular, cl 10 of that agreement; and

  2. by cl 10, Mr Wilson thereby agreed to “continuously indemnify” Management “from and against and in respect of any … loss … cost … expense, outgoing or payment (including … legal costs & expenses) arising out of or in connection with … any breach of this agreement by [Corporate]”.

  1. I am satisfied that the effect of the Individual Representative Letter was to make Mr Wilson personally liable for losses or expenses sustained or incurred by Management as a result of Corporate’s breach of the CAR Agreement.

  2. The promise given by Mr Wilson was supported by consideration, being the consent Management gave, and continued to give, for Mr Wilson to be appointed as Corporate’s Individual Representative and to provide financial services covered by Management’s Australian Financial Services Licence.

  3. The terms of cl 10.1(b) otherwise specifically envisage an agreement by the Individual Representative, appointed in accordance with the framework in cl 4 of the CAR Agreement, to indemnify Management against “any … loss … arising out of or in connection with …. any breach of” the CAR Agreement by Corporate.

  4. It follows that Management is entitled to recover from Mr Wilson for the unpaid Monthly Fees, the Staff Payments, and for its costs of these proceedings on a party/party basis.

Conclusion

  1. Management is entitled to judgment against Corporate and Mr Wilson in relation to its claim for unpaid Monthly Fees, the Staff Payments, and is entitled to its costs on a party/party basis.

  2. Management should bring in short minutes of order to give effect to these reasons.

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Endnotes

Amendments

24 April 2025 - Staff Payment figures in [75] and [76] amended.

13 May 2025 - Staff Payment figures in [38], [41(3)] and [70] amended.

Decision last updated: 13 May 2025

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Cases Cited

14

Statutory Material Cited

1

Apparel Group Pty Ltd v Bettina Liano Pty Ltd [2014] NSWSC 670
Chen v Kevin McNamara & Son Pty Ltd [2012] VSCA 229
Commonwealth Bank of Australia v Usalj [2010] NSWSC 1105