Dalton and Schaeffer as Executors of the Estate of the Late John Herman Schaeffer v Naegeli

Dalton and Schaeffer, as executors of the estate of the late John Herman Schaeffer, appealed a decision concerning a Deed of Guarantee and Indemnity against Naegeli. The dispute centred on the enforceability of this deed and whether it contained unjust or unconscionable terms. The appeal was heard by Ward P, Stern JA, and Griffiths AJA.

The court was required to determine whether the primary judge erred in finding that Naegeli did not act unconscionably in procuring the Deed of Guarantee and Indemnity, specifically in relation to section 12CB of the *Australian Securities and Investments Commission Act 2001* (Cth). Furthermore, the court had to consider whether a clause within the Deed was unjust under section 7 of the *Contracts Review Act 1980* (NSW). Finally, the court was asked to determine the applicable rate of interest on the judgment, given that the primary judge had awarded interest at the rate stipulated in the Deed, while the pleaded claim sought interest at the rate prescribed by the *Civil Procedure Act 2005* (NSW).

The appellate court dismissed the appeal, finding no error in the primary judge's assessment of unconscionability or injustice. However, the court allowed a cross-appeal concerning the award of interest. The reasoning was that while the Deed of Guarantee and Indemnity was enforceable, the pleaded claim for interest under the *Civil Procedure Act 2005* (NSW) should have been followed. Consequently, the orders of the primary judge were set aside.

The court ordered judgment for the plaintiff against the defendants for $6.5 million, with interest payable from 16 June 2023 at the rates prescribed under section 101 of the *Civil Procedure Act 2005* (NSW). The defendants were ordered to pay the plaintiff’s costs, and the appellants were ordered to pay the respondent’s costs of the appeal.