Goldstein v Shyzi Pty Ltd (No 2)

In Goldstein v Shyzi Pty Ltd (No 2), the plaintiff sought to enforce rights as a secured creditor under a mortgage. The dispute arose from the plaintiff's application for orders to establish their rights and to recover certain funds. The court was tasked with deciding whether the plaintiff was entitled to indemnity costs as per the mortgage terms, despite being unsuccessful on other issues. The plaintiff had obtained orders recognising their rights as a secured creditor, but had not succeeded in obtaining other relief. The mortgage in question contained a clause stating that the defendant would pay the plaintiff's costs on a full indemnity basis.

The court considered whether it should adhere to the general rule or whether it should order indemnity costs in line with the mortgage provision. The general principle is that the successful party is entitled to indemnity costs if they are expressly provided for in the contract. The court weighed the principle of indemnity costs against the broader considerations of fairness and justice. Ultimately, the court found that the principle of indemnity costs should be upheld unless there were exceptional circumstances to justify departing from it. The court concluded that the plaintiff's partial success did not create exceptional circumstances warranting a departure from the general rule.

The court ordered that the defendant should pay the plaintiff's costs on a full indemnity basis, in accordance with the mortgage provision. The court emphasised the importance of adhering to contractual provisions that clearly outline the costs entitlements of the parties involved. This decision underscores the significance of contractual agreements in determining the allocation of costs in commercial disputes.