JB Asset Management v LBA Capital Pty Ltd (No 3)

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S ECI 2019 03875

JB ASSET MANAGEMENT & ANOR (according to the Schedule attached)	Plaintiffs
v
LBA CAPITAL PTY LTD & ORS (according to the Schedule attached)	Defendants

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JUDGE:	M Osborne J
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers, plaintiffs’ submissions on costs and interest filed 9 April 2025 and accompanying spreadsheet, tenth and eleventh defendants’ costs submissions filed 9 April 2025, twelfth defendant’s costs and interest submissions filed 9 April 2025, fourteenth defendant’s costs submissions filed 9 April 2025, twelfth defendant’s additional note in short reply dated 10 April 2025, twelfth defendant’s additional submission on interest filed 11 April 2025 and accompanying spreadsheet, plaintiffs’ submissions on the operation of clause 5 of the Facility Agreement and interest filed 15 April 2025 and accompanying spreadsheet, plaintiffs’ further reply submissions on costs and interest filed 15 April 2025 and plaintiffs’ spreadsheet dated 24 April 2025
DATE OF JUDGMENT:	14 May 2025
CASE MAY BE CITED AS:	JB Asset Management & Anor v LBA Capital Pty Ltd & Ors (No 3)
MEDIUM NEUTRAL CITATION:	[2025] VSC 264

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INTEREST – Interest pursuant to contract – Statutory interest – Accrued unpaid interest - Whether entitled to interest under contract once contract has been terminated – Standard interest – Default interest – Whether both standard and default interest continued to accrue on the terms of the contract.

COSTS – Where plaintiffs successful in claim – Where some defendants successful and unsuccessful in defending claim - Determining costs orders where mixed success of the parties – Overlap of costs due to the same legal representation – Broad impressionistic approach.

COSTS - Whether plaintiffs entitled to costs on an indemnity basis or standard basis – Whether entitled to costs on an indemnity basis under a clause of the contract or due to rejected Calderbank offer – Whether Calderbank offer unreasonably refused – Costs awarded on an indemnity basis - Calderbank v Calderbank [1975] 3 WLR 586.

CONTRACT – Interpretation of terms – Construction of contract - What a reasonable person would have understood the terms of the contract to mean – Consideration of the text of the contract and surrounding circumstances known to the parties – Purpose and object of the transaction - Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104.

CONTRACT – Accrued rights - What rights had the lender accrued at the date repudiation of the contract was accepted by the borrower - McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 - Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	T Warner with H McAvaney	Johnson Winter Slattery
For the Tenth to Twelfth Defendants	P Ehrlich KC with R Kornhauser	Madgwicks Lawyers
For the Fourteenth Defendant	H Hill-Smith (on 10 February 2025 only)	Batten Sacks

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

The remaining points of dispute.................................................................................................... 2

Interest............................................................................................................................................ 2
Costs................................................................................................................................................ 6
The critical points of difference................................................................................................... 7

Key provisions of the Facility Agreement..................................................................................... 7

Construction Issues......................................................................................................................... 11

The plaintiffs’ submissions........................................................................................................ 11
Trivett’s submissions.................................................................................................................. 14
Analysis........................................................................................................................................ 15

Accrued Rights Issue....................................................................................................................... 23

Costs.................................................................................................................................................... 29

Indemnity Costs by reason of cl 5.4(a)..................................................................................... 29
Indemnity Costs – the Calderbank offer.................................................................................. 30

Orders as to costs.............................................................................................................................. 34

The parties’ positions.................................................................................................................. 34
Analysis and conclusion............................................................................................................ 35
Procedural background.................................................................................................... 35
NSL...................................................................................................................................... 38
NSL Group, NSLMP and Trivett..................................................................................... 39
Indemnity costs against Trivett....................................................................................... 41

Conclusion......................................................................................................................................... 47

HIS HONOUR:

Introduction

On 2 April 2025, I handed down reasons for judgment (‘Primary Reasons’).[1] I made orders that the parties confer and provide orders in agreed form to give effect to the Primary Reasons including as to interest and costs, alternatively that they provide their respective proposed orders if unable to agree. In the result, the issues which arose in relation to interest in particular were complex and the parties were not able to agree. These reasons assume familiarity with the Primary Reasons and defined terms have the same meaning as used in the Primary Reasons.
[1][2025] VSC 166.

By way of brief summary, the plaintiffs sued as assignees of the rights of LBA Capital Pty Ltd (‘LBA’) and sought to recover $2.97 million from one or more of the tenth defendant Next Stage Living Group Pty Ltd (‘NSL Group’), the eleventh defendant Next Stage Living Moonee Ponds Pty Ltd (‘NSLMP’), the twelfth defendant Trivett Property Partners Pty Ltd (‘Trivett’) and fourteenth defendant Next Stage Living Pty Ltd (‘NSL’). For convenience, NSL Group, NSLMP, Trivett and NSL are referred to as the NSL Companies. Notwithstanding that convenient designation, it is necessary to distinguish between them where relevant. NSL was separately represented albeit that it played a very limited role at trial and it is necessary at various points to distinguish its position from the other defendants. The claims were brought in the alternative and on a variety of bases more fully spelt out in the Primary Reasons.

In the Primary Reasons I concluded, inter alia, that:

(a) the payment made by LBA into the Madgwicks Lawyers’ trust account on 21 June 2019 constituted an Advance for the purposes of cl 1 of the facility agreement between LBA and Trivett dated 19 June 2019 (‘Facility Agreement’);

(b) the Facility Agreement claim against Trivett succeeded for $2.97 million[2] as a result of which the plaintiffs would be entitled to judgment against Trivett for $2.97 million together with interest under the Facility Agreement from 21 June 2019;
[2]Primary Reasons [159].

(c) the NSL Loan Agreement claim against NSL Group, NSLMP and NSL did not need to be decided but I would have found against the plaintiffs on the NSL Loan Agreement claim;[3]

(d) the claim for moneys had and received against NSL Group, NSLMP and NSL did not need to be decided but I would have found in favour of the plaintiffs as against NSLMP with respect to a claim for moneys had and received to the use of NSLMP but otherwise the claims against NSL Group and NSL would have failed; and

(e) the claims against NSL Group, NSLMP and NSL would be dismissed.

[3]Primary Reasons [198]-[222].

Relevantly, notwithstanding that the plaintiffs succeeded in the Facility Agreement claim, I also found that LBA[4] had repudiated the Facility Agreement by reason of its conduct on 7 October 2019 and 11 October 2019 and that the repudiation had been accepted by Trivett on 9 August 2023. The acceptance of the repudiation by Trivett effected a termination of the Facility Agreement which thereby came to an end.
[4]The plaintiffs were suing as assignees of LBA.

Notwithstanding the termination of the Facility Agreement, I accepted that LBA had accrued rights to the payment of interest and other costs including default interest (cl 5) and the right to have the Loan Balance repaid on the Repayment Date (cl 6.1) which was 21 June 2022. These accrued rights were unaffected by and survived the termination of the Facility Agreement.[5]
[5]Primary Reasons [134].

The remaining points of dispute

The parties remain in dispute as to interest and costs.

Interest

In relation to interest, the plaintiffs submit that they are entitled to interest under the Facility Agreement to the date of the judgment.

In their initial submissions[6] the plaintiffs argued that interest calculated at the rates set out in the Facility Agreement up to and including 2 April 2025 totalled $5,499,111.58[7] with such sum continuing to increase by $3,480.46 per day. On the plaintiffs’ initial submissions, the sum due as at 2 April 2025 inclusive of the $2.97 million Advance is $8,469,111.58 (‘plaintiffs’ first calculation’).
[6]Plaintiffs’ submissions on costs and interest dated 9 April 2025.
[7]The plaintiffs also argued that interest continues to accrue at $3,480.46 per day until final orders are made.

In Trivett’s first submission[8] Trivett submits that the plaintiffs are only entitled to interest under the Facility Agreement up to and including 8 August 2023 and that from 9 August 2023 (being the date on which the Facility Agreement was terminated) until the date of judgment, the plaintiffs are entitled only to interest pursuant to s 58(1) of the Supreme Court Act 1986 (Vic) (‘Supreme Court Act’). Trivett submits that the sum due as at 2 April 2025 is $6,361,316.14 comprising the Advance together with interest owing under the Facility Agreement up to and including 8 August 2023 of $5,460,678.25 plus statutory interest of $900,637.89.
[8]Trivett’s submissions on costs and interest dated 9 April 2025.

As became clearer from the plaintiffs’ second submission,[9] the plaintiffs submit that after the Repayment Date, both standard interest and default interest continue to apply such that the consequence of failing to discharge the loan balance on the Repayment Date is that both standard interest of 15% and default interest of 15% apply, which is the equivalent of 30%.
[9]Plaintiffs’ submissions on operation of clause 5 of the Facility Agreement dated 15 April 2025.

In Trivett’s third submission,[10] Trivett asserts that the plaintiffs’ calculations as to interest were in error insofar as the plaintiffs had miscalculated interest from the Repayment Date as defined in the Facility Agreement (ie, 21 June 2022). Trivett accepts that from 19 June 2019 until the Repayment Date, being 21 June 2022, the plaintiffs correctly applied interest at the standard rate (15%),[11] to the Advance pursuant to cls 5.1 and 5.2 of the Facility Agreement. Trivett also accepts that the plaintiffs correctly applied default interest (15% compounding interest) to the unpaid interest component (which constituted the Overdue Amount as defined in cl 5.3 of the Facility Agreement). Trivett notes that the Advance was not repayable until the Repayment Date,[12] and therefore submits that no default existed as to repayment of the Advance until the end of 21 June 2022 and it therefore did not form part of the Overdue Amount.
[10]Trivett’s additional submission on interest dated 11 April 2025. Trivett also delivered an additional short note in reply on 10 April 2025.
[11]The standard rate is the ‘Interest Rate’ under the Facility Agreement which in turn is defined as ‘the rate per annum specified in Item 7 of Schedule 1. Item 7 – Interest Rate states ‘Fifteen percent (15%) p.a.’.
[12]Facility Agreement defines Repayment Date as the date specified in Item 6 of Schedule 1. Item 6 – Repayment Date states ‘Thirty six (36) months from the date of Initial Drawdown Date’.

From 22 June 2022, Trivett accepts that the plaintiffs have correctly included the Advance which had now become payable in the Overdue Amount, in respect of which default interest (15% compounding interest) was payable, pursuant to cl 5.3 of the Facility Agreement but erred by also continuing to apply standard interest to the Advance so that from the Repayment Date, the plaintiffs have applied a total interest rate of 30% to the Advance. Trivett submits that the proper construction of the Facility Agreement is that Default Interest is calculated at the Interest Rate for the period for which the Overdue Amount remains unpaid or to put it another way an interest rate of 15% is to apply both before and after the Repayment Date.

Trivett attached a spreadsheet to Trivett’s third submission with 3 tabs:

(a) The first tab – which is the plaintiffs’ calculation applying interest under the Facility Agreement to 2 April 2025 with yellow highlighted cells showing the calculations in issue. The first tab shows the debt as at 2 April 2025 as $8,469,111.58 comprising the principal (ie, the Advance) of $2.97 million; accrued standard interest (to 21 June 2022) of $2,577,797.26 and compound default interest to 2 April 2025 of $2,921,314.32 (which is the plaintiffs’ first calculation).

(b) The second tab – which is the calculation pressed by Trivett shows that the indebtedness as at 2 April 2025 is $6,361,316.14 comprising the Advance together with interest owing under the Facility Agreement calculated at 15% per annum[13] up to and including 8 August 2023 of $5,460,678.25 plus statutory interest of $900,637.89 (‘Trivett’s calculation’).

(c) The third tab – is a calculation prepared by Trivett which calculates interest under the Facility Agreement to 2 April 2025 but which applies a 15% rate (not 30%) after the Repayment Date. This shows the debt to 2 April 2025 inclusive of the Advance and interest under the Facility Agreement at the rate of 15% per annum to 2 April 2025 as $6,963,532,61.

[13]Trivett’s calculation was based on 15% interest being applied on the Advance both prior to and after the Repayment Date notwithstanding its earlier submission that the plaintiffs had correctly applied standard and default interest on the unpaid interest component prior to the Repayment Date; see above [11].

By way of a further submission in reply to Trivett’s third submission,[14] the plaintiffs defended their original submission subject to one ‘relatively minor point’; namely that in the plaintiffs’ first calculation they overlooked the definition of Loan Balance, such that they treated the Loan Balance for the calculation of interest and Default Interest, as being only the Advance of $2.97 million when in fact it means both the Advance and accrued unpaid simple interest and Default Interest. The effect of this ‘relatively minor point’ is to increase the sum due as at 2 April 2025 to $11,246,548.09 comprising the Advance of $2.97 million, accrued standard interest to 21 June 2022 of $4,807,134.32 and compounded default interest to 2 April 2025 of $3,469,413.77.
[14]Plaintiffs’ submissions on operation of clause 5 of the Facility Agreement dated 15 April 2025.

The plaintiffs also submitted an additional calculation, proffered on the basis of an alternative construction of the Facility Agreement which is to the effect that up to and including 21 June 2022, interest within the meaning of cls 5.1 and 5.2 applied to the Loan Balance and Default Interest applied on the Overdue Amount (which to that point comprised only the unpaid but accrued interest). However that from 22 June 2022, only Default Interest of 15% per annum applied to the Overdue Amount (which sum now included the $2.97 million Advance). On the basis of this alternative construction of the of the Facility Agreement, which the plaintiffs accept is potentially open but less probable than their preferred construction, the sum due as at 2 April 2025 is $7,573,402.40 comprising the Advance of $2.97 million, accrued standard interest to 21 June 2022 of $1,697,001.73 and default interest to 2 April 2025 of $2,906,400.67 with daily interest thereafter of $3,112.36 per day (‘plaintiffs’ alternative second calculation’).

Costs

The parties are also at odds in relation to costs. The plaintiffs submit that they are entitled to indemnity costs from Trivett on two bases.

First, the plaintiffs argue that they are entitled to indemnity costs because of cl 5.4(a)(i) of the Facility Agreement. That clause appears under the subheading ‘Enforcement Expenses’ and provides that the ‘Borrower must, on demand by the Lender pay to, or as directed by, the Lender, and indemnify the Lender against, all costs, losses, charges, expenses, liabilities, damages, fees and disbursements (including all legal costs on an indemnity basis) paid or incurred by the Lender of or incidental to (i) any breach of, or default under, [the Facility Agreement] …’. Lender is defined in the Facility Agreement as the person or entity specified in Item 3 of Schedule 1 which is LBA but the plaintiffs rely on cl 2(b) of the Facility Agreement which provides that ‘a reference to a person includes a corporation, firm or body of persons recognised by law and that person’s successors, assigns and legal personal representatives’. As a result, the plaintiffs submit that they are entitled to rely on cl 5.4(a) in relation to the plaintiffs’ costs. Trivett denies that the plaintiffs are entitled to rely on cl 5.4(a) and argue that the rights under cl 5.4(a) were not accrued rights as at the date of termination of the Facility Agreement on 9 August 2023.

Secondly, and in the alternative, the plaintiffs submit that indemnity costs should be payable by Trivett from 17 December 2024. They rely upon the non-acceptance by Trivett of an offer contained in a letter dated 2 December 2024 (‘Calderbank offer’) by which the plaintiffs agreed to accept $2.8 million paid within 30 days of acceptance of the offer. Notably, the $2.8 million is less than the amount of the Advance which was $2.97 million and substantially less than Trivett’s calculation of the sum due as at 2 April 2025 of $6,361,316.14 (inclusive of statutory interest).[15]
[15]The figure which is exclusive of statutory interest, on Trivett’s calculations is $5,460,678.25.

Otherwise, the parties are in dispute as to the costs consequences which arise from the success of the plaintiffs’ claims against Trivett but not as against NSL Group, NSLMP and NSL. Ordinarily a successful defendant is entitled to its costs of the proceeding. The position here is complicated including by reason of the fact that Trivett, NSL Group and NSLMP were all represented by the same firm of solicitors and counsel and because NSL was only joined to the proceeding because of matters alleged by Trivett, NSL Group and NSLMP in their defence.

The critical points of difference

The parties primary respective interest calculations lead to a difference of up to $4,885,232. The difference turns on disputes as to the proper construction of the Facility Agreement (‘Construction Issues’). The Construction Issues in turn depends on whether both standard interest and Default Interest are to be imposed prior to 21 June 2022; whether standard interest and Default Interest are calculated on only the Advance prior to 21 June 2022 or on the Loan Balance comprising the Advance plus accrued unpaid interest and Default Interest, and whether both standard interest and Default Interest apply from the Repayment Date (ie, 21 June 2022). The difference also turns on the extent of the lender’s accrued rights as at 9 August 2023 (‘Accrued Rights Issue’). The Accrued Rights Issue is also relevant to the costs dispute insofar as the plaintiffs rely on clause 5.4(a)(i) of the Facility Agreement. Reliance on the Calderbank offer involves separate issues.

It is appropriate to set out the relevant provisions of the Facility Agreement insofar as they affect both issues, then determine the Construction Issues and then the Accrued Rights Issue followed by the costs issue.

Key provisions of the Facility Agreement

The critical provision with respect to the payment of interest is cl 5 which reads as follows:

5.1 Payment of interest and rate
(a)The Borrower must pay interest in arrears on the Loan Balance for each Interest Period until it becomes due and payable, and such accrued interest must be paid on each Interest Payment Date.
(b)The interest rate on the Loan Balance until it becomes due and payable will be the Interest Rate.

5.2 Computation of interest
Interest will:
(a) accrue from day to day;
(b)be calculated from and including the day when the money on which interest is payable becomes owing to the Lender by the Borrower until and including the day of payment of that money;
(c)be calculated on the daily balance of the Loan Balance for the actual number of days elapsed on the basis of a 365 day year; and
(d)interest is payable until the Loan Balance (and all other amounts due, including Default Interest) has been repaid in full.

5.3 Default interest
(a)Where any sum, or any part of any sum, payable by the Borrower under a Finance Document is not paid to, or as directed by, the Lender on or before its due date for payment (Overdue Amount), interest (Default Interest) will accrue on the Overdue Amount from the due date up to the date of actual payment (both before and after judgment).
(b)Accrued Default Interest shall be immediately payable by the Borrower to the Lender upon demand by the Lender.
(c)Default Interest will be calculated at the Interest Rate for the period for which the Overdue Amount remains unpaid.
(d)Until paid in full, the accrued amount of Default Interest will be compounded with the Overdue Amount on a quarterly basis on each Interest Payment Date, such that the amount of Default Interest debited to the Loan Balance will itself bear interest at the Interest Rate until the Overdue Amount has been repaid in full, but will remain immediately due and payable.

5.4 Enforcement Expenses
(a)The Borrower must, on demand by the Lender, pay to, or as directed by, the Lender, and indemnify the Lender against, all costs, losses, charges, expenses, liabilities, damages, fees and disbursements (including all legal costs on an indemnity basis) paid or incurred by the Lender of or incidental to:
(i)any breach of, or default under, this agreement or any Security provided by the Borrower, Guarantor or other person (including the fees of all professional consultants properly incurred by the Lender in consequence of or in connection with, any such breach or default);

…

5.6 Capitalisation of Fees and costs
(a) The Borrower may capitalise:
…
(iii)any quarterly interest payment payable on an Interest Payment Date under clause 5.1,
(each such amount, a Capitalised Amount),

and the Lender agrees to advance to the Borrower an amount equal to the Capitalised Amount on the date on which the Capitalised Amount would otherwise have been payable if:
(iv)the Lender is satisfied (in its absolute, sole and unfettered discretion) that no Event of Default has occurred and is subsisting;
(v)the capitalisation of the Capitalised Amount will not result in the occurrence of an Event of Default; and
(vi)the Loan Balance (including all Capitalised Amounts) will not exceed the Facility Limit immediately after the Capitalised Amount is capitalised).

(b)The Borrower must pay a Capitalised Amount on any date on which such Capitalised Amount would otherwise be payable if any one or more of the above conditions is not satisfied.
(c)The Lender and the Borrower agree that:
(i)a Disbursement Authority is not required for any advance made under clause 5.6(a);
(ii)the amount of such advance will be taken to be an Advance added to the amount of the Loan Balance under this Agreement, as of the relevant date for all purposes under this Agreement (including for the calculation of interest on the Loan Balance under this Agreement from that date); and
(iii)upon the making of such Advance, the Capitalised Amount will be taken to have been made by the Lender on that date.

…

Clause 6 is headed ‘Loan Balance Repayment’. The only relevant component of the clause for present purposes is subclause 6.1 which reads:

6.1 Repayment of Loan Balance on Repayment Date
The Borrower must repay and finally discharge the Loan Balance on the Repayment Date. The Borrower must also pay any interest accrued and not then paid and all other amounts payable under this Agreement and unpaid, to the Lender on or before the Repayment Date.

Relevant definitions of the Facility Agreement for the purposes of this analysis include the following:
…
Interest Payment Date in respect of each Advance means the last day of each calendar quarter, being the three month periods ending on the last day of March, June, September and December in each calendar year; and the Repayment Date;
Interest Period in relation to an Advance means each successive period of one (1) day, the first such day being the Initial Drawdown Date for that Advance and the last such day being the Repayment Date;
Interest Rate means the rate per annum specified in Item 7 of Schedule 1; [which is 15% per annum]
…
Loan Balance means, at any time and from time to time, the aggregate principal amount remaining unpaid of all Advances, together with any accrued but unpaid interest, Costs and Fees and all other amounts accrued or outstanding under or in connection with this Agreement;
…
Repayment Date means the date specified in Item 6 of Schedule 1 [36 months from date of Initial Drawdown Date][16]
[16]The Initial Drawdown Date was 21 June 2019. In Trivett’s submissions, it referred to the Repayment Date as 20 June 2022. The Plaintiffs’ submissions proceeded on the basis that it was 21 June 2022. The difference is de minimis. Paragraph 17 of the 6FASOC which pleaded that LBA paid $2.97 million into the Madgwicks’ trust account on 21 June 2019 was admitted and the Madgwicks’ trust account receipt bears that date. The Repayment Date was 21 June 2022.

Construction Issues
The plaintiffs’ submissions

The plaintiffs submit that cls 5.1 and 5.2 deal with ‘interest’, also known as simple interest.[17] Although not defined in the Facility Agreement, interest has a well-known ordinary meaning:
[17]The NSL Companies use the term standard interest. Generally, where the parties submissions are summarised, these reasons use the terminology used by the parties in their respective submissions but the terms standard interest and simple interest should be regarded as interchangeable.

13. Commerce
(a)a payment, or a sum paid, for the use of money borrowed (the principal) or the forbearance of a debt;
(a)the rate percent per unit of time represented by such payment.[18]

Clause 5.1 recognises that interest is payable on the Loan Balance.

[18]Macquarie Dictionary (5^th ed, 2009) ‘commerce’ (def 13).

Clause 5.3 is headed, and deals with Default Interest. Default Interest is defined only in cl 5.3(a) itself and is defined by reference to the also defined concept of an Overdue Amount being:

… any sum or any part of any sum, payable by the Borrower under a Finance Document [that] is not paid to, or as directed by, the Lender on or before its due date for payment.

Clause 5.1 deals with the payment of interest on the Loan Balance in the first place, whilst cl 5.2 deals with the computation of interest charged pursuant to cl 5.1. The computation of Default Interest is dealt with in cl 5.3(d). The plaintiffs submit that cl 5.3 is in effect a standalone regime for Default Interest.

Relevantly, cl 5.3(c) provides that ‘Default Interest will be calculated at the Interest Rate for the period for which the Overdue Amount remains unpaid’. Thus Default Interest is to be calculated for the purposes of cl 5.3 at the same rate as interest is calculated for the purposes of cl 5.1. The plaintiffs submit that simple interest in cls 5.1 and 5.2 operates in one silo, while Default Interest in cl 5.3 operates as a separate silo such that in the event of default they run concurrently.

Thus, on the very first interest payment date, being 30 June 2019, the plaintiffs note that there was a default as the interest that became due on that day went unpaid. It submits that the unpaid amount had two relevant effects:

(a) First, it was added to the Loan Balance (as defined) which is then relevant to cls 5.1(a), 5.1(b) and 5.2(d) meaning that going forward all further interest calculations would add it to the Advance (and each unpaid interest amount that followed on each following Interest Payment Date) to come up with the integer for the 15% calculation – ie, the simple interest silo; and

(b) Second and separately, it became an Overdue Amount triggering Default Interest for the purposes of cl 5.3, and again, increased with each unpaid Interest Payment Date, ie, the Default Interest silo.

Thus, the plaintiffs submit that both amounts have been accruing and compounding side by side since 30 June 2019.

The plaintiffs also argue that the obligation to pay simple interest extends beyond the Repayment Date because to construe the obligation to pay simple interest under cl 5.1 as ending on the Repayment Date conflicts with cl 5.2(d). Clause 5.2(d) provides that ‘interest is payable until the Loan Balance (and all other amounts due, including Default Interest) has been repaid in full’. The plaintiffs submit that the reference to Default Interest in the parenthesis makes clear that the ‘interest’, the subject of cl 5.2(d), is simple interest. The plaintiffs note that the definition of Loan Balance[19] does not include Default Interest which is evident from the definition of Loan Balance but also from the need to include the concept of Default Interest in parenthesis in cl 5.2(d) alongside the separate concept of Loan Balance. Although the definition of Loan Balance does not include Default Interest, the plaintiffs submit that as a matter of mechanics cl 5.3(d) operates such that in every quarter the amount of Default Interest accrued in that quarter is debited to the Loan Balance itself and that they have prepared their calculations accordingly. The plaintiffs emphasise that whilst there is an interaction between the Loan Balance and the Overdue Amount, they remain definitionally distinct concepts.
[19]See above [23].

The plaintiffs emphasise that the contracting parties put in place a regime pursuant to which, in a world where there was no default, Trivett would pay the 15% on the Advance every Interest Payment Date (or quarter) pursuant to cls 5.1 and 5.2(a)-(c), and then on the Repayment Date repay the Advance and one final interest amount, such that cl 5.3 (and cl 5.2(d)) had no work to do.

However, Trivett ignored all interest repayment obligations.

The plaintiffs otherwise submit that the obligation to pay interest pursuant to cl 5.1 does not cease on the Repayment Date unless the Loan Balance was actually repaid, which it was not.

Whilst the plaintiffs accept that the Loan Balance first became due and payable on the Repayment Date, it remains due and payable to this day with the consequence that interest under cl 5.1 continues to run. The plaintiffs emphasise that the Loan Balance becoming due and payable was not a one-off event but a continuous state of affairs.

The plaintiffs submit that the Loan Balance now due comprises the original Advance as well as interest of two components being:

(a) interest pursuant to cls 5.1 and 5.2, being 15% on the Loan Balance, being the original Advance of $2.97 million plus all accrued but unpaid interest on that Advance, from the first Interest Repayment Date;

(b) Default Interest pursuant to cl 5.3 being the first unpaid interest amount of 15% on the Advance, again compounding, but increasing by the amount of the Advance on the day after the Repayment Date when the $2.97 million also became an Overdue Amount for the purposes of the defined term in cl 5.3(a).

The plaintiffs argue that after 21 June 2022 when the Advance was not repaid on the Repayment Date, Default Interest began to also be charged upon it (in addition to interest under cls 5.1 and 5.2).
Trivett’s submissions

Trivett accepts that the plaintiffs correctly applied standard interest (15%) to the Advance pursuant to cls 5.1 and 5.2 of the Facility Agreement from 19 June 2019 until the Repayment Date and correctly applied Default Interest (15% compounding interest) to the unpaid interest component (which constituted the Overdue Amount as defined in cl 5.3 of the Facility Agreement),[20] pursuant to cl 5.3 of the Facility Agreement.
[20]Cf Trivett’s calculation - see above [13(b)] .

According to Trivett, the plaintiffs’ error is that from 21 June 2022, the plaintiffs applied both default interest (15% compounding interest) and standard interest of 15% per annum to the Advance so that from the Repayment Date, the plaintiffs have applied a total interest rate of 30% to the Advance.

Trivett submits that cls 5.1 and 5.2 deal with payment of interest on (relevantly) the Advance prior to the Repayment Date, whilst cl 5.3 deals with interest on (relevantly) the Advance after the Repayment Date, at which time it would (if not repaid) form part of the Overdue Amount.

Trivett submits that the question of what rate is payable after a default (ie, after a sum (in this case the Advance) has become ‘due and payable’) is governed by cl 5.3(a) and cl 5.3(c) is the provision that then provides the rate of Default Interest. That clause provides that ‘Default Interest will be calculated at the Interest Rate for the period for which the Overdue Amount remains unpaid’. Interest Rate is defined as the rate per annum specified in Item 7 of Schedule 1, which is 15%, which is the same rate as the pre-default (or standard) rate.

Accordingly, Trivett submits that the parties provided that a flat interest rate of 15% was to apply both prior to and after the due dates of payment and relevantly that cl 5.1(b) cannot be engaged after default as that clause ceases to have operation with cl 5.3(c) then applying. Trivett submits that the plaintiffs’ construction which gives rise, in effect, to a default interest rate of 30% (that is 15% plus 15%), is not open on the plain words of cl 5.1(b) which applied prior to any default and cl 5.3(c) which applies after the default.

Whilst Trivett denies that the Facility Agreement is ambiguous in this respect, in the event that it is, Trivett also relies upon an earlier draft of the Facility Agreement provided by Joshua Balsim to Raffaele Aiello and Anthony Cazzupi by email dated 13 August 2019. The earlier draft provided for a separate Item 8 with a default rate of 18% per annum which stood in contrast to Item 7, the Interest Rate of 15% per annum.

Analysis

The critical question is whether the provision for standard interest in cl 5.1 of the Facility Agreement applies after the Repayment Date as well as the provision for default interest in cl 5.3. As is well known, the meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That normally requires consideration not only of the text but also of the surrounding circumstances known to the parties and the purpose and object of the transaction.[21] To similar effect, in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd,[22] French CJ, Nettle and Gordon JJ said:

The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.
In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.
Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.
However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”.[23]

[21]Toll (FGCT) Pty Ltd v Alfapharm Pty Ltd (2004) 219 CLR 165, 179 [40].

[22](2015) 256 CLR 104.

[23]Ibid 116-117 [46]-[49] (citations omitted).

It is useful to commence the analysis on the assumption that there was no default in the payment of standard interest. On this assumption, the Loan Balance is relevantly confined to the aggregate principal amount remaining unpaid of the Advance of $2.97 million.

As cl 6.1 makes clear, the Loan Balance was not required to be repaid, and hence was not due and payable until the Repayment Date which was 21 June 2022.

Clauses 5.1(a) and (b) have the effect that Trivett was to pay interest in arrears on the Loan Balance (ie, the Advance) at the rate of 15% per annum until the Loan Balance becomes due and payable (that is until 21 June 2022).

On the assumption that the Loan Balance was not repaid on 21 June 2022 (as was the case here), the Loan Balance then became the, or part of the Overdue Amount, for the purposes of cl 5.3(a), in which case Default Interest accrues on the Overdue Amount from the due date up to the date of actual payment (both before and after judgment).

Trivett’s analysis is the more persuasive. The standard interest payable pursuant to cl 5.1 applies for the period prior to the Repayment Date and the Default Interest applies for the period after that date. The fact that the Default Rate of 15% is the same as the Interest Rate of 15% may be unusual but does not impact on the necessary interpretative exercise any more than would be the case if the Default Rate was significantly higher (say, double the standard rate) which is the effective consequence of accepting the plaintiffs’ submissions (which involves both the Interest Rate of 15% and the Default Interest being payable from 22 June 2022).

The premise of Trivett’s analysis is of a clear demarcation between the period prior to the Repayment Date and after, with the standard interest rate payable in the former period and Default Interest being payable in the latter.

This clear demarcation contains support from both the text of the Facility Agreement when interpreted as a whole.[24]
[24]Perpetual Custodians Ltd v IOOF Investment Management Ltd (2013) 304 ALR 436, 456-457 [86].

As to textual matters, cl 5.1(a) requires the Borrower to pay interest in arrears on the Loan Balance for each Interest Period until it becomes due and payable with such accrued interest to be paid on each Interest Payment Date.

The plaintiffs’ submissions emphasise that ‘due and payable’ is a continuous state which, insofar as it relates to that part of the Loan Balance comprising the Advance, commenced on 21 June 2022 but has remained thereafter. Whilst the Loan Balance (including the Advance) has remained due and payable on an ongoing basis from 21 June 2022, the plaintiffs’ analysis pays insufficient regard to the definitions of Interest Period and Interest Payment Date.

The Interest Period, as defined, starts on the Initial Drawdown Date but ends on the Repayment Date, hence the concluding words of the definition of Interest Period which read ‘… the last such day being the Repayment Date’. Similarly, albeit less conclusively, the Interest Payment Date in respect of each Advance (here only the $2.97 million) is ‘…the last day of each calendar quarter, being the three month periods ending on the last day of March, June, September and December in each calendar year; and the Repayment Date’ which is suggestive (albeit not conclusive) that the references to the last day of March, June, September and December in each calendar year are for those years that precede the Repayment Date.

The obligation imposed on the Borrower to pay standard interest under cl 5.1 therefore only applies ‘for each Interest Period’ with the end point of the Interest Period being the Repayment Date. On that basis, there is no obligation to pay interest in arrears on the Loan Balance which endures beyond the Interest Period.

Consistently with that analysis, cls 5.1(a) and (b) (in specifying that the interest rate for each Interest Period is the Interest Rate of 15%) further provide that this rate (the Interest Rate) applies only until the Loan Balance, becomes due and payable which is the Repayment Date of 21 June 2022. Notably, any default prior to the Repayment Date did not give rise to any ability on the part of the lender to call for the repayment of the Loan Balance. Consistent with this analysis, the reference to ‘until it becomes due and payable’ in cl 5.1 signifies the end point at which the obligation to pay interest under cl 5.1 (standard interest) ends and does so in a manner which is entirely consistent with the meaning of Interest Period and when read in that context, the meaning of Interest Payment Date.

Correlatively but consistently with that analysis, cl 5.3(a) provides that Default Interest will accrue on the Overdue Amount (as defined internally in cl 5.3(a)). Clause 5.3(a) specifies a commencement point for the date on which Default Interest will commence which is from the ‘due date’ (evidently a reference to the due date for the repayment of the Loan Balance which is 21 June 2022) and an end date with the relevant end date being the ‘date of actual payment’ (both before and after judgment).

The only significant contrary indicator in the Facility Agreement is found in cl 5.2(d). This clause provides that interest is payable until the Loan Balance (and all other amounts due including Default Interest) has been repaid in full. The plaintiffs submit that this means that standard interest within the meaning of cl 5.1 continues to be payable until such time as the Loan Balance (and all other amounts due including Default Interest) have been repaid in full. I do not accept that this indicator is sufficient to amount to in effect a new source of obligation beyond that imposed by cl 5.1(a). If cl 5.1(a) does not apply because the obligation only requires payment in interest on arrears for each Interest Period (which periods have expired), then the premise of the plaintiffs’ submission is that cl 5.2(d) must give rise to a new obligation, and that the interest payable under cl 5.2(d) is standard interest payable pursuant to cl 5.1. I do not accept that is so; the obligation to pay standard interest is that set out in cl 5.1. Secondly, the reference in cl 5.2(d) appears in a section of the Facility Agreement under the subheading ‘Computation of interest’. The heading suggests that the reference in cl 5.2(d) to interest being payable until the Loan Balance has been repaid in full relates to the question of computation only, not a separate source of obligation.[25]
[25]As to reliance on a heading as a tool of interpretation, see Lewis Construction (Engineering) Pty Ltd v Southern Electric Authority of Queensland (1976) 50 ALJR 769.

Assuming in favour of the plaintiffs’ argument that the concept and definition of Loan Balance continues to have relevance after the Repayment Date and is not subsumed by and becomes the Overdue Amount, the submission further assumes that the reference to ‘interest’ in cl 5.2(d) is a reference to interest under cl 5.1 as opposed to a reference to Default Interest or to both standard and Default Interest. That assumption is made notwithstanding the inaptness of cl 5.1 being construed as a continuing obligation to pay interest after the Repayment Date for the reasons explained above. Whilst cl 5.2(d) does sit somewhat incoherently with the remaining parts of the Facility Agreement, the presence of ambiguities or inconsistencies in a complex document is not uncommon.[26] The relevant interpretative task is to construe the agreement as a whole in light of such ambiguities and to do so in determining what a reasonable person in the position of the parties would have understood the Facility Agreement to mean.
[26]Re Sigma Finance Corp [2010] All ER 571, 589 [35].

When the Facility Agreement is construed as a whole, for the reasons set out above, the parties intended that the interest which applied on the Overdue Amount was Default Interest with cl 5.1 providing for the payment of standard interest at the Interest Rate in the period prior to the Repayment Date. The mere presence of subparagraph (d) in cl 5.2 of the Facility Agreement which relates to computation of interest, which arguably points in a contrary direction, is insufficient to compel any contrary conclusion.

Whilst the above analysis proceeds on the premise that there is no default before 21 June 2022, the contrary premise does not affect the interpretative task. In any case, the basis for that premise is not merely the expectation that the parties would adhere to their contractual obligations. The Facility Agreement contemplated a straightforward and undemanding way for Trivett to pay the quarterly interest payments on the Interest Payment Date(s). Clause 5.6(a) entitled the Borrower to capitalise any quarterly interest payment payable on an Interest Payment Date with the Lender agreeing to advance to the Borrower an amount equal to the Capitalised Amount on the date on which the Capitalised Amount would otherwise have been payable.

All the Borrower had to do in order to comply with the obligation to make the quarterly interest payment on the Interest Payment Date under cl 5.1 was confirm with the Lender (ie, LBA) that it wished to capitalise an amount equal to the amount of the quarterly interest payment. Given that Trivett had no other obligations imposed upon it under the Facility Agreement and that there was such a ready means available to it of satisfying the obligation to make the quarterly interest payment, the prospects of any default under the Facility Agreement were slight or if there was, the event of default did not bring with it the consequence that the Loan Balance became due and payable.

On the assumption that there would be no default, only standard interest would be expected to apply during the period prior to the Repayment Date with the standard interest being capitalised such that the Loan Balance at the time of the Repayment Date would comprise the total of the Advance(s) together with Capitalised Amount(s).

Here the unlikely default materialised because Trivett did not avail itself of the ability provided under cl 5.6 to capitalise the quarterly interest payments due on the Interest Payment Date. Rather, when LBA wrote to Tony Balsim on 11 October 2019, both requesting repayment of the sum of $2.97 million plus interest said to be payable in arrears in the sum of $140,363,[27] Trivett’s response was to send a default notice in respect of the failure to comply with a drawdown notice for a further advance of $14 million. It then wrote to LBA’s solicitors on 18 October 2019 rightly asserting that there was no requirement to repay any moneys until the Repayment Date which date had not passed, and otherwise putting LBA on notice of a claim for loss and damage but made no reference to the obligation to pay interest in respect of that part of the advance that had been provided.[28]
[27]In the Primary Reasons this letter is referred to at [65] although the reference in that paragraph did not identify the amount of interest accrued from 21 June 2019.
[28]Primary Reasons [67].

As a result, prior to the Facility Agreement coming to an end when Trivett accepted LBA’s repudiation upon the filing of the 9 August 2023 defence,[29] Trivett was in breach of the obligation to pay standard interest in arrears on the Loan Balance at the Interest Rate in the period prior to the Repayment Date on 21 June 2022. The consequence of this was that the unpaid quarterly interest payment constituted an Overdue Amount within the meaning of cl 5.3. This resulted in the unanticipated incurring of Default Interest per force of cl 5.3(a) on the Overdue Amount comprising the unpaid standard interest. The unlikelihood of this occurring explains the otherwise incongruous outcome that both standard interest and Default Interest apply (albeit only on the unpaid standard interest instalments) but only Default Interest was payable after the Repayment Date.
[29]Primary Reasons [132]-[133].

Hence in the period prior to the Repayment Date, Trivett became liable for both the interest payable pursuant to cl 5.1 on the Loan Balance (which comprised initially the amount of the Advance and then the amount of the Advance together with each unpaid quarterly interest payment) as well as for Default Interest with the Default Interest also accumulating and forming part of the Loan Balance.

Trivett’s calculation,[30] as the plaintiffs suggest, adds to the Loan Balance each month, the amount of the unpaid quarterly interest payment. It proceeds as if the quarterly interest payment was made and was advanced to Trivett by LBA as if it constituted a Capitalised Amount within the meaning of cl 5.6. Thus, Trivett’s calculation ignores and therefore does not include the Default Interest payable on those amounts.
[30]See above [9]; [13(b)].

Given that in the period prior and including 21 June 2022, Trivett was liable to pay both the quarterly interest payments pursuant to cl 5.1 and in the event that was not paid Default Interest under cl 5.3 but was only liable for the Default Interest on the Overdue Amount from 22 June 2022, the correct interest calculation at least for that period up to and including 8 August 2023 is the plaintiffs’ alternative second calculation. That calculation insofar as it relates to the period up to the Repayment Date, identifies that the Loan Balance as at 21 June 2022 was $5,026,282.91 comprising the principal (or the Advance of $2.97 million) together with standard interest and Default Interest which collectively total on a cumulative basis, $2,056,282.91.

The plaintiffs’ alternative second calculation therefore proceeds correctly on the basis that only Default Interest is payable after the Repayment Date. However the calculation assumes that Default Interest continues up to 2 April 2025. This date is well beyond 8 August 2023 which is the relevant end date if Trivett’s arguments are accepted to the effect that its acceptance of the repudiation on 9 August 2023 has the effect that any entitlement to interest under the Facility Agreement ended on 8 August 2023.

Whether the plaintiffs’ alternative second calculation is correct therefore depends upon whether the entitlement to Default Interest after the Repayment Date continues beyond the date on which the Facility Agreement came to an end upon Trivett’s acceptance of LBA’s repudiation. This in turn depends upon whether the right to Default Interest under cl 5.3 constitutes an accrued right which endures to the lender’s benefit beyond the termination of the Facility Agreement. That issue, together with the correlative entitlement of the plaintiffs to rely upon cl 5.4(a) is the next issue for consideration.

I did not find it necessary to have regard to the earlier draft of the Facility Agreement referred to in Trivett’s third submission. Although the document was not in evidence, and Trivett did not expressly seek to re-open its case to tender that document, I would not have denied reliance on the document on that basis alone. As Trivett notes, the document in question was referred to in the plaintiffs’ opening submissions, albeit was not tendered. The trial was conducted solely on the basis of documentary evidence and I accept that the question of the interest and in particular whether both standard interest and Default Interest ran after the Repayment Date was not squarely in issue at the trial. The plaintiffs submit that the earlier draft is not relevant. Earlier drafts of a written agreement are generally inadmissible as an aid to construction save for certain limited circumstances such as where a rejected prior draft shows that the parties are not united in rejecting a particular meaning.[31] The earlier draft does not establish this. It shows only internal deliberations on the NSL Companies end. There is no evidence that the draft was provided to LBA and hence no joint rejection of the draft.
[31]Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 352-353.

Accrued Rights Issue

As noted in the Primary Reasons, I determined that LBA had repudiated the Facility Agreement in October 2019 and that the repudiation was accepted by Trivett on 9 August 2023. That conclusion has led to the further dispute as to whether the plaintiffs are entitled to standard interest and/or Default Interest from and including 9 August 2023. The reference in the Primary Reasons to LBA having ‘accrued rights to the payment of interest and other costs including default interest (cl 5), and the right to have the Loan Balance repaid and discharged on the Repayment Date (cl 6.1)’[32] and that ‘the plaintiffs [would] be entitled to judgment for $2.97 million together with interest payable under the Facility Agreement’[33] was not intended to preclude the argument that the entitlement ceased on 9 August 2023. Relatedly, the plaintiffs also submit that notwithstanding the acceptance of the repudiation by Trivett on 9 August 2023, they are nevertheless entitled to rely upon cl 5.4(a) of the Facility Agreement to recover their legal costs of the proceeding on an indemnity basis.
[32]Primary Reasons [135].
[33]Primary Reasons [255].

Where one party accepts a repudiation by another of an agreement, the consequence is that the agreement comes to an end. The fact that the contract has come to an end however does not mean that the parties are placed in the position they would have been in prior to their contract. The effect of the acceptance by one party of the repudiation by the other is not to rescind the contract from the beginning. The discharge operates only prospectively.[34]
[34]Baltic Shipping Co v Dillon (1993) 176 CLR 344, 390.

The discharge however does not affect accrued rights, obligations and liabilities. The guiding principle as to accrued rights and obligations is the judgment of Dixon J, with whom Rich and McTiernan JJ agreed, in McDonald v Dennys Lascelles Ltd (‘McDonald’):[35]

When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected. When a contract is rescinded because of matters which affect its formation, as in the case of fraud, the parties are to be rehabilitated and restored, so far as may be, to the position they occupied before the contract was made. But when a contract, which is not void or voidable at law, or liable to be set aside in equity, is dissolved at the election of one party because the other has not observed an essential condition or has committed a breach going to its root, the contract is determined so far as it is executory only and the party in default is liable for damages for its breach.

[35](1933) 48 CLR 457, 476-477, quoted in Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560, 575-576 [9] (‘Mann’).

The plaintiffs contend that the contractual rights given to LBA (to which the plaintiffs succeed by virtue of the assignment), in cls 5.1, 5.3 and 5.4(a) constitute such accrued rights.

Although Dixon J’s statement in McDonald has been quoted or applied in many cases, as Professor Carter and Associate Professor Tolhurst noted in Recovery of Contract Debts Following Termination for Breach,[36] there has been less analysis in the case law as to the question of what constitutes an accrued right.[37] The question becomes more problematic where the accrued right is that of the repudiating party.[38]
[36]J W Carter and G J Tolhurst ‘Recovery of Contract Debts Following Termination for Breach’ (2009) 25 Journal of Contract Law 191 (‘Carter and Tolhurst’).
[37]Ibid 191-192.
[38]Mann (n 35).

The relevant analysis must proceed from the starting point of his Honour’s judgment in McDonald; the right must be one which has been unconditionally acquired. The mere fact that a liquidated sum fell due prior to payment is not sufficient to enable the recovery of the amount as a contract debt. Had it been so, the plaintiff would have succeeded in McDonald. Instead, his Honour categorised the relevant right as being one which must have been unconditionally acquired and arising from partial execution of the contract.

The starting point or prima facie position is that the parties are discharged from all unperformed obligations. This reflects the common law presumption of the dependency of obligation.

The right of a contracting party however to recover a contract debt or a liquidated sum which was overdue at the time of termination represents an exception to the prima facie position. The termination of a contract cannot place a promisee in a better position than it would have been in had the contract not been discharged; the right to recover payment of a contract debt depends on whether the right to the payment has been earned, not whether the time for payment arrived prior to termination.[39] Whether the prima facie position is rebutted is to be determined by reference to the intention of the parties as reflected in the relevant agreement.
[39]Carter and Tolhurst (n 36) 195.

As Professor Carter and Associate Professor Tolhurst describe it, the right of a party to recover a contract debt as a liquidated sum overdue at the time of termination arises either because of:

(a) the existence of an unconditional accrued right in relation to the liquidated sum; or

(b) an express or implied agreement that the liquidated sum was to remain payable after termination.[40]

In relation to the former possibility, that is whether the payee enjoyed the benefit of an accrued right prior to termination, the payee must identify the agreed return for the payment by construing the contract and it must be concluded that the agreed return was provided.

[40]Ibid 213.

Whilst there are disputes between the plaintiffs and Trivett as to whether Trivett is liable for both standard interest and Default Interest prior to the Repayment Date, there is no dispute that the plaintiffs, now standing in the shoes of LBA, are entitled to recover the contract debt (however it may be calculated) payable pursuant to cl 6.1 of the Facility Agreement. Nor is there any dispute that they are entitled to recover as a contract debt, the Default Interest that accrued on the Loan Balance payable on the Repayment Date. There is no dispute that the plaintiffs are entitled to the contract debt arising under cl 6.1 or the quantification of the debt arising under cl 5.3. This follows because the agreed return for the payment due under cl 6.1 and the interest due under cl 5.3 was the provision of the Advance and that the Advance was provided.

The Facility Agreement contemplated that LBA might make one or more advances. The entitlement under cl 6.1 is an entitlement to be repaid the Loan Balance which comprised, inter alia, the amount of each advance made prior to the Repayment Date.

However, in contrast the entitlements claimed by the plaintiffs in relation to the rights under cl 5.4(a) most clearly, and cl 5.3(a) are of an entirely different character. Turning first to the plaintiffs’ assertion that the contractual right given to them under cl 5.4(a) entitles them to recover indemnity costs, the plaintiffs cannot point to a contractual debt or liquidated sum which is payable as at 8 August 2023.[41] This is in contrast to cl 6.1 in relation the Loan Balance. The correlative of the contractual right claimed by the plaintiffs is an accompanying obligation on the part of Trivett. But Trivett was discharged from its obligations under the Facility Agreement from 9 August 2023 including the obligations under cl 5.4(a). If the plaintiffs are entitled to rely on cl 5.4(a) then it can only be because Trivett is liable under that clause in which case the discharge affected by Trivett’s acceptance of the repudiation is illusory. If Trivett is no longer bound by cl 5.4(a) as from 9 August 2023, as must follow upon its acceptance of the repudiation, then there is no right on the part of the plaintiffs to rely upon a contractual right embodied in the same clause. Unlike the plaintiffs’ reliance upon cl 6.1 and Default Interest on the Overdue Amount under cl 5.3, there was no liquidated sum overdue at the time the contract came to an end.
[41]Cf Ettridge v Vermin Board of the District of Murat Bay [1928] SASR 124, 128-129.

Further, and even if the plaintiffs were otherwise entitled to rely upon cl 5.4(a), the cause of action in respect of such a clause only arises on demand by the Lender (here the plaintiffs), which demand was apparently first made upon the services of its submission in this proceeding. Contrary to the plaintiffs’ assertion, Australian Zircon NL v Austpac Resources NL (No 2)[42] is directly on point. There, like here, no entitlement arose under the relevant indemnity clause by the time the relevant agreement was terminated.
[42][2011] WASC 186.

A similar analysis applies in relation to the plaintiffs’ reliance on cl 5.3. Clause 5.3(a) specifies the circumstances in which Default Interest accrues. Clause 5.3(a) however does not in terms impose any obligation on the borrower to pay the accrued Default Interest. The obligation to pay the accrued Default Interest arises as an incident of the obligation under cl 6.1 to repay and finally discharge the Loan Balance (which includes accrued but unpaid interest). That obligation became complete on 21 June 2022 well before the acceptance of the repudiation. This explains why Trivett accepts that the contract debt, which became payable on 21 June 2022, is an accrued right to payment together with that part of the accrued Default Interest calculated up to 8 August 2023.

However the right to payment of the Default Interest ended on 8 August 2023 because the Lender and hence the plaintiffs’ rights to enforce the Facility Agreement and hence Trivett’s obligation to adhere to it were discharged from that date. The only saving was with respect to the liquidated debt entitlement to the calculated Default Interest as at that date. Clause 5.3(b) makes clear what is implicit in cl 5.3(a) which is that the counterpart of the plaintiffs’ entitlement to Default Interest under cl 5.3(a) is Trivett’s obligation to pay the Default Interest.

That obligation was discharged from 9 August 2023 following Trivett’s acceptance of the repudiation.

It follows therefore that the plaintiffs have no right to interest under the Facility Agreement from 9 August 2023. From that point their entitlement is confined to interest pursuant to s 58 of the Supreme Court Act.

At my request, the plaintiffs forwarded a further set of spreadsheets with the relevant calculations prepared on the basis that the only entitlement to interest from 9 August 2023 was statutory interest.[43]
[43]The plaintiffs provided a further spreadsheet via email sent 24 April 2025. By the series of calculations contained in the second tab of that spreadsheet, the plaintiffs, inter alia, calculated the judgement debt inclusive of interest as at 2 April 2025 in the sum of $6,918,443.51 comprising the total of the Advance ($2.97 million); accrued standard interest to 21 June 2022 ($1,697.001.73), accrued default interest to 8 August 2023 ($1,271,925.56) and interest from 9 August 2023 at the daily rate of $1,627.10 to 2 April 2025 and then at the daily rate of $1,895.46 from 2 April 2025. Trivett did not take issue with those calculations save to the limited extent that it submits that the daily interest from 9 August 2023 to the date of the final orders is $1,627.10 per day.

Having regard to my conclusions above, which are to the following effect:

(a) the plaintiffs are entitled to both standard interest pursuant to cl 5.1 calculated on the Advance and Default Interest pursuant to cl 5.3 calculated on the Loan Balance comprising the Advance together with the cumulative standard interest and Default Interest up to and including 21 June 2022;

(b) the plaintiffs are entitled to Default Interest only on the Loan Balance as calculated on 22 June 2022 from 22 June 2022 up to and including 8 August 2023;

(c) the plaintiffs are only entitled to statutory interest from 9 August 2023 onwards,

the correct calculations are those set out in the plaintiffs’ alternative second calculation as revised.

It follows therefore that the sum due as at 2 April 2025 is $6,918,443.51 comprising the principal (ie, the Advance) together with interest pursuant to the Facility Agreement to 8 August 2023 and interest pursuant to s 58 of the Supreme Court Act from 9 August 2023. As the only orders made on 2 April 2025 were directions for the provision of joint agreed orders or competing orders, no judgment debt arose on that day. Trivett’s submission that the daily rate of statutory interest continues at the rate of $1,627.10 to the date of judgment being given for the debt is therefore correct. Accordingly, the amount of the debt for which judgment shall be given on 14 May 2025 is $6,985,154.61 which sum comprises the Advance together with interest under the Facility Agreement to 8 August 2023 and interest pursuant to s 58 of the Supreme Court Act from 9 August 2023 to 14 May 2025.

Costs
Indemnity Costs by reason of cl 5.4(a)

In light of my conclusion that the rights under cl 5.4(a) did not constitute a relevant accrued right under the Facility Agreement at the time of its termination, the relevance of cl 5.4(a) to the plaintiffs’ claim for indemnity costs is confined to the period from 26 June 2023, when Trivett was joined to the proceeding upon the filing of an amended writ,[44] to 9 August 2023 which was the date on which Trivett terminated the Facility Agreement. In Trivett’s proposed form of orders, it accepts that the plaintiffs are entitled to indemnity costs until 8 August 2023 (inclusive) in respect of the claims made against Trivett in the sixth further amended statement of claim filed 2 December 2024 (‘6FASOC’) including the plaintiffs’ costs of the application to join Trivett made by summons dated 9 June 2023 (‘Trivett joinder application’).
[44]Pursuant to orders made 23 June 2023.

To the extent the plaintiffs’ costs submissions can be interpreted as an alternative submission, that if the benefit of cl 5.4(a) ended on 9 August 2023, then an order for indemnity costs should be made in the plaintiffs’ favour for the limited period up to and including 8 August 2023, the form of the order should be limited to the proceeding against Trivett alone and not as the plaintiffs’ propose, the NSL Companies generally.

To the extent to which the plaintiffs had a contractual entitlement, it was a contractual entitlement against Trivett only, not one applicable as against the remaining NSL Companies.

As the plaintiffs acknowledge, the presence of such a clause is not dispositive of the proper exercise of the Court’s discretion albeit that it is a weighty factor in favour of the making of a special costs order which ordinarily should be given effect to unless there is some other discretionary consideration that militates against the making of such an order.[45]
[45]Gomba Holdings (UK) Ltd v Minories Finance Ltd (No 2) [1993] Ch 171; Chen and Xi v Kevin McNamara & Son Pty Ltd [2012] VSCA 229, [8].

Notwithstanding Trivett’s concession, there are arguably discretionary considerations here that militate against the making of such an order. This is because, given my preference for the form of order proposed by Trivett, it would require segregating the plaintiffs’ costs of the proceeding against Trivett from those costs incurred by the plaintiffs against the other NSL Companies over a limited period. The issue of overlapping costs between claims against Trivett and the remaining NSL Companies is addressed below in my broader discussion of the exercise of discretion in relation to costs, and will be considered in that context.

Indemnity Costs – the Calderbank offer

The plaintiffs also submit that costs should be awarded on an indemnity basis from 17 December 2024 which is the date after the expiry of the Calderbank offer.

The Calderbank offer was addressed both to Madgwicks Lawyers, the solicitors for NSL Group, NSLMP and Trivett, and to Joshua Balsim, a director of NSL. The letter was dated 2 December 2024 and was sent three days after an order had been made joining NSL as the fourteenth defendant to the proceeding.[46]
[46]The relevant amended writ was filed and served on 29 November 2024.

The reason for the offer being sent to both the solicitors on the record for NSL Group, NSLMP and Trivett and to NSL was that the offer was an offer made to all of the Trivett/NSL parties (ie, the NSL Companies) on a joint and several basis. The letter was comprehensive and expressed the view that it was more likely than not that the plaintiffs would succeed in the proceeding against one or more of the NSL Companies.

The letter set out in some detail the perceived strength of each of the categories of the plaintiffs’ alternative claims, that is it dealt separately with the strength of the NSL Loan Agreement claim and the strength of the Facility Agreement claim. Although it did not deal specifically with the strength of the money had and received claim, it confirmed that the plaintiffs pursued claims on that basis. The letter advanced essentially the same arguments (albeit in summary form) to those raised by Trivett and the remaining NSL parties at trial and considered in the Primary Reasons.

In the Calderbank offer, the plaintiffs expressed the view that they would likely succeed in obtaining judgment against one or more of the NSL Companies and recorded the key question as being ‘which entity will be found liable and how much interest will be payable?’ The letter advised that judgment would be sought for the $2.97 million plus interest (which in the case of Trivett is likely to be in the order of at last $4.5 million) and costs. In respect of the other NSL entities statutory interest would be sought from the date of joinder of the relevant party. Further, the Calderbank offer communicated the plaintiffs’ position that if they did not succeed in obtaining judgment against all of the NSL Companies, the plaintiffs’ position would be that the costs of any successful defendant ought not be borne by the plaintiffs and that they would rely on the history of the conduct of the NSL Companies in filing inconsistent defences to the plaintiffs’ claim as being the cause of any wasted costs.

The Calderbank offer then concluded as follows:

Offer
41However, in the interests of resolving the Proceeding as expeditiously as possible and avoiding all parties incurring further unnecessary costs, the Plaintiffs are willing to resolve this proceeding as against all of the Trivett/NSL parties on the following terms,
(a)Payment to the Plaintiffs of the sum of $2,800,000 within thirty days of acceptance of the Offer (the Settlement Sum);
(b)On receipt of the Settlement Sum, the Plaintiffs will agree to release not just the entity which pays the Settlement Sum, but all of the Trivett/NSL Parties;
(c)NSL Group, NSL MP, NSL P/L, Trivett, Balsim Family Holdings Pty Ltd, Asya Balim, Tony Balsim and Joshua Balsim agree to release the Plaintiffs from any claims the subject of this proceeding and in relation to the two assignment deeds;
(d)The parties agree to file consent orders discontinuing the claims in the Proceeding with no order as to costs including reserved costs; and
(e)The settlement will be subject to agreement of terms including as to confidentiality to be incorporated into a deed of settlement.

(the Offer).
42 For the reasons outlined above, the Plaintiffs consider this to be a reasonable offer ….

The Calderbank offer concluded with a statement that the offer would remain open for acceptance until 5pm on 16 December 2024 and will automatically lapse if not accepted in writing before that time by one or more of the NSL Companies.

In circumstances where the plaintiffs have now succeeded in respect of a claim against Trivett for the principal debt of $2.97 million (being $197,000 above the amount of the offer) the extent of the compromise offered was highly significant. The plaintiffs were willing to forego any entitlement as to costs and interest (whether pursuant to the Facility Agreement or statutory) and to take a discount on the principal sum.

Accordingly, the plaintiffs submit that it was unreasonable for Trivett to have not accepted the Calderbank offer having regard to:

(a) the stage of the proceeding at which the offer was received, 2 December 2024, when all the evidence had been filed, discovery was complete and the matter had been listed for trial. All that was left was the submissions with opening submissions being due simultaneously with the expiry of the Calderbank offer.[47] Thus, Trivett and its advisers were well-placed to assess its prospects of beating the Calderbank offer at trial;
[47]Being the plaintiffs’ opening submissions.

(b) the Calderbank offer contained a detailed explanation with great specificity of the plaintiffs’ contention that the defendants should accept the compromise which was never queried by Trivett or the other NSL Companies or the subject of any request for clarification;

(c) the time allowed for Trivett to consider the offer was reasonable being 14 days;

(d) the extent of the compromise being offered was very significant;

(e) the clarity of the offer was such that it was a simple one contemplating the payment by one or more of the NSL Companies of the settlement sum in consideration of mutual releases being given. The plaintiffs emphasise that the offer was not one that required the negotiation of detailed mechanisms to be embodied in a complex deed of settlement; and

(f) the fact that the Calderbank offer expressly referred to the fact that an indemnity costs order would be sought if the offer was rejected.

Trivett submits that the plaintiffs’ reliance upon the Calderbank offer does not warrant an order for indemnity costs for three principal reasons.

First, the offer was made very late and that ‘the Court should not encourage the use of a Calderbank letter delivered shortly before trial when the other party might reasonably be expected to have their minds on a number of matters’.[48]
[48]Maclean v Rottnest Island Authority [2001] WASCA 323, [36].

Secondly, the offer period was expressed to close at 5pm on 16 December 2024 notwithstanding that by paragraph 15 of the orders made 29 November 2024 the plaintiffs’ opening submissions were not due to be filed until 4pm on that very day and that as such, the offer did not afford the recipient a reasonable opportunity to consider the proposed compromise. Trivett submits that there was nothing reasonable about the plaintiffs affording a period of only 14 days to consider the offer where their opening submissions were not due to be filed until one hour before the expiry of that offer. Trivett submits that this was not a position which occurred ‘by happenstance’ but was deliberate.

Thirdly, Trivett submits that the offer was not capable of acceptance or enforcement by any of the defendants including Trivett whether acting unilaterally or collectively, because none of Balsim Family Holdings Pty Ltd, Asya Balsim, Tony Balsim or Joshua Balsim were parties to the proceeding and nor were there claims by them ‘in relation to the two assignment deeds made in the proceeding’. Trivett submits that the desire for a release by those parties was a transparent attempt to neutralise the foreshadowed claim by Balsim Family Holdings Pty Ltd referred to in paragraph 21 of the plaintiffs’ submissions styled ‘THE PLAINTIFFS’ SUBMISSIONS ON THE JOINDER OF NSL P/L AND THE 6FASOC’ filed on 25 November 2024. Accordingly, Trivett submits that the offer was illusory in that it was incapable of acceptance and enforcement by any or even all of the defendants relying on M.T. Associates Pty Ltd v Aqua-Max Pty Ltd (No 3)[49] (‘M.T. Associates’).
[49][2000] VSC 163, [56].

Whilst Trivett acknowledges that M.T. Associates is a case dealing with an offer of compromise, it submits that the same consideration applies in relation to Calderbank offers.[50] Relatedly, Trivett argues that the illusory nature of the offer is further indicated by the fact that the offer was also subject to ‘agreement of terms including as to confidentiality to be incorporated into a deed of settlement’ which rendered the offer capable of acceptance and enforcement and therefore illusory noting that it did not even refer to ‘usual terms’.[51]
[50]Amorosi v Robinson (No 2) [2024] VSC 806, [48] (‘Amorosi’); Kemp v Ryan [2012] ACTCA 12, [12]-[13] (‘Kemp’).
[51]Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd [1985] 2 NSWLR 309, 326-327, 329.

Orders as to costs
The parties’ positions

The plaintiffs submit that Trivett should pay the plaintiffs’ costs on and from 23 June 2023 on an indemnity basis of the proceeding by the plaintiffs against all the NSL Companies in addition to the costs of the Trivett joinder application. They submit that there should be no order as to the costs of the proceeding of NSL Group, NSLMP and NSL.

Trivett submits that Trivett should pay the plaintiffs’ costs of the proceeding by the plaintiffs against Trivett on and from 26 June 2023 to 8 August 2023 (including the costs of the Trivett joinder application) on an indemnity basis and thereafter on a standard basis.

NSL Group and NSLMP submit that are entitled to their standard costs of the proceeding on and from 24 June 2023 and that those costs should be taxed on the basis that they comprise 50% of the combined costs of Trivett, NSL Group and NSLMP.

NSL submits that it is entitled to its costs of and incidental to the proceeding on a standard basis.

Analysis and conclusion

The parties differ both as to the form of the costs orders generally and insofar as costs orders are made against Trivett, whether they should be ordered on an indemnity basis either because of cl 5.4(a)(i) or because of the Calderbank offer.

It is useful to determine the form of the orders first and then to determine whether any part of the costs ordered to be paid by Trivett should be paid on an indemnity basis.

In order to determine the form of the orders, it is necessary to set out some of the procedural chronology.

Procedural background

On 21 October 2022, the plaintiffs filed their third further amended statement of claim (‘3FASOC’) which contained a direct claim[52] against NSL Group and NSLMP, but no claim against Trivett.
[52]To be contrasted with the claim which succeeded which was brought as assignee of LBA’s rights.

On 21 November 2022, NSL Group and NSLMP filed their defence to the 3FASOC, relevantly pleading at [53S5(c)(iv)] that:

[O]n or about 19 August 2019, with a commencement date of 19 June 2019, LBA (as lender) entered into a Facility Agreement with Trivett (as borrower) ... by which, inter alia, LBA agreed that Trivett, … assumed liability for repayment of the deposit moneys and any interest thereon.

On 14 April 2023, I made orders striking out the claims in the 3FASOC against NSL Group and NSLMP, refused the plaintiffs’ application to file and serve a proposed further amended statement of claim and stayed the claims against the tenth and eleventh defendants until further order. I made further orders that if the plaintiffs wished to proceed with the claim against the tenth and eleventh defendants (or any one of them), they would have to obtain leave to file and serve an amended statement of claim within 60 days or such further period as is ordered.[53]
[53]See JB Asset Management v LBA Capital Pty Ltd [2023] VSC 183.

On 23 June 2023, I made orders giving the plaintiffs leave to file and serve a fourth further amended statement of claim (‘4FASOC’) and granted them leave to, inter alia, join Trivett as a defendant. I made a further order that the plaintiffs pay the costs of NSL Group and NSLMP of and incidental to the proceeding after 14 October 2022 to the date of the order to be taxed and payable forthwith. The plaintiffs have made payment of those costs.

On 26 June 2023, the plaintiffs filed and served the 4FASOC and the amended writ giving effect to the joinder of Trivett.

The 4FASOC represented wholesale orientation of the plaintiffs’ claims. The plaintiffs prosecuted claims against NSL Group, NSLMP and Trivett as assignees of LBA’s rights, including under the Facility Agreement.

On 9 August 2023, Trivett, jointly with NSLMP and NSL Group, filed an amended defence to the 4FASOC. By the 4FASOC, Trivett denied that it ever assumed liability under the Facility Agreement or otherwise in respect of the $2.97 million.[54]
[54]Primary Reasons [93].

Trivett, NSLMP and NSL Group all pleaded that the only entity liable to LBA was NSL.

On 29 November 2024, the existing parties attended before me for directions. At the directions hearing, the plaintiffs sought leave to join NSL as a defendant to the proceeding. Orders were made accordingly. At that same directions hearing, discussion ensued in relation to various procedural matters, including the time for the filing of opening submissions. At that directions hearing, counsel for NSL Group, NSLMP and Trivett informed the Court that NSL would be separately represented. Otherwise, counsel confirmed that his client’s opening submissions were done.

The joinder of NSL as a defendant necessitated making revised directions, including for the filing of any defence by NSL and the filing and service of an amended defence by NSL Group, NSLMP and Trivett. Additionally, orders were made extending the time for the filing and service of written outlines of opening submissions so as to require the plaintiffs to file and serve written outlines of opening submissions to 16 December 2024, with the time for the filing of the defendants’ submissions (which now included NSL) extended to 27 January 2025.

On 2 December 2024, the plaintiffs filed and serve the 6FASOC and the sixth further amended writ. By the 6FASOC, the plaintiffs prosecuted claims against NSL as assignees of LBA’s rights in essentially the same form as those claims already advanced against NSL Group and NSLMP (for moneys had and received).

On that same day, the plaintiffs sent the Calderbank offer. None of the NSL Companies responded to the Calderbank offer.

As a result of the success of the plaintiffs’ claim against Trivett, the claims against NSL Group, NSLMP and NSL did not have to be determined. In the Primary Reasons, however, I stated that the plaintiffs would have failed in respect of the NSL Loan Agreement claim, but succeeded in a claim for moneys had and received to the use of NSLMP, had the claims against Trivett not succeeded. Relevantly I accepted the plaintiffs’ submission, that the moneys paid out of the Madgwicks Lawyers trust account were to the use of NSLMP not NSL. Relevantly, the plaintiffs’ claim in respect of the action for moneys had and received was pleaded as a claim for moneys had and received to the use of LBA, albeit there was some inconsistency in the manner in which the plaintiffs had framed their claim in that regard.[55] The claim which would have succeeded, however, was a claim against NSLMP for moneys had and received to the use of NSLMP.
[55]Primary Reasons [224].

NSL

Starting first with the position of NSL, I accept that the claim against NSL failed and that, as a result, the starting point is that NSL is entitled to its costs. However, the only reason that NSL was joined to the proceeding as a defendant was because of the plea by Trivett, NSL Group and NSLMP in their amended defence to the 4FASOC filed 9 August 2023. They pleaded that the only entity liable to LBA, and hence the plaintiffs, was NSL. In those circumstances, the plaintiffs had no choice but to join NSL as a defendant, lest Trivett’s defence be accepted, but in a subsequent action, the plaintiffs may fail against NSL, NSL not being bound by the outcome unless joined to the proceeding as a party.

In circumstances where the successful defendant has only been joined to the proceeding in response to a matter raised in defence by an unsuccessful defendant (ie, Trivett), it is often the case that an order in the nature of a Bullock order or a Sanderson order is made. A Bullock order provides that the costs of the successful defendant form part of the costs of the plaintiff recovered against the unsuccessful defendant and a Sanderson order provides the costs are paid by the unsuccessful defendant directly to the successful defendant.

NSL Group, and NSLMP and NSL have the same directors; Joshua Balsim and Daniel Milentijevic. The shares in each company were owned by Trivett and by another company associated with Mr Milentijevic. Trivett’s directors were Raffaele and Asya Balsim. Asya Balsim and Joshua Balsim are related. The shares in Trivett were owned by Leo Trivett Pty Ltd as trustee of the Leo Trivett Trust and Balsim Family Holdings Pty Ltd.

Whilst I agree that NSL is entitled to an order that its costs be paid, the only relevant question is whether those costs should be ordered to be paid by the plaintiffs, with the liability for that costs incorporated in the order that the plaintiffs obtain for costs against Trivett, or whether there should be a direct order made in the nature of a Sanderson order, requiring Trivett to pay NSL’s costs directly. Given that the costs of NSL are likely to be insignificant, in that it was joined to the proceeding upon the filing of the sixth further amended writ on 2 December 2024 and played an inactive role thereafter, the simplest course is to order that the unsuccessful defendant, Trivett, pay the standard costs of the proceeding of NSL.

NSL Group, NSLMP and Trivett

A different situation arises with respect to the costs of the successful defendants, NSL Group and NSLMP, and the unsuccessful defendant, Trivett. Whilst the success of the plaintiffs’ claim against Trivett means that the alternative claims against NSL Group and NSLMP fail, unlike with respect to the joinder of NSL, NSL Group and NSLMP were not joined to the proceeding because of any matter raised by Trivett in its defence. Rather, in the 4FASOC, the plaintiffs’ pleaded claims against NSL Group and NSLMP pursuant to the NSL Loan Agreement and in respect of an action for moneys had and received, as well as the Facility Agreement claim against Trivett. They advanced that plea, including in circumstances where NSL Group and NSLMP had previously filed a defence to 3FASOC in the terms set out above, which is to the effect that Trivett assumed liability by reason of its entry into the Facility Agreement.

The basis for the making of a Bullock order or a Sanderson order which exists in relation to the plaintiffs’ claim against NSL does not, therefore, apply with respect to the costs of NSL Group and NSLMP. Further, as the defendants raised, and as I concluded in the Primary Reasons, the claim against NSL Group in particular lacked merit.

Had Trivett been separately represented from NSL Group and NSLMP, there would have been no question that orders would have been that Trivett pay the plaintiffs’ costs and for the plaintiffs to pay the costs of NSL Group and, possibly, NSLMP.

The complication arises because of the common representation of Trivett, NSL Group and NSLMP. Those parties have sought to deal with the question of the overlap, the common representation by, effectively, apportioning the collective costs of NSL Group and NSLMP on the basis that the costs of NSL Group and NSLMP represent 50% of the combined costs of NSL Group, NSLMP and Trivett, and that any costs order in favour of the plaintiffs payable by Trivett be limited to those costs of the claims brought by the plaintiffs against Trivett. If the premise that the costs of NSL Group, NSLMP and Trivett is that 50% relate to NSL Group and NSLMP with the balance to Trivett, then it stands to reason that the same should apply with respect to those costs of the plaintiffs against Trivett on the one hand, and those costs incurred by the plaintiffs with respect to its claims against NSL Group and NSLMP on the other. Although that does not necessarily follow, it likely represents the starting point for any taxation. If for the sake of argument the actual costs incurred by the plaintiffs are the same as the actual costs incurred by NSL Group, NSLMP and Trivett and half relate to the proceeding against Trivett and half to the proceeding against NSL Group and NSLMP, then the netting out of the costs orders will be neutral.

Making orders in this way involves acceptance of the premise of the submission to the effect that 50% of its costs relate to NSL Group and NSLMP, with the balance relating to Trivett, and for that premise to be accepted without evidence in the making of these orders. Conversely if no specification or guidance along those lines is provided, it will give rise to difficulties of analysis with respect to any taxation of the plaintiffs’ costs.

In my view, the preferable approach is to adopt a broad brush and to make a single costs order in favour of the plaintiffs with respect to its costs of the proceeding, which takes account of the fact that some of those costs related to claims against the successful defendants, NSL Group, NSLMP and NSL and some limited portion of the costs relate to the short period in respect of which it is conceded by the NSL Companies that the plaintiffs are entitled to indemnity costs by reason of cl 5.4(a)(i).[56] Such an approach also takes account of the fact that many of the costs of the plaintiffs with respect to the prosecution of the claims against NSL Group and NSLMP, such as the costs of proving the facts that relate to the alleged entry into the NSL Loan Agreement and the claim for moneys had and received, were facts which were necessary for the purposes of the plaintiffs’ claim against Trivett with respect to the Facility Agreement, including the significance of the backdating of that agreement. It also takes account of the fact that the bulk of the submissions at trial were directed to the Facility Agreement claim against Trivett. The NSL Loan Agreement claim and the moneys had and received claim were both comparatively straight forward with the substantive issue being which NSL entity had received the benefit of the $2.97 million paid into the Madgwicks Lawyers’ trust account. Against this, the understandable focus on the Facility Agreement claim and the subsidiary nature of the other claims was less noticeable prior to the commencement of the trial.
[56]See above [89].

Doing the best that I can and operating on a broad impression, I consider the appropriate order is that the plaintiffs be entitled to 50% of their costs of the proceeding generally and that no order for costs should be made in favour of NSL Group and NSLMP.

Indemnity costs against Trivett

That leaves the question of whether the costs ordered against Trivett should be ordered on an indemnity basis.

Costs are ordinarily determined on a standard basis. Special circumstances may, however, justify costs being awarded on an indemnity basis. One circumstance is where the losing party has unreasonably rejected an offer to settle.[57] Whether the rejection was ‘unreasonable’ depends on all the circumstances, which ordinarily include the stage the offer was made, the extent of compromise offered, the offeree’s prospects of success (assessed as at the date of the offer), the clarity of the offer, and whether indemnity costs were foreshadowed.
[57]Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435, 441 [23].

Here, the extent of the compromise was very significant. By the Calderbank offer, the plaintiffs were willing to accept an offer inclusive of costs and interest, which was $170,000 less than the amount of the advance and to waive costs and interest.

The compromise offer represented about one third of the amount of the judgment that would be obtained against Trivett, even before one has regard to the question of costs.

That matter alone points in favour of the submission that the non-acceptance of the offer was unreasonable in all the circumstances.

The unreasonableness of the non-acceptance of the offer is not gainsaid by the matters relied upon by Trivett. I do not accept the submission that the offer was ‘very late made’ or ‘shortly before trial’, such that Trivett might reasonably be expected to have its mind on other matters. The offer was made more than two months prior to the trial commencing. Although some of that period fell over the holiday break, it was hardly made at a stage where one would expect that Trivett’s legal representatives were so consumed by other matters associated with trial preparation that they could not give the offer proper consideration. Nor do I accept that there was anything unreasonable about requiring Trivett to consider its position before it received the plaintiffs’ opening submissions or that there was something untoward and inappropriately tactical by reason of the plaintiffs affording Trivett only one hour to respond to the offer after the delivery of the plaintiffs’ opening submissions. By that stage, Trivett was well aware or ought to have been well aware of the plaintiffs’ case against it, and it is unlikely that the plaintiffs’ opening submissions would have revealed anything significant. Whilst I accept that there were aspects of the proceeding generally which were complex, the complexity must be weighed against the significant compromise proffered by the plaintiffs, and the significant public policy considerations in encouraging settlement.[58]
[58]See inter alia, Mutual Community Ltd v Lorden Holdings Pty Ltd (Supreme Court of Victoria, Byrne J, 28 April 1993) (‘Mutual Community Ltd’).

The plaintiffs were seeking to recover $2.97 million plus interest, plus costs. In the event that they succeeded against Trivett, they were claiming interest under the Facility Agreement. But even if their claim as to interest was confined to statutory interest, the statutory interest with respect to the claims by the plaintiffs against Trivett, NSL Group or NSLMP was somewhere in the order of $420,000 as at the date of the offer.[59]
[59]The new claims affected by the reorientation contained in the 4FASOC were first made on 26 June 2023. The offer was made on 2 December 2024. On a broad brush, this is 17 months. Interest at the penalty rate of 10% on $2.97 million over 17 months is $420,749.80 which can be rounded down to $420,000. When this is added to the advance of $2,970,000, one arrives at a figure of $3,390,750. In addition, the plaintiffs were offering to waive their costs.

Moreover, Trivett’s own defence was that NSL was liable. NSL was a subsidiary of Trivett. If Trivett’s defence was accepted, its subsidiary would be liable for $2.97 million, together with interest, albeit a much smaller amount of interest, because NSL was joined only on 2 December 2024.[60]
[60]Statutory interest from 2 December 2024 to 2 April 2025 is $99,000.

Further, the suggestion which is implicit in the submission that Trivett needed more time to consider the content of the plaintiffs’ opening submissions is belied by the history of the proceeding, briefly set out above. Whilst Trivett was not joined until 26 June 2023 its solicitors and counsel had first appeared for NSLMP and NSL Group at a directions hearing on 15 September 2022 and thereafter appeared at no less than an additional 17 directions hearings and applications, including its successful application where I struck out the plaintiffs’ 3FASOC. Whilst the statement made at the directions hearing on 29 November 2024 that opening submissions had already been completed, and I do take it as being completed in draft form pending the receipt of the plaintiffs’ submissions, it ought not be forgotten that the case was a documentary one and the plaintiffs had served the list of documents that they proposed to tender at the trial on 31 May 2024, which had been met by a very substantial schedule of objections on 31 July 2024 by Trivett, including objections on relevance grounds. I do not accept, that the stage at which the offer was made was such that Trivett was not in a position to undertake an assessment as to the merits or otherwise of accepting the offer.

Turning to the final matter relied upon by Trivett, Trivett points out, correctly, that its acceptance of the offer required it to, inter alia, procure a release from others, NSL Group, NSLMP, NSL and more particularly Balsim Family Holdings Pty Ltd, Asya Balsim, Tony Balsim and Joshua Balsim, who are not parties to the proceeding. Accordingly it submits that the offer was illusory in that it was incapable of acceptance and enforcement by any, or even all defendants. NSL Group, NSLMP and NSL were all subsidiaries of Trivett and NSL Group and NSLMP had common representation with Trivett at trial. There could have been no difficulty in Trivett procuring releases from those entities. Similarly, it is difficult to understand how Trivett could not have procured a release from Balsim Family Holdings Pty Ltd, which was one of its two shareholders or from Asya Balsim who was one of its two directors, or from Joshua Balsim who was one of the two directors of NSL, NSL Group and NSLMP. Tony Balsim, evidently a family member, was also party to some of the relevant correspondence.

In Barwon Region Water Authority v Aquatec-Maxcon Pty Ltd,[61] the Court of Appeal dismissed an appeal against the trial judge’s refusal to order indemnity costs where the offer of compromise was one the acceptance of which required acceptance from multiple parties. The appeal was brought on the narrow ground as to whether the offer of compromise by capable of assessment by the offeree alone. Whelan AJA, in holding that the offer could not be accepted by the offeree alone, nevertheless noted by way of obiter dictum, that the practical reality that the offeree could have resolved the proceeding by agreeing to pay the sum specified in the offer, in which case the remaining claims against the other parties would have gone away, might be relevant to the exercise of the discretion to make a special costs order. This recognises that there is no hard and fast rule contrary to Trivett’s submission.
[61](2007) 17 VR 480.

Trivett also argues that the offer was incapable of acceptance and enforcement because it was expressly subject to ‘agreement of terms including as to confidentiality to be incorporated into a deed of settlement’. As such, Trivett submits the offer was illusory and that these matters combined are such that because the Calderbank offer, if accepted, would not give rise to a binding contract, it cannot result in indemnity costs.

I do not accept that submission. The relevant question is whether the failure to accept the offer is ‘unreasonable’. The uncertainty as to the meaning of elements of the offer or the making of an offer which is ambiguous or otherwise unclear in its meaning will be a factor which may make it not unreasonable for the recipient to reject the offer.

I do not consider that there is any mandatory requirement that, in order to be effective, a Calderbank offer must be such that, if accepted, it creates a binding contract. If that were the case, then any Calderbank offer, to be effective in relation to the disposition of a contract for an interest in land, would have to be signed by the party bound.[62] Further, such a suggestion is at odds with the case which spawned the name Calderbank offer and prompted reliance on written offers otherwise than delivered in accordance with the Rules of Court as a basis for special costs orders, Calderbank v Calderbank.[63]
[62]InstrumentsAct 1958 (Vic) s 126.
[63][1975] 3 All ER 333.

In that case, the Court held that a successful litigant was not entitled to an order for costs when he ought to have accepted an offer which had been previously made greater than the award in the proceeding. Cairns LJ (with whom other members of the Court agreed) said:

… that was an offer which in the circumstances of this case the husband ought to have accepted and that, as he persisted in these proceedings and recovered a lump sum of a smaller amount than the value of that house, the right order would be that he should have the costs up to 14 days after 14th August and thereafter that the wife should have her costs of the proceedings in the court below.[64]

[64]Ibid 343.

The offer that Cairns LJ was referring to was a statement made by the wife in an affidavit in this form:

I am willing, and have always been willing, to make over to the [husband] the house at Alderley Edge.[65]

[65]Ibid.

Otherwise, any requirement that in order to be effective, a Calderbank offer must be such as upon acceptance it gives rise to a binding contract, is at odds with other authority, which recognises that the desirability of encouraging litigating parties to settle proceedings makes it undesirable that informal offers attracting the Calderbank principles be burdened with technicality.[66]
[66]Mutual Community Ltd (n 58) 12–14; BMD Major Projects Pty Ltd v Victorian Urban Development Authority (No 2) [2007] VSC 441, [5].

The comparison of Calderbank offers with formal offers of compromise under the Rules of Court is inapt. The reason for a greater degree of certainty and formality with respect to the content of formal offers of compromise is that if the offer is accepted but then not complied with, the offeror is then entitled to obtain an order to the effect set out in the offer.

That is not the case with respect to informal Calderbank offers.

Although there are some statements made in some cases to the effect that the content of the offer must be such as to create a binding contract if accepted,[67] when read in their context, those statements are obiter dictum and made as part of the overall assessment as to whether the failure to accept the offer was unreasonable or not, not as imposing a mandatory requirement. Rather, the critical question is whether the offeree’s failure to accept the offer is unreasonable such as to warrant a special costs order. As part of the unreasonableness assessment, it is critical that the offeree be in no reasonable doubt as to the nature and extent of the offer.[68] To the extent to which they are such as to impose a mandatory requirement, I do not agree with them.
[67]Amorosi (n 50); Kemp (n 50).
[68]Grbavac v Hart [1997] 1 VR 154, 155.

I do not therefore consider that the fact that acceptance of the offer by Trivett (or any of the other defendants in the proceeding) required them to procure releases from Balsim Family Holdings Pty Ltd and others means that the offer cannot be regarded as a Calderbank offer. Nor do I see those requirements as being of sufficient uncertainty or problematic such as to mean that Trivett’s failure to accept the offer was not unreasonable. Although there was no reference to a requirement for a confidentiality deed on the usual terms, clauses of such nature are well known and entirely orthodox. Any uncertainty on the part of Trivett or any of the other defendants as to the content of that requirement could have easily been dealt with by a communication to that effect. Relevantly, Trivett never sought clarification of the content of a confidentiality term (or any other term).[69]
[69]In Kemp (n 50) at [36], the Court recognised that a failure to seek clarification may be a factor which can be taken into account in the exercise of the discretion.

Nor do I see the requirement of a release from Balsim Family Holdings Pty Ltd, Asya Balsim, Tony Balsim and Joshua Balsim in relation to the two assignment deed claims made in the proceeding as being either improper or in any way problematic.

When faced with the proposed claim by the plaintiffs relying upon the assignment deed, NSLMP and NSL Group foreshadowed in correspondence an argument that they were going to oppose the joinder or defend the claim on the basis that the deeds of assignment were void or voidable as insolvent transactions[70] and that one of the bases of alleged insolvency on the part of LBA was that Balsim Family Holdings Pty Ltd had a claim against LBA which might conceivably tender LBA insolvent. Such allegations were never pressed, whether by NSL Group or NSLMP, and at first blush appear hopeless, given that even if LBA were insolvent, a transaction is ordinarily voidable on the application of a liquidator. In any case, the deeds of assignment conferred the benefit of LBA’s rights on the plaintiffs but not their obligations, and no such assertion as to avoidance was made in this proceeding, where the plaintiffs have successfully prosecuted a claim against Trivett by reason of their title acquired under the assignment deeds. In that context, what claims any of those persons could have had in relation to an assignment deed can scarcely be imagined and appear entirely without merit. Clearly, the motivation behind the request was to wrap up on a belts and braces basis all claims and foreshadowed claims between parties (and those associated with them). This was both orthodox and sensible. The fact that this was sought does not mean that it was not unreasonable for Trivett to accept the offer, particularly in the circumstances of the very significant compromise embodied in it.
[70]NSL Group and NSLMP had previously relied on the fact of the assignment as an answer to the direct claim made against them by the plaintiffs; Primary Reasons [167].

Accordingly, the costs order that will be made against Trivett in favour of the plaintiffs in the terms set out above should provide for the payment of standard costs up to and including 16 December 2024, but thereafter for the payment of indemnity costs.

Conclusion

In the result, orders will be made for judgment in favour of the plaintiffs against Trivett as at 14 May 2025 for $6,985,154.61 inclusive of interest under the Facility Agreement to 8 August 2023 and thereafter interest pursuant to s 58 of the Supreme Court Act.

Costs orders will be made for the payment by Trivett of 50% of the plaintiffs’ costs of the proceeding on and from 26 June 2023 together with 50% of the plaintiffs’ costs of the summons dated 9 June 2023 such costs to be assessed on a standard basis up to and including 16 December 2024 and thereafter on an indemnity basis. Costs orders will also be made for the payment by Trivett of NSL’s costs of the proceedings. There will be no orders for NSL Group and NSLMP’s costs of the proceeding.

SCHEDULE OF PARTIES

S ECI 2019 03875

JBA ASSET MANAGEMENT	First Plaintiffs
and
KB KOOKMIN BANK (ALSO KNOWN AS KOOKMIN BANK)	Second Plaintiff
~~and~~
~~LBA CAPITAL PTY LTD (ACN 628 451 267)~~	~~First Defendant~~
~~and~~
~~LIVING BRIGHT AUSTRALIA PTY LTD~~ ~~(ACN 625 648 606)~~	~~Second Defendant~~
~~and~~
~~SDA STUDIOS PTY LTD (ACN 635 171 774)~~	~~Third Defendant~~
~~and~~
~~MT ALEXANDER ROAD (MELB) PTY LTD~~ ~~(ACN 635 120 660)~~	~~Fourth Defendant~~
~~and~~
~~DEMETRIOS CHARISIOU (ALSO KNOWN AS JAMES CHARISIOU)~~	~~Fifth Defendant~~
~~and~~
~~MATTHEW BARTALOTTA~~	~~Sixth Defendant~~
~~and~~
~~HENRY EL CHEIKH~~	~~Seventh Defendant~~
and
~~MARIO CHARISIOU (ALSO KNOWN AS MARIO IOANNOU)~~	~~Eighth Defendant~~
~~and~~
~~RAFFAELE AIELLO~~	~~Ninth Defendant~~
and
NEXT STAGE LIVING GROUP PTY LTD (ACN 629 888 240)	Tenth Defendant
and
NEXT STAGE LIVING MOONEE PONDS PTY LTD (ACN 629 891 765)	Eleventh Defendant
and
TRIVETT PROPERTY PARTNERS PTY LTD (ACN 621 615 727)	Twelfth Defendant
~~and~~
~~ASYA BALSIM~~	~~Thirteenth Defendant~~
and
NEXT STAGE LIVING PTY LTD (ACN 624 960 978)	Fourteenth Defendant

[2025] VSC 264

14 May 2025