Sutherland v Ghougassian (No 2)

In this case, the respondents, Sutherland, were the mortgagees of a property owned by the appellants, Ghougassian. The dispute centred on the calculation of interest on a sum of money secured by the mortgage. The mortgage agreement stipulated that interest would be calculated as simple interest at a defined "Interest Rate." However, the respondents argued for the application of a default interest rate. The matter was heard in the Supreme Court of Victoria. The primary legal issue before the court was whether the mortgage agreement's stipulation for calculating interest as simple interest at a defined "Interest Rate" was valid and enforceable. Additionally, the court had to determine whether the respondents were entitled to an indemnity for their costs and whether those costs could be paid out of the secured property.

The court held that the mortgage agreement's stipulation for calculating interest was valid and enforceable. The court reasoned that the relevant contentions regarding a default interest rate were not advanced at the hearing, and thus, the interest should be calculated as per the defined "Interest Rate" in the mortgage agreement. Regarding the costs, the court found that the mortgagees were contractually entitled to indemnity costs. The court also determined that there was a contractual right for the costs to be paid out of the secured property, as between the solicitor and the client. The court exercised its discretion under the relevant statute to order that the costs be paid out of the secured property.

The final orders of the court were that interest on the sum of money secured by the mortgage should be calculated as simple interest at the defined "Interest Rate" in the mortgage agreement. Additionally, the respondents were entitled to indemnity costs, and these costs could be paid out of the secured property. The appellants were ordered to pay the respondents' costs of the proceeding.