Aquamore Credit Equity Pty Ltd v Hung; First on First Development Pty Ltd v Aquamore Credit Equity Pty Ltd (No 2) [2022] NSWSC 117

Aquamore Credit Equity Pty Ltd v Hung; First on First Development Pty Ltd v Aquamore Credit Equity Pty Ltd (No 2) [2022] NSWSC 117

The stipulation in clause 7.1 of the Facility Agreement for payment of interest at the Higher Rate is unenforceable as a penalty; therefore, only the Lower Rate of interest applies from the date of default until judgment. The proper calculation is based on the balance outstanding from 6 September 2017, with pre-judgment interest at 2.5% per month. Aquamore is entitled to judgment in the specified sum and a partial costs order given mixed outcomes, notwithstanding the unsuccessful offer of compromise.

Parties
Plaintiff (2019/371915); First Defendant (2020/341930): Aquamore Credit Equity Pty Ltd; First Defendant (2019/371915): Edgar Hung; Second Defendant (2019/371915): Trevor Chappell; Plaintiff (2020/341930): First on First Development Pty Ltd; Second Defendant (2020/341930): Allen Hsu; Third Defendant (2020/341930): Zachary Chang
Jurisdiction
Australia
Judgment Date
17 February 2022
Procedural Posture
Civil / Post Hearing; Judgment and Final Orders
Outcome
Judgment for plaintiff (Aquamore) in 2019/371915 against the two guarantors; Declaration that higher interest rate is a penalty; Claims in 2020/341930 otherwise dismissed; 70% of costs awarded to Aquamore and associated parties.
Legal Topics
Interest as Penalty, Costs, Offer of Compromise, Pre Judgment Interest, Post Judgment Interest
Commercial Law Contract Law Civil Procedure Interest as Penalty Costs Offer of Compromise Pre Judgment Interest Post Judgment Interest

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Parties

Aquamore Credit Equity Pty Ltd

Plaintiff (2019/371915); First Defendant (2020/341930)

Edgar Hung

First Defendant (2019/371915)

Trevor Chappell

Second Defendant (2019/371915)

First on First Development Pty Ltd

Plaintiff (2020/341930)

Allen Hsu

Second Defendant (2020/341930)

Zachary Chang

Third Defendant (2020/341930)

Procedural Posture

Civil / Post Hearing; Judgment and Final Orders

Legal Issues

  1. 1 Whether stipulation in clause 7.1 of Facility Agreement for payment of interest at higher rate is unenforceable as a penalty
  2. 2 Proper calculation of pre-judgment interest rate and sum owing
  3. 3 Eligibility for post-judgment interest at higher contractual rate

Ratio Decidendi

The stipulation in clause 7.1 of the Facility Agreement for payment of interest at the Higher Rate is unenforceable as a penalty; therefore, only the Lower Rate of interest applies from the date of default until judgment. The proper calculation is based on the balance outstanding from 6 September 2017, with pre-judgment interest at 2.5% per month. Aquamore is entitled to judgment in the specified sum and a partial costs order given mixed outcomes, notwithstanding the unsuccessful offer of compromise.

Court Disposition

Judgment for plaintiff (Aquamore) in 2019/371915 against the two guarantors; Declaration that higher interest rate is a penalty; Claims in 2020/341930 otherwise dismissed; 70% of costs awarded to Aquamore and associated parties.

Orders

  • Judgment for Aquamore Credit Equity Pty Ltd against Edgar Hung and Trevor Chappell in the amount of $10,175,367, taking effect as of 21 December 2021.
  • Declaration that clause 7.1 of Facility Agreement (providing for Higher Rate of interest) is unenforceable as a penalty.