This court case, JCP Holdings Pty Ltd v Ulrich Pty Ltd (No 2), decided on 15 October 2025, deals with finalising orders after an initial judgment. It covers how much money is still owed under a loan agreement, which properties are charged as security for that loan, and importantly, who has to pay the legal costs and on what basis. The court had to sort out arguments about interest calculations, the extent of the security over properties, and whether legal costs should be paid on an indemnity basis as per the loan agreement, or on a standard basis, considering the mixed success of the parties in the litigation.
Key details of the case
- Case Name: JCP Holdings Pty Ltd v Ulrich Pty Ltd (No 2)
- Medium Neutral Citation: NSWSC 1207
- Court: Supreme Court of New South Wales
- Date of Decision: 15 October 2025
- Judge: Pike J
- Parties:
- JCP Holdings Pty Ltd (Plaintiff/Cross-Defendant)
- Ulrich Pty Ltd (First Defendant)
- Jovan Sarai (Second Defendant/Cross-Claimant)
- File Number: 2025/00095645
- Background: This case follows an earlier judgment ( NSWSC 911) where the court found a loan contract valid but ruled that the default interest claimed by the plaintiff was unenforceable as a penalty. The court also determined that all real property owned by the defendants was charged as security for the loan, not just a specific property in Darling Point. The parties couldn’t agree on the final orders, leading to this subsequent hearing.
Simple summary of the case
The initial judgment in this matter found that a loan contract between JCP Holdings Pty Ltd and Ulrich Pty Ltd was valid. However, the court decided that the hefty default interest JCP Holdings was trying to claim was too much and was essentially a penalty, so it couldn’t be enforced. Despite this, the court confirmed that the loan was secured against all the real estate the defendants owned, not just one particular property.
After the first judgment, the parties still had a few things to sort out, mainly the exact amount of money owing and how the legal costs would be handled. JCP Holdings argued that interest should be calculated from the date of default, which they won, meaning the judgment amount of $597,443.29 included simple interest from 1 December 2024. The defendants tried to argue for a grace period on interest, but this was dismissed because the default interest clause itself was found to be a penalty.
Another big issue was which of the defendants’ properties were actually charged as security for the loan. JCP Holdings initially focused on a few properties, but then asked the court to charge four additional properties owned by the second defendant. The defendants argued against this, saying JCP Holdings hadn’t pleaded this in their initial claim and that they would have defended their case differently if they’d known. However, the court allowed JCP Holdings to charge these extra four properties, stating that the core issue litigated was whether *all* properties were charged, and the defendants’ main defence was that *only* the Darling Point property was charged, not that only some properties were charged.
The most significant part of this decision concerns the legal costs. The loan agreement had a clause stating that the borrower would pay the lender’s costs on an indemnity basis, capped at $550 per hour, if the lender had to take action due to default. JCP Holdings pushed for this. The defendants, however, argued for a split: indemnity costs for their claim, but only ordinary costs for certain issues, and a division of costs for the cross-claim. They also argued that the penalty interest issue and a claim for judicial sale shouldn’t attract indemnity costs. The court agreed that while the contractual clause for indemnity costs was generally applicable, it wasn’t appropriate to award 100% of JCP Holdings’ costs because they didn’t win on every point, specifically the penalty interest and a judicial sale claim that was abandoned. Therefore, the court ordered that the defendants pay 90% of JCP Holdings’ costs on an indemnity basis, with the hourly rate capped at $550, to account for the issues JCP Holdings didn’t win.
Q&A
- Q: Is it legal for a loan agreement to include a clause about paying the other party’s legal costs?
A: Yes, it is generally legal for loan agreements to include clauses about how legal costs will be handled if one party has to take action due to a default or breach of the agreement. This is often referred to as an indemnity costs clause. - Q: Can a court ignore a costs clause in a contract?
A: While courts generally respect contractual terms, they do have discretion over costs. In this case, the court upheld the indemnity costs clause but adjusted the amount awarded to reflect the parties’ success on different issues. - Q: What is an “indemnity basis” for costs compared to an “ordinary basis”?
A: Costs on an “ordinary basis” usually cover about 60-70% of a party’s actual legal costs. Costs on an “indemnity basis” are much broader and aim to cover almost all reasonable legal costs incurred, typically above 80-90%. - Q: When can a penalty interest clause in a contract be considered unenforceable?
A: A penalty interest clause is generally unenforceable if the interest rate charged is considered excessive and designed to punish the borrower rather than genuinely compensate the lender for their loss. The court looks at whether the amount is disproportionate to the legitimate interest the lender has in enforcing the contract. - Q: If a contract term is found to be a penalty, does that invalidate the entire contract?
A: Not necessarily. In this case, the loan contract was found to be valid, but the specific clause about default interest was deemed an unenforceable penalty. Other terms of the contract, like the obligation to repay the principal and simple interest, remained enforceable. - Q: Can a lender claim security over all of a borrower’s property, even if the loan was for a specific purpose?
A: It depends on what is agreed in the loan agreement and security documents. In this case, the court found that the loan agreement created a charge over all the borrower’s real property, not just a specific asset mentioned. This was based on the interpretation of the contract terms. - Q: What happens if a party wants to claim relief that wasn’t clearly stated in their initial court documents?
A: Generally, parties are expected to clearly state the relief they are seeking in their pleadings (like a statement of claim). If a party tries to introduce new claims or seek additional relief late in the proceedings, the court may refuse it, especially if it would unfairly prejudice the other party. However, as seen here, if the core issue litigated was broad enough, the court might allow amendments or grant additional relief related to that core issue. - Q: Is it legal to charge a capped hourly rate for legal costs in a contract?
A: Yes, it is legal for contracts to specify a maximum hourly rate for professional costs. This was included in the indemnity costs clause in this loan agreement. - Q: What does it mean for a property to be “charged” with a debt?
A: When a property is charged with a debt, it means that the property serves as security for that debt. If the debt is not repaid, the lender can take steps to sell the property to recover the money owed. - Q: How does a court decide if a contract term is a penalty?
A: A court determines if a term is a penalty by assessing whether it imposes a detriment on the contract-breaker that is out of all proportion to any legitimate interest the innocent party has in the performance of the contract. It’s about punishment rather than genuine pre-estimate of loss or compensation. - Q: If a party abandons a claim during a court case, how does that affect costs?
A: If a party abandons a claim, they generally cannot recover the costs associated with pursuing that claim. Furthermore, the costs they might otherwise have been awarded could be reduced to account for the resources spent on the abandoned claim. - Q: Can a court order costs to be paid on an indemnity basis even if the contract doesn’t explicitly say so?
A: While contractual clauses are persuasive, courts have inherent discretion regarding costs. However, they are more likely to order indemnity costs if there are exceptional circumstances, such as misconduct by a party or if it’s clearly provided for in the contract, as was the case here. - Q: What is the difference between a “default interest” and “simple interest”?
A: Default interest is a penalty rate of interest applied when a payment is late, often higher than standard interest rates. Simple interest is calculated on the principal amount only, whereas compound interest is calculated on the principal amount plus accumulated interest. In this case, the default interest was deemed a penalty, so simple interest was applied. - Q: If a court decision has multiple parts, how are costs typically handled?
A: Costs are often awarded based on the overall outcome and the relative success of each party on the various issues. If a party wins on some issues but loses on others, the court may apportion the costs or reduce the amount awarded to reflect their mixed success. - Q: What are the implications of a property sale while a legal case involving that property is ongoing?
A: If a property that is subject to a charge or dispute is sold, the charge or dispute may follow the property, or the proceeds of sale may become subject to the legal claims. The court can make orders to restrain dealings with the property to protect the lender’s interests. - Q: Does the ‘medium neutral citation’ of a case matter for its legal weight?
A: The medium neutral citation (e.g., NSWSC 1207) is the official and standard way to refer to a court judgment, ensuring consistent referencing across different law reports. It doesn’t affect the legal weight of the decision itself, but it’s crucial for accurate citation and research.
For more simplified NSW Supreme Court cases, visit this link. You can find the original judgment details at AustLII.