Background
Mr Su lent 5 Blackman Cres Macquarie Pty Ltd and Mr Kamal $100,000 under a secured short-term deed of loan. After repayment defaults, Mr Su claimed as much as $1,394,093.13, including default interest of 3% per month compounded monthly and costs arising from enforcement measures in the ACT Supreme Court. 5 Blackman cross-claimed against Mr Su, guarantor Mr Noumeir and Mr Kamal, seeking to set aside the loan deed and mortgage and obtain equitable compensation.
In the principal judgment, the Court held that the deed was binding and enforceable but rejected Mr Su’s claims for default interest and enforcement costs. The default rate was an unenforceable penalty, many enforcement costs were unsubstantiated or unnecessarily incurred, and an Anshun estoppel barred recovery of certain ACT costs. The Court also held that 5 Blackman had not proved knowing receipt against Mr Kamal and that he was entitled to dismissal of the cross-claim, subject to final orders. This judgment determined the final orders and costs.
The Court’s Holding
McGrath J entered judgment for Mr Su against 5 Blackman for $60,559.56, the agreed amount owing with interest as at 25 September 2026. Although Mr Su was the successful plaintiff, the Court ordered 5 Blackman to pay only 50% of his costs on the ordinary basis. His unsuccessful default-interest and enforcement-cost claims were severable, unreasonable in light of the grounds on which they failed, and responsible for substantial additional expense and trial time.
UCPR r 42.34 did not prevent a costs award because continuation of the proceedings in the Supreme Court was warranted by 5 Blackman’s cross-claim for equitable relief, which the District Court could not determine. The Court declined to alter the costs outcome based on 5 Blackman’s Calderbank offers because the evidence did not permit a reliable comparison between the offers and the judgment, including their respective treatment of ACT costs liabilities and Mr Su’s costs in this proceeding.
The Court dismissed the cross-claim against Mr Su and Mr Kamal in the final orders made in this judgment, and ordered 5 Blackman to pay each of their costs of the cross-claim. It also declined to direct how funds held by the ACT Supreme Court should be distributed, treating that as a matter for that court.
Key Takeaways
- A successful party may recover only a proportion of its costs when major, severable issues fail and materially increase the scope and expense of the proceeding.
- A recovery below $500,000 does not automatically bar Supreme Court costs under UCPR r 42.34 where the proceedings’ commencement or continuation in that court was warranted.
- A Calderbank offer will not support a special costs order without evidence enabling the court to value the offer as a whole and determine that non-acceptance was unreasonable.
Why It Matters
The decision illustrates that success on liability does not guarantee full costs where inflated claims for interest or enforcement expenses dominate the litigation and fail. The Court may make an impressionistic percentage costs order reflecting the additional work attributable to those issues.
It also underscores that courts assess Calderbank offers by their complete practical effect, not merely their cash component. Releases, existing costs liabilities and the loss of accrued costs rights must be capable of valuation before an offer can justify indemnity or other special costs consequences.