Lava v Avery [2009] NSWSC 237

This case was the tail end of successful possession proceedings and Price J was deciding an application brought by the lender for indemnity costs. His Honour noted the leading authority was Kyabram Property Investments v Murray [2005] NSWCA 87. In Kyabram the Court of Appeal held that if a mortgage includes a clear clause providing for costs to be paid by the borrower on an indemnity basis then that clause could displace the ordinary party/party costs rule.

Nevertheless in Kyabram the Court exercised its discretion and awarded costs on a party/party (ordinary) basis even though the mortgage expressly provided for a solicitor/own client (indemnity) basis. The reason they gave was that the claim for solicitor/own client costs had not been pleaded in the statement of claim.

In this case the mortgage had a clear indemnity costs clause, however the pleadings did not disclose the indemnity costs claim.  Nevertheless, the conduct of the borrower was otherwise deserving of an indemnity costs order and the affidavit of debt by the lender made it clear the debt sought in the proceedings included indemnity costs. Thus, His Honour distinguished Kyabram and awarded indemnity costs.

Click here to read the full judgment

Scroll to Top