The applicant creditor sought to allocate a $5 million payment received from the respondent debtor to various outstanding debts, including legal fees and a late information disclosure fee, rather than to a consent judgment.
The court held that the debtor failed to plainly and irrevocably allocate the payment at the time it was made, entitling the creditor to allocate the funds.
However, the court found that the $5,000 per day late disclosure fee was an extravagant and unconscionable penalty, and therefore void.
The court also declined to refer the creditor's legal fees to assessment, finding them reasonable and noting the debtor's failure to review the fee summaries in good faith.
