AB Developments (Australia) Pty Ltd v El-Sayed - [2016] NSWSC 1613

Supreme Court

New South Wales

Medium Neutral Citation: AB Developments (Australia) Pty Ltd v El-Sayed [2016] NSWSC 1613
Hearing dates: 7 to 9 November 2016
Date of orders: 17 November 2016
Decision date: 17 November 2016
Jurisdiction: Common Law
Before: Beech-Jones J
Decision:
(1)   Judgment for the Defendant against the First Plaintiff.
(2)   Judgment for the Defendant against the Second Plaintiff.
(3)    The proceedings stand over to 9.30am on 29 November 2016 before Beech-Jones J for mention.

Catchwords: Loan advance – subrogation – defendant’s father approached second plaintiff seeking funds to discharge security over defendant’s property – source of funds was second plaintiff’s cousin – funds advanced – funds used to discharge security – whether second plaintiff loaned funds to defendant – whether second plaintiff subrogated to rights of creditor – found that cousin lent funds to defendant’s father – subrogation claim fails
Cases Cited: Bofinger v Kingsway Group Ltd (2009) 239 CLR 269
Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd (2003) 59 NSWLR 452
Circuit Finance Australia Limited (Receivers and Managers appointed) (in liquidation) v Panella & Anor [2011] NSWSC 311
Cochrane v Cochrane (1985) 3 NSWLR 403
Fox v Percy [2003] HCA 22; 214 CLR 118
Re Cleadon Trust Ltd [1939] Ch 286
Texts Cited: Equity Doctrines & Remedies, 4th ed, pp 358-9
Category: Principal judgment
Parties: AB Developments (Australia) Pty Ltd (First Plaintiff)
Abdul Hamdan (Second Plaintiff)
Ahmed El-Sayed (Defendant)
Representation:
Counsel:
A Duc (Plaintiffs)
P Barham (Defendant)
Solicitors:
Edgeworth Legal Pty Ltd (Plaintiffs)
Smith Leonard Fahey Lawyers (Defendant)

File Number(s): 2014/312841

Judgment

HIS HONOUR: The principal claim in these proceedings was brought by the first named plaintiff, AB Developments (Australia) Pty Ltd (“AB”), against the defendant, Ahmed El-Sayed, for the recovery of a sum in excess of $1,000,000 said to be owing under a Deed of Loan allegedly guaranteed by Ahmed El-Sayed and secured over a mortgage of a home owned by him and his brother Azzam at Antwerp Street, Auburn (the “Antwerp Street property”). At the commencement of the hearing the Court was advised that this claim was not pressed. Accordingly, judgment will be entered in favour of Ahmed El-Sayed against AB.
The remaining claim was made by the second plaintiff, Abdul Hamdan, against Ahmed El-Sayed for recovery of an amount of $100,000 that Abdul Hamdan claims that he lent to Ahmed El-Sayed in January 2011 to help him discharge a security over the Antwerp Street property. In the alternative, Mr Hamdan seeks to recover that amount by making a claim in subrogation.
For the reasons that follow I reject Abdul Hamdan’s claim. In particular, I am not satisfied that Mr Hamdan lent any money. Instead I find that the amount of $100,000 was lent by his cousin, Gazwan Hamdan, and at most Abdul Hamdan guaranteed repayment of that amount. I am also not satisfied that Ahmed El‑Sayed borrowed the money. Instead I am satisfied that his father Khaled El‑Sayed borrowed $100,000 from Gazwan Hamdan to discharge a debt owed by…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading AB Developments (Australia) Pty Ltd v El-Sayed

Details

AGLC: AB Developments (Australia) Pty Ltd v El-Sayed [2016] NSWSC 1613
Case: [2016] NSWSC 1613
Decision Date: 17 November 2016

CaseChat Overview and Summary

In AB Developments (Australia) Pty Ltd v El-Sayed, the plaintiffs, AB Developments (Australia) Pty Ltd and the second plaintiff, sought a determination of whether the second plaintiff had loaned funds to the defendant, and if so, whether the second plaintiff was subrogated to the rights of the creditor. The defendant had approached the second plaintiff's cousin for funds to discharge security over his property. The cousin, who was also the second plaintiff's cousin, provided the funds, which were subsequently used to discharge the security. The plaintiffs argued that the second plaintiff had loaned the funds to the defendant and that, as a result, the second plaintiff was subrogated to the creditor's rights.

The court was required to determine whether the second plaintiff had indeed loaned the funds to the defendant and, if so, whether the second plaintiff had been subrogated to the creditor's rights. The key issue was whether the funds were advanced by the second plaintiff directly to the defendant, or whether the funds were provided by the cousin, as claimed by the defendant. If the funds were provided by the cousin, then the subrogation claim would fail.

The court found that the funds were not advanced by the second plaintiff to the defendant but rather by the cousin. As a result, the second plaintiff was not subrogated to the creditor's rights. The court held that for subrogation to occur, the party claiming subrogation must have made a payment to a third party that was intended to discharge a debt owed by that third party to a creditor. In this case, the funds were provided by the cousin, not the second plaintiff, and therefore the second plaintiff was not subrogated to the creditor's rights.

The court dismissed the plaintiffs' claims, finding that the second plaintiff had not loaned funds to the defendant and that the subrogation claim therefore failed. The defendant was not liable to the plaintiffs on the claims made.

Orders