Delic v Kazar and Slaven as Joint Trustees in the Bankrupt Estate of Delic (No 2)

This case concerned an application by Mr Delic, a bankrupt, to review the decision of the joint trustees in his bankruptcy to accept a proof of debt lodged by Fidelity. The dispute centred on whether Mr Delic was liable for the amounts claimed in the proof of debt, which arose from a chattel lease agreement that Mr Delic had guaranteed. Mr Delic contended that the claimed amounts were not debts because the relevant clause constituted a penalty, or alternatively, that the debts were not payable due to his asserted ignorance of the lessee's deregistration, misunderstanding of the lease terms, or a failure of disclosure by a finance broker acting as Fidelity's agent.

The court was required to determine whether the amounts claimed in the proof of debt were legally recoverable from Mr Delic as guarantor. Specifically, the court had to consider whether the asserted grounds for disputing the debt, including the nature of the clause as a penalty, Mr Delic's alleged lack of knowledge or misunderstanding regarding the lease, and the conduct of the finance broker, were sufficient to invalidate the debt. The court also had to assess whether there was any burden on Mr Delic to disturb the trustees' acceptance of the proof of debt.

Judge Manousaridis found that Mr Delic, as guarantor, was liable only for recovery costs and interest on that amount under the relevant agreement. The court was not satisfied that the finance broker acted as Fidelity's agent, and therefore rejected the argument that Fidelity contravened the Australian Consumer Law. Having determined that the amounts paid by Ms Delic and Mr Delic were sufficient to cover the admitted liabilities, the court concluded that the trustees ought not to have admitted the proof of debt.

Consequently, the court ordered that the decision of the trustees to admit Fidelity's proof of debt for $285,142.46 be reversed pursuant to s 104(2) of the *Bankruptcy Act 1966* (Cth). The parties were directed to file written submissions regarding costs, with an option for the court to determine costs on the papers or after a further hearing.