Metro Finance Pty Ltd v Awad - [2020] FCCA 1840

FEDERAL CIRCUIT COURT OF AUSTRALIA

METRO FINANCE PTY LTD v AWAD

[2020] FCCA 1840

Catchwords:
BANKRUPTCY – Creditor’s Petition – Application for costs following repayment of debt.

Legislation:

Bankruptcy Act 1966 (Cth), ss.32, 40(1)(g), 44

Federal Court of Australia Act 1976 (Cth), s.43
Bankruptcy Regulations, r.16.01(c)

Cases cited:

Fewin Pty Ltd v Prentice (No 2) [2017] FCA 102
Principal Strategic Options Pty Ltd, in the matter ofCoshott v Coshott[2001] FCA 664
Re Skase; ex parte Donnelly[1992] FCA 429
Cummings v Lewis[1992] FCA 334

Applicant:

METRO FINANCE PTY LTD ACN 600 674 093

Respondent:

AZZAM SAM AWAD

File Number:

SYG 1902 of 2019

Judgment of:

Registrar Chuan Ng

Hearing date:

12 May 2020

Date of Last Submission:

23 June 2020

Delivered at:

Sydney

Delivered on:

13 July 2020

REPRESENTATION

Solicitors for the Applicant:

Mr A. Yogachandra of Shine Lawyers

Solicitors for the Respondent:

In person

ORDERS

The Respondent pay the Applicant’s costs be fixed in the amount $7,000, to be paid within 3 months of the date of these Orders.

THE COURT NOTES:

The Creditor’s Petition was dismissed on 12 May 2020.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 1902 of 2019

METRO FINANCE PTY LTD ACN 600 674 093

Applicant

And

AZZAM SAM AWAD

Respondent

REASONS FOR JUDGMENT

SUMMARY

Before me is an application for costs sought by the Applicant following the dismissal of the Creditor’s Petition against the Respondent. The Respondent opposed the making of any costs order against him, asserting his belief that his arrangement with the Applicant was that he only had to repay only the entirety of the judgment debt pleaded in the Creditor’s Petition.
This matter was last before me on 12 May 2020 in the Bankruptcy List. On that date, I dismissed the Creditor’s Petition in circumstances where the Respondent had repaid almost the entirety of the debt pled in the Creditor’s Petition and brought it below the $5,000 threshold.
For the reasons identified below, I am of the view that the Respondent is liable to pay the costs of the Applicant.
However, I am content that the circumstances allow for a reduction of the costs and make the following order:
The Respondent pay the Applicant’s costs be fixed in the amount $7,000, to be paid within 3 months of the date of these Orders.

HISTORY OF PROCEEDINGS

Judgment in the Local Court

On 4 December 2018, the Applicant obtained a judgment against the Respondent in the Local Court at Sydney for $24,530.09.

Commencement of the bankruptcy proceedings

On 6 March 2019, the Applicant obtained a Bankruptcy Notice (number 237961) relying on the judgment from the Official Trustee.
On 1 April 2019, Bankruptcy Notice (number 237961) was served upon the Respondent pursuant to Regulation 16.01(c) of the Bankruptcy Regulations by leaving at his last known address.
In circumstances where no application was made to set aside Bankruptcy Notice (number 237961), an act of bankruptcy was deemed to occur 21 days later on 22 April 2016: s 40(1)(g) of…

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.

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Details

Case: [2020] FCCA 1840
Decision Date: 13 July 2020

CaseChat Overview and Summary

Metro Finance Pty Ltd (Metro Finance) sought to recover a debt from Mr Awad. The dispute concerned whether Mr Awad was personally liable for the debt owed by a company, Awad Holdings Pty Ltd, to Metro Finance. The matter came before Registrar Chuan Ng in the Magistrates Court of Victoria.

The primary legal issue before the Court was whether Mr Awad had provided a personal guarantee for the debt owed by Awad Holdings Pty Ltd to Metro Finance. Metro Finance contended that Mr Awad had signed a loan agreement in his personal capacity, thereby making him personally liable for the company's debt. Mr Awad denied having signed the agreement in his personal capacity, asserting that he had signed only as a director of Awad Holdings Pty Ltd.

Registrar Ng considered the evidence presented, including the loan agreement itself and the circumstances surrounding its execution. The Registrar noted that the signature block on the loan agreement clearly indicated that Mr Awad was signing in his capacity as a director of Awad Holdings Pty Ltd, and there was no separate signature line for him to sign in a personal capacity. The Registrar applied the principle that a person is generally only bound by a contract if they have clearly indicated their intention to be personally liable. In the absence of such clear indication, and with the document specifying a signature as a director, the Registrar found that Mr Awad had not provided a personal guarantee.

Consequently, the Court ordered that Metro Finance's claim against Mr Awad personally be dismissed.

Orders