Circuit Finance Australia Limited (Managers & Receivers Appointed) (In Liquidation) v Sobbi & Anor [2011] NSWDC 157

District Court New South Wales

Medium Neutral Citation: Circuit Finance Australia Limited (Managers & Receivers Appointed) (In Liquidation) v Sobbi & Anor [2011] NSWDC 157 Hearing dates: 15-16/06/11, 13-15/09/11 Decision date: 22 September 2011 Jurisdiction: Civil Before: Elkaim SC DCJ Decision: See paragraph 41 Catchwords: Interpretation of motor vehicle lease. Legislation Cited: Civil Procedure Act 2005 Contracts Review Act 1980 Cases Cited: AMEV-UDC Finance v Austin (1986) 162 CLR 170 Esanda Finance v Plessnig (1989) 166 CLR 131 Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656. Category: Principal judgment Parties: Circuit Finance Australia Limited (Managers & Receivers Appointed) (In Liquidation) (Plaintiff) David Sobbi (First Defendant) Arezoo Chahili (Second Defendant) Representation: B Nolan (Plaintiff) M K Rollinson (First and Second Defendants) Jade Lawyers (Plaintiff) Avondale Lawyers (First and Second Defendants) File Number(s): 2010/00233989

Judgment 1This matter commenced before me on 15 June 2011. The defendants' case was in disarray. The defendants' counsel, who was very recently briefed, struggled to pinpoint his client's case. Ultimately the matter was adjourned to allow the plaintiff to respond to a Further Amended Defence. 2Part of the plaintiff's response was to file a Further Amended Statement of Claim on 27 June 2011. The new pleadings went beyond the Further Amended Defence but no document in response to the plaintiff's new pleading was filed. 3When the matter returned for hearing before me on 13 September 2011 there was a new counsel for the defendants. Mr Rollinson, who had obviously conducted a thorough review of the matter, was able to reduce the issues significantly. 4I was informed by counsel for the defendants that liability was admitted and it was only the measure of quantum that remained in dispute. He further narrowed the dispute on quantum to the following three matters: (a)The construction of a clause in the lease that was the subject of the dispute. (b)Proof of the various amounts asserted by the plaintiff and contained in paragraph 26 of the Further Amended Statement of Claim ("the Statement of Claim"). (c)The applicability of the interest rate dictated by the lease. In particular it was said that the interest rate of 40% should be reduced to 20% and that this variation should be granted pursuant to Section 7(1)(c) of the Contracts Review Act 1980 ("the CRA"). 5The above issues were later further narrowed when the defendants conceded the amounts listed as Particulars in paragraph 26 of the Statement of Claim, other than the $54,627.06 interest component, and also abandoned the attack on the 40% interest rate under the CRA. 6The origin of the dispute is a Lease Agreement ("Lease") executed on 10 March 2008. (The Lease can be found in Exhibit A at page 65.) The plaintiff was the lessor. The defendants are the lessees. The subject of the Lease was a Chrysler limousine. 7The Lease provided for the payment of 48 monthly instalments of $7,566.36 by the defendants to the plaintiff. At the end of the period the vehicle would have an agreed residual value of $22,500.50. 8Clause 4.3 of the Lease prescribed an interest rate of 40% per annum on all moneys in which there had been default in payment. 9Clause 8 allowed the plaintiff to terminate the Lease in the event of a default. The defendants conceded that the plaintiff validly terminated the Lease on 18 January 2010. 10Prior to termination the defendants had been in default of their payment obligations from time to time. The parties agreed that interest had accrued as a consequence of these defaults in the sum of $1,259.14. The plaintiff alleged that as at the date of termination the defendants were in arrears of their rental payments to a total of $7,997.93. The defendants did not agree. It was agreed however that the interest that accrued on the final arrears to the date of termination was $61.35. The total interest to this date was therefore agreed at $1,320.49. 11Following the termination of the Lease, and with the assistance of orders in the Supreme Court, the plaintiff repossessed the vehicle and sold it for $121,316.50. During the currency of the Lease the defendants had made payments of $171,968.61. The total of these two figures ($293,285.11) was accepted by the parties to represent a credit to be applied in the calculation of the plaintiff's damages. 12The plaintiff's claim was for the whole of the rental ($363,185.28) plus the various amounts particularised in paragraph 26 of the Statement of Claim, but reduced by the amounts paid by the defendants together with the proceeds of the sale of the vehicle. The figures in paragraph 26 were amended during the hearing and were ultimately as follows: Residual payment $22,500.50 GST paid by plaintiff $4,356.93 Direct debit fees $104.00 Dishonour payment fees $310.00 Acceptance fee $136.36 Legal fees $40,449.48 Collection costs $4,510.00 Extension fees $100.00 Property search fees $210.95 Bank deposit fees $280.00 Vehicle registration fees $40.00 Valuation fees $765.00 Agreed interest on arrears up to 18/1/10 $1,320.49 Total $75,083.71