Flexicommercial Pty Ltd v Hybrid PG Pty Ltd (in its own right as trustee for Hybrid Property Group)

File Number(s): 2024/00186832

Publication restriction: Nil.

Judgment

1. HIS HONOUR: The second defendant, Mr Patrick Gerard Cooper, is the sole shareholder, sole director, and company secretary of the first defendant, Hybrid PG Proprietary Limited, which was incorporated in this State on 22 September 2021. The exact business of the second defendant is not clearly given in the evidence. However, there are some documents annexed to the affidavit of Mr Cooper, sworn on 20 May 2025, which is Exhibit 1, which indicate to me that the business of the first defendant was the transportation by air of goods between Sydney and Melbourne, Sydney and the Gold Coast, and Sydney and Perth. Mr Cooper describes himself in the documentation to which I have just referred as the “CEO” of the first defendant, and gives his degrees as being those of a Bachelor of Business and a Master of Business Administration. An email address for the first defendant is given as “hybridaviation.com.au”.

2. For the purpose of its business, the first defendant elected to purchase two Isuzu motor vehicles. The first vehicle has been described as a 2008 Isuzu, FRR FH 10, Pallet Pantech. It can shortly be described as the “2008 vehicle”. The second vehicle which the first defendant acquired was a similar vehicle manufactured in 2017 and can be described as the “2017 vehicle”. The purchase price for the 2008 vehicle was $53,000. The purchase price for the 2017 vehicle was $120,000. The total sum therefore was $173,000.

3. To acquire those vehicles, the first defendant entered into an agreement with the plaintiff company, Flexicommercial Proprietary Limited. The contract is described as a “Specific Security Agreement.” It financed a total of $173,445 to be paid by 60 monthly instalments of $3,727.35. The first instalment was payable on the first day of the agreement. The agreement was signed on behalf of the first defendant by Mr Cooper on 3 November 2022. Under the agreement, Mr Cooper was personally liable as guarantor of the first defendant's obligations. Mr Cooper signed the guarantor's acceptance of his role in the agreement, again, on 3 November 2022. The defendant was operating out of premises in Bronti Street in Mascot, which ties in with its role in transporting palletised products by aviation.

4. A number of terms of the agreement need to be noted. Clause 1 provides a number of definitions and interpretations. They are these:

“Break Costs Means any reasonable costs, loss or expense actually arising by reason of the cancellation, termination or alteration of any funding arrangements entered into by Financier in order to fund this Specific Security Agreement, but only to the extent that such cost, loss or expense is not recovered or recoverable by Financier as part of the Present Value Amount or in consequence of a liability to pay the Present Value Amount.

Discount Rate Means the rate reasonably determined by Financier, having regard to prevailing interest rates as appropriate to calculate the net present value of the remaining Instalment Payments.

Early Termination Amount Means the sum of:

a) Present Value Amount; and

b) Break Capital Cost.

Present Value Amount Means the instalment Payments which, but for the termination of this specific security agreement, would have been payable by Customer under this Specific Security Agreement as from the Termination on Date up to and including the Expiry Date inclusive of any unamortised brokerage or commission comprising part of any instalment, Payments, reduced to a present value as at the Termination Date by applying the Discount Rate to such instalment Payments.

Termination Event Occurs if:

a) Failure to pay: customer fails to pay any Payment within five (5) Business Days of the due date.”

The definition of “Termination Event” goes on to provide for six other circumstances which would give rise to a termination of the contract but are not applicable in the present case.

5. Clause 3 is headed “PAYMENT OBLIGATIONS” and contains these subclauses:

“3.7, Amount of Instalment Payment. Those four words to be in bold. The Instalment Payment has been calculated on the basis:

a) Interest has been calculated in accordance with the Financier’s usual practices for transactions of this nature;

b) That all Instalment Payments will be paid when due;

c) Of the interest rate adopted by Financier for the purposes of this Specific Security Agreement;

d) Of the estimated amount of stamp duty and other fees and expenses payable at the time of disbursement.

3.8. Adjustment of Instalment Payment.

Financier may adjust the amount of each instalment payment as a result of any variation of any estimated amount or otherwise in accordance with this Specific Security Agreement, by giving written notice to Customer at least 10 (10) days prior to the adjusted instalment payment becoming payable.

3.9. Fees and Charges

Customer must pay to Financier the Fees and Charges: A full list of the Fees and Charges, is available upon request by Customer. Customer acknowledges these fees and charges may change from time to time where such change is applied generally to other customers of Financier. Financier will provide Customer with reasonable written notice of any such change not being less than notice one (1) Instalment Payment in interval. Any change of the Fees and Charges will only be made to the extent applied to other like customers of the Financier.

3.10. Payments are absolute and unconditional

Customers' obligation to pay the Payments is absolute and unconditional.

3.11. No right of set-off

Customer and Guarantor must make all payments to Financier in full and without any set-off, counterclaim or deduction. If customer or guarantor is required by law to deduct any amount from any payment to Financier (such as withholding tax), it must increase the payment by the amount deducted. If Customer or Guarantor claims Financier owes it money, it may bring a claim for this amount against Financier but may not exercise any set-off, counterclaim or deduction.

6. Clause 10 of the agreement is headed “TERMINATION”. Clause 10.1 is this:

“Termination Event

Without limiting Financier’s rights, on the occurrence of a Termination Event, financier may on written notice to Customer, terminate this Specific Security Agreement stock before Financier takes this action in respect to a Termination Event which can be remedied, Financier will give Customer at least 30 days’ notice to allow it an opportunity to remedy the Termination event. However, financier need not give any such notice to customer or wait until the end of any period given in any such notice if:

a) Financier is of the reasonable opinion that it is necessary to terminate the Specific Security Agreement and/or take possession of Goods to manage an immediate risk, or a Termination Event under paragraphs (a) or (e) of the definition of Termination Event is continuing.”

7. Clause 10.3 is this:

“Termination before the Expiry Date-during the Term

Subject to clause 10.2 of this Specific Security Agreement is terminated for any reason before the Expiry Date, customer must immediately pay Financier:

a) The Early Termination Amount;

b) The Arrears; and

c) All other amounts then due and payable under or in connection with this Specific Security Agreement and which remain outstanding.”

8. Clause 11 is headed, “GUARANTEE AND INDEMNITY.” Clause 11.11 is this:

“No competing claims

As long as an amount payable remains unpaid, Guarantor may not, without Financier’s prior written consent (such consent not to be unreasonably withheld):

a) Reduce Guarantor’s liability under the Guarantee and Indemnity by claiming that guarantor, customer, or any other person has a right of set-off or counterclaim against financier.”

9. Finally, cl 13.8 ought be taken into account. It is this:

“Set-off

Customer irrevocably authorises Financier to set-off without notice any money held by Financier on any account of customer against any money owing by Customer to Financier (including any liquidated damages). If customer claims Financier owes it money, Customer may bring a claim for this amount against Financier, but may not exercise any set-off, counterclaim or deduction.”

10. Exhibit B is an affidavit of Kailum Dennis Latimer-Micek sworn on 31 July 2025. To it, is annexed a statement of account showing payments and dishonours made by the first defendant to the plaintiff. Direct debit payments were made by the plaintiff on 7 November 2022, 7 December 2022, 9 January 2023, 7 February 2023, 7 March 2023, 11 October 2023, 8 May 2023, 7 June 2023, 7 July 2023 and 7 August 2023. There was a purported payment of an instalment on 7 September 2023, but that was dishonoured on 11 September 2023. However, the dishonour was remedied by a payment on 15 September 2023. There were then payments on 9 October 2023, 7 November 2023 and 7 December 2023. After that, there were a number of payments which were dishonoured.

11. The list of payments shows that between 7 November 2022, when the agreement commenced, and 15 May 2024, there were in fact 14 payments made. There were eight dishonoured payments, there were two manual adjustments and there were two sales representing sales of each of the vehicles. The relevant dishonours came about as a result of the first defendant’s notifying the plaintiff of its concerns on Saturday, 6 December 2023 at 7.58am. That appears to be a very odd time at which to give notice to a financier, not being a usual business day. It was also exactly one week before a long weekend which ended on Monday, 25 December 2023, which was, of course, Christmas Day. The email under the hand of Mr Cooper addressed to Yakka Finance, who were his agents for dealing with the defendant, is this;

“We have lost a major contract and are looking to sell the trucks, our income will reduce as of next month. Is there any financial relief we can apply for with Azoro and Flexi until we can get the trucks sold?”

In his evidence or submissions, the plaintiff referred to this as losing Qantas Airlines as a customer. That email is annexed to Mr Cooper's affidavit, which is Exhibit 1 and is part of annexure C. The emails are not complete. However, they show that on Thursday, 29 February 2024, the commercial collections officer of the plaintiff provided the defendant with the address to surrender the trucks to, and what to do when the trucks arrived at the address, which was at commercial premises at Milperra. The communication also asked for the date when the vehicles would be surrendered.

12. On the same day, Mr Cooper advised the collections officer that there are two trucks to be collected, which would require a heavy vehicle license to drive, and that he didn't have any staff at the present time to drive them, and he asked what were the options for either collecting them and driving them or towing them. The commercial collections officer then replied that she would need to know the address where the trucks were held, were they in working condition, how many sets of keys were there, and the contact details of the person available on the day that the trucks would need to be picked up.

13. Mr Cooper advised that the address was the address in Bronti Street, Mascot, that the trucks were available from the following Monday but not on the preceding Friday. He advised the trucks might need to be jump-started and then driven and that there is only one key available for each vehicle and the person to contact concerning the vehicles’ pickup was Mr Cooper himself. In any event, eventually the vehicles were taken to the Pickles auction premises at Milperra.

14. On 10 April 2024, the 2017 Isuzu was offered at auction. As I have previously said, it had been purchased by the first defendant on 17 October 2022 for $120,000. According to the auctioneer, the value of the vehicle was $40,000 and a reserve was fixed at $50,000. The car was sold at auction on 10 April 2024 for $62,000. The 2008 vehicle was auctioned on 8 May 2024. As I have earlier said, it had been bought on 17 October 2022 for $53,000. According to the auctioneer, the value of the vehicle was $10,000. A reserved was fixed at $15,000, but it only realised at auction on 8 May 2024, $11,000.

15. Mr Cooper complained strenuously about what he believed was an undervaluation of each of the two vehicles and he argued that the 2008 Isuzu which had been sold for $11,000 was worth, in fact, $32,400. Annexed to his affidavit, is a document which purports to show that that very vehicle had been later sold for $32,400, albeit that it only realised at an earlier auction, $11,000. Mr Cooper was cross-examined at some length about this issue and was shown a document which became MFI 6 and eventually was admitted into evidence as Exhibit D.

16. That showed the same truck to have been sold at auction on 23 August 2022 in Melbourne for $32,400. Mr Cooper was cross examined about whether he had altered what became Exhibit D into the form annexed to his affidavit such as to show a misleading value of the vehicle in question. That cross-examination made quite clear to me that the second defendant had been, “inventive,” in annexing to his affidavit the document in question, which causes me great concern, and has made me pause when listening to whatever evidence Mr Cooper gave.

17. Indeed, Mr Cooper, in cross-examination, was very defensive and refused to answer any further questions from learned counsel for the plaintiff when it was suggested to him that he had, “doctored,” a record of Grays Auctioneers in Melbourne to make it appear to have been the vehicle that had been sold by Pickles Auctioneers on 8 May 2024. Mr Cooper complained of what might be called sharp or predatory practice by the financier, but this was not established on the evidence before me, and, indeed, it is behaviour which this Court often sees in dealing with commercial disputes of this nature.

18. Furthermore, the protestations by Mr Cooper that he was unaware of his obligations as guarantor of the loan flies in the face of common human experience. Anyone who goes guarantor for another realises that one becomes liable for the same damage as is the person who is guaranteed. Furthermore, he purports to be a businessman with degrees in business, including a master's degree, so he is not some parvenu businessman with little or no acumen. I found Mr Cooper's evidence completely unreliable.

19. The real issue is really the quantification of the damages for which the defendant is liable. The transcript will show the interaction between myself and learned counsel for the plaintiff yesterday afternoon when I queried why the valuation did not arise as at the date that the plaintiff rescinded the agreement in accordance with its terms on 15 February 2024. That caused learned counsel for the plaintiff to provide me with a further supplementary submissions which have been marked for identification 8. Those, which Mr Cooper sent to my associate, as he was not able to be here today, have been marked for identification 9.

20. The plaintiff terminated the agreement on 15 February 2024. The notice of termination is annexure (B) to the affidavit of Mr Latimer-Micek, which is Exhibit A, which was sworn on 4 February 2025. The letter is addressed to the first defendant at its business meeting address. The letter bears this heading:

“NOTICE OF TERMINATION OF CONTRACT & DEMAND FOR PAYMENT.”

TERMINATION VALUE: $170,749.98

Refer to the Notice of Default and intention to repossess dated 31/01/2024, sent to you because the contract was in arrears as both the Customer and the Guarantors have failed to rectify the default;

1. We have exercised our right to terminate your Contract. Accordingly, The Agreed Termination Value is now due for payment. As at the date of this Notice, the Termination Value is $170,749.98.

2. We demand you return the financed equipment in good working order and condition to us immediately. Failure to do so will result in us [sic] taking steps to repossess the equipment, at your expense, and without any further notice.

3. We may disclose details regarding your default to credit reporting body in accordance with the Privacy Act 1998, if payment of the Termination Value is not paid within the time specified below.

Please pay the termination value within seven (7) days of this Notice. Failure to comply with the above may result in us [sic] commencing legal action against you, in addition to the enforcement actions outlined above, without any further notice. You will be required to pay any/all enforcement expenses incurred. We do not wish to take enforcement action against you, so please contact us immediately on [telephone number redacted], Monday to Friday to arrange payment of the above.”

Clearly, no payment was made, and hence the commencement of the current proceedings by statement of claim filed on 20 May 2024.

21. As at the date of termination of the contract on 15 February 2025, there were two instalments outstanding, that due on 7 January 2024, and that due on 7 February 2024. The total of those sums is $7,454.70. There were 44 instalments that were to be paid between March 2024 and the contractual termination of the contract in October 2027. The value of those 44 future monthly payments was $164,003.40. When the discount rate of 4.35% was applied, the total present value of future instalments was $151,888.39. The total of the arrears and the present value of future rentals and a fee or charge of $180 amounted to $159,523.09.

22. The fee of $180 was calculated, I was told earlier today, by the plaintiff's computer system and probably represents an estimate of the time and expense dealt with in terminating the contract and calculating the necessary payments and the like. The fee is modest, and no actual challenge was made to it by Mr Cooper. The total of those sums was $159,523.09. From that should be deducted the net value of the sale of the 2017 Isuzu, $57,847.50, and the net value of the sales of the 2008 Isuzu, $9,817.50. That leaves a total payment of $91,858.09, which has been put forward by the defendant in accordance with the schedules annexed to MFI 8.

23. I am happy to accept that sum. The remaining issue concerns whether the plaintiff is entitled to interest on that sum. The interest on that sum has been calculated in two schedules which are again annexed to MFI 8, and amounted to $12,281.44 as at 31 July, and updating it to today's date, 7 August, the sum becomes $12,419.96. I was concerned yesterday by the fact that the claim for interest appeared to be a claim for interest upon interest, as clearly from the definition that I read earlier into these reasons of how the amount of the instalment payments was calculated, clearly provides that includes an amount for interest.

24. However, this item has been addressed by learned counsel for the plaintiff in his supplementary witness submissions, MFI 8. It says this;

“The ‘present value amount,’ which forms part of the ‘early termination amounts,’ is calculated on the basis that the total amount of the payments due over the term of the agreement are paid immediately on termination, as required by cl 10.3. Those payments are reduced by the ‘discount rate’ to account for the fact that they are received by the plaintiff earlier than they would have otherwise been.

The agreement requires the early termination is paid ‘immediately’ on termination. If the amount is not paid on termination and no ongoing monthly payments are made (as is the case here), the plaintiff does not get the benefit of the early payment, despite having applied its Discount Rate at the unpaid future instalments as at the date of termination.

On that basis, the plaintiff's pleaded claim seeks interest at the Court rates from the date that the ‘early termination amount’ was calculated (statement of claim at [12]-Court book p 4).

If, to take an extreme example, the Agreement is terminated, a discounted figure is demanded, and then the customer delays in paying the demanded amount until the end of what would have been the original term of the agreement, the customer will get the benefit of the discounting by the calculation of the ‘present value amount’ (applying the Discount Rate) without having paid any amount earlier than it would have if the agreement had remained on foot the whole of its term. The prejudice to the plaintiff is exacerbated where no instalment payments are made in the meantime (as is the case here).

If the Court has any concerns about the claim for interest at Court rates, the plaintiff does not press that claim.”

25. I have still some concerns about the payment of interest upon interest, but the point made by learned counsel is a valid one. I have decided in this case that the appropriate thing to do is to allow interest, but not at the rate payable directly under the rules, but at half that rate. That means that I allow interest in the sum of $6,209.88. The total of the sums is therefore that sum added to $91,858.09, which if my mathematics be correct, which is always problematical, gives a total of $98,067.97.

26. For those reasons, I give judgment for the plaintiff against each of the defendants for $98,067.97.

27. I order the Defendants to pay the Plaintiff’s costs pursuant to clause 6.1 of the Specific Security Agreement.

28. Liberty to the Plaintiff to file and serve a Notice of Motion returnable on Thursday, 30 October 2025 seeking to quantify such costs.

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