Background
Haiyong Su lent $100,000 under a May 2019 deed to 5 Blackman Cres Macquarie Pty Ltd and Fadi Nihad Kamal. Danny Noumeir, then 5 Blackman’s sole director and secretary, executed the deed for the company. The short-term loan was secured by mortgages over property and a personal guarantee from Mr Noumeir. After extensions and default, Mr Su pursued several enforcement measures and claimed principal, compound interest at 3% per month and legal costs.
By trial, Mr Su contended that the debt could be as high as $1,394,093.13. 5 Blackman disputed its liability and cross-claimed against Mr Su, Mr Noumeir and Mr Kamal, alleging that Mr Noumeir had breached fiduciary duties and that Mr Kamal had knowingly received trust property. Mr Noumeir submitted to judgment on the cross-claim, agreeing to compensate 5 Blackman for liabilities to Mr Su and to pay indemnity costs.
The Court’s Holding
McGrath J held that the loan deed bound 5 Blackman. Mr Noumeir had executed it as the company’s sole director and secretary, and Mr Su was entitled under the Corporations Act 2001 (Cth) to make the applicable assumptions concerning the company’s execution and authority. The Court also refused to allow 5 Blackman to rely on unpleaded matters that would surprise and prejudice Mr Su.
The Court nevertheless rejected most of Mr Su’s claimed enforcement costs. Many were not proved to have been incurred, while substantiated costs associated with unsuccessful ACT Supreme Court proceedings had been incurred unnecessarily and unreasonably. Anshun estoppel also prevented Mr Su from recovering costs that he had been ordered to pay 5 Blackman in those proceedings. The 3% monthly compound default rate was an unenforceable penalty because it was out of proportion to Mr Su’s legitimate interest in repayment. On the parties’ calculations, these conclusions reduced the debt as at 9 March 2026 to $53,775.15.
5 Blackman’s knowing-receipt claim against Mr Kamal failed. Although he received the loan proceeds, the funds could not constitute trust property in his hands because he was independently entitled to them. The cross-claim against him was therefore dismissed.
Key Takeaways
- A company may be bound by an agreement executed by its sole director and secretary where the counterparty is entitled to rely on the statutory assumptions in the Corporations Act.
- A contractual right to enforcement costs does not excuse a mortgagee from proving that the costs were incurred, and unnecessarily or unreasonably incurred costs may be irrecoverable.
- A steep default-interest increase may be an unenforceable penalty when it is out of proportion to the lender’s legitimate interest, while Anshun estoppel can bar cost claims that should have been raised in earlier litigation.
Why It Matters
The decision illustrates that enforceability of the underlying loan does not guarantee recovery of every amount claimed under it. Courts will separately scrutinise corporate authority, default-interest provisions, enforcement expenses and the effect of earlier proceedings.
For lenders and litigators, the judgment highlights the importance of using defensible default rates, maintaining evidence of costs and advancing connected claims in the first proceeding. For companies, it confirms that internal misconduct by an officer will not necessarily defeat an agreement where an outsider was entitled to rely on statutory assumptions.