Orion Funds Pty Limited v Quinn

[2024] NSWSC 1392

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Orion Funds Pty Limited v Quinn [2024] NSWSC 1392

Hearing dates:

04 September 2024, 22 October 2024

Date of orders:

22 October 2024

Decision date:

04 November 2024

Jurisdiction:

Common Law

Before:

Wright J

Decision:

1.   The defendant’s notice of motion filed on 16 October 2024 is dismissed.

2.   The defendant is to pay the plaintiff’s costs of the defendant’s notice of motion filed on 16 October 2024.

3.   Judgment for the plaintiff in the sum of $3,823,846.06.

4.   Otherwise, the plaintiff’s amended notice of motion filed on 1 August 2024 is dismissed.

Catchwords:

JUDGMENTS AND ORDERS – summary judgment – where no reasonable defence pleaded – where prerequisites for summary judgment established – summary judgment ordered – no point of principle

PLEADINGS – defence – leave to file amended defence – whether reasonable defence disclosed on the proposed amended defence – no reasonable defence disclosed – leave refused – no point of principle

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 56

Supreme Court Act 1970 (NSW), s 63

Uniform Civil Procedure Rules 2005 (NSW), r 13.1

Cases Cited:

Agar v Hyde (2000) 201 CLR 552

Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87

Spencer v The Commonwealth (2010) 241 CLR 118; [2010] HCA 28

Category:

Principal judgment

Parties:

Orion Funds Pty Limited (Plaintiff)
Simon John Quinn (Defendant)

Representation:

Counsel:
J Foley (Plaintiff)
S Philips (Defendant)

Solicitors:
HWL Ebsworth (Plaintiff)
Matthews Dalton Lawyers (Defendant)

File Number(s):

2024/00146

Judgment

1. At the end of the hearing on 22 October 2024, the Court took time to consider the matter and then made orders as follows:

“1.   The defendant’s notice of motion filed on 16 October 2024 is dismissed.

2.   The defendant is to pay the plaintiff’s costs of the defendant’s notice of motion filed on 16 October 2024.

3.   Judgment for the plaintiff in the sum of $3,823,846.06.

4.   Otherwise, the plaintiff’s amended notice of motion filed on 1 August 2024 is dismissed.”

2. It was also indicated that the Court would provide its reasons in due course. These are my reasons for making those orders.

The notices of motions

3. By an amended notice of motion filed on 1 August 2024, the plaintiff, Orion Funds Pty Limited (Orion), sought summary judgment against the defendant, Mr Quinn, in respect of his liability as a guarantor of the amount owed by Jack Swagman Pty Ltd (JSPL) to Orion under a secured loan facility agreement. In the alternative, Orion sought orders striking out, in whole or in part, Mr Quinn’s defence filed on 12 June 2024. In that notice of motion, Orion also sought orders setting aside a notice to produce issued by Mr Quinn and a subpoena issued by the Court at the request of Mr Quinn, both dated 24 July 2024.

4. At the hearing on 4 September 2024, Mr Quinn’s counsel acknowledged that he needed to amend his defence. Accordingly, orders were made to facilitate such an amended defence being considered.

5. On 16 October 2024, Mr Quinn filed a notice of motion seeking leave to file an amend defence in the form attached to the notice of motion.

6. Those notices of motion came on for hearing or further hearing on 22 October 2024.

The background to the proceedings

7. In order to understand the issues raised by the notices of motion, it is useful to set out some of the relevant background which was not in dispute, mostly having been admitted on the pleadings (including, for these purposes, the proposed amended defence) and also established on the evidence before the Court.

8. Pursuant to a secured loan facility agreement dated 30 May 2023, Orion advanced a total $7.15m to the borrower, JSPL (in its personal capacity and as trustee of Jack Swagman Hotel Trust No 1).

9. The facility agreement included terms pursuant to which Mr Quinn and Pymble Property Holdings Pty Ltd (PPH) each provided, inter alia, an unconditional and irrevocable:

1. guarantee of the punctual performance of JSPL’s and the other parties’ obligations under the facility agreement; and

2. undertaking to pay any relevant amount due on demand,

as well as assuming an express obligation to pay immediately on demand any Secured Money (as defined expansively in the facility agreement) which was not paid when due.

10. The guarantee was agreed to be:

1. a principal obligation and not to be treated as ancillary or collateral to any other right or obligation and was independent of and not in substitution for, or affected by, among other things, any other security which Orion might hold in respect of secured money or any obligations of any other party to the transaction or other person; and

2. enforceable against each of Mr Quinn and PPH without first having recourse to, among other things, any security and whether or not Orion had taken any other steps against any obligor or any other person.

11. The obligations of JSPL, Mr Quinn and PPH under the facility agreement were secured by:

1. a general security agreement between Orion and JSPL dated 30 May 2023 (GSA);

2. a registered mortgage over specified land at Blacktown given by JSPL (the Blacktown mortgage); and

3. a registered mortgage over specified land at Pymble given by PPH (the Pymble mortgage). Since there appeared to be a first registered mortgagee of the Pymble property, I inferred that the Pymble mortgage is a second mortgage.

12. On 29 May 2023, Orion advanced the funds to JSPL.

13. JSPL failed to repay the Secured Money in full on or by the repayment date, 30 November 2023.

14. By letter dated 18 December 2023 to JSPL, copied to Mr Quinn and PPH, Orion gave notice of an event of default under the facility agreement.

15. By a notice of default issued on 22 December 2023, Orion demanded that Mr Quinn, and the other obligors, pay the amount then said to be owing under the facility agreement, $7,237,241.93 within one month.

16. Mr Quinn failed to pay the amount demanded within the time specified.

17. On 13 February 2024, Mr Quinn (and others) entered into a deed of forbearance with Orion in which, inter alia, Orion agreed, on payment of a forbearance fee, to forbear from exercising its relevant rights for a period as specified in the deed. In the deed, Mr Quinn acknowledged and agreed that both the facility agreement and the guarantee were enforceable, that he had defaulted under his obligations, and that (at that time) the amount owed (excluding the forbearance fee of $200,000, unbilled legal costs and all other costs incurred by Orion in connection with defaults under the facility agreement) was $7,433,081.70.

18. JSPL, Mr Quinn and PPH did not comply with the terms of the deed of forbearance including by not paying the forbearance fee in full. Consequently, the forbearance period ended and Orion thereupon became entitled to take whatever action it deemed appropriate without notice.

19. On 19 February 2024, Orion appointed a receiver and manager to JSPL pursuant to the Blacktown mortgage and the GSA.

20. On 16 April 2024, Orion filed its statement of claim in the present proceedings claiming the following relief:

“1. Judgment for the Plaintiff in the sum of $7,836,867.79 plus accrued costs and expenses pursuant to the Facility Agreement up until the date of Judgment.

2. Interest on the sum of $7,836,867.79 from 10 April 2024 until the date of Judgment currently accruing at 18.75% per annum or $4014.79 per day.

3. In the alternative, interest on the sum of $7,836,867.79 from 10 April 2024 until the date of Judgment calculated pursuant to section 100 of the Civil Procedure Act 2005 (NSW);

4. Costs on an indemnity basis;

5. In the alternative, costs on an ordinary basis; and

6. Any other such order as the Court deems fit.”

21. In light of the evidence and the positions of the parties on the hearing of these notice of motions, the following matters were also not in dispute or were established on the evidence.

22. As at 16 April 2024 when Orion’s statement of claim was filed, the Blacktown property had not been sold and no funds from that sale had been applied to reduce the amount owing under the facility agreement.

23. On 6 June 2024, the solicitors for Orion confirmed in email correspondence that, if the Blacktown property or the Pymble property was sold, the net proceeds of sale of each property would be applied in reduction of the amount owed under the facility agreement and, thus, in reduction of the amount claimed against Mr Quinn in the proceedings. The relevant email also contained the comment that Orion’s solicitors noted “for the avoidance of doubt that pursuant to clause 17.16.1 of the Facility Agreement, the Guarantee is enforceable against [Mr Quinn] without first having recourse to any Collateral Security.” Given the terms of the facility agreement, this notation was and is correct.

24. On 23 August 2024, Orion received the amount of $4,810,000 from the receiver and manager appointed to JSPL being the net proceeds of sale of the Blacktown property. Consequently, as at that date, the total amount owing to Orion by Mr Quinn pursuant to the facility agreement was reduced by that amount to $3,583,613.41. The reduced amount did not, however, include enforcement expenses incurred but not then billed or any further enforcement expenses which might accrue after that date, which Orion was entitled to recover under the facility agreement.

25. On 3 September 2024, receivers were re-appointed to PPH by the first mortgagee of the Pymble property and the first mortgagee gave notice that it intended to exercise its power of sale.

26. At the date of hearing, the Pymble property had not been sold but it was anticipated that there would be substantial net proceeds from any sale, after the first mortgagee had been paid out.

27. On 22 October 2024, the date when the orders were made, the total amount owing to Orion by Mr Quinn pursuant to the facility agreement was $3,823,846.06 calculated as set out in the table below.

Item	Amount
Total principal	$7,150,000.00
Interest to 22 October 2024	$1,201,053.08
Balance of forbearance fee	$150,000.00
Interest on balance of forbearance fee	$19,186.64
Enforcement expenses	$113,616.33
Less: Net proceeds of sale of Blacktown property	$4,810,010.00
Total amount outstanding at 22 October 20-24	$3,823,846.06

Mr Quinn’s notice of motion filed on 16 October 2024

28. As noted above, by his notice of motion filed on 16 October 2024, Mr Quinn sought leave to file an amended defence. The proposed amendments related to two topics, namely the sale of the Blacktown property and the proposed sale of the Pymble property. They can be adequately summarised as follows.

29. In relation to the sale of the Blacktown property, the amendments were:

1. allegations concerning JSPL, the Blacktown property and the Blacktown mortgage, in pars 2(b)(i), (ii) and (iii);

2. allegations concerning definitions in the facility agreement relating to valuations, Orion not being obliged to provide funds unless the valuation of the Blacktown property was satisfactory to it and the Hymans Valuation of the Blacktown property of about 29 March 2023, in pars 4(b)(1) and (2);

3. an allegation that, in May 2024, Mr Quinn received an offer to refinance “which included the title to the Blacktown Property for $25,000,000”, in par 11(d);

4. an allegation that, on 6 June 2024, Orion’s solicitors accepted “that, if the Blacktown Property or the Pymble Property were to be sold, the net proceeds of the sale … would be applied in reduction of the amount owing to [Orion] secured by the Blacktown Mortgage and would reduce the amount owed by [Mr Quinn] to [Orion] pursuant to the Guarantee” in par 11(g); and

5. allegations concerning the sale of the Blacktown property and the net proceeds of sale reducing the amount owed by Mr Quinn under the facility agreement to $3,583,613.41, in 11(h)-(k).

30. In relation to the proposed sale of the Pymble property, the amendments were:

1. allegations concerning PPH, the Pymble property and the Pymble mortgage being a second mortgage, in pars 2(d)(i),(ii) and (iii), 4(c)(i) and (ii); and

2. allegations concerning steps by the first mortgagee of the Pymble property to exercise its power of sale, the amount which the first mortgagee sought to recover, valuations of the Pymble property, steps taken by Mr Quinn to sell the Pymble property and the possible net proceeds of sale after payment out of the first mortgage if the Pymble property were sold, in pars 11(l)-(s).

31. The culmination of the proposed amendments relating to both the Blacktown and Pymble properties was contained in par 11(u) which, in the proposed amended form, read as follows:

“(u) in the premises pleaded above, and in particular the exercise of a power of sale by the Plaintiff and the appointment of the [Blacktown] Receiver and the Pymble Receivers to conduct a sale of the Blacktown Property and the Pymble Property, the sale of the Blacktown Property and the admissions by the plaintiff that the net proceeds of the sale with respect to the Blacktown Property and the Pymble Property will be applied in reduction of the amount owing to it and that the total amount owing under the [facility agreement] as at 29 August 2024 was $3,583,613.41, [Mr Quinn] is not presently liable to pay the Amount Demanded or the amount claimed by the [Orion] in the statement of claim of $7,836,867.79 and may not be liable to [Orion] for any amount at all”.

32. There was no other defence pleaded arising out of the proposed amendments.

33. The allegations concerning the Blacktown property amounted to no more than that the net proceeds of sale of that property reduced Mr Quinn’s liability by $4,810,010.00 to $3,583,613.41, as at 29 August 2024. This, however, was not in dispute, was precisely what Orion had said would occur in its email of 6 June 2024 and was accepted by Orion for the purposes of its summary judgment application. Further and in any event, while payment may be pleaded as a defence to a claim in debt, it is not the case that, between the time a plaintiff files a statement of claim seeking to recover a debt and determination of the claim, a defendant has to amend its defence every time the plaintiff receives a payment which reduces that debt. Similarly, a plaintiff does not have to amend its statement of claim to reduce the amount claimed every time it receives a payment which reduces the amount of the debt. In such a case, the plaintiff is only entitled to recover the amount of the debt outstanding at the date of judgment, which is a matter of fact to be established on the evidence at the relevant time. In the circumstances, while it may be permitted, it is not necessary for Mr Quinn to amend his defence to include the allegations concerning the sale of the Blacktown property and the application of the net proceeds of sale to reduce the amount owed by Mr Quinn.

34. There is a further issue in relation to the proposed amended pleading relating to the Blacktown property, namely, the proposed amendments include allegations which appear to be irrelevant or embarrassing in the technical sense. These allegations include those concerning valuations, Orion’s required satisfaction before funds were advanced and similar matters. These do not appear to be material to the defence of payment actually sought to be advanced and should not be permitted to be included in any amended pleading.

35. Finally, in relation to the proposed amended Blacktown property allegations, the substance of what is alleged was not in dispute. Furthermore, those allegations would have had no effect on the outcome of the summary judgment application, whether or not Mr Quinn was permitted to amend his defence to include them. Thus, there appeared to me to be no utility in granting leave to file the proposed amended defence in so far as it related to those allegations.

36. As to the amendments concerning the Pymble property, which was referred to during oral submissions as “the Pymble Defence”, these amounted to no more than a contention that if attempts to sell the Pymble property were successful the possible net proceeds of sale after payment out of the first mortgage would reduce or possibly even extinguish the amount owed by Mr Quinn under the facility agreement. That contention was accepted as being correct by Orion and was in accordance with what Orion had said in its email of 6 June 2024. Nonetheless, the possibility of a sale and consequential reduction of the amount owed by Mr Quinn did not amount to a defence to Orion’s claim. As Orion correctly noted in its email of 6 June 2024, “pursuant to clause 17.16.1 of the Facility Agreement, the Guarantee is enforceable against [Mr Quinn] without first having recourse to any Collateral Security.” There was no pleading of any allegations which would establish a basis for contending that the possibility of a sale of the Pymble property disentitled Orion from recovering prior to such a sale amounts otherwise due from Mr Quinn. In these circumstances, “the Pymble Defence” did not amount to a viable or reasonable defence to Orion’s claim against Mr Quinn made in the statement of claim.

37. Since the allegations concerning the Blacktown property and Pymble property in the proposed amended defence did not lead to any reasonable defence being disclosed, it was inappropriate to grant leave to file the proposed amended defence.

38. For all these reasons, I ordered that Mr Quinn’s notice of motion filed on 16 October 2024 seeking leave to file the proposed amended defence was dismissed.

Orion’s amended notice of motion filed on 1 August 2024

39. By its amended notice of motion filed on 1 August 2024, Orion sought summary judgment against the defendant, Mr Quinn, in respect of his liability as a guarantor of the amount owed by JSPL to Orion under the facility agreement in the sum of $7,836,867.79, being the amount allegedly outstanding at the time the original notice of motion was filed, together with interest and costs on various alternate bases. In the alternative to the summary judgment prayer for relief, Orion sought orders striking out, in whole or in part, Mr Quinn’s defence filed on 12 June 2024. As noted above, Orion also sought orders setting aside a notice to produce issued by Mr Quinn and a subpoena issued by the Court at the request of Mr Quinn, both dated 24 July 2024.

40. As to the notice to produce and the subpoena, Mr Quinn’s counsel noted that these had not relevantly been called on and there was no intention to call on them in the future. Accordingly, it did not appear to me to be necessary to set them aside and the amended notice of motion in that regard should be dismissed.

41. As to the summary judgment application, there was no dispute as to the principles to be applied. It was accepted that, while the Court has power under r 13.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), this power is to be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried: Spencer v The Commonwealth (2010) 241 CLR 118; [2010] HCA 28 (Spencer) at [24] citing Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99. A party is not generally to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes: Agar v Hyde (2000) 201 CLR 552 at 575-576; Spencer at [24].

42. In support of its application, Orion relied on the affidavits of Brett Matthews sworn 12 July 2024 and 21 October 2024. Those affidavits set out the facts on which the claim was based. That evidence was not challenged and was, where relevant, consistent with the admissions and allegations in Mr Quinn’s defence and proposed amended defence. In addition, Mr Matthews gave evidence that he believed that Mr Quinn had no defence to the claim. Accordingly, the requirements in r 13.1(1)(a) and (b) of the UCPR were satisfied. Mr Matthews’ 21 October 2024 updated affidavit of debt established that, as at 22 October 2024, the total amount owing by the plaintiff was $3,823,846.06, calculated as set out in the table after [27] above.

39. Mr Quinn appeared, at times, to submit that Orion was not entitled to summary judgment as claimed in the amended notice of motion because prayer (1) of the motion sought judgment in sum of $7,836,867.79 and the updated affidavit of debt established that a lesser sum of $3,823,846.06 was all that was due as at the date of the hearing. This was not a matter which disentitled Orion to summary judgment in the lesser amount for a number of reasons. First, such an approach would be to give the form of the prayer for relief determinative weight without regard to the clear substance of the claim and the matters actually in issue. If necessary, leave to amend the form of prayer (1) could have been sought and obtained, or deemed to have been sought and obtained, having regard to the overriding purpose in s 56 of the Civil Procedure Act 2005 (NSW). Secondly, even at a formal level, the submission was without merit as the amended notice of motion also contained prayer (6), “Any other such order as the Court deems fit”, and the Court is obliged under s 63 of the Supreme Court Act 1970 (NSW) to:

“grant , either absolutely or on terms, all such remedies as any party may appear to be entitled to in respect of any legal or equitable claim brought forward in the proceedings so that, as far as possible, all matters in controversy between the parties may be completely and finally determined, and all multiplicity of legal proceedings concerning any of those matters avoided.”

44. At the substantive level, review of the pleadings and the issues in dispute revealed that the only issue sought to be raised by Mr Quinn in opposition to the summary judgment application was the possibility of the sale of the Pymble property and the consequential possibility that there might be sufficient net proceeds of sale after payment out of the first mortgagee to extinguish or reduce the amount outstanding for which Mr Quinn was otherwise liable under the guarantee in the facility agreement. This was confirmed by counsel for Mr Quinn during the hearing on 22 October 2024 in the following exchange with the bench: [1]

“[COUNSEL for Mr Quinn]: So, I can't probably advance a ground of opposition in relation to a summary judgment application in the amount of 3.8 million, the amount that is articulated in this affidavit of debt.

HIS HONOUR: So do I understand you can't resist the summary judgment [for] … $3,823,846.06[?] [I]s that right[?]

[COUNSEL for Mr Quinn]: As at today's date. Other than on the basis of what I could call the Pymble defence and your Honour, we have already canvassed, I just wish to say one brief thing about that, but I think, that, cutting to the chase, that is the position.

If the application had been made on the last occasion which is now being made which is effectively basic summary judgment for whatever the, effectively, an ambulatory figure but crystalised on the date that summary judgment is entered, it is probably fair to say I couldn't oppose that. …

…

[COUNSEL for Mr Quinn]: That leaves if I could call it the Pymble defence and I probably can't, say much further except I did, in the interests of fullness I think to do justice to it the position adopted by my client I think I need to take your Honour just to the text of that document that I referred to which is the nub of this defence.”

1. Tcpt 22 October 2024, p 26 (3-26).

45. The documents referred to by counsel for Mr Quinn in that exchange was the email of 6 June 2024, which relevantly said:

“(c) If the [Blacktown] Property is sold, the net proceeds of the sale will be applied in reduction of the amount owing to the Plaintiff which is secured by the Blacktown Mortgage and by extension, will reduce the amount owed by the Defendant to the Plaintiff pursuant to the Guarantee contained in the Facility Agreement. Similarly, any proceeds that may be received by the Plaintiff from any sale of the Pymble Property (after repayment of the amount owing to the first registered mortgagee) would reduce the amount owed by the Defendant. We note for the avoidance of doubt that pursuant to clause 17.16.1 of the Facility Agreement, the Guarantee is enforceable against the Defendant without first having recourse to any Collateral Security.”

46. I have referred to this email above, when considering the application for leave to file the proposed amended defence, and held that it did not give rise to any viable or reasonable defence available to Mr Quinn in the circumstances of the present case. The email set out correctly the position if net proceeds of sale were received by Orion from any future sales of the Blacktown property or the Pymble property and also correctly noted that Mr Quinn’s liability under the guarantee was enforceable against him without Orion being required first to exercise any rights under the Blacktown mortgage or the Pymble mortgage. Contrary to Mr Quinn’s submission, this email did not constitute an admission that Orion was not entitled to recover from Mr Quinn the amount outstanding as at 22 October 2024, before the sale of the Pymble property.

47. Accordingly, I was satisfied that it was clear that there was no real question to be tried in relation to Mr Quinn’s liability for the amount claimed as at 22 October 2024.

48. In all the circumstances, in my view, Orion was entitled to summary judgment in the amount sought.

Costs

49. Although Orion sought costs of the motion on an indemnity basis or, in the alternative, on the ordinary basis, it was apparent from the calculation of the sum of $3,823,846.06 as set out in the table after [27] above that that sum included costs under the heading “Enforcement expenses” in the sum of $113,616.33. Counsel for Orion did not contend to the contrary.

50. In these circumstances, it did not appear to me that it was appropriate to order that Mr Quinn pay Orion’s costs, on any basis, in addition to judgment for the sum of $3,823,846.06.

51. Orders

52. For these reasons, the Court made the orders set out at [1] above on 22 October 2024.

**********

Endnote

Amendments

05 November 2024 - Removal of the word "by" in [23] line 3.

Decision last updated: 05 November 2024