Prime Capital Securities Pty Ltd v Pypy

[2025] NSWSC 132

Supreme Court

New South Wales

Medium Neutral Citation:

Prime Capital Securities Pty Ltd v Pypy [2025] NSWSC 132

Hearing dates:

18 February 2025

Date of orders:

3 March 2025

Decision date:

03 March 2025

Jurisdiction:

Common Law

Before:

Wright J

Decision:

(1) The Plaintiff have possession of the land described as Unit 109, 12-22 Dora Street, Hurstville, in the State of New South Wales, Torrens Title identifier 109/SP64498.

(2) The Plaintiff have leave to issue a writ of possession forthwith in respect of the land described as Unit 109, 12-22 Dora Street, Hurstville, in the State of New South Wales, Torrens Title identifier 109/SP64498.

(3) The Defendant pay the Plaintiff’s costs on a full indemnity basis.

(4) The Defendant’s amended notice of motion filed on 19 December 2024 is dismissed.

(5) The Defendant pay the Plaintiff’s costs of the amended notice of motion on an indemnity basis.

Catchwords:

CONTRACT - construction and interpretation – where court asked to determine meaning of clauses of deed of settlement and forbearance under s 73 Civil Procedure Act 2005 (NSW) – no point of principle

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 73

Category:

Principal judgment

Parties:

Prime Capital Securities Pty Ltd ACN 623 195 871 (Plaintiff)
Suriawati Pypy (Defendant)

Representation:

Counsel:
R O’Donnell (Plaintiff)
A Avery-Williams (Defendant)

Solicitors:
QBM Lawyers (Plaintiff)
ALP Lawyers (Defendant)

File Number(s):

2024/ 00113602

JUDGMENT

1. By an amended notice of motion filed on 19 December 2024, the defendant, Ms Suriawati Pypy, seeks orders pursuant to s 73 of the Civil Procedure Act 2005 (NSW) concerning the proper construction of a deed of settlement and forbearance (the S&F Deed) executed by her and Prime Capital Securities Pty Ltd (Prime), the plaintiff. The defendant also seeks an order for costs.

2. In addition, the question of whether orders should be made by the Court in accordance with signed consent orders filed with the Court pursuant to the S&F Deed was listed by the Registrar for hearing at the same time as the applicant’s amended notice of motion.

3. In order to consider these applications, it is necessary to review their background.

Background

4. On 20 November 2020, Prime, Cemerleng Pty Ltd (Cemerleng), Audrie Hioe and Ms Pypy entered into a Loan, Security and Guarantee Deed (the LSG Deed) pursuant to which Prime agreed to lend to Cemerleng funds up to a limit of $415,000 and Cemerleng agreed to repay the funds advanced together with interest payable at the “Interest Rate”, on the terms set out in the LSG Deed.

5. “Interest Rate” was defined in the LSG Deed to mean “the Higher Rate. However, if no Event of Default has occurred, the Interest Rate is the Lower Rate”. In “Part 1 – Key Details”, the Higher Rate was specified to be 1.5% per month and the Lower Rate was 6.95% per annum.

6. In the LSG Deed, Cemerleng, Ms Hioe and Ms Pypy were each defined to be “Obligors” and each Obligor agreed to guarantee, inter alia, the due and punctual payment of the “Secured Money”.

7. “Secured Money” was defined in the LSG Deed so as, in effect, to include relevantly all money that any Obligor became liable to pay to Prime pursuant to the LSG Deed (including the guarantee).

8. Repayment of Secured Money was also secured by way of a registered mortgage over a strata unit in Hurstville, of which Ms Pypy is the registered proprietor and mortgagor.

9. On 20 November 2020, $415,000 was drawn down and thereafter certain repayments were made.

10. By March 2024, Cemerleng was in default in repaying amounts due under the LSG Deed. As at 7 March 2024, the amount owing under the LSG Deed (including interest at the Higher Rate, Default Administration Fees and other charges under the LSG Deed) was $380,231.62.

11. On 26 March 2024, Prime commenced the present proceedings seeking orders against Ms Pypy for possession of the Hurstville unit and costs.

12. On 14 May 2024, default judgment was entered.

13. On 31 July 2024, default judgment was set aside by consent. Directions were made for the filing of a defence and a reply to defence.

14. On 16 September 2024, having reached agreement to settle the proceedings, Prime, Cemerleng, Ms Hioe and Ms Pypy entered into the S&F Deed.

The S&F Deed

15. The recitals to the S&F Deed included:

“B. The Group Members [that is, each of Cemerleng, Ms Hioe and Ms Pypy who were also defined as the “Group”] have defaulted in their obligations to Prime.”

16. Clause 1.1 of the S&F Deed provided:

“Subject to the terms of this Deed being met and there being no further defaults, Prime agrees to forbear from further enforcing the Securities until the earlier of payment of the Debt to Prime or an Event of Default occurring.”

17. It was not in dispute that the “Securities”, as defined, included the mortgage of the Hurstville unit.

18. Under cl 2.1 of the S&F Deed, Ms Pypy and the other Group Members agreed:

“(c) to pay to Prime;

(i) $90,000 by 2 September 2024;

(ii) $90,000 by 2 October 2024;

(iii) $90,000 by 4 November 2024; and

(iv) balance Money Secured by 2 December 2024.”

19. Clause 2.3 provided that:

“Payment of the sum set out in clause 2 herein is in addition to any monies which have already been paid to or received by Prime.”

20. It was not in dispute that, although the S&F Deed was not executed until 16 September 2024, the payments made on 28, 29 and 30 August 2024, which totalled $90,000, were payments made in satisfaction of the obligation to pay $90,000 by 2 September 2024 as referred to in cl 2.1(c)(i).

21. Clause 3 of the S&F Deed was in the following terms:

“3. PROCEEDINGS

3.1 Upon execution of this Deed, the parties will notify the Court of the settlement and request the proceedings adjourned, pending completion of these terms.

3.2 A party may not take any further step in the Proceedings unless permitted to do so under the terms of this Deed.

3.3 On the date of this Deed, the solicitors for [Ms Pypy] will:

(a) sign the Notice of Discontinuance in the form of Annexure A to this Deed; and

(b) sign the Consent Judgment in the form of Annexure B to this Deed, and provide copies of same to Prime, to be held in escrow until either the Debt is paid or an Event of Default occurs.

3.4 Upon payment of the Debt, Prime is to file the Notice of Discontinuance (Annexure A) discontinuing the Proceedings with no order as to costs, and the parties agree to the proceeding being dismissed/discontinued with no order as to costs.

3.5 If an Event of Default occurs, the Group Members consent to Judgment being entered against them in the Proceedings with Prime being entitled to costs on a full indemnity basis, and to Prime filing the Consent Order (Annexure B).”

22. The Consent Order (Annexure B) to the S&F Deed named Prime as the plaintiff and Ms Pypy as the defendant and included the following orders:

“1 The Plaintiff have possession of the land [being the Hurstville unit with the Torrens title identifier specified].

2 The Plaintiff have leave to issue a writ of possession forthwith in respect of the [Hurstville unit]

3 The Defendant pay the Plaintiff’s costs on a full indemnity basis.”

23. It was not in dispute that a signed form of the Consent Order (Annexure B) was provided to Prime by Ms Pypy in accordance with cl 3.3(b) of the S&F Deed.

24. “Event of Default” was defined in cl 4.1 of the S&F Deed as ”a default in any of the obligations under this Deed.”

25. Clause 4.2 of the Deed provided:

“4.2 Occurrence of an Event of Default

If an Event of Default occurs:

(a)    the forbearance ceases to apply;

(b)   Prime may immediately enforce the Facilities, the Loan, Security and Guarantee Deed, this Deed, and the Securities [including the mortgage over the Hurstville unit];

(c)   Prime shall also be at liberty to enter, and the Group Members acknowledge and consent to, judgment (either in the Proceedings or in separate proceedings) in favour of Prime for possession of the [Hurstville unit], for the Debt (less any payments made from the date of this Deed) together with interest and costs on an indemnity basis;

(d)    the Group Members consent to Prime providing a copy of this Deed to the Court evidencing their agreement and consent for such judgment and the matters provided for in this Deed.”

26. In addition, the S&F Deed included the following terms:

“6.11 Time of the essence

Time is of the essence of this Deed in respect of an obligation of the Group to pay money.

6.12 Entire Agreement

Save as expressly set out herein, this Deed constitutes the entire agreement of the parties about its subject matter and supersedes all previous agreements, understandings, and negotiations on that subject matter.

…

7.1 Definitions

The definitions and meaning set out in the Loan, Security and Guarantee Deed apply to this Deed unless expressly stated otherwise. Unless the contrary intention appears: –

…

Debt means the money owing to Prime by the Group pursuant to the Loan, Security and Guarantee Deed which as at 1 May 2024 was $396,168.86;

Loan, Security and Guarantee Deed means the loan, security and guarantee deed between Prime and the Group or any Group Members dated 20 November 2020;

…”.

27. Although cl 2.1(c)(iv) of the S&F Deed referred to “balance Money Secured”, there was no definition of “Money Secured” in that deed. The term “Secured Money” was, however, defined in the LSG Deed so as to include relevantly all money that any Obligor, including Ms Pypy, became liable to pay to Prime pursuant to the LSG Deed, including the guarantee.

Events after settlement and entry into the S&F Deed

28. On 30 September 2024 a payment of $45,000 was made and on 3 October 2024 a further payment of $45,000 was made, in partial compliance with the obligation in cl 2.1(c)(ii) to pay $90,000 by 2 October 2024.

29. On 9 October 2024, a payment of $5000 was made but no further payment was made by 4 November 2024 so as to comply with the obligation in cl 2.1(c)(iii) to pay $90,000 by 4 November 2024.

30. Given that time was of the essence by virtue of cl 6.11, the fact that the full amount of $90,000 was not paid by 2 October 2024 as required by cl 2.1(c)(ii) would mean that there had been an Event of Default. Similarly, the failure to pay a further $90,000 by 4 November 2024 as required by cl 2.1(c)(iii) meant that a further Event of Default occurred. It does not appear, however, that Prime relied upon these Events of Default.

31. On 21 and 22 November 2024 further payments of $40,000 and $45,000 were made.

32. On 25 November 2024, Ms Pypy’s solicitors wrote to Prime’s solicitors by email in terms including the following:

“Our client advised that they have made payment for the third instalment. Please find attached the proof of transfers.

Could you please advise the amount of the final instalment and provide the breakdown of costs and itemised calculation of interest?

If you have any questions, please feel free to reach out to me or our office at your earliest convenience.”

33. On 28 November 2024, the solicitors for Prime responded by email which included the following:

“We attach loan statement which includes the anticipated costs of settlement and discharge. The balance payable by 2 December 2024 is $196,154.62.

…

… Upon confirmation of receipt of cleared funds, Prime will instruct [their solicitors] to register the Discharge of Mortgage, and we will file the … Notice of Discontinuance in the New South Wales proceedings.”

34. On 3 December 2024, the solicitors for Prime sent an email to the solicitor for Ms Pypy as follows:

“Our client has not received the payment due 2 December 2024.

Please provide evidence of payment by 5 PM Wednesday, 4 December 2024 failing which we expect to receive instructions to immediately proceed to Judgment and enforcement action.”

35. No payment was made by 5:00pm on 4 December 2024.

36. On 11 December 2024, the signed Consent Order (Annexure B to the S&F Deed) was filed as provided for in cl 3.5 of that Deed. On that same day, Ms Pypy paid a further $10,000 to Prime.

37. Ms Pypy’s solicitors subsequently sent an email to the Court advising that they did not consent to the making of orders in accordance with the consent order for judgment and that Ms Pypy disputed the calculation of interest included in the amount claimed to be due under the fourth instalment payable by 2 December 2024.

Ms Pypy’s application

38. On 16 December 2024, Ms Pypy filed a notice of motion seeking orders that:

“1 Order pursuant to s 73 of the Civil Procedure Act 2005 (NSW) that the construction of the Deed stipulates that interest shall continue to accrue at a lower rate during the payment period.

2 Order that the consent order made to be set aside.”

39. On 19 December 2024, an amended notice of motion was filed seeking:

“1 Order pursuant to s 73 of the Civil Procedure Act 2005 (NSW) that on a proper construction the Deed of Settlement and Forbearance between the Plaintiff and the Defendant dated September 2024:

a. the amount to paid on or about 2 December 2024 was $81,781.24;

b. the forbearance was to extend to the incurring of interest on the debt owed as at the date of the Deed;

c. no further interest was to be imposed under the period of payment contemplated in the Deed;

d. in the alternative, interest was to continue to accrue at only at the lower rate during the payment period contemplated by the Deed.

2 Costs.

3 Such further or other orders as this court thinks fit.”

40. It can be noted at this point that the amended notice of motion no longer included a prayer for relief relating to the form of consent order filed pursuant to cl 3.5 of the S&F Deed. Nonetheless, as noted above, the Registrar listed the question of whether orders should be made in accordance with the signed form of consent order to be heard together with the amended notice of motion.

Subsequent payments

41. On 8 January 2025, Ms Pypy paid $30,000 to Prime.

42. On 17 January 2025, Ms Pypy paid $20,000 to Prime.

43. On 20 January 2025, Ms Pypy paid $21,751.24 to Prime.

44. The payments made between 11 December 2024 and 20 January 2025 totalled $81,751.24.

45. No point was taken by Ms Pypy that Prime had waived any of its rights under the S&F Deed and, thus, the total of the payments made by Ms Pypy for the purposes of cl 2.1(c) of the S&F Deed was $351,751.24.

Construction of the S&F Deed

46. Ms Pypy submitted that the Court should exercise its jurisdiction to determine the questions in dispute between Prime and herself concerning the terms on which the proceedings were settled as set out in the S&F Deed. That jurisdiction is conferred by s 73 of the Civil Procedure Act which provides:

“(1) In any proceedings, the court--

(a) has and may exercise jurisdiction to determine any question in dispute between the parties to the proceedings as to whether, and on what terms, the proceedings have been compromised or settled between them, and

(b) may make such orders as it considers appropriate to give effect to any such determination.

(2) This section does not limit the jurisdiction that the court may otherwise have in relation to the determination of any such question.”

47. Ms Pypy’s principal contentions were that on the proper construction of the S&F Deed:

1. no further interest was to be charged on the “Debt” while the S&F Deed was on foot;

2. the “Debt” was the defined sum of $396,168.86; and

3. Prime would forbear from enforcing the Securities, including the mortgage of the Hurstville unit, subject to payment of the Debt in the defined amount in four instalments.

48. In the alternative, it was submitted that during the period of the S&F Deed, the higher rate of interest payable under the LSG Deed ought not to have been applied and interest should only accrue at the higher rate if there were an “event of default”.

49. Prime’s principal submission was in effect that there was no purpose to be served by considering the construction of the S&F Deed as sought in the amended notice of motion because:

1. an Event of Default had occurred as a result of the failure to make any relevant payment in respect of the amount due by 2 December 2024 under cl 2.1(c)(iv) or by 5:00pm on 4 December 2024 as requested in the email of 3 December 2024; and

2. as a result, Prime is entitled to rely on its rights under cl 4.2 and cl 3.5 of the S&F Deed.

50. In my view, Prime’s submission should be accepted. As a result of Ms Pypy’s failing to pay any relevant sum by 2 December 2024 as required by cl 2.1(c)(iv), there was an Event of Default within cl 4.1 of the S&F Deed and consequently, by virtue of cl 4.2:

1. the forbearance in cl 1.1 from further enforcing the Securities, including the mortgage over the Hurstville unit, ceased to apply;

2. Prime became entitled immediately to enforce, inter alia, the mortgage over the Hurstville unit as well as Ms Pypy’s guarantee of repayment of the Secured Money as defined in the LSG Deed; and

3. Prime also obtained the right to enter judgment for possession of the Hurstville unit “for the Debt (less any payments made from the date of this Deed” together with interest and costs on an indemnity basis”.

51. Even if reliance on the Event of Default by failure to pay by 2 December 2024 was waived by the email of 3 December 2024 there was an Event of Default when Ms Pypy failed to pay by 4 December 2024 or subsequently.

52. In addition, as a consequence of the Event of Default and by virtue of cl 3.5 of the S&F Deed:

1. Ms Pypy consented to judgment being entered against her in these proceedings with Prime being entitled to costs on a full indemnity basis; and

2. Prime was entitled to file the signed consent order in the form of Annexure B to the S&F Deed.

53. Further and in any event, I do not accept Ms Pypy’s submissions that:

1. no further interest was to be charged on the “Debt” while the S&F Deed was on foot; or

2. the “Debt” was the defined sum of $396,168.86.

54. As to the submission concerning whether interest would continue to be charged, it is significant that the S&F Deed:

1. does not make express reference to interest;

2. does not state that no further interest would be charged on the Debt (as defined in the S&F Deed);

3. does not state that, during the period of forbearance under the S&F Deed, interest under the LSG Deed would cease to accrue or that such interest would only be charged at the “Lower Rate”.

55. Furthermore, “Debt” is defined in the S&F Deed as “the money owing to Prime by the Group pursuant to the Loan, Security and Guarantee Deed …”. This definition on its natural meaning includes not only the principal sum but also, inter alia, interest charged in accordance with the LSG Deed.

56. Such a meaning is consistent with what reasonable persons with the knowledge of the parties would understand those words to mean in the context of the transactions and circumstances in the present case.

57. In my view, there is no proper basis for construing the words in the definition of “Debt” or any other provisions of the S&F Deed as meaning that no interest would be charged during the period of forbearance or that only the “Lower Rate” of interest under the LSG Deed would be charged. Even if the evidence of the negotiations upon which Ms Pypy sought to rely were admissible for this purpose, that evidence did not establish that interest was not to be charged at the Higher Rate or at all during the forbearance period.

58. I also reject the submission that the definition of “Debt” in the S&F Deed should be construed as providing that the Debt was “the defined sum of $396,168.86”.

59. The definition is in the following terms:

“Debt means the money owing to Prime by the Group pursuant to the Loan, Security and Guarantee Deed which as at 1 May 2024 was $396,168.86”.

60. The definition is not “Debt means $396,168.86”. The figure in the definition is expressly stated to be the amount of “the money owing to Prime by the Group pursuant to the Loan, Security and Guarantee Deed” which “was” owing “as at 1 May 2024”. The use of the past tense indicates that, as at the date of the S&F Deed in September 2024, the money owing to Prime under the LSG, was known to be different from what was owing as at 1 May 2024, some months earlier. There is no basis in the express words of the definition or in the circumstances known to the parties which would justify the construction propounded by Ms Pypy. Once again, even if the evidence of the negotiations upon which Ms Pypy sought to rely were admissible for the purpose of construing the definition of “Debt”, that evidence did not support the construction for which Ms Pypy contended.

60. Furthermore, the context of the S&F Deed provides confirmation that the definition of “Debt” should not be construed as being “the defined sum of $396,168.86”. If the “Debt” was defined as being $396,168.86, the amount payable under cl 2.1(c)(iv) would have been able to be specified as “$126,168.86” ($396,168.86 less $270,000 payable under cl 2.1(i), (ii) and (iii)). In fact, cl 2.1(c)(iv) specified that that amount to be repaid by 2 December 2024 was “balance Money Secured”.

61. While the term “Money Secured” used in cl 2.1(c)(iv) is not defined in the S&F Deed, I accept Prime’s submission that “Money Secured” should be construed as referring to “Secured Money” as defined in the LSG Deed. Clause 7.1 of the S&F Deed provides that the definitions and meaning set out in the LSG Deed apply to it unless expressly stated otherwise. The reference to “Money Secured” may well have been an unintended typographical transposition of the two words, but in any event, it would have been understood by reasonable persons with the knowledge of the parties at the time of contracting as referring to whatever moneys were due to Prime under the LSG Deed, repayment of which was secured by the LSG Deed and by the related securities such as the mortgage of the Hurstville unit. None of the contractual negotiations or other material provides any basis for concluding otherwise.

62. Moreover, even if definition of “Debt” were as Ms Pypy submitted, she would have been required to pay $126,168.86 by 2 December 2024 under cl 2.1(c)(iv) and she failed to do so. Thus, there was an Event of Default even if her submission were accepted. In addition, Ms Pypy only ever paid $81,751.24 towards what was still owing under cl 2.1(c)(iv) and she has only paid a total of $351,751.24 for the purposes of the S&F Deed, which was less than was due even on her own case.

63. Finally, I reject the submission that the Entire Agreement clause, cl 6.12 of the S&F Deed, had the effect, when the S&F Deed was entered into, that the LSG Deed was superseded for all purposes or that the LSG Deed did not continue to apply to the determination of the amount to be paid under cl 2.1(c)(iv) of the S&F Deed. This is simply inconsistent with the definition of “Debt” in the S&F Deed. Furthermore, the Entire Agreement clause only operated to supersede “all previous agreements, understandings, and negotiations on that subject matter” (underlining added) and the “subject matter” of the S&F Deed was the terms of the settlement and forbearance and not the terms and conditions under which the original facility was provided and was to be repaid and under which repayment was to be guaranteed and secured.

Conclusion on the amended notice of motion

65. For all of these reasons, I refuse to make any of the orders sought in prayer 1(a) to (d) of the amended notice of motion filed on 19 December 2024. As Ms Pypy has been unsuccessful in those claims, there is no reason why costs should be awarded in her favour. Accordingly, I shall dismiss the amended notice of motion in its entirety.

Consent order and costs

66. Since there has been an Event of Default under the S&F Deed as a result of the default in compliance with the obligation in cl 2.1(c)(iv) to pay the balance of the Money Secured by 2 December 2024 or by 5:00pm on 4 December 2024, Prime’s rights under cl 3.5 and cl 4.2(2) are enlivened. Consequently, Prime is entitled to judgment in accordance with the signed form of consent order filed with the Court. Furthermore, even if Ms Pypy’s submissions were accepted as to the construction of the definition of “Debt”, there would still be an Event of Default and Prime’s rights would be the same. In addition, these orders would be appropriate in light of Ms Pypy’s failure to comply with her obligations under the LSG Deed, even if the S&F Deed were not operative.

67. In addition, in so far as the costs of the amended notice of motion are not covered by the costs order in the signed form of consent order, Prime should also be entitled to its costs of the amended notice of motion on an indemnity basis, in accordance with cl 12.2 of the LSG Deed.

Orders

68. Accordingly, the orders of the Court are that:

1. The Plaintiff have possession of the land described as Unit 109, 12-22 Dora Street, Hurstville, in the State of New South Wales, Torrens Title identifier 109/SP64498.

2. The Plaintiff have leave to issue a writ of possession forthwith in respect of the land described as Unit 109, 12-22 Dora Street, Hurstville, in the State of New South Wales, Torrens Title identifier 109/SP64498.

3. The Defendant pay the Plaintiff’s costs on a full indemnity basis.

4. The Defendant’s amended notice of motion filed on 19 December 2024 is dismissed.

5. The Defendant pay the Plaintiff’s costs of the amended notice of motion on an indemnity basis.

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Decision last updated: 03 March 2025