Aquamore Finance Pty Ltd v Horne

1. [1]

   This judgment involves an order for money to be paid by a guarantor in the sum of $2,002,595.29 arising from a loan agreement in default.

2. [2]

   The plaintiff Aquamore Finance Pty Ltd (‘Aquamore’) was represented by A. Cutler of counsel. The defendant, Benjamin John Horne (‘Mr Horne’) was called three times outside the Court. He did not appear.

3. [3]

   By way of statement of claim filed 19 December 2023 the plaintiff seeks the following relief,

   1. (1)

      Judgment against the defendant in the sum of $2,002,595.29 to 19 December 2023.

   2. (2)

      Interest on the amount claimed in (1) above from 19 December 2023 at the rate of 20.95% per annum pursuant to the terms of the loan agreement and the guarantee.

   3. (3)

      Interest on the amounts claimed in (1) and (2) above from the date of judgment at the rate of 20.95% per annum pursuant to the terms of the loan agreement and the guarantee.

   4. (4)

      In the alternative to (3) above, interest pursuant to s 100 and or section 101 of the Civil Procedure Act 2005 (NSW).

   5. (5)

      Costs on a full indemnity basis.

Background

1. [4]

   On 26 November 2021, Aquamore the lender and BBARC Pty Limited (‘BBARC’) the borrower entered into a loan agreement (‘loan agreement’) pursuant to which Aquamore agreed to advance the sum of $2,520,000.00. The loan agreement is in writing. (CB 66). For convenience, I will refer to the ‘Facility Overview’. At the hearing I was taken to the relevant contractual provision.

Facility Overview

1. [5]

   Mr Horne and Aqua Law Pty Limited (‘Aqua Law’) are joint and several guarantors of BBARC’s obligations to Aquamore.

2. [6]

   On 26 November 2021 and pursuant to the loan agreement, Aquamore advanced $2,520,000 to BBARC to assist in the refinance of a property located at XXXX Pacific Highway, Cowan NSW 2082 (‘the Cowan property’) and for cash out and project related expenses.

The mortgage

1. [7]

   BBARC was the registered proprietor of the Cowan property which was subject to a mortgage to Keystone Capital. The funds from the loan agreement were used to discharge that mortgage.

2. [8]

   Aquamore took a mortgage over the Cowan property as security.

3. [9]

   Mr Horne signed the mortgage as sole director of BBARC. Mr Horne also signed the memorandum of common provisions, being Annexure “A” to the mortgage.

BBARC Defaults

1. [10]

   BBARC did not make payment within 12 months of the loan agreement (being by 25 November 2022). This was an event of default under the loan agreement.

2. [11]

   On 9 February 2023, Aquamore’s solicitors issued a notice of event of default to BBARC. The notice was served.

3. [12]

   No payment was made by BBARC in response to the notice of event of default.

4. [13]

   This resulted in:

   1. (1)

      The appointment of receivers and managers to BBARC and Aqua Law pursuant to Aquamore’s security documents; and

   2. (2)

      The sale of the Cowan property by the receivers and managers of BBARC.

5. [14]

   Aquamore received net proceeds of $1,225,827.02 from the sale of the Cowan Property and applied it in partial reduction of the amount owing under the loan agreement. This sum was deducted from the amount outstanding loan agreement.

Deed of Guarantee and Indemnity

1. [15]

   On 26 November 2021 (contemporaneously with the loan agreement), Mr Horne and Aqua Law (each of them as joint and several guarantors) entered into a deed of guarantee and indemnity (‘Guarantee’).

2. [16]

   The guarantee was signed by Mr Horne.

3. [17]

   The relevant clauses of the guarantee with page references to the court book at (CB 103) are set out in the table below.

Mr Horne’s guarantee called in.

1. [18]

   On 9 November 2023, Aquamore’s solicitors issued a notice of event of default to Mr Horne pursuant to the guarantee. It is not disputed that this default notice was served.

2. [19]

   The amount demanded was $1,956,551.99.

3. [20]

   To date, Mr Horne has made no payment in reduction of the amount owing by him as guarantor under the guarantee.

Amount currently owing.

1. [21]

   The amount outstanding under the loan agreement and the guarantee as at 24 May 2024 is about $2,234,621.65

2. [22]

   The outstanding amount referred to in the preceding paragraph includes some costs that Aquamore has paid.

3. [23]

   As at today, the amount outstanding under the loan agreement and the guarantee is $2,449,420.76

Legal Framework

1. [24]

   In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165; 79 ALJR 129; 211 ALR 342 the High Court affirmed that,

2. [25]

   Mr Horne (who is a practising solicitor) signed the loan agreement, mortgage and the guarantee in his own capacity and as a director/shareholder of BBARC.

3. [26]

   He is prima facie bound by what he signed.

4. [27]

   Funds were advanced by Aquamore pursuant to the loan agreement. BBARC is in default under the loan agreement. The security property has been realised. There is a significant shortfall owing to Aquamore.

5. [28]

   Mr Horne is the director and shareholder of the principal borrower as well as guarantor of its obligations.

6. [29]

   Aquamore is entitled to judgment against Mr Horne (as guarantor) for the shortfall that is owing under the loan agreement and by Mr Horne as guarantor under the guarantee, including interest that has accrued pursuant to the provisions of the loan agreement and guarantee and Aquamore’s costs on a solicitor-client basis pursuant to clause 6.4 of the loan agreement and clause 7 of the guarantee.

7. [30]

   The defendant filed a defence on the 18 March 2024, It pleaded:

   1. (1)

      Admits to (1) of the relief claimed in the SOC at [2] of this judgment.

   2. (2)

      Admits to (2) of the relief claimed in the SOC in [2] of this judgment.

   3. (3)

      Admits to (3-7) of the relief claimed in the SOC in [2] of this judgment only in so far as he admits the loan agreement contained the provisions set out in those paragraphs. He otherwise denies those paragraphs and says:

Resolution

1. [31]

   As stated above the defendant did not comply with the Courts directions. Aside from bare pleadings there is no evidence from the defendant to establish that he has an arguable case, particularly in relation to his claims of unconscionable conduct pursuant to s 21 of the ACL or s 12CB of the ASIC Act. Nor is there any evidence as to the defendants claim pursuant to s 7 of the CRA. Finally, he did not provide any evidence as to the property being sold under value by the receiver, nor did he file any cross claims. Without some primary evidence the defendant cannot establish these causes of action, I am satisfied that the defendant’s case is hopeless. In these circumstances defence should be struck out and judgment entered for the plaintiff against the defendant.

2. [32]

   I enter judgment for the plaintiff against the defendant in the sum of $2,449,420.76.

Costs

1. [33]

   Costs are discretionary, normally costs follow the event. The defendant is to pay the plaintiff’s costs. The plaintiff seeks those costs of the proceedings be paid on an indemnity basis in accordance with clause 7 of the Deed of Guarantee and Indemnity. It reads,

2. [34]

   The plaintiff also seeks post judgment interest at the prescribed rate of 20.95% as in accordance with clause 5.4 of the loan agreement

3. [35]

   I note that this rate is over twice the interest rates specified by the Supreme Court. While I have some reluctance to grant this order, the defendant made at best one payment. The prescribed interest rate is specified in the loan agreement at 20.95%. The defendant is a practicing solicitor and should have been aware of this provision when he signed the loan agreement and the deed of guarantee and indemnity. Hence, I make the orders as to the indemnity costs and the post judgment interest rate.

Judgment

1. [36]

   The defendant is to pay the plaintiff the sum of $2,449,420.76.

   1. (1)

      The defendant pays the plaintiff’s costs of the proceedings on an indemnity basis.

   2. (2)

      The defendant pays the plaintiff post judgment interest costs from today at the rate of 20.95%.