Bizcap Au Pty Ltd v Vo

[2025] NSWSC 518

Supreme Court

New South Wales

Medium Neutral Citation:

Bizcap Au Pty Ltd v Vo [2025] NSWSC 518

Hearing dates:

21 May 2025

Date of orders:

21 May 2025

Decision date:

21 May 2025

Jurisdiction:

Equity - Real Property List

Before:

McGrath J

Decision:

Order for judicial sale of the property

Catchwords:

LAND LAW – equitable mortgages – security interest over real property granted by guarantor in loan agreement – borrower in default under loan agreement – guarantor in default under guarantee in loan agreement – lender seeks to enforce rights against guarantor as equitable mortgagee of real property

EQUITY – Equitable remedies – order for judicial sale – whether order for judicial sale should be made

Legislation Cited:

Personal Property Securities Act 2009 (Cth), s 12

Uniform Civil Procedure Rules 2005 (NSW), r 6.8

Cases Cited:

King Investment Solutions Pty Ltd v Hussain (2005)64 NSWLR 441; [2005] NSWSC 1076

National Australia Bank Ltd v Clowes [2013] NSWCA 179

Guo v Option Holdings Pty Ltd [2024] NSWSC 1506

Swiss Bank Corporation v Lloyds Bank Ltd [1982] AC 584

Westfield Holdings Ltd v Australian Capital Television Pty Ltd (1992) 32 NSWLR 194

Category:

Principal judgment

Parties:

Bizcap AU Pty Ltd (Plaintiff)
Duc Dung Vo (First Defendant)
Commonwealth Bank of Australia (Second Defendant)

Representation:

Summer Lawyers (Plaintiff)

File Number(s):

2023/00294653

Publication restriction:

Nil

ex tempore JUDGMENT (revised)

INTRODUCTION

1. These proceedings have been brought by the plaintiff, Bizcap AU Pty Ltd, against the first defendant, Duc Dung Vo, and the second defendant, the Commonwealth Bank of Australia (CBA).

2. The proceedings were commenced by Bizcap with the filing of the statement of claim on 15 September 2023. The claims as they are now made against Mr Vo and CBA are contained in the further amended statement of claim filed 30 September 2024 (FASOC). Both Mr Vo and CBA have not entered appearances or filed any defences at any stage of the proceedings. Mr Vo and CBA did not appear at the hearing, including after both parties were called outside the court at the commencement of the hearing.

3. Bizcap now seek orders for the judicial sale of a property comprised in folio identifier X/XXX known as X River Avenue, Carramar NSW 2163 (Carramar property). Mr Vo is the registered proprietor of the Carramar property. CBA is the registered mortgagee of the Carramar property.

4. For the reasons set out below, I have determined to make orders for the judicial sale of the Carramar property.

RELEVANT FACTS

Sydney CBD Café’s and Mr Vo

5. Sydney CBD Café’s was registered on 23 October 2018. Mr Vo is the sole director, secretary and shareholder of Sydney CBD Café’s.

6. The registered office of Sydney CBD Café’s is the Carramar property.

7. It appears that Sydney CBD Café’s operated a restaurant called Edes Restaurant & Bar in the Sydney Central Business District.

Loan Agreement

8. On 14 July 2023, Bizcap as lender entered into the Loan Agreement with Sydney CBD Café’s Pty Ltd as borrower and Mr Vo as guarantor pursuant to which Bizcap loaned $70,000 to Sydney CBD Café’s for a period of 22 weeks.

9. The Loan Agreement was signed by Mr Vo on behalf of Sydney CBD Café’s in his capacity as a director and on his own behalf as guarantor. In essence, under the Loan Agreement, Sydney CBD Café’s agreed to repay the amount of $93,800 to Bizcap, the payment of which was guaranteed by Mr Vo (Guarantee).

10. In summary, the relevant terms of the Loan Agreement were as follows:

1. Bizcap agreed to make available to Sydney CBD Café’s the Loan (defined in cl 1.1 to be the “Initial Loan Amount” of $70,000, as stated in the Key Terms) during the Availability Period (defined in cl 1.1 to be the period specified in the Key Terms, which is seven days from the date on which Bizcap notifies Sydney CBD Café’s that all conditions precedent have been met) (cl 2.1(a)).

2. Sydney CBD Café’s declared that it would only use the Loan for business purposes (cl 2.2(a)).

3. During the Term (defined in cl 1.1 to be the period of 22 weeks specified in the Key Terms) Sydney CBD Café’s must pay to Bizcap the “Daily/Weekly Debit Amount” (defined in cl 1.1 to be $4,274 per week as specified in the Key Terms) on each Payment Date (defined in cl 1.1 to be as listed in the Key Terms, which is daily or weekly during the Term commencing on the date advised by Bizcap to Sydney CBD Café’s) (cl 5.1(a)).

4. By the Repayment Date (relevantly defined in cl 1.1 to be the last day of the Term, which is 14 December 2023), Sydney CBD Café’s must repay the Repayment Amount (defined in the Key Terms to be $93,800) (cl 5.2(a)).

5. Mr Vo unconditionally guaranteed to Bizcap the due and punctual payment by Sydney CBD Café’s of all amounts owing under the Loan and all moneys owing to Bizcap under the Loan (cl 7.1).

6. If Sydney CBD Café’s defaults in the due and punctual payment of any money owing to Bizcap, Mr Vo must pay that money to, or as directed by, Bizcap immediately on demand (cl 7.2).

7. If Sydney CBD Café’s defaults or fails in the due and punctual performance of any of its liabilities and obligations, Mr Vo must indemnify Bizcap immediately against all losses, liabilities, damages, costs and expenses (including legal expenses on a full indemnity basis) that may be incurred (directly or indirectly) by Bizcap by reason of that default or failure (cl 7.3).

8. Mr Vo’s Guarantee is a continuing guarantee and, relevantly, remains in full force until Sydney CBD Café’s obligations have been paid and performed in full (cl 7.4).

9. Mr Vo’s obligations as guarantor are principal obligations (cl 7.7).

10. Mr Vo granted to Bizcap a Security Interest over all of his Secured Property to secure the payment of the amount owing and the punctual performance of all of Mr Vo’s other obligations to Bizcap as guarantor (cl 7.19). The relevant definitions are:

1. “Security Interest” is relevantly defined in cl 1.1 to mean “Security Interest” under the Personal Property Securities Act 2009 (Cth) (PPSA); and security for payment of money, performance of obligations or protection against default, including any mortgage, encumbrance or charge. “Security Interest” is defined in s 12(1) of the PPSA as follows:

A security interest means an interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who has title to the property).

2. Section 12(2) of the PPSA provides that a “Security Interest” includes an interest in personal property provided by example transactions which in substance secure payment or performance of an obligation, amongst which are a fixed charge and a floating charge.

3. “Secured Property” is relevantly defined in cl 1.1 to mean all of Sydney CBD Café’s and Mr Vo’s present and after acquired property, including any real or personal property.

11. Mr Vo indemnifies Bizcap against all actions, claims, demands, liabilities, losses, damages, costs and expenses of whatever nature (either actual or contingent) which Bizcap may suffer, incur or sustain in connection with or arising in any way whatsoever out of the Guarantee (cl 7.32).

12. Pursuant to the Guarantee, Mr Vo must pay interest at the Interest Rate (defined in cl 1.1 to be 3% per month) on each amount due and payable but not paid under the Guarantee on the day on which it falls due, and this interest will accrue on a daily basis and be capitalised on the last day of each month (cl 7.33).

13. As the Initial Loan Amount is greater than $30,000, Sydney CBD Café’s and Mr Vo granted a Security Interest in all of its Secured Property to Bizcap (cl 8.1). This grant of Security is in addition to the grant of security in cl 7.19.

14. On an Event of Default (defined in cl 1.1 to be any event or circumstance specified in cl 11.1) arising, Bizcap may enforce the Security and Security Interest and sell any Secured Property without any notice (cl 8.2(a)).

15. An Event of Default includes if Sydney CBD Café’s does not pay any of the amount owing that is due and payable under the Loan Agreement within two business days after the due date for payment (cl 11.1(a)(i)).

16. If an Event of Default subsists, Bizcap may give notice to Sydney CBD Café’s declaring that all or part of the amount owing is immediately due and payable, in which case Sydney CBD Café’s must immediately pay the amount owing to Bizcap (cl 11.4(a)(ii)). The default fee set out in Schedule 2 is immediately due and payable, and Sydney CBD Café’s must pay interest to Bizcap upon the amount owing at the rate of 3% per month, calculated daily and compounding weekly until the amount owing is repaid in full and any costs incurred by Bizcap are immediately payable upon demand (cl 11.4(a)).

17. Sydney CBD Café’s must pay to Bizcap each fee specified in the Key Terms (cl 14). Those fees are set out in Schedule 2, which include an administration fee ($649), an establishment fee (5% of the Initial Loan Amount), a direct debit fee ($10 per transaction), the default fee (being the greater of $2,500 or 15% of the Initial Loan Amount), a late payment fee ($10 per day), a dishonour fee ($50 per dishonour) and a caveat fee ($1,500 per caveat).

18. Sydney CBD Café’s will, within two business days of demand, pay to Bizcap the amount of all costs and expenses (including legal fees on a full indemnity basis) incurred by Bizcap in connection with the enforcement of, or the preservation of any rights under, the Loan Agreement (cl 15.3).

19. At any time after the occurrence of an Event of Default has occurred, the powers of sale and all other powers, rights and remedies conferred on Bizcap by the common law, equity, any statute of the State or by the Loan Agreement may, without giving any notice, be exercised by Bizcap in respect of Sydney CBD Café’s, Mr Vo and any Secured Property (cl 16.1).

20. At any time after the occurrence of an Event of Default, Bizcap may at any time, or from time to time, and without giving any notice to Sydney CBD Café’s or Mr Vo, enter on and take possession of the Secured Property (cl 16.3(a)).

11. On 14 July 2023, Bizcap advanced the Loan of $70,000 to Sydney CBD Café’s.

12. On 21 July 2023, Sydney CBD Café’s made a payment of $4,264 to Bizcap under the Loan Agreement.

13. On 28 July 2023, Sydney CBD Café’s made a payment of $4,264 to Bizcap under the Loan Agreement.

14. Following those two payments, Sydney CBD Café’s has failed to make any further payments due to Bizcap under the Loan Agreement.

15. As at 3 April 2025, as appears in a statement issued by Bizcap, the amount owing by Sydney CBD Café’s as the balance of the Repayment Amount (excluding all fees, interest, costs and expenses) is $85,571.

16. Under the Loan Agreement, Bizcap also claims the default fee of $10,500, the caveat fee of $1,500, a late payment fee of $10 per day, a dishonour fee of $50 per dishonour (charged weekly) and default interest of 3% per month calculated daily and compounding weekly.

17. In the calculation of the amounts asserted by Bizcap to be owing as at 3 April 2025, the late payment fee and the dishonour fee have been added and charged at $120 per week and the default interest has been calculated on some basis. I have not been provided with the precise basis on which the default interest has been calculated. Based on my own calculations, it appears to be asserted that the total of the late payment fees and the dishonour fees to 3 April 2025 is $7,590 and the total of the default interest is $53,859.81. I make no finding that default interest of that magnitude is secured by the Loan Agreement.

18. I was also not provided with any evidence substantiating the calculation of legal costs, which are asserted to be $141,436.39 and seem to be very high for debt recovery of this sort. I make no finding that legal costs of that magnitude are secured by the Loan Agreement.

19. Under the orders for judicial sale of the Carramar property I propose to make, it will be a matter for Bizcap to apply to the court properly proving any further amount beyond $85,571 owing to it from the proceeds of sale, should there be any surplus.

Caveat lodged

20. On 16 August 2023, Bizcap lodged a caveat with the dealing number AT359105 over the Carramar property. The estate or interest claimed in the caveat by Bizcap is described as “Mortgage by virtue of Loan Agreement” and the details supporting the claim are “[e]quitable interest as mortgagee pursuant to clause 7.19”.

21. There are three other caveats lodged on the title to the Carramar property.

Demands for payment

22. On 15 August 2023, Bizcap sent a letter of demand to Sydney CBD Café’s and Mr Vo demanding that they pay the then outstanding balance due under the Loan Agreement of $96,221 within 48 hours, failing which Bizcap reserved the right to commence legal proceedings to recover the debt.

23. On 3 September 2024, Summer Lawyers (solicitors acting for Bizcap) sent a notice of demand to Sydney CBD Café’s and Mr Vo demanding that Mr Vo as guarantor immediately pay the amount of $158,799.53 plus enforcement and legal costs, reserving the right of Bizcap to take whatever action as it considers necessary to recover the full amount due under the Guarantee.

24. No further payments have been made by Sydney CBD Café’s or Mr Vo to Bizcap.

Market value of the Carramar property

25. There is evidence from Asset Valuations Group Australia that, as at 16 April 2025, the Carramar property had a market value of $550,000.

Service of the FASOC

26. Bizcap has had difficulty locating and serving Mr Vo despite numerous attempts to do so.

27. In accordance with orders made on 29 October 2024 by the Equity Registrar (as modified by Peden J on 22 November 2024), Bizcap has effected substituted service of the FASOC by:

1. on 1 November 2024, affixing the FASOC and the substituted service orders to the front door of the Carramar property;

2. on 1 November 2024, delivering the FASOC and the substituted service orders to a specified address in Canley Heights, New South Wales;

3. on 29 October 2024, by emailing the FASOC and the substituted service orders to a specified email address;

4. on 12 November 2024, placing an advertisement in the Sydney Morning Herald in a specified form; and

5. on 26 November 2024, placing an advertisement in the Daily Telegraph in a specified form.

28. On 24 September 2024, CBA was served with the FASOC. CBA has not entered an appearance and does not wish to take an active role in the proceedings. Bizcap has kept CBA informed in relation to the steps it has taken in the proceedings. Bizcap sought to obtain from CBA an indicative amount to discharge its registered mortgage over the Carramar property but CBA has so far resisted those attempts.

Notice to occupiers of the Carramar property

29. It appears that the Carramar property is occupied by a husband and wife who are renting it.

30. On 29 April 2025, the female occupant of the Carramar property was served with a letter from Summer Lawyers dated 28 April 2025, two copies of the notice to occupier in accordance with r 6.8 of the Uniform Civil Procedure Rules 2005 (NSW), a possession of land coversheet and a copy of the FASOC.

31. The ten days within which the occupiers of the Carramar property could apply to be joined as parties to these proceedings has now expired and no such application has been made by them.

LEGAL PRINCIPLES

32. An equitable mortgage may be created by an agreement in which the parties demonstrate an intention to create a present security: Westfield Holdings Ltd v Australian Capital Television Pty Ltd (1992) 32 NSWLR 194, Young J at 200, citing Swiss Bank Corporation v Lloyds Bank Ltd [1982] AC 584, Buckley LJ (with whom Brandon and Brightman LLJ agreed) at 595.

33. An equitable mortgage will also arise where there is a specifically enforceable agreement to create a mortgage: National Australia Bank Ltd v Clowes [2013] NSWCA 179, Leeming JA (with whom McColl and Macfarlan JJA agreed) at [25].

34. An unregistered mortgage is regarded in equity as conferring an equitable charge and an order for judicial sale is the standard way of enforcing an equitable charge: King Investment Solutions Pty Ltd v Hussain (2005) 64 NSWLR 441; [2005] NSWSC 1076, Campbell J at [81].

35. The relevant principles regarding an application for a judicial sale of real property by an equitable mortgagee/chargee were conveniently summarised in Guo v Option Holdings Pty Ltd [2024] NSWSC 1506, by Peden J at [43]–[45]:

[43]   It is unclear on the authorities as to whether an equitable chargee is entitled to an order for judicial sale as of right, or whether the Court retains a discretion to withhold relief: see the discussion of authorities in Bellevarde Constructions Pty Ltd v Cosmas Pty Ltd [2016] NSWSC 406 at [25]-[35] (Stevenson J).

[44]   I consider the better view is that the power to order a judicial sale of Torrens land upon default arises from the Court’s inherent equitable jurisdiction, and when considering whether to order judicial sale, the Court is exercising a discretion: Morris Finance Ltd v Free (2017) 18 BPR 37,223; [2017] NSWSC 1417 at [34] (Ward CJ in Eq, as the President then was). It may be that judicial sale is the standard remedy sought by an equitable chargee to enforce their equitable interest: Thorn v Boyd [2016] NSWSC 1344 at [64] (Sackar J). However, as an equitable remedy, the Court ought to have regard to the position of those who will be adversely affected by an order before making it, lest the remedy itself become “an instrument of injustice”: Australia and New Zealand Banking Group Pty Ltd v Donnelly [2012] NSWSC 161 at [29]-[30] (Garling J), discussed with approval in Harriette & Co Pty Ltd v Platine Property Development Pty Ltd (No 2) [2022] NSWSC 1611 at [43] (Walton J) and ACT Plasterboard Pty Ltd v Pohorukov [2024] NSWSC 218 at [15] (Peden J).

[45]   Consistent with this view, Campbell J (as his Honour then was) observed in King Investment Solutions Pty Ltd v Hussain (2005) 13 BPR 25,077; [2005] NSWSC 1076 that “without factual material by reference to which the discretion can be exercised, which includes at least the value of the property and the amount owing on the security of it, the exercise of the discretion itself is likely to miscarry”: at [119]; see also [100]-[101].

CONSIDERATION

36. The Carramar property falls within the definition of Secured Property under the Loan Agreement over which Mr Vo granted to Bizcap a Security Interest in the form of an unregistered mortgage to secure the payment of the amounts owing and the punctual performance of all of Mr Vo’s obligations to Bizcap as guarantor of the amounts owing by Sydney CBD Café’s to Bizcap under the Loan Agreement.

37. Sydney CBD Café’s failure to pay the amounts owing to Bizcap under the Loan Agreement is an Event of Default after the occurrence of which Bizcap is entitled to enter on and take possession of the Carramar property and exercise the power of sale.

38. In my opinion, applying King Investment, as an unregistered mortgagee Bizcap holds an equitable charge over the Carramar property in accordance with the rights it has under the Loan Agreement.

39. In light of the fact that Sydney CBD Café’s has defaulted in its obligations to make repayments under the Loan Agreement, and Mr Vo has guaranteed those obligations, Bizcap is entitled to seek an order for judicial sale of the Carramar property. Applying Guo, whether such an order should be made in the present circumstances is a discretionary decision to be determined by me.

40. The following matters are relevant to the exercise of my discretion:

1. Mr Vo has failed to pay the amounts owing by Sydney CBD Café’s to Bizcap under the Loan Agreement despite demands made of him to do so.

2. Bizcap has gone to considerable efforts to bring the claims made in the FASOC and this application to the attention of Mr Vo. All those attempts have been unsuccessful. The requirements of the substituted services orders made on 29 October 2024, as amended on 22 November 2024, have been met.

1. The market value of the Carramar property is $550,000.

2. The amount owing to the registered mortgagee, CBA, is not known but there is provision in the orders I propose to make in which it may become known and for the sale price to be set with respect to it.

3. The persons occupying the Carramar property have been notified of Bizcap’s application for possession of it and have not sought to be joined as parties to these proceedings.

4. Although there are three other caveats lodged on the title to the Carramar property, it will be a matter for Bizcap to negotiate with the holders of each of those caveats to enable any sale to take place.

41. In these circumstances, I am satisfied that it is appropriate to make orders for the judicial sale of the Carramar property.

ORDERS

42. For the reasons stated above, I propose to make the following orders:

1. A declaration that the whole of the property comprised in folio identifier X/XXX being the land situated at and known as X River Avenue, Carramar NSW 2163 (Carramar property) is the subject of an equitable mortgage pursuant to the Loan Agreement dated 13 July 2023 made between Sydney CBD Café’s Pty Ltd, the first defendant, and the plaintiff.

2. An order for judicial sale of the Carramar property with the plaintiff to be appointed as the court’s agent effecting that sale.

3. As an aid to enforcement of order (2) above:

1. An order that the first defendant provide vacant possession, to the exclusion of any party, of the Carramar property to the plaintiff within 14 days from the date of this order.

2. An order that a writ of possession be issued in relation to the Carramar property in favour of the plaintiff forthwith, but that the writ is to lie in the Registry for a period of 14 days from the making of this order.

4. An order that the plaintiff shall, with respect to the sale of the Carramar property, act in the following fashion:

1. The plaintiff is to act at all times in relation to the sale of the Carramar property in accordance with the duties owed by a mortgagee exercising a mortgagee’s power of sale.

2. The plaintiff shall consult with the second defendant with respect to the sale of the Carramar property and ascertain from the second defendant the amount owing to the second defendant secured against the Carramar property (Second Defendant’s Mortgage Debt).

3. Unless the court otherwise orders, the plaintiff shall not sell the Carramar property at less than the Second Defendant’s Mortgage Debt.

4. In the event that:

1. the second defendant does not provide to the plaintiff the amount of the Second Defendant’s Mortgage Debt within 7 days of request; or

2. if the total of the Second Defendant’s Mortgage Debt is an amount that the plaintiff reasonably believes is unlikely to be realised or exceeded on a sale of the Carramar property; or

3. if the plaintiff is not able to ascertain a sale price for the Carramar property which exceeds the Second Defendant’s Mortgage Debt,

4. the plaintiff shall not proceed to sell the Carramar property but shall instead cause the matter to be listed before the court for the purpose of the court making directions as to a minimum reserve price for any auction and/or minimum sale price for any sale by private treaty or any other order that the court deems fit.

5. An order that at the settlement of the plaintiff’s sale of the Carramar property, the second defendant provides to the plaintiff a discharge of the second defendant’s registered mortgage and any other documents of title (including, but not limited to, the Certificate of Title) in the second defendant’s possession or under the second defendant’s control relating to the Carramar property as may be properly required for the completion of any such sale, in exchange for payment of the Second Defendant’s Mortgage Debt.

6. An order that the plaintiff pay the proceeds of the sale of the Carramar property in the following order:

1. first, council rates, water rates, any statutory duties and charges;

2. second, for all the plaintiff’s proper costs and expenses relating to the sale of the Carramar property;

3. third, any amount due to the second defendant pursuant to the second defendant’s registered mortgage;

4. fourth, the amount of $85,571 due to the plaintiff secured by the plaintiff’s equitable mortgage; and

5. fifth, any surplus from the sale of the Carramar property to be paid into court.

7. An order that the plaintiff be empowered to transfer the legal title of the Carramar property to any purchaser(s) to effect the sale of the Carramar property.

8. Liberty to apply to the court in relation to any matter arising in relation to the judicial sale of the Carramar property and/or the distribution of the proceeds from that sale, including any further amount to be paid to the plaintiff from those proceeds.

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Decision last updated: 22 May 2025