Zhou v Truong

[2018] NSWSC 2051

Supreme Court

New South Wales

Medium Neutral Citation:

Zhou v Truong [2018] NSWSC 2051

Hearing dates:

18 December 2018

Date of orders:

18 December 2018

Decision date:

18 December 2018

Jurisdiction:

Equity - Real Property List

Before:

Kunc J

Decision:

Orders made for money judgment and judicial sale of property

Catchwords:

EQUITY – Equitable charges and liens – Enforceability – Right of equitable chargee to orders for judicial sale and vacant possession

Cases Cited:

Chateau Constructions (Aust) Limited v Zepinic [No 5] [2010] NSWSC 265
Morris Finance Ltd v Free [2017] NSWSC 1417; (2017) 18 BPR 37,223
Sood v Christianos [2008] NSWSC 1087; (2008) 14 BPR 26,101
Troncone v Aliperti (1994) 6 BPR 97,455
Re Westpac Banking Corporation [2015] NSWSC 869; (2015) 18 BPR 35,501

Category:

Principal judgment

Parties:

Wen Zhou (First Plaintiff)
Jin Yi Wang (Second Plaintiff)

  Albert-Edris Tri Dai Min Truong (First Defendant)
Teresa Wang Yang (Second Defendant)
Westpac Banking Corporation (Third Defendant)

Representation:

Counsel:

 

J C Lee (Plaintiffs)

 

Solicitors:

  Summit Legal (Plaintiffs)

File Number(s):

2017/227715

Publication restriction:

No

EX TEMPORE Judgment (REVISED)

1. By an amended statement of claim filed 27 March 2018 the plaintiffs seek declarations and orders to enforce payment of a debt owed to them by the first and second defendants. The proposed method of enforcement is for a judicial sale of a property at Kellyville (the “Property”) by the plaintiffs under the supervision of the Court. The third defendant, which has entered a submitting appearance save as to costs, is the bank which holds a mortgage over the Property.

2. The hearing before me today has been conducted in the absence of the first and second defendants. I have been informed by Mr J C Lee of Counsel, who appears for the plaintiffs, that the first and second defendants have not taken an active role in the proceedings. Moreover, I am satisfied by affidavit evidence that they were properly notified of today’s hearing. They were also called outside the Court at the commencement of the hearing and there was no appearance by them or on their behalf.

3. The facts may be briefly stated. I take these from Mr Lee’s thorough, but nevertheless commendably succinct, written submissions.

4. On 26 May 2015 the plaintiffs, as the lenders, entered into a loan agreement with the first and second defendants as borrowers. It was agreed that the plaintiffs would lend the first and second defendants $750,000 for a period of 18 months. It was also agreed the first and second defendants would repay the plaintiff the sum of $1,500,000 within 18 months from 26 May 2015. The first and second defendants agreed to pay $750,000 in interest. The loan principal of $700,000 was advanced by the plaintiffs to the first and second defendants.

5. In circumstances where the first and second defendants were in breach of their obligations, on 23 January 2017 the plaintiffs and first and second defendants entered into a deed of variation of their original loan agreement. That deed of variation contained this clause:

“3.   Teresa Wang of the Borrowers agrees the Lender to lodge a caveat on her property known as XXXX, Kellyville NSW 2155 with Folio Identifier XXXX (“Kellyville Property”) as the security of the Loan Agreement and also this Variation Deed. Teresa Wang warrants that only Westpac Banking Corporation is registered on title as mortgagee (dealing number: XXXXX ). Teresa Wang further agrees that no further caveat will be registered on the title (except the one to be registered by the Lenders) without the Lender’s written consent.”

6. On the basis of the evidence which has been read today, the Court is satisfied that the first and second defendants are in default of their obligations under the loan agreement as varied by the deed of variation. By reason of that default, the Court finds that the plaintiffs are entitled to a money judgment in the sum of $1,520,000 plus interest and costs. That sum has been calculated up to today as being a total of $1,781,939.70 and the Court will in due course enter judgment for that amount against the first and second defendants.

7. The plaintiffs also seek an order for judicial sale of the Property. There is no dispute that an equitable chargee is entitled to an order for judicial sale as of right upon default: Chateau Constructions (Aust) Limited v Zepinic [No 5] [2010] NSWSC 265; Sood v Christianos [2008] NSWSC 1087; (2008) 14 BPR 26,101. The only questions requiring particular attention in connection with this application are whether or not the plaintiffs have an equitable charge over the Property and, if they do, whether they are entitled to an order for vacant possession.

8. The Court accepts Mr Lee’s submission that in all the circumstances, upon the proper construction of clause 3 - in particular by reason of the use of the word “security” - clause 3 of the deed of variation expressly creates an equitable charge over the Property in favour of the plaintiffs.

9. If there were any doubt about the conclusion expressed in the preceding paragraph, then the Court is also satisfied that clause 3, by implication if not expressly, confers an equitable charge in favour of the plaintiffs over the Property: Troncone v Aliperti (1994) 6 BPR 97,455; Re Westpac Banking Corporation [2015] NSWSC 869; (2015) 18 BPR 35,501.

10. The second matter is whether or not the beneficiary of an equitable charge is entitled, when enforcing their rights under that charge, to an order for vacant possession as part of an order for sale by the Court. I respectfully adopt the conclusion of Ward CJ in Eq in Morris Finance Ltd v Free [2017] NSWSC 1417; (2017) 18 BPR 37,223 at [124] answering that question in the affirmative. The orders which I propose to make are based upon the formal orders which her Honour made in that case.

11. Finally, I note that there is evidence before the Court as to both the amount owing to the third defendant as registered mortgagee and of the current value of the Property. This latter piece of information is necessary to enable the Court to set a reserve price for the sale.

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