Investment Group Australia Pty Ltd v Vinrec Australia Pty Ltd (in liq)

Category: Principal judgment

Parties: Investment Group Australia Pty Ltd (Plaintiff)
Vinrec Australia Pty Ltd (in liq) (First Defendant)
Tuong Huy Nguyen (Second Defendant)
Thi Kim Thi Nguyen (Third Defendant)
Perpetual Trustee Company Limited (Fourth Defendant)
Orde Mortgage Custodian Pty Ltd (Fifth Defendant)

Representation: Counsel:
D Meyerowitz-Katz (Plaintiff)
Solicitors:
Summer Lawyers (Plaintiff)

File Number(s): 2024/00483752

Publication restriction: Nil

JUDGMENT (Ex tempore revised from transcript)

1. Investment Group Australia Pty Ltd (plaintiff) is an equitable mortgagee seeking orders for judicial sale of the property at X Auburn Road, Birrong NSW, folio identifier X (Property). The Property is owned by the second defendant, Mr Tuong Huy Nguyen (Mr Nguyen).

2. The proceedings were commenced by the plaintiff with the filing of a statement of claim on 1 December 2024.

3. No other party has appeared in the proceeding save for the fourth defendant, Perpetual Trustee Company Limited (Perpetual), which holds a first-registered mortgage on the title of the Property. Perpetual has filed a notice of submitting appearance.

4. For the reasons set out below, I am satisfied that the Court should grant the relief sought by the plaintiff.

Claims not pressed

5. The plaintiff no longer seeks judicial sale of another property in Bankstown that Mr Nguyen owns, as the fifth defendant, Orde Mortgage Custodian Pty Ltd, took possession of that property on or about 22 April 2025. The plaintiff does not dispute the fifth defendant’s priority in relation to the Bankstown property. Accordingly, the plaintiff seeks leave to discontinue the claims in relation to the Bankstown property with no order as to costs.

6. The plaintiff also no longer seeks relief against the first defendant, Vinrec Australia Pty Ltd (Vinrec). As the first defendant is now in liquidation, the plaintiff would need leave pursuant to s 471B of the Corporations Act 2001 (Cth) to proceed, however, leave is not sought by the plaintiff.

Overview of the evidence

7. In support of the claim for the judicial sale of the Property, the plaintiff relies upon two substantive affidavits of the director of the plaintiff, Mr Spiro Geha (Mr Geha), both dated 22 May 2025. The plaintiff also relies upon a number of affidavits of service. I have marked the affidavits to be relied upon by the plaintiff as Exhibit A in the proceedings.

8. In addition, counsel for the plaintiff tendered several documents before me this afternoon.

9. I am satisfied that all of the documents in relation to the proceedings have relevantly been served on the defendants and the defendants are aware of the hearing today but have chosen not to take any role in the proceedings. The matter was called outside Court this afternoon and there were no appearances for the second and third defendants.

Relevant facts

10. Neither of the second and third defendants has filed a defence to the statement of claim. Under the Uniform Civil Procedure Rules 2015 (NSW), rule 14.26, the allegations of fact in the statement of claim are deemed to be admitted: See Brady v Brady [2025] NSWSC 217 at [69], and the cases there referred to.

11. In any event, I am affirmatively satisfied of the relevant facts set out below by reason of the evidence relied on by the plaintiff.

12. Mr Nguyen is the registered proprietor of the Property and the director of Vinrec.

13. On 21 December 2023, the plaintiff as lender entered into a Loan Agreement with Vinrec as borrower and Mr Nguyen and Ms Thi Kim Thi Nguyen (Ms Nguyen) as guarantor (Loan Agreement). On 21 December 2023, a Deed of Guarantee and Indemnity was also entered into between the plaintiff as lender, Vinrec as borrower and Mr and Ms Nguyen as guarantors (DOGI).

First Loan

14. Under the Loan Agreement, the plaintiff agreed to provide to Vinrec a “Facility” in the sum of $484,248.00 (First Loan). Pursuant to cll 1.1 and 1.3 of the DOGI, Mr and Ms Nguyen unconditionally guaranteed the punctual payment to the plaintiff of all money owing at any time by Vinrec to the plaintiff, payable on demand.

15. The advances under the First Loan formed part of the “Debt” as defined in the Loan Agreement. The Debt was repayable in full on the date 4 months after the Interest Commencement Date. The Interest Commencement Date was the earliest of three dates, relevantly including the day that the Borrower has requested the Lender to make available the initial advance of the Facility.

16. The principal loan proceeds were $400,000 after deducting fees and prepaid interest. Those proceeds were paid to Vinrec between 20 December 2023 and 5 January 2024. The initial advance was a payment of $131,500 on 20 December 2023. Thus, the Interest Commencement Date was 20 December 2023, and the Repayment Date was 20 April 2024.

17. Vinrec was required to pay interest in advance on the outstanding balance of the Debt, for each month of the term of the loan, payable on the date of the first advance and thereafter on the last day of each month for the term of the loan. Interest was payable at the “Interest Rate”, calculated daily on the balance outstanding of the Debt, and charged to the loan on the last day of each month. The plaintiff could elect to capitalise any interest payments due under the Loan Agreement which were not paid on the Interest Payment Date.

18. The Interest Rate was 7.0% per month on the amount outstanding, although a discounted rate of 3.5% per month applied for timely payment of interest when the loan was not in default.

19. The First Loan has not been repaid and has been in default since at least 20 April 2024.

Mortgage

20. A mortgage in registerable form was signed by Mr Nguyen on 18 December 2023 and signed on behalf of the plaintiff on 21 December 2023 but was never registered (Mortgage).

21. Memorandum Q860000 (Memorandum) was incorporated into the Mortgage by reference.

22. Pursuant to the Mortgage, Mr Nguyen agreed to repay the sum of $484,248 (being the amount of the Facility) together with all interest owing in accordance with the Loan Agreement signed on or about the date of the mortgage, and also agreed to pay “all other money due to the Mortgagee”. The Mortgage was granted pursuant to cl 11.1 of the Loan Agreement, to secure the performance of Vinrec’s obligations under that agreement.

Second Loan

23. On 15 January 2024, a second loan of $80,000 was entered into between the plaintiff, Vinrec and Mr Nguyen (Second Loan). By a confirmation letter dated 15 January 2024, Mr Nguyen confirmed a loan of $80,000 from the plaintiff and promised to repay the loan in 6 weeks in the amount of $88,000.

24. According to Mr Geha there was an oral agreement on 15 January 2024 to the effect that interest would accrue on the Second Loan at a rate of 10% every six weeks.

25. The sum of $80,000 was advanced by the plaintiff to Vinrec on 16 January 2024 and was to therefore be repaid by 26 February 2024. The Second Loan has not been repaid and has been in default since at least 26 February 2024.

26. The amount owing under the Second Loan is part of the Debt payable under the Loan Agreement pursuant to the definition of “Debt” in the Loan Agreement, relevantly being, “moneys owing to the Lender … by any Transaction Party … pursuant to any other agreement”.

Legal principles

27. The relevant principles in relation to an equitable mortgage and judicial sale of land were recently summarised by McGrath J in Bizcap Au Pty Ltd v Vo [2025] NSWSC 518 at [32]-[35]:

[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].

Determination

28. As Vinrec has defaulted and Mr and Ms Nguyen have guaranteed the obligations under the Loan Agreement, the plaintiff is entitled to seek an order for judicial sale of the Property.

29. In the circumstances of the present proceeding, there is no basis on which an order for judicial sale could be opposed. In exercising my discretion, the following matters are relevant:

30. the prior mortgagee, Perpetual, has been joined as a party to the proceedings and has filed a submitting appearance: see King Investment Solutions Pty Ltd v Hussain (2005) 64 NSWLR 441; [2005] NSWSC 1076 at [101]-[102] per Campbell J;

31. the amount owing to Perpetual is not known but there is provision in the orders for the Property not to be sold for an amount less than Perpetual’s debt;

32. the orders I propose include a period 14 days for redemption of the mortgage; and

33. although there are two other caveats on the title, both of which are subsequent to the caveat lodged by the plaintiff, the other caveators’ interests are protected as the proposed orders do not require the caveats to be removed. If necessary, a further application can be made in this regard.

34. Further, the plaintiff seeks an order that it be appointed to sell the property rather than an independent party: see AJG Capital Pty Ltd v AJG Properties Pty Ltd (2010) 15 BPR 28,837; [2010] NSWSC 884 at [27]-[33] per Slattery J and Guo v Option Holdings Pty Ltd [2024] NSWSC 1506 at [48]-[50] per Peden J.

35. I am satisfied that it is appropriate to appoint the plaintiff to conduct the sale in circumstances where:

36. there will be substantial costs savings if the plaintiff is appointed;

37. all interested parties have been notified of the orders the plaintiff proposes, and they have all elected not to oppose the plaintiff’s appointment;

38. there are no personal issues or issues of faction or bias to make the plaintiff’s appointment inappropriate; and

39. the plaintiff has a contractual right of sale pursuant to cl 6 of the Memorandum.

Costs

32. The plaintiff submitted that indemnity costs should be awarded pursuant to cl 1.2 of the DOGI which entitles the plaintiff to be indemnified “against all loss, damages, costs, and expenses incurred by the Lender as a result of any failure by anybody to pay the Debt on the due dates”.

33. Costs remain in the discretion of the Court pursuant to s 98 of the Civil Procedure Act 2005 (NSW) and are not ousted by provisions such as cl 1.2 of the DOGI: see Goldstein v Shyzi Pty Ltd (No 2) [2017] NSWSC 543 at [12] per Darke J. Where a contractual provision clearly stipulates that costs are to be paid on a particular basis, the Court ordinarily exercises its discretion to give effect to the contractual provision: see Kyabram Property Investments Pty Ltd v Murray [2006] NSWSC 54 at [17]-[18] per Campbell J.

34. In this case, there is no reason to exercise the discretion as to costs otherwise than consistently with cl 1.2 of the DOGI. Accordingly, the second and third defendants are to pay the plaintiff’s costs on an indemnity basis.

Suppression and Non-Publication Order

35. As part of the orders sought by the plaintiff, the plaintiff seeks an order that a market appraisal that has been prepared in relation to the Property not be disclosed to any person other than the parties to these proceedings, or the officers and employees of the Court, for a period of one year from the date of these orders. In circumstances where the Property is yet to be sold, and public knowledge of the appraisal may impact on the price achieved on a public sale, I am satisfied that it is appropriate to make the suppression and non-publication order sought.

Orders

36. For the reasons set out above, the orders of the Court are as follows:

Suppression and Non-Publication Order

1. Order pursuant to ss 7 and 8 of the Court Suppression and Non-publication Orders Act 2010, to prevent prejudice to the proper administration of justice, that the document at page 156 of Exhibit SG-1 to the Affidavit of Spiro Geha sworn on 22 May 2025 (Appraisal) not be disclosed to any person other than the parties to this proceeding (themselves and by their legal representatives) or the officers and employees of this Court, for a period of 1 year from the date of these orders.

Discontinuance

2. Pursuant to r 12.1 of the Uniform Civil Procedure Rules 2005, the plaintiff be granted leave to discontinue its claims for relief in this proceeding insofar as they concern the property described in the statement of claim as “X Chapel Road”.
3. Pursuant to r 42.19(2) of the Uniform Civil Procedure Rules 2005, there be no order as to the costs of the discontinued claims, with the intention that each party bear its own costs.

Monetary Judgment

4. Judgment for the plaintiff against the second and third defendants in the sum of:

(a) $1,288,815.20 (First Loan Judgment); and (b) $85,737.00 (Second Loan Judgment).

5. Order pursuant to section 101 of the Civil Procedure Act 2005 (NSW) that post-judgment interest shall run on the:

(a) First Loan Judgment at the rate of 7.0% per month, compounding monthly, from the date on which judgment takes effect; and (b) Second Loan Judgment at the rate of 10.00% per every 6 weeks, from the date on which judgment takes effect.

Judicial Sale

6. On the plaintiff giving the undertaking noted in order 7, order that the plaintiff be appointed:

(a) to sell the property at X Auburn Road, Birrong NSW, folio identifier X (Property); and (b) to transfer the Property to the purchaser(s) thereof to effectuate the sale.

7. Note the undertaking of the plaintiff, by its counsel, that the plaintiff, by its director, Mr Spiro Geha, will:

(a) appoint a suitably qualified real estate agent; (b) advertise the Property properly, in accordance with the advice of the appointed agent; and (c) use its best endeavours to sell the Property for the best price which is reasonably achievable.

8. In aid of the enforcement of order 6 above:

(a) grant judgment to the plaintiff for possession of the Property; and (b) grant leave to issue a writ of possession for the Property forthwith, but with that writ to lie in the registry for a period of 14 days from the making of this order.

9. Order that the Property be sold by the plaintiff by public auction, if the reserve price is achieved, or if not, then by private treaty at the best price obtainable being not less than 90% of the reserve price. For this purpose the reserve price shall, subject to any further order, be a price not less than the lower end of the value disclosed in the Appraisal.
10. Order that the plaintiff shall, with respect to the sale of the Property, act in the following fashion:

(a) the plaintiff shall consult with the fourth defendant with respect of the sale of the Property and ascertain from the fourth defendant the amount of the debt secured against the Property by registered mortgage X (Fourth Defendant**’**s Mortgage Debt); (b) unless the Court otherwise orders, the plaintiff shall not sell the Property for less than the Fourth Defendant’s Mortgage Debt; (c) in the event that the fourth defendant does not inform the plaintiff of the amount of the Fourth Defendant’s Mortgage Debt within 7 days of request, or if the total of the Fourth Defendant’s Mortgage Debt is a figure that the Plaintiff reasonably believes is unlikely to be realised or exceeded on a sale of the Property, the Plaintiff shall not proceed to sell the Property but shall instead cause the matter to be listed before the Court for the purposes of the Court making directions as to a minimum reserve price for any auction and a minimum sale price for any sale by private treaty, or any other order that the Court deems fit.

11. Order that at the settlement of the plaintiff’s sale of the Property, the fourth defendant provide to the plaintiff a discharge of the Fourth Defendant’s registered mortgage and any other documents of title (including but not limited to the Certificate of Title) in the fourth defendant’s possession or under the fourth defendant’s control relating to the Property as may be properly required for the completion of any such sale, in exchange for payment of the Fourth Defendant’s Mortgage Debt.
12. Order that the plaintiff pay the proceeds of sale of the Property in the following order and priority:

(a) first, in payment of all the plaintiff’s costs and expenses relating to the sale of the Property; (b) second, in payment to the fourth defendant of the whole amount of the Fourth Defendant’s Mortgage Debt; (c) third, in payment to the plaintiff of the whole of the amount owing to the plaintiff secured by the plaintiff’s equitable mortgage (which, for the avoidance of doubt, includes the amounts payable by the second defendant pursuant to the judgment and costs orders made herein); and (d) fourth, any surplus to be paid into Court.

13. Direct the plaintiff to give notice of these orders to the second, third and fourth defendants within three days of these orders being made.
14. Order that the second and third defendants pay the plaintiff’s costs of the proceedings on a solicitor and own client basis.
15. Grant liberty to the parties to apply with respect to any matter that may arise with respect to the sale of the Property or the distribution of the sale proceeds.

**********