JSY Securities Pty Ltd v Dakabin Homes Pty Ltd & Anor [2025] QSC 316

• [1] Pursuant to r 483 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) the respondents seek an order that the Court decide separately, and before the trial of the proceeding, whether the relief the applicant seeks "is available given the matters referred to in paragraphs 25 and 30(a) of the Points of Defence."
• [2] The trial of the proceeding is listed to be heard on 10-12 February 2026.
• [3] By originating application filed on 8 August 2025 the applicant applied for orders for: declarations concerning the proper construction of a Deed of Priority and Postponement; for judgment against the second respondent, alternatively, against both respondents, in the amount of $3,456,883.16; and, "Further or alternatively" for the appointment of a special referee to take an account and prepare a written report about various matters.
• [4] The substantial matter in issue at the trial will concern whether the applicant is presently entitled to be paid the sum sought in the originating application.
• [5] For the reasons set out below the respondent's application is dismissed.

Context for consideration of the application for separate decision

• [6] The circumstances next set out are not in dispute.
• [7] In late 2016 Linzin Dakabin Pty Ltd executed two mortgages over land at Alma Road, Dakabin, first to the second respondent, and then to the applicant. Around 2017 Linzin commenced construction of townhouses on the land. The townhouse development was to occur over at least nine stages. On 10 January 2020 a Deed of Priority and Postponement was entered into by Linzin, the applicant and the second respondent. On 30 September 2020 Linzin defaulted on its obligations under a loan agreement and the mortgage with the second respondent.
• [8] In March 2021 Linzin went into liquidation. In April 2021 the second respondent took possession of the land. By then townhouses the subject of a number of the stages of the development had been completed and sold. However, some completed townhouses had not been sold and a number of the townhouses the subject of one stage had defects which required rectification before they could be sold. The remaining stages of the development had not commenced and there were no funds available in the liquidation for their construction or for any rectifications of defects.
• [9] On 30 September 2021 the second respondent informed the applicant that the second respondent would continue the development.
• [10] On 22 June 2022 the second respondent executed a deed of assignment with the first respondent pursuant to which the first respondent agreed to be bound by the Deed of Priority and Postponement and agreed to perform all of the second respondent's obligations under the Deed of Priority and Postponement.
• [11] Both respondents continued the development and so far have incurred expenses of about $32 million excluding GST in doing so. Sales of townhouses have netted the respondents about $35 million. Further stages of the development remain to be completed (or commenced in the case of two stages) and the development may be completed in early 2027.
• [12] The Deed of Priority and Postponement relevantly provided:

"'Harburg Priority Amount' means $11,794,444.92 representing the aggregate of $7,891,279.92 being the amount owing by the Mortgagor to Harburg under the Existing Loan Facility as at the 1st January, 2020 (including a facility fee of $50,000.00) and $3,903,165,00 being the amount agreed to be lent and advanced by Harburg to the Mortgagor under the Housing Construction Facility together with all interest on those amounts whether such interest shall be capitalised or not, fees, costs, consultancy expenses and any other monies necessary or required to preserve or protect the value of the Property.

'JSY Priority Amount' means the total amount presently owing by the Mortgagor to JSY under the JSY Mortgage together with all interest on such amount whether such interest shall be capitalised or not, fees, costs, consultancy expenses and any other monies necessary or required to preserve or protect the value of the Property.

'Property' means all the property situated at or about 140 Alma Road, Dakabin as secured by the Harburg Mortgage ...

3.1 The Harburg Mortgage shall take absolute priority over the JSY Mortgage to the extent of the Harburg Priority Amount.

3.2 The JSY Mortgage shall then have the next priority after the Harburg Priority Amount."

• [13] To understand the separate question which the respondents ask the Court to decide, it is necessary to have regard to the "pleadings" constituted by the Points of Claim, Points of Defence and Points of Reply. The respondents submitted that the issue that should be determined separately is made clear in paragraph 25 of the Points of Defence.
• [14] In Points of Claim[1] the applicant sought declarations about the proper construction of the Deed of Priority and Postponement and the applicant's priority vis-à-vis the second respondent.
• [15] The Points of Claim also stated:

(a) The applicant says the Harburg Priority Amount (as defined in the Deed of Priority) has already been recovered by Harburg.

(b) This is because the Harburg Priority Amount is expressly limited to the amounts stated within the definition of that term in the Deed of Priority, plus other amounts so far as they are 'necessary' or are 'required' to 'preserve' or to 'protect' 'the value of the Property'. The 'Property' is defined to be the physical land.

(c) Specifically, the costs incurred by Harburg improving the Property (by building and selling units and townhouses) do not form part of the Harburg Priority Amount.

(d) The words used in the Deed of Priority are deliberately narrow and should be given their natural and ordinary meaning. The words 'preserve' and 'protect' are used synonymously to mean 'to maintain (the land) in its original or existing state'. The words 'necessary' and 'required' further limit expenditure to actions that are needed or compelled, if those amounts are to be captured within the Harburg Priority Amount.

(e) Harburg's election to incur significant costs improving the Property results from Harburg's own commercial risk assessment (from 2021) and the strategy devised by Harburg itself to ultimately recover the financial accommodation it had loaned to the Mortgagor. The Deed of Priority does not grant Harburg priority over the JSY Mortgage for that.

(f) It then follows that Harburg (and Dakabin Homes) is overdue in paying or accounting to the applicant for the 'JSY Priority Amount' according to the Deed of Priority.

1. If this Honourable Court accepts the applicant's construction of the Deed of Priority, to the extent specific amounts are unknown and unascertainable by the applicant because they are known only to Harburg (or Dakabin Homes), then the applicant seeks orders appointing a referee and appropriate machinery for the referee to discharge their tasks."

(a) The Deed of Priority and Postponement dated 10 January 2020 (the Deed of Priority) does not contain a contractual obligation by the respondents to pay any money to JSY;

(b) The source of entitlement to a payment of money by a first mortgagee to a second mortgagee as a result of the exercise of a power of sale, is an account;

(c) The declarations sought as to the construction of the Deed of Priority seek to address one issue that might arise as part of an account;

(d) Equity does not permit more than one account between the same parties, or partial or interim accounts. The declarations sought by JSY amount to an attempt to obtain a partial or interim account;

(e) An account is not available until the completion of the sale of the security, namely when all townhouses in the Development have been completed and sold, and the net sale proceeds calculated;

(f) By reason of the matters referred to above, the OA should be dismissed on the basis that the relief is prematurely sought and therefore not available.

(a) The relief sought is premature, and therefore not available, for the reasons set out at paragraph 25 above;

(b) denies sub-paragraph (b) on the grounds that section 118 of the Property Law (sic) 2023 relevantly provides that the proceeds of sale must be held by the mortgagee in trust to be applied in payment of the following amounts in the following order:

1. the reasonable expenses incurred in selling the property;

1. If the property has more than 1 mortgage - the principal amount, interest and other amounts owing under the mortgages in order of the priority of the amounts;

(c) Further, by the Deed of Priority the applicant and the respondents agreed to the order of priorities and in particular clause 3.3 of the Deed relevantly provides that Harburg's priority is limited to $11,794,444.92 plus interest on that amount plus expenditure that is 'necessary or required to preserve or protect the value of the Property';

(d) denies sub-paragraph (c) as the declaration sought is in relation to the construction and effect of the Deed of Priority and that clause 3 of the Deed of Priority expressly excludes any rights or remedies that are not contained in the Deed of Priority;

(e) denies the conclusions of law at sub-paragraph (d) and (e); and

(f) denies sub-paragraph (f) on the grounds that the respondents have received funds from the proceeds of sale far in excess of the Priority Amount (as defined in the Deed of Priority) such that relief sought is not premature.

(a) denies sub-paragraph (a) on the grounds pleaded in response to paragraph 25 of the defence;

• [18] The party who seeks a determination of a separate question bears the onus of persuading the Court that it should exercise the discretion provided for in r 483 of the UCPR having regard to what is just and convenient. The starting point is that usually all issues of fact and law should be determined at the one trial. The potential advantages and disadvantages of ordering separate consideration must be balanced and the order should only be made where the utility of and the economy to be achieved by doing so and fairness to the parties is clearly made out.[2]
• [19] The question to be separately considered must be precisely formulated. Even if the separate question will not resolve all issues an order may nevertheless be made. An issue will not be appropriate for separate consideration if it is one of a number of different ways in which an applicant puts its case and resolution of the question would leave other significant issues unresolved. Relevant considerations include whether the determination of a question separately will contribute to the saving of time and costs by substantially narrowing issues in dispute, or even resolving the proceeding, or whether it will potentially prolong the proceeding. The Court should be cautious about acceding to a request to order a separate question.[3] Another relevant consideration may be whether the final disposition of the proceeding could end up being delayed by an appeal against the judgment on the separate question.[4]

• [20] The respondents submitted the issue paragraph 25 raises for separate consideration is whether a second mortgagee can seek the relief the applicant has sought when the relief of an account is only available once the mortgaged land is finally sold upon completion of the entire development. Unless an account is available the declarations the applicant has sought will have no purpose or practical utility and so will not be made. A determination that an account is not presently available and that the declarations sought are premature would result in the dismissal of this proceeding which would occasion a meaningful saving of time, expense and Court resources.
• [21] In support of this submission the respondents relied on Adams v Bank of New South Wales[5] in which Hutley JA said:

"In Colin D Young Pty Ltd v Commercial and General Acceptance Ltd (Court of Appeal, 24 August 1982, unreported) Hutley JA, with whom the other members of the Court agreed said:

'... a party cannot, as it were, have little bits of accounts. There is one account and one account only and the issue is what is owed and what is not owed. The declaratory procedure cannot be used to get declarations about little bits of accounts because the proceedings may become, in relation to a total account, otiose.'

It seems to me that no utility can attend a declaration unless it amounts to a complete accounting between the mortgagor, purchasers from the mortgagor if the contract is on foot, and mortgagees at the relevant date, that is, the date of the first mortgagee's sale. It could take the form of a series of declarations as to the proper appropriation of the sale price as between all parties, but anything less than this, that is, a complete accounting, has no utility whatsoever. The trusts upon which the first mortgagee holds the property in his hands are thereby fully declared."

• [22] Even if the separate question were ultimately determined adversely to the respondents, it would nevertheless narrow the issues at trial as the point would otherwise be taken at trial. Further, any appeal in relation to the determination of the separate question would be an appeal on a narrow point. Resolution of the separate question does not depend on resolving contested facts. It was also submitted that determining the separate question would potentially avoid the need for the Court to make "provisional" findings about other issues. Other issues which will arise at the final hearing concern whether the Deed is effective to expressly exclude equitable principles which the respondents argue ordinarily operate to entitle a first mortgagee to recover expenses. In response to the applicant's oral submissions the respondents reiterated that the construction of the Deed was not the only issue; for example, there is an issue concerning whether the doctrine of estoppel operates to prevent the applicant from obtaining any relief.

• [23] The applicant submitted that at the trial it will be necessary for the Court to determine what the Deed of Priority and Postponement means. In other words, whether certain expenses are included within the definition of "Harburg Priority Amount". This issue would be common to the trial and to the separate question the respondents seek to have the Court consider. Understood this way, no saving of expense, time or Court resources would be achieved by making the order the respondents seek. As the declarations sought will not concern the amount secured by the first/second mortgage, the applicant is not seeking to use any declaration to supplement the process of seeking an account about any amount owing under the mortgage. Accordingly, the principle relied on from Adams has no application to this case. Further, paragraphs 7(a)(v) and (vi) of the Points of Defence (which paragraphs were admitted in the Points of Reply) have arguably obviated the need for an accounting.
• [24] The applicant also submitted that the respondents had not articulated a precise question or questions. Paragraph 25(b)-(e) of the Points of Defence were contentions relied on as the foundation for the conclusion in 25(f) that the claim for relief is prematurely sought. Paragraph 25(b) stated a principle in the abstract, whereas the issue in the case was whether in the context of the Deed of Priority and Postponement that principle leads to a conclusion that the relief claimed is premature. Directing attention to paragraph 25(c), the applicant submitted that it was not at all clear how the proper construction of a contact could be a matter that arises as an issue within the taking of an account. Paragraph 25(d) stated a proposition but in the context of the Deed of Priority and Postponement, the issue is whether the relief sought is premature. Whatever might be thought about the articulation of a separate question it could not be determined without determining the ambit of the "Harburg Priority Amount" in the Deed.

• [25] The respondents have not demonstrated that it would be just and convenient in the circumstances for there to be a separate consideration and determination concerning whether the relief claimed is premature. An advantage of a separate determination could be that it could shorten the trial by determining an issue which would otherwise have to be determined at the trial. However, this would merely result in a reallocation of time and expense rather than a saving of time and expense. It is by no means clear that determination of the separate question in the favour of the respondents will result in an outcome in which the applicant's claim will be dismissed. The primary relief the applicant seeks is a declaration about the proper construction of a contractual provision, the "Harburg Priority Amount", in the Deed of Priority and Postponement. Also, paragraph 6 of the Points of Claim shows that an order for the appointment of a referee to take an account is to be agitated only if the Court accepts the applicant's construction of the contract and even then only if "specific amounts are unknown and unascertainable" by the applicant. The applicant now says the pleadings probably render an account unnecessary.
• [26] Whether the Deed of Priority and Postponement is effective to exclude the equitable principles the respondent refers to will again depend on the proper construction of the Deed. This will remain an issue at the final hearing and determination of the proposed separate question seemingly will not dispose of it. In these circumstances no time or expense will be saved if the order sought by the respondents is made. All issues of law and fact can be conveniently determined at the same time at a trial which, in terms of the Court's sitting weeks, is now only a little over five weeks away. The final hearing of this case is expected to occupy only three days of Court time, from 10-12 February 2026. The determination of all issues at the one time is the more economical way for the matter to proceed. It avoids the possibility that the ultimate resolution of the real issue in the case will be delayed by an appeal from any order made at a preliminary hearing. Any possible advantage in determining the question separately is outweighed by the apparent disadvantages in doing so.

• [27] On 27 November 2025 the Court made the following orders:
  1. Application dismissed.
  2. The respondents pay the applicant's costs of this application on the standard basis.
• [28] Order 2 was set aside at the respondents' request because they wished to make submissions about costs in circumstances where the respondents' application had been dismissed. Submissions were then made by both the respondents and the applicant and the question of costs was reserved until 3:00 pm on 28 November 2025, and at that time the Court made the following order:

The respondents pay the applicant's costs of this application on the standard basis.

[2] Brisbane Cruise Wharf Pty Ltd v Body Corporate for Portside Wharf Principal Community Titles Scheme 36407 [2024] QSC 128 per Kelly J at [18]-[19].

[3] Callide Power Management Pty Ltd & Ors v Callide Coalfields (Sales) Pty Ltd & Ors; CS Energy Ltd v Callide Coalfields (Sales) Pty Ltd & Ors (No 3) [2015] QSC 295 per Flanagan J at [45]-[46].

[4] Watpac Civil Infrastructure P/L v Komatsu Australia P/L [2009] QSC 281 per McMurdo J at [8].

[5] [1984] 1 NSWLR 285 at 296.