KBRZ Capital Management Pty Ltd v Zhang

[2026] NSWSC 623

Supreme Court of NSW|2026-06-02|Before: Sirtes J

View on NSW Caselaw

At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2026-06-02

Before

Sirtes J

Catchwords

CIVIL PROCEDURE – cross-vesting – transfer to Federal Circuit and Family Court of Australia – whether in interests of justice – where claims concern matters within expertise of the Supreme Court – considerations of delay CIVIL PROCEDURE – order for production of documents – no evidence served – no notice to produce – no application for discovery

Source

Original judgment source is linked above.

Catchwords

CIVIL PROCEDURE – cross-vesting – transfer to Federal Circuit and Family Court of Australia – whether in interests of justice – where claims concern matters within expertise of the Supreme Court – considerations of delay CIVIL PROCEDURE – order for production of documents – no evidence served – no notice to produce – no application for discovery

Judgment

Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.

Medium Neutral Citation: KBRZ Capital Management Pty Ltd v Zhang [2026] NSWSC 623

Hearing dates: 28 May 2026

Date of orders: 2 June 2026

Decision date: 02 June 2026

Jurisdiction: Common Law

Before: Sirtes J

Decision: (1) The Second Defendant’s Notice of Motion filed on 21 April 2026 be dismissed.
(2) The Second Defendant pay the Plaintiff’s costs of the motion.

Catchwords: CIVIL PROCEDURE – cross-vesting – transfer to Federal Circuit and Family Court of Australia – whether in interests of justice – where claims concern matters within expertise of the Supreme Court – considerations of delay CIVIL PROCEDURE – order for production of documents – no evidence served – no notice to produce – no application for discovery

KBRZ Capital Management Pty Ltd, to which I shall refer as the L****ender, claims that it entered into a suite of agreements with Advantage Capital Pty Ltd and the First and Second Defendants, namely:
a Deed of Loan;
a Deed of Guarantee;
a registered mortgage (AU984559) over land described in folio identifier 236/SP92334, otherwise known as Unit 603, 11 Waterview Drive, Lane Cove (the Property); and
a registered memorandum (AT499605), which is incorporated into the above documents.
The Lender advanced the sum of $450,000 to Advantage Capital for the period of one month (16 April–16 May 2023). That loan was secured by a mortgage over the Property and guaranteed by the Defendants. The Defendants are the registered proprietors of the Property as joint tenants. They are married but separated.
By Statement of Claim, filed on 26 September 2025, the Lender sues the Defendants for possession of the Property. The Lender contends that on that date, Advantage Capital and the Defendants failed to repay the principal. This gave rise to the Lender’s issuing a notice of default on 30 May 2025.
The Lender claims that the Defendants did not rectify the failure to repay the principal on 16 May 2025, nor comply with the notice of default dated 30 May 2025.
On 8 December 2025, the Second Defendant filed a Defence. She denies that she entered into any written agreements with the Lender and claims that the purported signatures appearing on the aforesaid documents were not “applied by, or authorised by, the second defendant and are therefore the consequence of a forgery and/or fraud”.
It is not necessary to address the other parts of the Defence for the purposes of the present application.
On 11 December 2025, several months after the institution of the proceedings in this Court, the Second Defendant filed an initiating application in the Federal Circuit and Family Court of Australia against her husband, seeking property distribution orders pursuant to s 79 of the Family Law Act 1975 (Cth) (the FLA). The Court has not received details of the proceedings in that Court due to apparent restrictions on the use of such documents under the FLA.
In light of these two proceedings, the Second Defendant filed a Notice of Motion on 21 April 2026 seeking an order pursuant to the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) (the Cross-vesting Act), that these proceedings be transferred to the Federal Circuit and Family Court of Australia (the FCFCOA) with the intention that they be heard together with proceedings SYCXXXXX/2025.
Alternative orders are sought for discovery of certain documents, presumably held by the Lender, evidencing steps taken by it to comply with its obligations under s 56C(1) of the Real Property Act 1900 (NSW).
I propose to deal with these prayers for relief seriatim.

The Second Defendant’s evidence, given via her solicitor, is that the Defendants were married on 30 March 2015 but have now separated on a final basis. On or about 25 November 2025, a friend informed the Second Defendant that her husband was arrested in Hong Kong and was apparently incarcerated. The circumstances of his incarceration, when he may be released and whether he will be able to participate in either these proceedings or the proceedings in the FCFCOA are not the subject of evidence. Therefore, I cannot factor his participation in either of the proceedings into my deliberations hereunder.
On 21 April 2026, the Second Defendant filed a Further Amended Initiating Application in the FCFCOA in which she seeks an order that, pursuant to s 106B of the FLA, the transaction between the Lender and the husband, and the loan documents (including the mortgage created thereunder), be set aside.
The affidavit of the Second Defendant’s solicitor raises a number of arguments in the nature of submissions which address the contended overlap of issues between the proceedings in this Court and those commenced by the Second Defendant in the FCFCOA. She contends that if the proceedings in this Court are not transferred, it may be necessary for the Second Defendant to join additional persons to these proceedings, including the Registrar General and the legal practitioners involved in the mortgage supposedly executed by the Second Defendant.
At [22] of Ms Yu’s affidavit, she identifies those overlapping issues as including:
whether the Second Defendant’s signature on the loan documents in relation to the Property was forged (and, if so, by whom);
whether the loan documents were entered into by fraud and/or with an intention to defeat the Second Defendant’s potential family law claim against the First Defendant;
whether the Lender took reasonable steps to ensure that the person who executed the mortgage dated 5 April 2025, bearing what appears to be a wet signature, was in fact the Second Defendant;
whether the First Defendant received the funds advanced under the loan documents;
whether the Defendants were bound by the loan documents;
whether the Lender in these proceedings has a charge over all or part of the Property;
how proceeds of any sale of the Property should be applied; and
in the determination of the above issues that the parties will rely upon the same evidence.
Ms Yu also gives evidence about the estimated progress of the FCFCOA proceedings. This is a relevant factor, as the estimated progress of the proceedings in this Court, of which I am able to take judicial notice.

The Second Defendant’s Defence to the proceedings in this Court, namely, that she is the victim of fraud by forgery, is a cause of action which has been considered by this Court regularly over many decades. It is unnecessary, for the purposes of this application, to cite every one of those cases; it is sufficient to note the following: Perpetual Trustees Victoria Ltd v English [2010] NSWCA 32; 14 BPR 27,339; Van den Heuvel v Perpetual Trustees Victoria Ltd [2010] NSWCA 171; 15 BPR 28,647; Ippin Textiles Pty Ltd v Winau Aust Pty Ltd [2021] NSWCA 9; 386 ALR 286.
My own research has not found cases similar to that brought by the Lender being determined by either the FCFCOA or its predecessors. The Second Defendant did not refer me to any such decisions.
At the outset, I observe that this is a rather heterodox transfer application. This is not a situation where a matter has been commenced in one court and a party then seeks to transfer those proceedings into a different court on the basis that the other court is a more appropriate forum and that the interests of justice therefore dictate that a transfer is warranted. Rather, the Lender has commenced proceedings first in this Court in a jurisdiction wholly appropriate to the nature of its claim. The Second Defendant has subsequently commenced proceedings against the First Defendant, which do not involve the Lender, in another court which is the only court able to determine such a claim. The notion that this Court is now less appropriate to determine the Lender’s claim, and that, accordingly, the claim should be conjoined with the Second Defendant’s subsequent matrimonial proceedings, strikes me as novel, to say the least.
In addition to the present configuration of these proceedings, it is, in cases of mortgage fraud, common for the putative victim to join the Registrar General in a claim brought under s 120 of the Real Property Act 1900 (NSW) (the RPA). That provision entitles any person who suffers loss or damage as a result of the operation of the RPA in respect of land to commence proceedings in the Supreme Court for recovery of damages arising from, inter alia, fraud. Those proceedings are taken against the Registrar General as nominal defendant: RPA s 132(1). And those proceedings may only be commenced if administrative proceedings have been commenced and determined in relation to the compensable loss, or by leave of the Court or with consent of the Registrar General: RPA s 132(2).
Section 129 of the RPA addresses the circumstances in which compensation is payable. There is a series of ‘carve-outs’ which disentitle a claimant from compensation, including if the loss or damage is a consequence of any fraudulent, wilful or negligent act or omission by any solicitor, licensed conveyancer, real estate agent or information broker, and is compensable under an indemnity given by a professional indemnity insurer: RPA s 129(2)(b).
In this case, the involvement of legal practitioners in the execution of the mortgage has already been foreshadowed at [20] of Ms Yu’s affidavit. Accordingly, it appears likely that if the proceedings are determined in this Court, it will be a multi-party action: the mortgagee will seek possession of the Property; the Second Defendant will defend that claim on the basis of mortgage fraud; she may seek, by way of Cross-Claim in the alternative, compensation from the Registrar General under the RPA; and any negligence by solicitors will require their being joined to these proceedings by the Second Defendant. The Second Defendant also indicates that the mortgage is liable to be cancelled by the Registrar General under s 56C(6) of the RPA. It appears almost inevitable, therefore, that one way or the other the Registrar General will be a party to these proceedings.
The Second Defendant does not indicate that the Registrar General or the solicitors involved in the transaction would be joined if the proceedings were transferred to the FCFCOA but, if they were, it would have an obvious effect on the timetabling of the proceedings for hearing in that court.
I remain firmly of the view that the issues which will be ventilated in these proceedings are more appropriately heard in this Court rather than the FCFCOA. This Court is intimately familiar with disputes that involve mortgage fraud, issues concerning indefeasibility under s 42 of the RPA, claims for compensation under the Torrens Assurance Fund, and professional negligence claims, which may involve a professional indemnity insurer if there is a dispute between that solicitor and its insurer. Such proceedings often involve complicated factual and legal determinations, which are frequently resolved by the Court of Appeal. Those issues are not regularly considered by the FCFCOA; indeed, as stated, I have not identified a single decision where this has occurred. That is because the parties’ assets as identified in the balance sheet are ascertained after those claims have been determined in this Court.
After the determination of these proceedings, the FCFCOA will have greater certainty as to how the assets and liabilities of the Defendants can be notated in the balance sheet. That Court will undoubtedly need to make determinations as to whether liabilities on the balance sheet should be shared between the Defendants or attributed solely to one or other of the parties. It may be that the debt incurred is attributable only to the First Defendant and is therefore excluded from the balance sheet, so that the Second Defendant is not disadvantaged by its deduction against the net assets of the marriage. But these are matters within the expertise of the FCFCOA. To my mind, this justifies the Lender’s trepidation about being embroiled in a dispute in the FCFCOA: it has no interest in that outcome.
The prospect of the Lender’s being involved in the Second Defendant’s s 106B claim in the FCFCOA also does not dispose me to consider that Court the more appropriate forum. To be set aside under s 106B of the FLA, the relevant disposition must be made or proposed to be made to defeat an existing or anticipated order in the FCFCOA proceedings or that, irrespective of intention, is likely to defeat any such order. That relief is discretionary. For example, where an innocent third party has loaned funds on the strength of a mortgage security, the Court may be less likely to exercise its discretion to set aside such a transaction. Indeed, the Court is required to “have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested”: FLA s 106B(3); see also Wasem & Nasser (No 5) [2024] FedCFamC2F 1063 at [142]–[143] (Judge Street).
There is no relevant overlap in the legal issues between the issues that arise in this Court and those that may arise in the FCFCOA. In these proceedings, any decision that impugns the mortgage will not be discretionary. In the FCFCOA, whether the transaction is to be set aside under s 106B is an exercise of discretion governed by a particular statutory provision. Whilst there may be facts in common between these proceedings, the legal analysis required is quite different. Moreover, if there is any overlap in the issues determined by this Court and the FCFCOA proceedings, this is a situation created by the Second Defendant and which could be decided by those proceedings being stayed pending the outcome of these proceedings.

Another relevant factor is the likely date by which these proceedings will be determined in the respective courts. As stated, I can take judicial notice of when proceedings in this Court, in this Division, and in the Possession List, are likely to be determined. In relation to the FCFCOA, this requires evidence.
Ms Yu provides that evidence in [28]–[34] of her affidavit. She is a solicitor with four years’ experience practising in civil litigation and family law. She assumes that because the First Defendant has not filed any appearance in the FCFCOA proceedings, it is likely that any dispute between the Defendants will be heard on an undefended basis (at least undefended by the First Defendant). She notes that procedural orders have been made for the Second Defendant (the Applicant Wife in those proceedings) to file points of claim by 1 May 2026, for any other parties to file defences to points of claim by 31 May 2026, and for a directions hearing to occur on 16 June 2026. At that directions hearing, Ms Yu anticipates that the proceedings will be listed for a readiness and compliance hearing before a judge in or about August or September 2026 to obtain a final hearing date. She expects that if these proceedings were transferred and heard alongside the proceedings presently before the FCFCOA, they would be transferred to Division 1 to be heard over five days in or around mid-2027. There is a fair degree of necessary speculation in Ms Yu’s evidence.
First, I am not persuaded that these proceedings will be heard by Division 1. This is hardly a major complex financial dispute, nor is there any other obvious or compelling reason why it would be heard in that Division. I am not denying the possibility that that could occur, but Ms Yu’s evidence is founded on unexplained opinion, as if this were a fait accompli. The size of the marital pool would justify hearing the proceedings in Division 2.
Secondly, there is some likelihood that if these proceedings were transferred to the FCFCOA and ‘bolted on’ to the existing proceedings, this would have a significant effect on the trajectory of both proceedings going forward. Indeed, it would defy logic if that were not so. In my view, it would be likely to slow their progress not insignificantly. Further, that Court may stagger the proceedings so that the possession case is heard first, which would then cause further delay, particularly if the determination of the first matter required a different judge to determine the second matter. I raise this because it highlights the highly speculative task of trying to forecast how these proceedings would be case managed in the FCFCOA.
Thirdly, the allocation of a hearing of five days, particularly in Division 1, will depend on the availability of a significantly smaller pool of judges than are otherwise available in Division 2. Even if Ms Yu’s prognostication is correct, I must still consider when the proceedings in this Court would likely be heard and determined.
Proceedings in the Possession List of this Court are case managed by a judge. Whether that will be me or another judge, it would be surprising if these proceedings were only to be determined sometime in mid-2027. Although the case may be at an embryonic stage in terms of evidence, there is no reason why, with efficient case management, it could not be heard and determined by the end of this year or early 2027.
Relatedly, I must also consider the effect of any delay occasioned by a transfer. The Lender would undoubtedly be prejudiced by such a delay if there is a shrinking amount of equity in the Property. It is especially necessary for proceedings of this kind to proceed in accordance with the dictates of s 56 of the Civil Procedure Act 2005 (NSW).

KBRZ Capital Management Pty Ltd v Zhang

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment

JUDGMENT

Application for transfer

Second Defendant’s position

Lender’s position

Applicable legal principles

Appropriate forum

Expected date of hearing

Conclusion

Production of documents

Orders

Parties

Legislation Cited (7)

Cases Cited (15)