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Texts Cited: Croft, Mortgagee’s Power of Sale (4th ed, 2020, LexisNexis)
Edgeworth, Butt’s Land Law (7th ed, 2017, Thomson Reuters)
Gray, Foster, Roberts and Jensen, Property Law in New South Wales (5th ed, 2022, LexisNexis)

Category: Procedural rulings

Parties: Zhao’s Brothers Investment Pty Ltd as trustee for the Zhao Family Trust (receiver and manager appointed) (Applicant)
Xiaowen Su (First Respondent)
Registrar General of NSW (Second Respondent)
Magenta Shores Management Pty Ltd (Third Respondent)
ACAPITAL Finance No 5 Pty Ltd (Fourth Respondent)
Proceedings 2026/00017227
Xiaowen Su (Plaintiff)
Zhao’s Brothers Investment Pty Ltd as trustee for the Zhao Family Trust (receiver and manager appointed) (First Defendant)
Golden Stone Fund Pty Ltd as trustee for Golden Stone Fund Unit Trust (Second Defendant)
Registrar General of NSW (Third Defendant)
Tung Chit Real Estate Investment Australia Pty Ltd (Fourth Defendant)

Representation: Counsel:
D Neggo SC / I Leong (Plaintiff/First Respondent)
D Cook SC / P Sharp (First Defendant/Applicant)
S Baron Levi (Third Respondent)
M McGirr (Fourth Respondent)
Solicitors:
ACME Consulting Lawyers (Plaintiff/First Respondent)
Auyeung Hencent & Day (First Defendant/Applicant)
Woods & Day (Third Respondent)
Mills Oakley (Fourth Respondent)

File Number(s): 2026/00017227

Publication restriction: Nil

JUDGMENT

1. By a notice of motion filed on 18 June 2026, the first defendant, Zhao’s Brothers Investment Pty Ltd as trustee for the Zhao Family Trust (receiver and manager appointed) (the Applicant or Zhao**’s Brothers), seeks an order restraining the third defendant, the Registrar-General of NSW (Registrar-General),** from registering, recording or otherwise giving effect to three dealings relating to five parcels of land at Magenta, New South Wales (Magenta Shores land):

2. the transfer by the plaintiff, Ms Su, exercising the mortgagee power of sale, to Magenta Shores Management Pty Ltd (MSM), the third respondent, of Zhao’s Brothers’ interest in the Magenta Shores land; and

3. two subsequent mortgages by MSM of that interest – one to ACAPITAL Finance No 5 Pty Ltd (ACapital), the fourth respondent, and one back to Ms Su by way of vendor finance.

4. The first, second and fourth defendants (being the Applicant, Golden Stone Fund Pty Ltd (Golden Stone) and Tung Chit Real Estate Investment Australia Pty Ltd (Tung Chit) respectively) have offered an undertaking as to damages in support of the injunction sought. In addition, the following further undertakings are offered:

(a) if the injunction sought in the Injunction Motion is later found to have been incorrectly granted (as determined at the final hearing, including any appeal), and any person is found entitled to damages pursuant to Tung Chit’s undertaking as to damages, Tung Chit will, to the extent that any such damages remain unpaid, not demand, enforce, receive or otherwise insist upon payment of any amount owing to it by Golden Stone under the vendor finance arrangement entered into between Golden Stone and Tung Chit unless and until all such damages have been paid in full; (b) if the injunction sought in the Injunction Motion is later found to have been incorrectly granted (as determined at the final hearing, including any appeal), and any person is found entitled to damages pursuant to Golden Stone’s undertaking as to damages, Golden Stone will, to the extent that any such damages remain unpaid, pay those damages in priority to any amount otherwise payable by it to Tung Chit under the vendor finance arrangement entered into between Golden Stone and Tung Chit.

3. In addition, the Applicant seeks an order restraining the plaintiff from exercising any power of sale in respect of the Magenta Shores land without first providing 14 days’ notice to the Applicant and orders joining MSM and ACapital to the proceedings.

4. It is not in dispute that in order to obtain the relief sought Zhao’s Brothers must establish first that there is a serious question to be tried for final relief (in the sense that there is a sufficient likelihood of success to justify preserving the status quo pending the trial); and second, that the balance of convenience favours the grant of the injunction sought: Australian Broadcasting Corporation v O*’*Neill (2006) 227 CLR 57; [2006] HCA 46 at [65].

Background facts

5. The present dispute has its genesis in a joint venture entered into in 2015 between three entities: Tung Chit (the fourth defendant), Options Funds Management Ltd (OFM) and Zhao’s Brothers. In December 2015, they purchased land at Magenta for a purchase price of $28.5 million as tenants-in-common in unequal shares: Tung Chit as to 51%, OFM as to 39% and Zhao’s Brothers as to 10%. Following the sale of some of that land, what is now left is the Magenta Shores land.

6. Prior disputes in relation to the joint venture have been the subject of other proceedings in this Court: see Options Funds Management Ltd v Tung Chit Real Estate Investment Australia Pty Ltd [2025] NSWSC 1142 and Options Funds Management Ltd (receivers and managers appointed) v Wenbo Zhao [2025] NSWSC 1376. Some of the background history in relation to the joint venture is contained in those judgments.

7. These proceedings are, in essence, a competition between two persons each claiming an entitlement to be registered as purchaser under a transfer of Zhao’s Brothers’ 10% interest in the Magenta Shortes land: the first is Golden Stone, the second defendant, under a transfer in its favour made by Zhao’s Brothers dated on or about 16 December 2025 pursuant to a contract for sale dated 23 September 2025 and the second is MSM, under a transfer dated 1 June 2026 made to it by the plaintiff pursuant to a contract for sale dated 23 January 2026 (as novated on 27 April 2026).

8. Golden Stone’s interest in the Magenta Shores land arose as a result of the following events in connection with the joint venture:

9. OFM borrowed funds from Tung Chit under a loan agreement dated 6 December 2019 secured by a general security agreement of the same date granting a charge to Tung Chit over all the assets of OFM. Following default under the loan agreement, on 27 August 2024, Tung Chit appointed receivers and managers over all the property of OFM, including its interest in the joint venture.

10. Zhao’s Brothers borrowed funds from Tung Chit Australia Investment Pty Ltd (TCAI), a related entity of Tung Chit, under a loan agreement dated 25 March 2020, secured by a general security agreement of the same date granting a charge to TCAI over all the assets of Zhao’s Brothers. The loans were used by Zhao’s Brothers to repay borrowings previously made to fund its investment in the joint venture, and further contributions required for the development of the land.

11. On 9 February 2024, TCAI assigned the benefit of the loan agreement and associated security to Tung Chit, and on 27 August 2024, following default by Zhao’s Brothers under the loan agreement, Tung Chit appointed Mr Alexander Sui of Hall Chadwick as the receiver and manager over all the property of Zhao’s Brothers, including its interest in the joint venture. Mr Sui conducts these proceedings on behalf of Zhao’s Brothers as its agent following his appointment as its receiver and manager.

12. On 30 July 2025, an umbrella deed was entered into between Zhao’s Brothers, Mr Sui as its receiver and Golden Stone, setting out a process for the sale of Zhao’s Brothers’ 10% interest in the Magenta Shores land to Golden Stone, including a market testing procedure conducted by an independent agent, Cushman & Wakefield. During the market testing, the plaintiff (among others) submitted an expression of interest to purchase Zhao’s Brothers’ 10% interest in the Magenta Shores land for $8 million, which was unsuccessful.

13. On 23 September 2025, following the implementation of the sale process, a contract for the sale of Zhao’s Brothers’ 10% interest in the Magenta Shores land to Golden Stone was entered into (Golden Stone Contract) and completion of the contract occurred on 16 December 2025, at which time a transfer in registrable form was delivered to Golden Stone (Golden Stone Transfer).

14. The Golden Stone Transfer was lodged for registration shortly after completion and became Dealing AV 725807. The solicitors for Golden Stone received a notification from Land Registry Services (LRS) on 22 December 2025 that it intended to register the transfer (together with a number of other dealings including the transfer of the Wang Mortgage in favour of the plaintiff referred to below), unless before 5pm on 30 January 2026 it received notice of an order from this Court preventing the Registrar-General from doing so. As set out below, the plaintiff commenced these proceedings on 14 January 2026, and ultimately an interlocutory injunction was granted by Slattery J on 23 January 2026 restraining the Registrar-General from registering the Golden Stone Transfer. It may be inferred that this was for the purpose of maintaining the status quo pending the final hearing.

15. A similar process for the sale of OFM’s 39% interest in the Magenta Shores land to Golden Stone was followed by the receivers and managers of OFM. Completion of the contract for the sale of that interest to Golden Stone occurred on 21 October 2025 and the transfer in its favour was registered shortly afterwards.

16. Accordingly, the persons now registered on the title to the Magenta Shores land are Tung Chit (51%), Golden Stone (39%) and Zhao’s Brothers (10%).

17. The interest in the Magenta Shores land claimed by MSM came about as follows:

18. By a loan agreement dated 4 March 2018 Coco Wang (Ms Wang) agreed to make a loan of $1.5 million to Zhao’s Brothers (Wang Loan Agreement), secured by a general security deed granted by Zhao’s Brothers and a guarantee from Mr Zhao dated the same date. At that time Mr Zhao was the sole director of Zhao’s Brothers. The loan agreement records that the loan was fully drawn on 3 September 2017 by a transfer of $1.5 million at the direction of Zhao’s Brothers to Ms Hui Zhao. It is not suggested that these three documents were not executed on or about 4 March 2018.

19. By a document entitled ‘Variation of Loan Agreement’ which is dated 16 July 2018, the Wang Loan Agreement was purportedly amended to provide for Zhao’s Brothers to give a registered mortgage over its 10% interest in the five parcels of land comprising the Magenta Shores land (Variation Agreement). The only signature on the various copies of this agreement in evidence is that of Mr Zhao (on behalf of Zhao’s Brothers), and there is no evidence that it was ever signed by Ms Wang. The Applicant disputes that the signature of Mr Zhao was placed on the document on 16 July 2018, and contends that it was signed by him some time in 2025 (when he had no authority to act on behalf of Zhao’s Brothers).

20. There is in evidence a copy of a mortgage in registrable form over all the land originally acquired by the joint venture in Magenta on which the signatures of both Ms Wang and Mr Zhao (on behalf of Zhao’s Brothers) appear (Wang Mortgage). The Wang Mortgage is undated. The Applicant disputes the genuineness of the signatures of both Ms Wang and Mr Zhao, and alleges that they were not placed on the document until some time in 2025 (in which event the Mortgage would not be binding on Zhao’s Brothers). Significantly, the description of the land mortgaged under the Wang Mortgage differs from the land to be mortgaged under the Variation Agreement: the Wang Mortgage refers to the mortgaged property as all the land originally owned by the joint venturer parties at Magenta, whereas the Variation Agreement identifies the land to be mortgaged as only the five parcels of Magenta Shores land. In the period between 2018 and 2025, a significant part of the joint venture’s landholding at Magenta had been sold. As at 2025, the five parcels of Magenta Shores land remained unsold. This oddity in the drafting of the Variation Agreement and the Wang Mortgage is one of the features of these documents which is relied on by the Applicant to call into question their genuineness (in particular the date on which they were signed).

21. On 27 March 2025, Ms Wang entered into a deed of assignment in favour of the plaintiff under which Ms Wang assigned to the plaintiff the debt owing by Zhao’s Brothers under the Wang Loan Agreement together with the ‘Transaction Documents’ (Deed of Assignment). The term ‘Transaction Documents’ was defined to mean, relevantly, the three documents dated 4 March 2018 referred to at [9(1)] above together with ‘any document or agreement entered into or given under any of the above’. No mention was made in the Deed of Assignment of either the Variation Agreement or the Wang Mortgage.

22. On 7 May 2025, Ms Wang gave written notice of the assignment under the Deed of Assignment to Zhao’s Brothers. Again, the notice of assignment makes no express mention of either the Variation Agreement or the Wang Mortgage.

23. As noted at [8(4)] above, the plaintiff sent an expression of interest to acquire Zhao’s Brothers’ 10% interest in the Magenta Shores land during the marketing process conducted by Cushman & Wakefield. The solicitor for the plaintiff noted in an email to Cushman & Wakefield sent on 15 September 2025 that the plaintiff had an outstanding loan exceeding $8 million to Zhao’s Brothers, and as this effectively exceeded the purchase price offered by the plaintiff there was no requirement for the plaintiff to pay a deposit if her offer was accepted. No mention was made in the email of the fact, if it be the case, that the plaintiff held a registrable mortgage over the Zhao’s Brothers’ 10% interest in the Magenta Shores land.

24. On 21 October 2025, the Wang Mortgage was registered. The titles to the land affected by the Mortgage which were no longer owned by the joint venture had been ruled through, so that the only titles affected by the mortgage are the five titles for the Magenta Shores land. Beside the alteration to the titles affected, there is a type-written notation in the margin which states, beneath a signature purporting to be that of Ms Wang: ‘I am authorised to make these amendments Dated 14/10/25’. The provenance of this amendment to the Wang Mortgage is unclear, given that the evidence establishes that Ms Wang was not in Australia on 14 October 2025. The Applicant disputes the genuineness of the signature in the margin purporting to be that of Ms Wang.

25. On 14 January 2026, the plaintiff commenced these proceedings by summons. The final relief sought included an order restraining the Registrar-General from registering the Golden Stone Transfer (AV725807) and an order permitting the registration of the transfer of the Wang Mortgage to the plaintiff (AV722259). Shortly afterwards, on 23 January 2026, Slattery J (as Equity Duty Judge) made orders including the following interlocutory injunction relating to the Golden Stone Transfer:

“By consent the plaintiff and the first and second defendants agree to the following orders:

1. On the plaintiff giving to the Court the usual undertaking as to damages, and reserving the right of any defendant to make an application with respect to the giving of security for that undertaking or as to their costs of the proceedings at any time, the Court orders that the third defendant be restrained from registering Transfer Dealing No AV725807 which has been lodged for registration over the real properties contained in folio identifiers: 10/270492, 25/270492, 27/270492, 30/270492, and 2/286016, until further order of the Court.

2. The Court notes that the consent of the first and second defendants to order 1 is given without admissions on their part and on the basis that they have liberty to apply to discharge the said order by way of notice of motion, and on that occasion the plaintiff will bear the onus of satisfying the Court that the order should be continued.”

9. On the same day that these orders were made, Ms Wang entered into a contract to sell to MSM the Zhao’s Brothers’ 10% interest in the Magenta Shores land for $15.5 million (MSM Contract). The vendor was described in the contract as ‘Coco Wang (Mortgagee Power of Sale)’. MSM is a company all the shares in which are owned by two companies controlled by the mother of Howard Cao. Mr Cao was involved in the development of the Magenta Shores land before the joint venture was established in 2015.

The deposit is stated to be ‘1% or subject to mutual agreement’. By this time, the Golden Stone Contract had completed. The contract includes a copy of the title search for the Magenta Shores land dated 23 December 2025, which discloses that Dealing AV 725807 had been lodged for registration (being the Golden Stone Transfer). It also disclosed a caveat lodged by Tung Chit on 2 December 2025 with the interest claimed by it being a ‘charge arising from General Security Agreement dated 25 March 2020 as regards to interests of Zhao’s Brothers Investment Pty Ltd’.

10. On 14 April 2026, the solicitors for ACapital (MSM’s proposed lender) sent an email to MSM stating:

“The borrower must ensure that the security interest to be granted to the Financier is free from all other interests, liens, encumbrances, proceedings and rights. In particular, please confirm that:

1. the court proceedings recorded in dealing AV822333, to the extent affecting the security property or proposed security interest, have been fully resolved; and

2. any prior agreements relating to the security property or security interests (including any joint venture or development agreements) have been terminated or rescinded, are no longer in effect, and do not affect the proposed transaction or the Financer’s security.”

Dealing AV822333 referred to in this email is a ‘request’ which attaches a sealed copy of the orders made by Slattery J on 23 January 2026 referred to above.

11. On 27 April 2026, a deed of novation was entered into by MSM, Ms Wang and the plaintiff under which the MSM Contract was novated to substitute the plaintiff for Ms Wang as vendor. The effect of the novation was to create a new contract for the sale of the Magenta Shores land between the plaintiff as vendor and MSM as purchaser: see Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473; [1999] NSWCA 323 at [78].
12. On 8 May 2026, Kunc J made an order that ‘any undertaking to Court made with respect to the Transfer Dealing [AV725807] be discharged’ and the orders included a notation that the first and second defendants (being Zhao’s Brothers and Golden Stone) had by consent and without admissions agreed with the plaintiff to withdraw that transfer, being the Golden Stone Transfer referred to above. However, nothing in these orders or those made by Slattery J on 23 January 2026 set out above suggests that either Golden Stone or Zhao’s Brothers has abandoned that transfer; rather, they merely accepted that the current proceedings were the forum to deal with the plaintiff’s challenge to that transfer based on her claim to be a mortgagee of the land under the Wang Mortgage.
13. On 29 May 2026, Mr Zhu, the solicitor for the Applicant, informed the solicitors for ACapital that there is a dispute about the Wang Mortgage and that the Applicant contends that it was registered on the title by fraud.
14. On 1 June 2026, the plaintiff executed a transfer in favour of MSM (expressed to be a transfer in exercise of the power of sale under the Wang Mortgage) (MSM Transfer) and on the following day settlement of the MSM Contract occurred.
15. On 2 June 2026, both the MSM Transfer (Dealing AW 177929) and a mortgage in favour of ACapital (Dealing AW 199930) were lodged with the LRS. On 18 June 2026, the LRS informed the solicitors for the Applicant that the LRS proposed to register these dealings unless served with an order from this Court preventing it from doing so. This prompted the Applicant to file the notice of motion.

Serious question to be tried

Submissions

10. The Applicant submits that the Wang Mortgage purportedly assigned to the plaintiff and the subsequent dealings which follow from her purported exercise of the power of sale, are not valid. It submits this on essentially two grounds.

11. First, it submits that there are reasonable grounds for doubting the authenticity of the Variation Agreement and the Wang Mortgage. In particular, it submits that due to various anomalies in the documents (some of which have been mentioned above), it is likely that the Variation Agreement and the Wang Mortgage were signed some time in late 2025, at which time Mr Zhao was not a director of Zhao’s Brothers and accordingly the Variation Agreement and the Wang Mortgage were ineffective to bind that company.

12. Second, the Applicant submits that because Ms Wang first entered into the MSM Contract on 23 January 2026, which was after she had already (in March 2025) purported to have transferred her interest under the Wang Mortgage to the plaintiff, there is a ‘disconformity’ in the transaction under which MSM claims its interest in the land which gives rise to a serious question as to whether the MSM Contract and subsequent dealings were validly made. The Applicant also submits that, because neither Ms Wang nor the plaintiff gave notice pursuant to ss 57(2)(b) and 57(3) of the Real Property Act 1900 (NSW) prior to the exercise of the power of sale, the plaintiff was not authorised to exercise the power of sale under s 58, meaning it went beyond her powers and was ineffective:

13. MSM submits:

14. Title is vested by registration. Section 42(1) of the Real Property Act provides that the registered proprietor of any estate or interest holds the registered interest, except in cases of fraud, free from all other interests not recorded in the folio. Indefeasibility attaches on registration even where the instrument by which the proprietor became registered was void or voidable: Breskar v Wall (1971) 126 CLR 376 at 385; [1971] HCA 70. The exception is fraud, which means actual fraud or dishonestly brought home to the registered proprietor or that proprietor’s agents, and does not extend to constructive or equitable fraud or to mere notice of an unregistered interest. The fraud exception applies only against the party guilty of, or privy to, the fraud; the antecedent fraud of a predecessor does not pass to an innocent successor: Real Property Act s 43(1); Butler v Fairclough (1917) 23 CLR 78 at 90; [1917] HCA 9*; Farah Constructions Pty Ltd v Say-Dee Pty Ltd* (2007) 230 CLR 89; [2007] HCA 22 at [192]; Mangano v Bullen [2020] NSWCA 283 at [73].

15. Pending registration, MSM is not a mere equitable claimant. It holds a transfer in registrable form, taken bona fide for value and without notice, to which s 43A(1) gives the protection of the legal estate in any competition with a merely equitable interest, so that no prior equity prevails over it. Section 43A is a priority provision; it does not itself confer indefeasibility that flows only from registration under s 42: see, e.g., Taleb v National Australia Bank Ltd (2011) 82 NSWLR 489; [2011] NSWSC 1562 at [40]. MSM already ranks ahead of any merely equitable interest the first defendant might hope to establish, and in relation to any such priority dispute, is, by reason of s 43A, deemed to hold the legal estate.

16. Further, a purchaser from a mortgagee exercising the power of sale takes the estate the mortgagee is empowered to convey free of the mortgagor’s interest on registration, and is not bound to inquire whether the power had arisen or was properly exercised, absent fraud to which the purchaser is privy: Real Property Act s 58; Forsyth v Blundell (1973) 129 CLR 477 at 493; [1973] HCA 20. The mortgagor’s remedy for any impropriety (should such impropriety come to be alleged) lies against the mortgagee, not the purchaser’s title.

17. Preventing registration of MSM’s interest does not preserve the status quo, because it only prevents a dealing which has already occurred from being perfected.

Consideration

14. I am satisfied that there is a serious question to be tried, for the following reasons.

15. These proceedings, as they have developed since they were commenced by the plaintiff on 14 January 2026, are a competition between two equitable interests in the Magenta Shores land, one being that of Golden Stone under the Golden Stone Transfer and the other being that claimed by MSM under the MSM Transfer allegedly pursuant to a sale made by the plaintiff as mortgagee under the Wang Mortgage. Both are registrable dealings, with the MSM Transfer being later in time. It is true that there is no claim for relief brought by either the Applicant or Golden Stone who are defendants in these proceedings who have yet to file a cross claim, so that the injunctive relief sought is not presently in aid of a legal or equitable right to be vindicated by final relief. However, that of itself is not a bar to the relief sought: Uniform Civil Procedure Rules (NSW) r 25.2(1).

16. Mr Cook SC, who appeared for the Applicant at the hearing, accepted that any grant of injunctive relief would be conditional on the Applicant and Golden Stone filing a cross claim in these proceedings in a timely fashion, seeking final relief. Based on the Applicant’s submissions at the hearing, that final relief can be expected to include declaratory relief that the Variation Agreement and the Wang Mortgage are not valid or effective because they were created in 2025 (not 2018) and the person who signed them on behalf of Zhao’s Brothers did not have authority to do so, with the consequence that the MSM Transfer has no effect, and that even if the MSM Transfer is valid, it does not take priority over the Golden Stone Transfer which is prior in time. I approach the notice of motion on that basis.

17. The general principle regarding the priority between competing equitable interests is that where the merits are equal the earlier in time prevails over the later: IWC Industries Pty Ltd v Sergienko (2021) 20 BPR 41,785; [2021] NSWCA 292 at [63]; Barlin Investments Ltd v Westpac Banking Corporation (2012) 16 BPR 30,671; [2012] NSWSC 699 at [31]. In determining whether the merits are equal, the Court attempts to discern where the better equity lies: Latec Investments Ltd v Hotel Terrigal Pty Ltd (in Liq*)* (1965) 113 CLR 265; [1965] HCA 17 at 276 per Kitto J. In the present case, as Golden Stone is first in time, the burden will be on MSM to establish that it has the better equity, and in particular, that Golden Stone has engaged in some disentitling conduct: Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd (2017) 18 BPR 36,683; [2017] NSWCA 99 at [231]. In my view, there is a serious question to be tried that MSM will not be able to discharge that burden even if the Wang Mortgage is valid.

18. The question then arises whether the position changes due to either s 43A or s 58 of the Real Property Act. In my view, it does not. Section 43A of the Real Property Act provides:

43A Protection as to notice of person contracting or dealing in respect of land under this Act before registration

(1) For the purpose only of protection against notice, the estate or interest in land under the provisions of this Act, taken by a person under a dealing registrable, or which when appropriately signed by or on behalf of that person would be registrable under this Act shall, before registration of that dealing, be deemed to be a legal estate.

19. Section 43A treats a purchaser who has paid the purchase money and received a registrable dealing as having a legal estate ‘[f]or the purpose only of protection against notice’. There was a difference of view between Taylor J and Kitto J in IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550; [1963] HCA 64 as to the extent of this protection against notice. Kitto J suggested that the section would, on the payment of the purchase price and receipt of a registrable instrument, give to a purchaser the protections against notice of pre-existing unregistered interests that occurs on the registration of an interest, which includes, by s 43, protection against notice of pre-existing unregistered interests prior to completion: at 573. However, that view sits uncomfortably with authority that the protections which accompany registration apply only from registration and not earlier: Templeton v Leviathan Pty Ltd (1921) 30 CLR 34 at 54–5 per Knox CJ; [1921] HCA 55; Lapin v Abigail (1930) 44 CLR 166 at 182 per Knox CJ, 188 per Issacs J, 196 per Gavan, Duffy and Starke JJ, 203–204 per Dixon J; [1930] HCA 22.

20. Taylor J was of the view that s 43A operates to protect a purchaser against notice of a prior unregistered interest, after the payment of the purchase price and receipt of a registrable instrument, to the same extent a purchaser who had acquired the legal estate at common law without notice of pre-existing interests takes priority over those earlier interests: at 584–5. The High Court in Meriton Apartments Pty Ltd v McLaurin & Tait (Developments) Pty Ltd (1976) 133 CLR 671 at 676; [1976] HCA 30 (Barwick CJ, Mason and Jacobs JJ) indicated that Taylor J’s view is the correct view; see also Edgeworth, Butt*’*s Land Law (7th ed, 2017, Thomson Reuters) at [12.1270].

21. Subsequent applications of s 43A have excluded purchasers with notice of a pre-existing unregistered interest: see, eg, United Starr-Bowkett Co-operative Building Society (No 11) Ltd v Clyne (1967) 68 SR (NSW) 331; including constructive notice of a pre-existing unregistered interest: Drulroad Pty Ltd v Gibson (1992) NSW Conv R 59-639; (1993) ANZ Conv R 115 (where a final search of the register before settlement would have put the purchaser on notice).

22. In my view, there is a good arguable case that MSM does not obtain the protection of s 43A in the present case because it had constructive notice of the prior equitable interest of Golden Stone under the Golden Stone Transfer in two ways: first, that transfer was referred to in the title search annexed to the MSM Contract; and second, MSM acquired an equitable interest in the Magenta Shores land on, at the earliest, 27 April 2026, when the novation of the MSM Contract occurred, by which time MSM had received the email from ACapital’s solicitors referred to above that referred to the dealing AV822333, which identifies the existence of the prior Golden Stone Transfer and draws its attention to the dispute between the plaintiff (the vendor under the MSM Contract as novated) and the Golden Stone over the plaintiff’s power to sell the Magenta Shores land.

23. There is also an issue as to whether the MSM Transfer is a ‘dealing registrable’ for the purposes of s 43A – i.e. a dealing which may be immediately registered. It is arguable that an invalid exercise of the power of sale by a mortgagee affects the status of the dealing for the purposes of s 43A. Gray, Foster, Roberts and Jensen, Property Law in New South Wales (5th ed, 2022, LexisNexis) at [14.140] suggests the protection of s 43A is lost on an invalid exercise of the power of sale (emphasis added):

“…in the interval between completion and registration, it may be possible for the purchaser taking from a mortgagee to invoke the protection of s 43A of the Real Property Act. Whether such protection is available depends on whether the transfer from the mortgagee is registrable. Registrability, in turn, is determined by compliance with s 57(2). Section 57(2) needs to be read in conjunction with s 58(1) and, most significantly, s 59 of the Real Property Act. Where either the power of sale has not arisen because there is no default triggering the power or because there has been a failure to comply with s 57(2), then the dealing is simply not registrable. Thus, the purchaser will not be granted protection pursuant to s 43A of the Real Property Act. It would seem that s 58(2) cannot cure this difficulty. In cases where the power of sale has arisen, but has been improperly exercised, by contrast, the purchaser has the protection of s 43A from this equity.

After registration, the purchaser is able to rely on s 42, which offers indefeasibility of title on registration in the absence of the purchaser’s fraud or other applicable exceptions to indefeasibility.”

24. Dr Baron Levi, counsel for MSM, said in oral submissions that the relevant test is whether MSM had notice of fraud in relation to the registration of the Wang Mortgage and that if it was not aware of any fraud, it ought to be entitled to registration of its interest under the MSM Transfer (T73.14, T7524 and T77.46). Whether MSM had notice of fraud would be a relevant question once MSM is registered. However, that is not the test under s 43A or otherwise where the contest is between unregistered interests, which is the current position.

25. MSM also relies on s 58 of the Real Property Act which relevantly provides:

58 Power to sell

(1) Where a mortgagee … is authorised by section 57(2) to exercise the powers conferred by this section, the mortgagee … may sell the land mortgaged …

(2) No such purchaser shall be answerable for the loss, misapplication, or non-application, or be obliged to see to the application of the purchase money by the purchaser paid, nor shall the purchaser be concerned to inquire as to the fact of any default or notice having been made or served as referred to in section 57(2).

…

26. The scope of protection this provides to a purchaser from a mortgagee (who has invalidly exercised the power of sale, for example, by failing to give notice) after completion but prior to registration is not clear. Edgeworth, Butt*’*s Land Law (7th ed, 2017, Thomson Reuters) at [11.1490] doubts whether s 58(2) provides purchasers with any protection in such a case (emphasis added; footnotes omitted):

“… s 58(2) of the Real Property Act 1900 (NSW), and counterpart provisions in South Australia, Tasmania and Western Australia, expressly provides that a purchaser with a receipt from the mortgagee is not … concerned to inquire whether default has occurred or the proper notices served. This provision protects a purchaser (who has the receipt) from constructive notice of any such matter on the part of the mortgagee from the moment the sale is completed, and not merely on registration. But it is doubtful if s 58(2) offers any further protection to purchasers prior to registration where the power of sale has not arisen, or where the sale has been exercised improperly. This is because, unlike the position in the other Australian jurisdictions, the provision does not declare the transferee’s status as not “impeachable” in the event of such sales.”

27. Gray, Foster, Roberts and Jensen, Property Law in New South Wales (5th ed, 2022, LexisNexis) at [14.140] similarly suggests that this provision does not protect such a purchaser (footnotes omitted):

“In particular, it will be noted that s 58(2) does not state that the purchaser’s title is unimpeachable. Therefore, s 58(2) of the Real Property Act appears to do little more than absolve the purchaser from constructive notice regarding any failure on the mortgagee’s part to comply with notice requirements or any misapplication of the proceeds of sale.”

28. See also the discussion in Croft, Mortgagee*’*s Power of Sale (4th ed, 2020, LexisNexis) at [10.9], noting that the question whether or not s 58(2) confers any protection on the purchaser prior to registration of transfer is ‘not settled’.

29. The issues concerning s 43A, s 58 and the validity of the Wang Mortgage are all matters for final hearing, but I accept the Applicant’s submission that there is a serious question to be tried that Golden Stone is entitled to registration of the Golden Stone Transfer in priority to the MSM Transfer, and also that the MSM Transfer is ineffective because the Wang Mortgage is not a valid mortgage. Further, the proposed injunction will preserve the status quo pending the final hearing and the case for final relief advanced by the Applicant is sufficiently strong to justify doing so. I do not accept MSM’s submission to the contrary, because it fails to address the significance of the principles concerning the priority between competing equitable interests prior to registration.

Balance of convenience

30. In relation to the balance of convenience, it is necessary to consider what course is best calculated to achieve justice between the parties, bearing in mind the consequences to the respondent of the grant of the injunction in support of relief which the applicant might not ultimately obtain and the consequences to the applicant of refusing the injunction in support of relief which it might ultimately be held to be entitled: Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 535.

31. The Applicant submits that it and Golden Stone would suffer prejudice if the MSM Transfer is registered through the loss of the priority arising from it being first in time, and that the injunction sought preserves the status quo pending resolution of proceedings. It was submitted that the undertaking as to damages offered by the Applicant, Tung Chit and Golden Stone protects the position of the plaintiff, MSM and ACapital because Tung Chit and Golden Stone already own a 90% interest in the Magenta Shores land which is unencumbered and, on the basis of the valuation evidence before the Court, that 90% interest has a market value of at least $50 million.

32. In my view, the balance of convenience favours the grant of the injunction sought on the basis of the undertakings offered by the Applicant, Golden Stone and Tung Chit, subject to two matters. First, while the existing 90% interest of Golden Stone and Tung Chit in the Magenta Shores land is presently unencumbered, the worth of the undertaking depends on that continuing to be the case. Hence, it will be necessary for each of them to provide an undertaking not to encumber their interest without first giving notice to the other parties of their intention to do so, and this will be incorporated into the orders to be made. Second, it is necessary for a cross-claim to be filed to seek final relief, as noted earlier. In my view, damages would not be an adequate remedy for the prejudice which would be suffered by the Applicant and Golden Stone if the dealings in favour of MSM and ACapital are registered now and the proposed orders set out below will preserve the status quo pending resolution of the dispute between the parties as to which dealings have priority.

33. The plaintiff, MSM and ACapital advanced a number of reasons why the balance of convenience is against the relief sought and I will address each in turn.

34. First, it was submitted that the restraint is sought against MSM’s three dealings alone with no restraint against any other dealing affecting the Magenta Shores land. That matter is dealt with by the further undertaking referred to above.

35. Second, the restraint would produce an event of default under the financing documents entered into by MSM with ACapital, potentially leading to ACapital calling up the loan which MSM will be unable to meet. In my view, this potential loss is covered by the undertaking as to damages.

36. Third, it was submitted that the undertaking as to damages provided by the Applicant (which is in receivership) and Golden Stone (which is indebted to Tung Chit under a vendor finance arrangement) are worthless. In my view, in circumstances where Golden Stone and Tung Chit own valuable land which is unencumbered and provide the undertaking referred to above not to further encumber the land without notice, the undertakings given by those two entities are not worthless.

37. Fourth, registration of the MSM Transfer and associated dealings will deprive the Applicant and Golden Stone of nothing because of the fraud exception in s 42(1) of the Real Property Act. I reject this submission for the reasons given earlier.

38. ACapital also expressed concern with the security of the funds paid on settlement of the MSM Contract which are held in the trust account of the lawyers acting in that transaction, and in the event of the injunction being granted requests the Court to also order for those funds to be paid into Court. No objection was taken by any party to this course, and the orders accommodate this request.

Orders

39. The Court makes the following orders:

40. Vacate Order 4 made on 9 July 2026.

41. Upon the undertakings to the Court set out in Order (8) below, ORDER that until further order the Third Defendant be restrained from registering, recording, or otherwise giving effect to any dealing or instrument lodged for registration in the NSW Land Registry Services (including without limitation, dealings with dealing numbers AW177929, AW177930 and AW177931) over the real properties contained in Certificate of Title Folio Identifier 10/270492, 25/270492, 27/270492, 30/270492 and 2/286016, other than a copy of these orders and any further restraining orders made by the Supreme Court of New South Wales in these proceedings.

42. Upon the undertakings to the Court set out in Order (8) below, ORDER that until further order the Plaintiff be restrained from exercising any power of sale in respect of the real properties contained in Certificate of Title Folio Identifier 10/270492, 25/270492, 27/270492, 30/270492 and 2/286016 without first providing 14 days’ written notice to the First Defendant’s solicitor.

43. By 4pm on 6 August 2026, the First Defendant and the Second Defendant are to file and serve a cross claim seeking final relief against parties including Magenta Shores Management Pty Ltd and ACAPITAL Finance No 5 Pty Ltd in relation to the dealings referred to in Order (2).

44. Costs reserved.

45. Liberty to apply.

46. These orders are to be entered forthwith.

47. NOTES that:

(a) The First, Second and Fourth Defendants by their counsel undertake to the Court that they will submit to such order (if any) as the Court may consider just for the payment of compensation, to be assessed by the Court or as it may direct, to any person (whether or not a party) adversely affected by the operation of the injunction in Order (2) granted by these orders. (b) Until the final determination of these proceedings or earlier order of the Court, the Second and Fourth Defendants by their counsel undertake to the Court that they will not, without first giving to the other parties in this proceeding not less than fourteen (14) days’ written notice of its intention to do so, either:

(i) grant any mortgage, charge or other encumbrance over; or (ii) transfer, assign or otherwise dispose of,

their interests in the real properties contained in Certificate of Title Folio Identifier 10/270492, 25/270492, 27/270492, 30/270492 and 2/286016.

(c) The Fourth Defendant by its counsel undertakes to the Court that if the injunction in Order (2) is later found to have been incorrectly granted (as determined at the final hearing, including any appeal), and any person is found entitled to damages pursuant to the Fourth Defendant’s undertaking as to damages, the Fourth Defendant will, to the extent that any such damages remain unpaid, not demand, enforce, receive or otherwise insist upon payment of any amount owing to it by the Second Defendant under the vendor finance arrangement entered into between the Second Defendant and the Fourth Defendant unless and until all such damages have been paid in full. (d) The Second Defendant by its counsel undertakes to the Court that if the injunction in Order (2) is later found to have been incorrectly granted (as determined at the final hearing, including any appeal), and any person is found entitled to damages pursuant to Second Defendant’s undertaking as to damages, the Second Defendant will, to the extent that any such damages remain unpaid, pay those damages in priority to any amount otherwise payable by it to the Fourth Defendant under the vendor finance arrangement entered into between the Second and Fourth Defendants.

9. NOTES that, within forty-eight (48) hours, the Plaintiff will instruct, on a without admissions basis, the law firm A Quantum Leap to pay into Court, within three (3) business days, such sale proceeds currently held in its trust account referrable to the sale of the interest of the First Defendant in the real properties referred to in Order (2) from the Plaintiff to Magenta Shores Management Pty Ltd, such funds to be held in Court pending further order.
10. To the extent necessary, grant liberty to apply for an order to vary any freezing order previously made by this Court to enable the payment into Court by A Quantum Leap under Order (9) of such sale proceeds as it holds in its trust account.
11. List the proceedings for directions before Richmond J on 13 August 2026 at 9:30am.

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Amendments

16 July 2026

Correction to representation of the Plaintiff/First Respondent. Typographical corrections at paragraphs 7 to 9, 32, 34, 36.