Wu v 330 Wattle Pty Ltd

Texts Cited: Nil

Category: Procedural rulings

Parties: Jonathan Sien Mun Wu (Plaintiff)
330 Wattle Pty Ltd (First Defendant)
National Australia Bank (Second Defendant)
XO Accounting Pty Ltd (Third Defendant)

Representation: Counsel:
M W Young SC (Plaintiff)
Solicitors:
Finn Roache Lawyers (Plaintiff)
Cochrane O’Higgins Lawyers (First Defendant)
Dentons (Second Defendant)

File Number(s): 2025/00332628

Publication restriction: Nil

JUDGMENT

1. By motion filed 26 November 2025, the plaintiff seeks default judgment against the first and third defendants.

2. I heard argument on the motion on 5 December 2025. I then sought further submissions from the parties which have now been provided.

3. Mr M W Young SC appeared for the plaintiff. Mr C Venegas (solicitor) appeared for the first defendant.

4. For the reasons set out below I am satisfied that default judgment should be granted.

Overview of the facts

5. The first defendant is a company associated with Mr Leon Mazarakis (Mr Mazarkis).

6. By Loan Agreement dated 14 March 2024 (March Loan Agreement), the plaintiff loaned the first defendant $250,000 for a period of one month, repayable on 14 April 2024. Mr Mazarakis guaranteed the loan. A sum of $50,000 was paid in part repayment of the loan on 16 May 2024. Proceedings were commenced in the District Court in relation to the $200,000 outstanding on under the March Loan Agreement. Default judgment was obtained in the District Court against both the first defendant and Mr Mazarakis on 20 May 2025 in the sum of $267,572.74. No payments have been made in reduction of that judgment debt.

7. By Loan Agreement dated 18 June 2024 (June Loan Agreement), the plaintiff entered into a further Loan Agreement with the first defendant as borrower and Mr Mazarakis as guarantor. The loan amount was $150,000 for one year. By letter dated 3 April 2025 the plaintiff contended that the moneys advanced under the June Loan Agreement were immediately due and payable by reason of a default under the March Loan Agreement.

8. Proceedings were then commenced in the District Court against the first defendant and Mr Mazarakis for recovery of moneys owing under the June Loan Agreement. On 22 July 2025, default judgment was entered against the first defendant and Mr Mazarakis in the sum of $152,495. No payments have been made in reduction of this judgment debt.

9. These proceedings were commenced by statement of claim filed 29 August 2025. The principal relief sought in the proceedings is for specific performance of the March Loan Agreement by the first defendant giving possession of the land located at 25/330 Wattle Street, Ultimo (the Land) to the plaintiff. Alternatively, relief in the same terms is sought by way of specific performance of the June Loan Agreement.

10. The statement of claim alleges that pursuant to the terms of the March Loan Agreement, the first defendant agreed to provide a mortgage over the Land as security for the loan advanced pursuant to the March Loan Agreement. Upon default in repayment, the plaintiff is entitled to take possession of the Land and to sell it.

11. The terms of the June Loan Agreement are relevantly the same.

12. Neither of the mortgages was registered on title and hence take effect as an equitable mortgage.

13. The second defendant is the National Australia Bank (NAB) who holds a registered first mortgage on the title to the Land. The plaintiff does not challenge the superior rights of the NAB with respect to the Land. The legal representatives for the plaintiff and the NAB have reached agreement as to the form of orders that should be made which the NAB does not oppose.

14. The third defendant is a company that has registered a caveat on title to the Land.

15. The proceedings were first before the Court on 26 September 2025. There was no appearance for the defendants. I made directions for defences and then evidence to be filed. The first and third defendants were notified of the orders by letter sent that same day.

16. The proceedings were relisted on 21 November 2025 when again there was no appearance for the defendants. I granted leave to the plaintiff to file a motion seeking default judgment.

17. The motion was served on each of the first defendant and the third defendant.

18. The motion was returnable for hearing on 5 December 2025.

19. On 2 December 2025 a Notice of Appearance was filed for the first defendant by Mr Claudio Venegas of Cochrane O’Higgins Lawyers (Mr Venegas).

20. Mr Venegas appeared for the first defendant on the hearing of the motion and opposed default judgment being entered against the first defendant. Mr Venegas relied on his own affidavit made 4 December 2025. He also provided written submissions to the Court on 5 December 2025 and further written submissions in reply to the written submissions of Mr M W Young SC dated 8 December 2025.

21. There was no appearance on behalf of the third defendant on 5 December 2025.

The alleged defence

22. Mr Young SC for the plaintiff accepted at the hearing on 5 December 2025 that now that the first defendant has appeared, if the Court is satisfied that the first defendant has an arguable defence the Court would ordinarily not enter default judgment but would permit the first defendant to file a defence. Mr Young SC contended, however, that the Court would not be satisfied that the first defendant has an arguable defence.

23. Mr Venegas’ affidavit did not include a draft defence to the statement of claim. Rather, Mr Venegas deposed to the fact that he believed that the first defendant had a bona fide defence to the claims advanced in respect of both the March Loan Agreement and the June Loan Agreement.

24. The affidavit further deposed as follows:

(a) that Mr Mazarakis instructs him that he was not served with the statement of claim and only became aware of the proceedings on receipt of the motion for default judgment; (b) he believes that the March Loan Agreement is the subject of a dispute in a creditors petition application filed by the plaintiff in the Federal Court of Australia; (c) the dispute is based on the contention that the March Loan Agreement was paid in full, and is null and void because it was not signed by all directors and the plaintiff has taken security under the March Loan Agreement of an asset that was not acquired by the borrowers; and (d) in relation to the June Loan Agreement, Mr Venegas believes that the first defendant has not signed the agreement, Mr Mazarakis’ signature has not been witnessed and the moneys were paid to a third party.

The essence of the dispute

25. On the hearing of the motion, the argument reduced to whether, in light of the default judgments obtained by the plaintiff against, inter alia, the first defendant in the District Court, it was open to the first defendant in these proceedings to contend, as Mr Venegas on behalf of the first defendant seeks to, that neither the March Loan Agreement or the June Loan Agreement was binding.

26. Mr Young SC contended that such arguments were prevented by reason of the principles of res judicata or issue estoppel. It was to this issue that I sought further submissions from the parties which were provided.

27. The further submissions from Mr Young SC referred to the authorities which have considered the question of res judicata or issue estoppel arising out of default judgments including Mandeville v Better Lending Pty Ltd (2021) 139 SASR 1; [2021] SASCA 28 (Mandeville) and Keybridge Capital Limited v Molopo Energy Limited [2024] NSWSC 779 (Keybridge).

28. Mr Venegas made three points in response:

(a) the scope of any estoppel arising from the District Court judgments is confined to what was necessarily determined by those judgments, namely, the existence of a debt and not the existence, validity or enforceability of an alleged equitable mortgage; (b) even if the plaintiff is correct as to res judicata, the equitable mortgage and possession claims should have been brought in the District Court proceedings such that the plaintiff is precluded by the principles of Henderson/Anshun estoppel and abuse of process from now bringing the claims; and (c) thirdly, the District Court judgments are themselves liable to be revisited or set aside in the Federal Court bankruptcy context, or the District Court.

Determination

29. It was not in dispute between the parties that a res judicata or issue estoppel could arise out of a default judgment.

30. In Mandeville, Doyle, Livesey and Bleby JJA stated at [45]-[46] and [48]:

[45] Strictly speaking, then, a default judgment is capable of giving rise to res judicata. However, that begs the question. The availability of a plea of res judicata where a default judgment has been entered depends on what it is that default judgment directly decides.

[46] Then, while the principles of res judicata and issue estoppel are distinct, where a default judgment is concerned, there is a commonality of inquiry. While a plea of res judicata asks precisely what cause of action has passed into judgment so that it has merged, issue estoppel asks precisely what state of fact or law that has been contested has been necessarily decided by the judgment.

…

[48] It is axiomatic from the above authorities that a res judicata can only be established by a final judicial decision. The right or cause of action has merged into the judgment and no longer had an independent existence. Similarly, in the case of issue estoppel, some state of fact or law must necessarily have been decided by a judgment such that a party is estopped from agitating that state of fact or law in some other claim.

31. The Court further stated that in determining the scope of the estoppels, it is necessary to look at the record, being at least the judgment and the pleadings to see what was decided: see [55] to [63].

32. In Mandeville, the Court determined that default judgment in a claim pleaded under a specified loan agreement determined that the moneys were owed and pursuant to the pleaded loan agreement: see [87].

33. In Keybridge, Nixon J stated at [85]-[88]:

[85] In order to establish that res judicata operates to preclude a cause of action being raised, it is necessary to establish that “the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment”: Blair v Curran at 532 per Dixon J.

[86] This does not require “absolute identity”, but rather “substantial correspondence” between the sources and incident of rights asserted in each set of proceedings, such that it is sufficient that “the rights are of a substantially equivalent nature and cover substantially the same subject matter”: Clayton v Bant (2020) 272 CLR 1; [2020] HCA 44 at [34] per Kiefel CJ, Bell and Gageler JJ. For example, in Trawl Industries of Australia Pty Ltd (in liq*) v* Effem Foods Pty Ltd (1992) 36 FCR 406 at 422; [1992] FCA 272, Gummow J held that a previous judgment in respect of a statutory claim for misleading or deceptive conduct prevented claims being brought both for misleading conduct and in negligence, on the basis that the “gist of the recovery sought both in negligence and for contravention of the TP Act is the same; the question is how much worse off is Trawl as a consequence of the acts and omissions of Effem?”

[87] As noted above, “only the actual record is relevant” when considering res judicata: Jackson at 467; Zetta Jet at [23]. That is, the Court is “restricted to the examination of the plaintiff’s pleadings and the Court’s orders”: Pollnow v Armstrong [2000] NSWCA 245 at [13] per Meagher JA (Priestley and Sheller JJA agreeing).

[88] Where a final order is made by consent, “care must be taken in determining exactly what has been concluded by the judgment”: Zetta Jet at [27]. In Macquarie Bank Ltd v National Mutual Life Association of Australia Ltd (1996) 40 NSWLR 543 at 559, Clarke JA said that what is necessary is “an examination of the factual circumstances relied upon to establish the right to relief in each case in order to determine whether there is a sufficient identity between them to found the conclusion that the same cause of action was in question in both cases”.

34. The statement of claim in the District Court proceedings concerning the March Loan Agreement expressly pleaded the March Loan Agreement, particularising that it was signed by all parties and $200,000 remains outstanding under the March Loan Agreement.

35. The position is the same in relation to the second District Court proceedings concerning the June Loan Agreement – the Loan Agreement is pleaded, particularised as having been signed by all parties and having been breached.

36. An examination of the record in each of the two District Court proceedings necessarily reveals that they determined that the monies were owing pursuant to the respective loan agreements. They necessarily determined that the loan agreements were binding because, as alleged, they were signed by the parties, and the monies were owing under each – the very matters that the first defendant seeks to reagitate.

37. The principles of estoppel prevent these matters being reagitated in these proceedings.

38. I turn now to consider the second matter relied on by the first defendant – namely Henderson/Anshun estoppel. As I understood the submission, it was that when commencing the District Court proceedings, the plaintiff could and should have:

(a) joined a claim for enforcement of the alleged equitable mortgages by way of additional relief; or (b) pleaded both money and possession/judicial sale in one proceeding.

39. It is said that the District Court would have jurisdiction to determine such claims under s 134(1)(h) of the District Court Act 1973 (NSW). No authority was referred to in support of these contentions.

40. Section 134(1)(h) relevantly provides that the District Court shall have the same jurisdiction as the Supreme Court, and may exercise all the powers and authority of the Supreme Court, in proceedings for:

(h) any equitable claim or demand for recovery of money or damages, whether liquidated or unliquidated (not being a claim or demand of a kind to which any other paragraph of this subsection applies), in an amount not exceeding the Court’s jurisdictional limit.

41. It is not obvious how this subsection would give the Court jurisdiction as claimed.

42. More relevantly, s 133(1) provides that the District Court has the same jurisdiction as the Supreme Court in proceedings for possession of land but only where the land is valued at less than $20,000. The Land in question is, not unexpectedly, valued at much more. The District Court would thus not have jurisdiction to make the possession orders sought.

43. I am not satisfied that the District Court would have jurisdiction to entertain all of the claims identified. The Henderson/Anshun estoppel contention thus falls away.

44. I also reject the third basis relied on by the first defendant. No application has been made to set aside the District Court default judgments. Unless and until set aside, they remain valid and enforceable. In any event, I am not satisfied that any basis has been established to set them aside.

45. For these reasons I am satisfied that the first defendant does not have an arguable defence to the statement of claim. Default judgment should thus be entered against the first defendant. The third defendant has not appeared and default judgment should be entered against it as well.

46. The orders sought by the plaintiff seek possession within 14 days of the making of these orders. In my view this period is too short, particularly given the time of year. In my view a period of 45 days is more appropriate.

Orders

47. The Court orders that:

48. Default judgment be granted to the Plaintiff as set out below.

49. The agreement made on or about 14 or 15 March 2024 between persons including the Plaintiff and the First Defendant ("the First Agreement") be specifically performed by the First Defendant giving to the Plaintiff possession of the land situated at and known as 25/330 Wattle Street, Ultimo, in the State of New South Wales, being the land contained in Folio Identifier 25/SP42936 ("the Land").

50. In the alternative, the agreement made on or about 18 June 2024 between persons including the Plaintiff and the First Defendant ("the Second Agreement") be specifically performed by the First Defendant giving to the Plaintiff possession of the Land.

51. By way of enforcement of the above order for specific performance (or, in the alternative, by way of facilitating the orders for judicial sale set out below), judgment to the Plaintiff as against the First Defendant for possession of the Land and grant leave to issue forthwith a Writ of Possession, with that Writ not to issue until 45 days have elapsed from the date of this order.

52. The First Defendant deliver to the Plaintiff vacant possession of the Land within 45 days of the making of this order.

53. The Land be sold by the Plaintiff in such manner and on such terms as the Court may in these orders and from time to time direct, but except to the extent of such direction, as the Plaintiff sees fit.

54. Direct the Plaintiff in selling the Land shall act in the following fashion:

(a) prior to offering the Land for sale, the Plaintiffs shall consult with the Second Defendant with respect to the sale of the Land and obtain from the Second Defendant a non-binding indicative payout figure for the Second Defendant's mortgage over the Land ("the Minimum Price"), which shall including a reasonable allowance for further interest and costs under that mortgage up to the anticipated date of completion of the sale; (b) the Plaintiff shall not offer the Land for sale at a price that is less than the Minimum Price; and (c) in the event that the Second Defendant does not provide to the Plaintiff the Minimum Price within 14 days of request, or if the Minimum Price is a figure that the Plaintiff reasonably believes is unlikely to be realised or exceeded on a sale of the Land, the Plaintiff shall not proceed to sell the Land or to offer it for sale, but shall instead cause the matter to be relisted before the Court for the purpose of the Court making directions as to a minimum reserve price for any auction and minimum sale price for any sale by private treaty.

8. The Second Defendant supply to the Plaintiff the Minimum Price within 14 days of request by the Plaintiff.
9. The Third Defendant remove caveat AV144951 from title of the Land to facilitate the sale of the Land at such time as the Plaintiff may reasonably request.
10. The Plaintiff is to act at all times in relation to the selling of the Land in accordance with the duties owed by a mortgagee in exercising a mortgagee's power of sale.
11. After the payment of all expenses with respect to the sale of the Land, the sale proceeds of the Land be applied as follows:

(a) first, so as to discharge the Second Defendants' mortgage over the Land; (b) second, so as to discharge the Plaintiff's mortgages over the Land; (c) third, so as to discharge the Third Defendant's interest in the Land (if any) and any further encumbrances of the Land in accordance with the terms thereof and in order of their priority; and (d) fourth, any residue be paid to the First Defendant.

12. The Plaintiff is hereby appointed to transfer the Land to the purchaser or purchasers thereof upon any such sale.
13. Grant liberty to the parties, and to any other person claiming an interest in the Land, to apply with respect to any matter that may arise with respect to the sale of the Land or the distribution of the sale proceeds.
14. The first defendant pay the plaintiff’s costs of the proceedings.
15. In relation to the selling of the Land:

(a) the Plaintiff is to provide the Second Defendant with fortnightly updates in relation to any sale the Plaintiff conducts pursuant to these orders; (b) in any sale conducted by the Plaintiff, the Second Defendant is to have the opportunity to review and approve the amount of any sale expenses to be paid out in priority to the Second Defendant, which sale expenses are to be reasonable; and (c) nothing in these orders precludes the Second Defendant from exercising its rights as first-registered mortgagee, including taking possession of or selling the Land at any time in accordance with its rights under and in connection with the mortgage it holds over the Land.

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