JimJim Investments Pty Ltd v MBC Miranda Nominees Pty Ltd

This is the final hearing of proceedings commenced by statement of claim filed on 3 December 2024 by JimJim Investments Pty Ltd as plaintiff against the defendants MBC Miranda Nominees Pty Ltd, Mr Qinglong Meng and BC Invest Loans Pty Ltd. The proceedings concern the enforcement of a mortgage and guarantee securing a loan advanced to MBC and guaranteed by its director Mr Meng in relation to two Miranda properties. BC Invest has a registered mortgage over the Miranda properties and has exercised its power of sale. JimJim’s interest in those properties is the subject of caveats which postdate BC Invest’s interest.

For the reasons which follow, there will be judgment for JimJim with costs on the indemnity basis. There will also be an order (not opposed by BC Invest) that BC Invest pay to JimJim any surplus remaining from the mortgagee sale of the Miranda properties.

JimJim was represented by Mr A J Macauley of Counsel with Mr B Madden of Counsel. There has never been any appearance or participation in the proceedings by MBC and Mr Meng. BC Invest was represented by Ms J Yu, solicitor. BC Invest did not oppose the orders sought by JimJim.

The first point to record is that the Court is satisfied that, by reason of proven compliance with orders for substituted service made earlier by the Registrar, MBC and Mr Meng have properly been put on notice of these proceedings and, in particular, today's hearing. They were called outside the Court at the commencement of today's hearing and there was no appearance by or for them.

MBC and Mr Meng have never filed any defence to the statement of claim, notwithstanding having been served with it. It follows that the allegations in the statement of claim are taken to have been admitted by them (Uniform Civil Procedure Rules 2005 (NSW) Pt 14 r 14.26(1)).

The total amount of the loan advanced by JimJim to MBC is $1,086,500. While the original arrangements for the loan were oral, the terms were recorded after the initial advances in a written loan agreement executed as a deed by the parties on 27 January 2022. Under the agreement, JimJim was the lender, MBC was the borrower and Mr Meng was described as the guarantor of MBC’s obligations under the agreement. There was in evidence a separate deed of guarantee executed by Mr Meng in favour of JimJim.

While the original amount advanced in two tranches was $1 million pursuant to the agreement, there was a further advance of $86,500. I accept Mr Macauley's submission that on the proper construction of the agreement, the additional advance also falls within the terms of the agreement.

While there were some small initial payments of interest, no funds have been paid since March 2022, whether by way of interest or repayment of principal. There can be no doubt that MBC and Mr Meng are in default of their obligations to JimJim under the agreement and the guarantee.

Turning to the orders sought today by JimJim, the first is for judgment against MBC and Mr Meng. I am satisfied on the evidence that the principal sum of $1,086,500 has not been repaid, which together with the interest under the agreement up to and including today gives rise to a debt of $2,410,893.11 owing to JimJim. There will be judgment against MBC and Mr Meng for that amount.

The second order sought is for a declaration that the judgment sum together with the JimJim’s costs of the proceedings are secured by way of an equitable charge over the Miranda properties. Under the agreement, the Miranda properties are identified in the summary section as "Security Property". Security is dealt with in cl 5 of the agreement:

There is no defined term “Security” in the agreement. The Court construes the two references to “Security” in that clause to mean “Security Property”. The other infelicities in the clause do not detract from its clear meaning.

In the events which happened, Mr Meng did not become the registered proprietor of the Miranda properties. They remained with MBC. I accept Mr Macauley's submission that in those circumstances MBC (which was Mr Meng’s corporate alter ego), pursuant to its obligation to provide alternative security property, and with Mr Meng’s consent, evinced a sufficient intention to create an equitable charge over the Miranda properties in favour of JimJim notwithstanding Mr Meng having failed to become their registered proprietor (Champion Homes Sales Pty Limited v JKAM Investments Pty Limited [2014] NSWSC 952 at [68] and [69] per Darke J). To conclude otherwise would be to permit Mr Meng and the company he controlled to have left JimJim unsecured.

Having regard to the evidence which has been tendered, including the terms of the agreement, I am satisfied that there is a proper basis to make the declaration sought by JimJim of the existence of an equitable charge in its favour over the Miranda properties. There was no dispute that JimJim's secured interest ranks after BC Invest as the registered mortgagee.

BC Invest has exercised its right as mortgagee to sell the Miranda properties. The contracts of sale are expected to settle in February 2026. There was no opposition by BC Invest to the third order sought by JimJim, being an order against BC Invest that any surplus from its sale of the Miranda properties should be paid to JimJim. While I briefly gave thought to making an order that any surplus be paid into Court to allow for what, on the evidence, is the unlikely event that any further unnotified claimants may emerge, I am satisfied that there is a proper basis for the present order to be made. That is because there are no other caveats registered over the Miranda properties and there is no evidence of any other possible claimant. Furthermore, the amount of the surplus to which JimJim will be entitled is relatively small. In those circumstances, I am satisfied that the just, quick and cheap disposition of these undefended proceedings is to make an order now for the surplus, whatever it is, to be paid by BC Invest to JimJim.

Finally, JimJim seeks an order that MBC and Mr Meng pay JimJim's costs of the proceedings on the indemnity basis. The basis for that order is what might be described as the usual term in both the agreement and guarantee that they are each liable for all of JimJim's costs incurred in enforcing those documents. While not necessarily decisive, the existence of such a provision is relevant to the exercise of the Court's general costs discretion. I am satisfied in the present case that, by reason of that entitlement and again having regard to the overarching purpose (in this case being to negate the theoretical possibility of a separate suit by JimJim for the difference between party/party and indemnity costs), JimJim should be awarded its costs of these proceedings on the indemnity basis.

Finally, I record the Court's gratitude to counsel for their detailed written submissions and careful exposition of the case. The Court was able comfortably to proceed to hear this matter on the evidence in the absence of MBC and Mr Meng with JimJim conducting itself in accordance with the principles I identified in Mazzeo (by his tutor NSW Trustee & Guardian) v Sidoti [2025] NSWSC 921 at [25] as to undefended hearings.