Guo v Wang

1. [1]

   The plaintiff, Wei Guo, holds unregistered equitable mortgages over seven properties located in Sydney, NSW (Security Properties) which are owned by either or both of the first and second defendants, Mr Nan Wang and his wife, Mrs Yan Wang (Mr and Mrs Wang). The equitable mortgages secure a loan of $400,000 made by Mr Guo to Mr and Mrs Wang on 28 July 2023. Following default in the repayment of the loan, Mr Guo seeks orders for monetary judgment and for the judicial sale of the Security Properties.

2. [2]

   Each property is subject to a first registered mortgage in favour of one of National Australia Bank Ltd (NAB), Westpac Banking Corporation (Westpac) or Australia and New Zealand Banking Group Ltd (ANZ) who are the third, fourth and fifth defendants respectively.

3. [3]

   The proceedings were commenced by the filing of a statement of claim on 30 June 2025. Mr and Mrs Wang filed a defence on 4 September 2025. Westpac has filed a submitting appearance and NAB and ANZ have filed notices of appearance. Mr and Mrs Wang have not filed any evidence. The only defendant to file any evidence is ANZ (see below at [8]).

4. [4]

   Mr Zhao, solicitor, appeared for Mr and Mrs Wang at the hearing today, but with instructions limited to making submissions regarding costs. Mr Wang observed the proceedings via AVL and Mrs Wang was present in Court. NAB and ANZ were each represented at the hearing. Except in relation to one matter concerning costs dealt with below, NAB and ANZ did not oppose the orders ultimately sought by the plaintiff at the hearing. Ms J Mee of counsel appeared for the plaintiff and the Court was assisted by her helpful submissions.

5. [5]

   For the reasons set out below, I am satisfied that the Court should make the orders sought but will allow the first and second defendants time to make submissions on costs.

Evidence

1. [6]

   Mr Guo relies on two affidavits affirmed by him. He also relies on affidavits of service of the statement of claim, a notice to occupier pursuant to r 6.8 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and a Possession of Land coversheet pursuant to r 6.8A of the UCPR on the occupiers of each of the Security Properties which occurred in July 2025. None of these occupiers has sought to be joined to the proceedings.

2. [7]

   I am satisfied that all of the documents in relation to the proceedings have been served on Mr and Mrs Wang and they have chosen not to take an active role in the proceedings beyond authorising Mr Zhao to make submissions on costs on their behalf.

3. [8]

   ANZ relied on an affidavit of Mr D Mustafa, solicitor, filed and served today which revealed that on 9 April 2026 ANZ obtained judgment in this Court against Mr and Mrs Wang for $1,278,620.20 and possession of three of the Security Properties over which it has a first mortgage (ANZ Security Properties). The lateness of the provision of this affidavit to the plaintiff was the basis for a costs order sought by the plaintiff against ANZ referred to below at [33].

Facts

1. [9]

   On 28 July 2023, Mr Guo (as lender and mortgagee) and Mr and Mrs Wang (as borrowers and mortgagors) entered into a Deed of Mortgage (Deed of Mortgage). On the previous day Mr and Mrs Wang (as mortgagors) signed mortgage forms in registrable form (mortgage forms) in relation to each of the Security Properties for which they are a registered proprietor. The mortgage forms incorporated the terms of mortgage memorandum Q860000 (mortgage memorandum). Copies of the Deed of Mortgage, mortgage forms and mortgage memorandum are in evidence.

2. [10]

   The mortgages were not registered, but Mr Guo lodged a caveat on the title of each of the Security Properties

3. [11]

   By Clauses 3.1 and 3.2 of the Deed of Mortgage Mr Guo (as lender) agreed to lend the amount of $400,000.00 (Loan Amount) to Mr and Mrs Wang (as borrowers). It is admitted in the defence that on or about 28 July 2023, Mr Guo advanced the Loan Amount to Mr and Mrs Wang pursuant to the Deed of Mortgage.

4. [12]

   In the defence Mr and Mrs Wang admit that by cl 6 of the Deed of Mortgage they were required to repay the Loan Amount on 28 July 2024 (Maturity Date), if they did not comply with the conditions for extension of the loan under clause 6.1.3, and that they did not comply with those conditions.

5. [13]

   The substance of the defence appears to be an alleged oral agreement of some kind, under which the loan would not be repayable until ‘Southern Ocean Bauxite Pty Ltd repays the Defendants for their investments’. However, Mr and Mrs Wang have not put on any evidence to support this alleged term, which is in any event contrary to the entire agreement clause found in cl 15.2 of the Deed of Mortgage and hence can be disregarded.

6. [14]

   Clauses 5.1 and 5.2 of the Deed of Mortgage provided that Mr and Mrs Wang were to pay to Mr Guo interest on the Loan Amount at the rate of 20% per annum, for the period from 28 July 2023 to the Maturity Date, on the Maturity Date.

7. [15]

   Clause 5.3 of the Deed of Mortgage provided that if Mr and Mrs Wang failed to pay any amount payable by them under that agreement on its due date, default interest will accrue on the outstanding Loan Amount at the rate of 22% per annum (Default Interest), which must be paid immediately on demand.

8. [16]

   The relevant provisions of the Deed of Mortgage regarding repayment of the Loan Amount, and the consequences of its non-payment, are cl 6, 8, 10, 11 and 12(a) which provide relevantly:

9. [17]

   In summary under these provisions:

   1. (1)

      If a Trigger Event (as defined in cl 10) occurs, the borrowers are required to take the steps referred to in cl 8(c) and if they fail to do so, the lender is entitled to exercise his power of sale under cl 11.

   2. (2)

      A Trigger Event includes a failure by the borrowers to repay 50% of the Loan Amount (and accrued interest) under cl 6.1.1 to cl 6.1.3. Those clauses contemplate that if the borrowers repay at least 50% of the Loan Amount (together with accrued interest) by the Maturity Date (being 28 July 2024) the repayment date for the balance of the Loan Amount would be extended for a further 12 months.

   3. (3)

      As it happened, no part of the Loan Amount was repaid before the Maturity Date and accordingly, the Trigger Event specified in cl 10(a) occurred, and the borrowers were required to take the steps set out in cl 8(c). It is clear from the evidence that they failed to do so, and consequently their obligation under that clause was not complied with.

   4. (4)

      This had two consequences under the Deed of Mortgage. First, there was an event of default under cl 12(a) with the result that the agreement terminated and all amounts owing to the lender became immediately due and payable. By cl 15.7, the obligation to pay interest at the default rate on the amount owing survived termination of the agreement.

   5. (5)

      Secondly, the lender became entitled to exercise the power of sale under cl 11. However, the lender is not exercising this power of sale, having elected instead to seek a judicial sale.

10. [18]

    I note one other feature of the Deed of Mortgage which is that beside the description of each Security Property in cl 3 of the information table in the Deed of Mortgage there is a reference to a ‘security amount’ for that property. This is stated to be $50,000 for each Security Property except for the one at St Ives for which it is $190,000.

11. [19]

    The only provision of the Deed of Mortgage which refers to the concept of a ‘security amount’ is cl 9 which provides:

12. [20]

    What cl 9 contemplates is that during the currency of the loan, the lender would on the borrowers’ repaying an amount equal to the ‘security amount’ for a particular Security Property discharge the mortgage over that property. That of course has not occurred, as the borrowers have not repaid any part of the Loan Amount to Mr Guo. Accordingly, clause 9 has ceased to have any relevance.

13. [21]

    This construction of clause 9 is confirmed by cl 11(3) which contemplates that following exercise of the power of sale, the sale proceeds would be applied, after discharging amounts owing to the first mortgagee of each property and the costs of the sale transaction, to paying ‘all outstanding Loan Amount and interest’ without any reference to a limit for the security amount.

14. [22]

    There is evidence from Mr Guo in his second affidavit regarding market appraisals of the market sale value of each of the Security Properties on 24 April 2026. Collectively, their estimated market value is well in excess of the debt owing to Mr Guo, but this does not take into account the total amount owing to Westpac, NAB and Westpac (as to which the only evidence is that ANZ has obtained the judgment debt referred to earlier).

Relevant principles

1. [23]

   The relevant legal principles to be applied in determining whether there is an equitable mortgage and whether an application for judicial sale should be granted were summarised by McGrath J in Bizcap Au Pty Ltd v Vo [2025] NSWSC 518 at [32]-[35]:

2. [24]

   These observations were followed by Pike J in Investment Group Australia Pty Ltd v Vinrec Australia Pty Ltd (in liq) [2025] NSWSC 612 at [27].

Determination

1. [25]

   The Deed of Mortgage together with the mortgage forms created an equitable mortgage over each of the Security Properties to secure the amount owing by Mr and Mrs Wang to Mr Guo under the Deed of Mortgage.

2. [26]

   Mr and Mrs Wang admit in the defence that they failed to repay to Mr Guo any of the Loan Amount of $400,000 on the Maturity Date or subsequently, and have failed to pay to Mr Guo any of the interest on the Loan Amount, for the 12-month period up until the Maturity Date (being $80,000). On or about 26 November 2024, Mr Guo received $10,000.00 from Mr and Mrs Wang in respect of unpaid interest, and that is the only amount paid by them to date.

3. [27]

   As a result of the breaches referred to in the previous paragraph, Default Interest (at 22% per annum) became payable on the Loan Amount from the Maturity Date (cl 5.3 of the Deed of Mortgage).

4. [28]

   Multiple demands for payment have been made, but not honoured.

5. [29]

   Accordingly, Mr Guo is entitled to judgment for the outstanding amount, which as at the date of hearing is $624,301.40.

6. [30]

   I am satisfied that it is appropriate to make orders for judicial sale of the Security Properties (other than the ANZ Security Properties which are to be sold by ANZ in exercise of its power of sale), noting that (a) while the amount owing to the first mortgagee of each property (NAB and Westpac) is not known, each has been joined and does not oppose the orders; (b) the orders contain a mechanism for the debts owing to the first and second mortgagees to be paid out of the proceeds of sale in accordance with their priority and any surplus to be paid to Mr and Mrs Wang; and (c) although there is a caveat on the title of three of the Security Properties, each of these caveats is later in time to Mr Guo’s caveat and the position of each caveator is protected in the proposed orders.

7. [31]

   Further, it is appropriate that the plaintiff be appointed to sell the Security Properties (other than the ANZ Security Properties) rather than an independent third party as each interested party has been notified and the plaintiff has a contractual power of sale under cl 11 of the Deed of Mortgage.

Costs

1. [32]

   At the hearing the plaintiff sought an order that the first and second defendants pay the plaintiff’s costs of the proceedings on an indemnity basis, relying principally on the contractual right of indemnity in cl 4 of the Deed of Mortgage. Mr Zhao sought time to make submissions on costs on behalf the first and second defendants. I will make orders to allow this to occur with a final determination of the appropriate costs order to be made on the papers.

2. [33]

   The plaintiff also sought an order that ANZ pay the plaintiff’s costs thrown away by reason of ANZ bringing the proceedings in this Court which resulted in the judgment referred to at [8] above, due to the lateness of being informed by ANZ that it was proposing to obtain possession of the ANZ Security Properties and enforce its power of sale. While there was delay in ANZ informing the plaintiff that on 9 April 2026 it had obtained orders for judgment and possession of those properties, the plaintiff has been on notice since 4 July 2025 that ANZ proposed to exercise its power of sale over those properties. In all the circumstances, the plaintiff could not reasonably have expected that an order for judicial sale would be made in his favour over those properties. Accordingly, I will not make an order for costs against ANZ.

Conclusion

1. [34]

   The orders of the Court are as follows:

   1. (1)

      Judgment for the Plaintiff against the First and Second Defendants in the amount of:

   2. (2)

      In relation to the costs of the plaintiff to be paid by the first and second defendants:

   3. (3)

      The determination of the final order as to costs payable by the first and second defendants to the plaintiff will be made on the papers.

   4. (4)

      Order pursuant to section 101 of the Civil Procedure Act 2005 (NSW) that post-judgment interest shall run on the Judgment Debt pursuant to Order (1) from the date of judgment and on the costs pursuant to the order made in accordance with Order 3 above from the date of that order, in each case at the rate of 22% per annum.

   5. (1)

      A declaration that each of the following properties is the subject of an equitable mortgage in favour of the Plaintiff as mortgagee (Security Properties) in order to secure all amounts owing to the Plaintiff under the Deed of Mortgage, Mortgage Forms and Mortgage Memorandum, including the Judgment Debt (and the costs payable pursuant to the order made in accordance with order 3 above).

   6. (1)

      An order for the judicial sale of each of the St Ives Property, the Lot 16 George Street Property, the Lot 18 George Street Property and the Lot 21 George Street Property (collectively, the Sale Security Properties), with the Plaintiff to be appointed as the Court’s agent effecting that sale.

   7. (2)

      As an aid to enforcement of Order (6) above:

   8. (3)

      An order that the Plaintiff is to act in the following fashion with respect to the sale of each of the Sale Security Properties:

   9. (4)

      An order that the Plaintiff be empowered to transfer the legal title of each of the Sale Security Properties to any purchaser(s) to effect the sale of that Sale Security Property.

   10. (5)

       An order that the Plaintiff be empowered to issue lapsing notices to the caveators on the title to the Sale Security Properties, on behalf of the registered proprietors, pursuant to section 74J of the Real Property Act 1900 (NSW).

   11. (6)

       An order that on settlement of the Plaintiff’s sale of each Sale Security Property, the relevant First Mortgagee provide to the Plaintiff a discharge of that party’s registered mortgage and any other documents of title in its possession or control as may properly be required for the completion of any such sale, in exchange for payment of the amount then due to the First Mortgagee pursuant to its registered mortgage over the Sale Security Property.

   12. (7)

       An order that the Plaintiff pay the proceeds of sale of each Sale Security Property in the following order:

   13. (8)

       The Court notes that:

   14. (9)

       The First and Second Defendants are ordered to pay the proceeds of sale of the Liverpool Property under the Liverpool Sale Contract in accordance with Order (12) above, as if were a Sale Security Property, provided that if the subsequent caveator on the title disputes the priority of the Plaintiff over that subsequent caveator, the First and Second Defendants are ordered to instead pay the net proceeds of sale, after payment of the amounts in Order (12)(a), (12)(b) and (12)(c), into Court.

   15. (10)

       The Fifth Defendant is ordered to pay the net proceeds of sale of the Browne Parade Property and the Lachlan Street Property, after paying the Fifth Defendant the amounts owing to it that are secured against those properties, as follows:

   16. (11)

       If any of the sale of the Liverpool Property, the Browne Parade Property or the Lachlan Street Property have not been completed by the date that is 3 months after the date of these Orders, the Plaintiff has liberty to apply to the Court for orders for the judicial sale of any or all of those properties.

   17. (12)

       Liberty to apply to the Court in relation to any matter arising in relation to the judicial sale of any of the Security Properties or the distribution of the proceeds from those sales, including for the payment of any amount out of Court.