My Financier Securities Pty Ltd v Chen [2020] NSWSC 273

Supreme Court New South Wales

Medium Neutral Citation: My Financier Securities Pty Ltd v Chen [2020] NSWSC 273 Hearing dates: 13 March 2020 Date of orders: 13 March 2020 Decision date: 13 March 2020 Jurisdiction: Equity - Real Property List Before: Parker J Decision: See [55] Catchwords: MORTGAGES AND SECURITIES — mortgages — mortgage contracts — form, validity and effect – solicitor's ad hoc authority to deliver executed mortgage instrument Legislation Cited: Evidence Act 1995 (NSW), s 69(2) Real Property Act 1900 (NSW), ss 36(11), 57, 58 Uniform Civil Procedure Rules 2005 (NSW), r 42.34 Cases Cited: Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Category: Principal judgment Parties: My Financier Securities Pty Limited (Plaintiff) Zhihua Chen (Defendant) Representation: Counsel: D Edney (Plaintiff) S Galitsky (Defendant)

Solicitors: Summer Lawyers (Plaintiff) Ian B Mitchell & Associates (Defendant) File Number(s): 2019/270652 Publication restriction: Nil

Judgment – EX TEMPORE Revised and reissued 25 March 2020 1. These proceedings arise out of a mortgage dispute concerning an abortive refinancing transaction in mid-2019. The plaintiff, My Financier Securities Pty Ltd ("MFS"), was the financier. A company called Australia Successful Holdings Pty Limited ("ASH") was the proposed borrower. That company appears to have been controlled by the defendant, Zhihua Chen. Mr Chen was to guarantee ASH's liabilities for the purposes of the transaction. 2. The terms of the proposed loan required Mr Chen to grant a mortgage to MFS securing his liabilities under the mortgage. The secured property was a strata plan unit in Sydney owned by Mr Chen which had been mortgaged to another financier. In the course of the negotiations, a solicitor apparently acting for Mr Chen delivered to MFS's solicitors a mortgage of the unit, in registrable RPA form, and apparently executed by Mr Chen. 3. For some reason, the transaction did not proceed. Subsequently, Mr Chen obtained from another source the funds necessary to pay out the pre-existing mortgage on the unit. So far as the register is concerned, the unit is unencumbered. 4. In May 2019, MFS had lodged a caveat over the property to protect its interests under the transaction. Subsequently, a lapsing notice was given on behalf of Mr Chen. That led to the commencement of these proceedings.