Australia, Aug. 4 -- New South Wales Land and Environment Court issued text of the following judgement on July 3:

1. These reasons concern the second defendant's application made by notice of motion filed on 5 May 2025 for an order that the plaintiff pay security for its costs of these proceedings in the sum of $219,213.50, or such other sum as the Court may determine.

2. The plaintiff is North Rocks St Pty Ltd (North Rocks). It sues in its capacity as trustee of the North Rocks Unit Trust.

3. North Rocks was the owner of land at North Rocks, which it sold to the first defendant, City Garden Australia Pty Ltd (City Garden), pursuant to a deed entered into in December 2016. The land was transferred to City Garden in February 2017.

4. City Garden acquired the land for the purpose of development.

5. The second and third defendants, GEMI 130 Pty Ltd (GEMI) and Bridge Street Capital No. 2 Pty Ltd (Bridge Street), lent funds to City Garden for the purpose of the development. It is convenient to refer to them together as the Lenders.

6. City Garden is now in liquidation. The Lenders have appointed the fourth defendant as the receiver and manager of the assets of City Garden (the Receiver).

7. A dispute between City Garden and the Lenders in relation to the validity and enforceability of a mortgage granted in favour of the Lenders of the North Rocks land was the subject of earlier proceedings that were determined in favour of the Lenders on the basis that, as GEMI pleads in its defence in the present proceedings, the Lenders were entitled to rely on the assumptions in ss 128 and 129 of the Corporations Act 2001 (Cth) in relation to the loan agreement, guarantees, mortgage and ancillary documents: City Garden Australia Pty Ltd (in administration) as trustee for the Ming Tian Garden Unit Trust v Meng Dai [2023] NSWSC 1498; City Garden Australia Pty Ltd (in liq) v Dais (2024) 115 NSWLR 468; [2024] NSWCA 238.

8. While those earlier proceedings were on foot, the title to the North Rocks land (or the lots into which the land had been subdivided as part of the development) recorded a caveat lodged by the Lenders in respect of their claimed interest as mortgagee, and two caveats lodged by North Rocks in respect of its claimed equitable interest in six lots pursuant to a covenant allegedly forming part of the terms of the sale of the land to City Garden. North Rocks contends that the covenant obliges City Garden to transfer the unencumbered title to those six lots to North Rocks.

*Rest of the document can be viewed at: (https://www.caselaw.nsw.gov.au/decision/197bec742983c6cfe53ef8de)

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