Supreme Court Rules 2000 (Tas), r 356

Land Titles Act 1980 (Tas), s 78

A New Tax System (Goods and Services Tax) Act 1999 (Cth), s 105-5

Woods v Deputy Commissioner of Taxation [2011] TASSC 68; Spencer v Commonwealth (2010) HCA 28; (2010) 241 CLR 118; Martin v NRMA Insurance Ltd [2000] FCA 773; Port v Alexopoulos (No 2) [2011] TASSC 37; Spellson v George [1992] NSWCA 254; (1992) 26 NSWLR 666; Dobbs v National Bank of Australasia Ltd [1935] HCA 49; (1935) 53 CLR 643; Nichol v Discovery Africa Ltd [2016] FCAFC 182; Jefferson Ford Pty Ltd v Ford Motor Co of Australia Ltd [2008] FCAFC 60.

Judgment Number: [2025] TASSC 65

EQUITY-ONE MORTGAGE FUND LIMITED v VALKYRIE PROPERTY VENTURES PTY LTD and TARRANT JAMES DERKSEN and

1. This is an interlocutory application brought by the plaintiff, Equity-One Mortgage Fund Limited, applying for an order for summary judgment for the plaintiff against the defendants under r 356(1) of the Supreme Court Rules 2000. These are my reasons for rejecting the application on the basis that the plaintiff has not demonstrated that the defendant does not have a defence to the claim.
2. The plaintiff's action seeks to recover from the defendants a balance amount outstanding under various loan, mortgage and guarantee agreements, together with costs on an indemnity basis as provided in those agreements. It is common ground that the first defendant was in default of its obligations to the plaintiff and that the plaintiff thereafter exercised its power of sale of the security property. The security property has now been sold, but there is a dispute about whether any indebtedness does, or should, exist after the sale.

1. Rule 356(1) provides as follows:

"356 Application by plaintiff for summary judgment

(1) If a statement of claim has been served on a defendant in an action and the defendant has appeared in the action, the plaintiff may apply to a judge for judgment against the defendant on the ground that the defendant -

(a) does not have a defence to a claim included in the writ or to a particular part of that claim; or

(b) does not have a defence to that claim or part, other than as to the amount of any damages claimed."

1. It is clear that r 356 places the obligation upon the plaintiff to satisfy the court that the defendant does not have a defence. If the plaintiff persuades the court that the facts are undisputed and the law is clear, summary judgment should be granted.
2. The principles governing summary judgment require that the power be exercised with great care and only where it is clear there is no real question to be tried: See Porter J's review of the principles in Woods v Deputy Commissioner of Taxation [2011] TASSC 68. A party should not be denied a trial unless the court has a high degree of certainty about the ultimate outcome or a concluded determination that the defence is bound to fail: Spencer v Commonwealth (2010) HCA 28; (2010) 241 CLR 118 at [24]; Martin v NRMA Insurance Ltd [2000] FCA 773 at [9]. The judge must be fully persuaded that there are no facts which could lead to an inference that a defence might succeed: Port v Alexopoulos (No 2) [2011] TASSC 37 at [5]. No order should be made where there is any serious conflict of fact or a question of credit, even if the judge holds a strong prima facie view as to the result: Spellson v George [1992] NSWCA 254; (1992) 26 NSWLR 666 at 678.

1. In support of its application, the plaintiff relies on the affidavits of (a) Dean Dimos Koutsoumidis affirmed 10 September 2025; and (b) Christopher Yam affirmed 10 September 2025. The defendants rely upon the affidavit of Anthony Laning sworn 30 September 2025.

1. The writ filed on 21 May 2025 was endorsed as a liquidated claim as follows:

"The plaintiff's claim against you is for judgment for the full amount of a loan, being $162,888.40 as at 9 April 2025, obtained by the first defendant from the plaintiff on 23 December 2022 pursuant to a written facility agreement and guarantee dated 12 December 2022 made between the plaintiff, the first defendant, the second defendant and the third defendant and costs to be taxed.

IF you pay the amount claimed plus the sum of $3,983.55 for costs to the plaintiff or to the practitioner for the plaintiff within 7 days, this action will be at an end."

1. However, by the time the statement of claim was filed on 8 July 2025, the security property had been sold and therefore the statement of claim sought relief in different terms:

"1 Judgment of this Court that the plaintiff recover against the defendants:

(b) interest on the amount of $23,972.96 at the rate of 13.95% per annum pursuant to written facility agreement and guarantee and its terms and conditions made between the plaintiff and the defendants signed by the defendants on 12 December 2022 (facility agreement and guarantee) from 6 June 2025 to the date of payment or judgment;

(c) costs on the indemnity basis pursuant to the facility agreement and guarantee, alternatively, costs to be taxed.

1. Any judgment or order as the case requires even though the judgment or order has not been sought in this statement of claim, in the writ filed 21 May 2025 or in the concurrent writ filed 21 May 2025."

1. The background facts are that on 12 December 2022, the defendants entered into a "facility agreement and guarantee" which comprised a loan agreement, a mortgage and guarantees. In accordance with those documents the plaintiff advanced $182,000 to the first defendant on 23 December 2022, secured by a mortgage over residential land at 86 Benjamin Terrace in New Norfolk. The second and third defendants guaranteed repayment and indemnified the plaintiff against any losses. The first defendant defaulted on repayment by the termination date as outlined in a notice dated 11 March 2025. The plaintiff exercised its power of sale under the mortgage and sold the property by contract of sale dated 30 April 2025 for $175,000. There is no dispute with any of the foregoing.
2. In the statement of claim, the plaintiff pleaded that the loan balance was $177,407.95. The amount claimed in the statement of claim is pleaded as being the balance owing under the loan and/or mortgage. The plaintiff pleads that the sale proceeds were $153,434.89 which left a shortfall of $23,972.96 on the mortgage debt of $177,407.85. The plaintiff seeks to recover the shortfall amount of $23,972.96 together with interest at 13.95% pa from 6 June 2025, until payment or judgment together with costs on an indemnity basis under the loan agreement.
3. The defendants deny that completion occurred on 5 June 2025, but solely for the purposes of this exercise and in light of the unchallenged evidence of that fact contained in the affidavit of Mr Koutsimidis at par 11, no other conclusion is reasonably open.
4. The defendants' amended defence disputes any indebtedness to the plaintiff in light of the plaintiff's failure to exercise its power of sale in accordance with the law.

1. On the plaintiff's case, the relevant starting point for the calculation of the defendants' indebtedness is the loan balance at 5 June 2025, being the date of the completion of the sale of the security property. The plaintiff pleaded the balance was $177,407.85.
2. The statement of claim at par 3(c) pleads that, by the facility agreement and guarantee:

"(c) the first defendant agreed to pay to the plaintiff the balance, if any, of the Debt (as defined in the facility agreement and guarantee) on the Termination Date (as defined in the facility agreement and guarantee)."

1. The defendants deny par 3(c), pleading, in effect, that things are not that straightforward, and that the "facility agreement and guarantee" was subject to certain express and implied limitations. The defendants submit that these limitations prevent any conclusion that their defence is bound to fail. I return to this point, below.
2. The plaintiff claims the shortfall between the amount owing under the facility agreement and guarantee less the proceeds of sale of the security property. The statement of claim pleads that the starting point is the amount due and owing on the mortgage. At par 9 of the statement of claim - which is denied - the plaintiff pleads:

"The money which was due and owing on the mortgage as at 5 June 2025 was $177,407.85 (money due and owing on the mortgage)".

"The purchase-money received by the plaintiff from the sale of the property (purchase-money) were insufficient to pay in full the money due and owing on the mortgage.

Less money due and owing on the mortgage $177,407.85

1. In his affidavit at par 14, Mr Koutsimidis deposes to amounts by way of sale proceeds and loan balance as at the same date which differ from the pleaded amounts:

"Pursuant to the facility agreement and guarantee, the defendants are jointly and severally liable, as at 5 June 2025, to pay to the plaintiff $27,655.76 calculated as follows:

Less money due and owing on the mortgage $180,210.65

together with interest and costs on a full indemnity basis."

"The money which was due and owing on the mortgage as at 5 June 2025 was $180,210.65 (money due and owing on the mortgage)".

The discrepancy between Mr Koutsimidis's figures of $180,210.65 in contrast to the pleaded amount of $177,407.85 was not explained.

1. Mr Koutsimidis's affidavit exhibited the relevant loan statement (see judges papers p 157). It was not apparent that the relevant loan statement contained a balance of $180,210.65 on any date. The loan statement also records that the closing balance on 1 June 2025 was $148,339.83. The next entry in the loan statement is for 11 June 2025 and provides an opening balance for that day of $148,999.83.
2. It is also probably relevant to note that the writ dated 21 May 2025 contained an endorsement that "the full amount of [the] loan ... as at 9 April 2025" was $162,888.40. That statement does not contain a specific entry for 9 April 2025, but it records a balance of $141,520.93 as at 4 April 2025 and $142,883.40 as at 1 May 2025. All of these circumstances undermine the assertion by the plaintiff that there is no serious conflict of fact such as to warrant a hearing.
3. The plaintiff's counsel referred to cl 311 of the mortgage and to cl 13.5 of the facility agreement and guarantee to establish that the loan statement should be regarded as conclusive proof, binding on the parties, as to the amount and existence of the defendants' indebtedness. Counsel for the plaintiff also relied on Dobbs v National Bank of Australasia Ltd [1935] HCA 49; (1935) 53 CLR 643 as high authority that courts should uphold the evidentiary effect of certified loan statements issued under clauses such as cl 311 and cl 13.5. Accepting for the moment that the loan statement is issued by the lender and signed by its authorised officer, in my view it does not provide prima facie evidence that "the money which was due and owing on the mortgage as at 5 June 2025 was $177,407.85", as pleaded at par 9 of the statement of claim. Firstly, the certified loan statement does not provide any evidence of the money due and owing on the mortgage as at 5 June 2025. Secondly, to the extent that any amount due and owing on the mortgage as at 5 June 2025 might be inferred from the certified loan statement, that would be an unascertainable amount but which is less than $148,999.83. On the plaintiff's approach, if the loan statement is to be conclusive proof of something, then it may conclusively prove that the defendants indebtedness was less than $148,999.83.
4. It seems clear from this analysis that there are factual issues to be resolved in order to determine the dispute about the defendants' indebtedness. In my view, the disputed allegation that $177,407.85 was due and owing on the mortgage as at 5 June 2025 presents a clear issue for determination at the trial.

1. The defendants submit that their amended defence raises interconnected issues involving:
   1. the plaintiff's duty to act in good faith and obtain the best price reasonably achievable; and
   2. the interpretation and application of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), Div 105 (supplies in satisfaction of debts) and Div 40 (input taxed supplies); and
   3. the nature and use of the security property, the first defendant's GST status, and how the plaintiff accounted for GST.
2. The defendants submit that these issues are raised by par 3 of their amended defence in which they plead that their obligations to pay any shortfall after the sale of the security property are limited by express or implied terms to the effect that:
   1. the plaintiff must exercise its power of sale in good faith, reasonably, and considering the defendants' interests;
   2. any loss, damage, costs, or expenses forming part of the debt must be incurred in good faith, reasonably, and with regard to the defendants' interests; and
   3. the second and third defendants' guarantee obligations are subject to these same limitations; and their indemnity obligation is similarly limited to costs incurred in good faith and reasonably.
3. The amended defence at par 3 pleads that the terms outlined above are to be implied by law or fact, by operation of the Land Titles Act 1980, s 78 (as to how the power of sale is to be exercised) and the Legal Profession Act 1997, s 319(7) and/or s 198 of the Legal Profession Uniform Law (NSW) (as to the costs incurred in exercising the power of sale).
4. The defendants plead that these terms are to be implied because they are:
   1. reasonable and equitable;
   2. necessary for business efficacy;
   3. so obvious they go without saying;
   4. capable of clear expression; and
   5. not inconsistent with any express term.

1. The defendants submit that their amended defence raises the issue that costs calculated on a full indemnity basis have been charged to the loan account in a manner which deliberately circumvents the assessment procedures in the Legal Profession Act 1997. The defendants allege that because the first defendant is a non-associated third-party payer for the purposes of the Legal Profession Act, s 319, the plaintiff was obliged to provide it with sufficient information so that it might engage the costs assessment process under s 319, but it deliberately failed to do so. The defendants submit that the evidence establishes that when their legal practitioner, Mr Laning, wrote to the plaintiff's legal practitioner, Mr Yam, on 9 September 2025 setting out a written request under s 319(7), Mr Yam did not respond to the request. The defendants submit that the Legal Profession Act, s 319(7) required the plaintiff's lawyers to provide the defendants, on their written request, with sufficient information to allow them to consider making, and if thought fit to make, an application for a costs assessment but the plaintiff refused to do so.
2. The defendants submit that because the plaintiff has refused to provide them with any notice of these legal costs (which are a contested component of the defendant's alleged indebtedness to the plaintiff) the plaintiff deprived them of the opportunity to apply for an assessment of those costs. The costs appear to be significant: Parsons & Partners legal costs credited to the first defendant's loan account amounted to $33,974.98: see invoices #7759 ($2,602.99) #8637, ($4,093.96), #8806 ($23,651.54) and #8807 ($3,626.49). It is common ground that these costs are a component of the disputed indebtedness pleaded at par 10 of the statement of claim.
3. On this issue, the plaintiff relies on the facility agreement and guarantee which requires the defendant to indemnify it for enforcement and legal expenses. The plaintiff submitted that any challenge to these costs under the Legal Profession Act is a separate process and does not have any impact on the defendants' liability. The plaintiff submitted further that under s 319(5) of the Legal Profession Act, a costs assessment application must be made within 60 days of receiving a bill, or from the date the costs were paid and no such application was made within that period nor has any application been made out of time under s 319(6).
4. The extent of the defendants' indebtedness to the plaintiff, if any, is a live issue. At the very least, the determination of the issue will require the Court to construe the provisions of the Legal Profession Act , s 319. The determination will also involve questions of fact relating to the contentions as to the requirement for notice. It is a live issue whether the financial "starting point" is the amount pleaded by the plaintiff as at 5 June 2025, or some lesser amount, having regard to the component of legal costs and whether that component is liable to assessment under s 319 prior to the determination of the defendant's indebtedness, if any, by the Court. I accept the defendants' submission that par 3 of the amended defence clearly presents this as an issue involving mixed questions of fact and law for determination at the trial.

1. The defendants submit that GST was wrongly remitted on the sale of the security property and the extent of their indebtedness, if any, should be reduced by that amount.
2. Section 105-5 of the GST Act is in the following terms.

"105‑5 Supplies by creditors in satisfaction of debts may be taxable supplies

(a) you supply the property of another entity (the debtor) to a third entity in or towards the satisfaction of a debt that the debtor owes to you; and

(b) had the debtor made the supply, the supply would have been a taxable supply.

(a) you made the supply in the course or furtherance of an enterprise that you carry on; or

(b) you are registered, or required to be registered.

(3) However, the supply is not a taxable supply if:

(a) the debtor has given you a written notice stating that the supply would not be a taxable supply if the debtor were to make it, and stating fully the reasons why the supply would not be a taxable supply; or

(b) if you cannot obtain such a notice - you believe on the basis of reasonable information that the supply would not be a taxable supply if the debtor were to make it.

(4) This section has effect despite section 9‑5 (which is about what is a taxable supply)."

1. At par 7 of the amended defence, the defendants admit that the plaintiff sold the security property under its power of sale, but that it did so in breach of its obligations to exercise its power of sale (a) in good faith; and (b) having regard to the interests of the defendants (as pleaded in par 3.2 of the amended defence). More particularly, the defendants plead that the breach occurred because the plaintiff wrongly treated the sale as a "taxable supply", thus incurring a GST liability which correspondingly increased their indebtedness to the plaintiff.
2. Paragraph 7 of the amended defence pleads that if the first defendant sold the property itself, the sale would not have been a taxable supply and therefore the sale could not be treated as a taxable supply in the hands of the plaintiff. The plaintiff submitted that:

(a) the GST Act s 105-5 governs the GST status of sales by creditors in the position of the plaintiff;

(b) the GST Act, s 105-5(1)(a) requires the plaintiff to treat the property sale as a taxable supply unless the debtor provides written notice under s 105-5(3) that the sale would not be a taxable supply if sold by the debtor themselves;

(c) there is no evidence that the debtor (the first defendant) gave the creditor (the plaintiff) any notice under s 105-5(3)(a); and

(d) the defendants have not pleaded that the plaintiff should have believed on the basis of reasonable information that the sale would be not be a taxable supply if the debtor had made it, as contemplated by s 105-5(3)(b).

1. This submission by the plaintiff appears to overlook a matter of fundamental importance in the operation of the GST Act in these circumstances: that s 105-5(1)(b) expressly states that the sale is not to be regarded as a taxable supply unless the sale would have been a taxable supply if the debtor had made the supply. The defendants submit that the sale would not have been a taxable supply had the first defendant made the supply because:

(a) the property is vacant residential land; and

(b) the first defendant is not registered for GST nor is it required to be registered for GST within the meaning of the GST Act.

The defendants submit that it is upon this basis that they have pleaded that the sale was not a taxable supply within the scope of s 105-5 and that this is an issue for determination at the trial of the action.

1. The defendants did not adduce any evidence to support the assertion that the security property was vacant residential land which would be exempt from GST, but that aspect of the submission was not subject to challenge. I did not detect any dispute around the assertion that the first defendant was neither registered for GST nor required to be. Even if I am wrong about that, I am not in a position to determine the question on a summary basis.
2. In my view, the plaintiff is unable to satisfy the Court that this issue is free from dispute. The determination of this issue involves the proper construction of the GST Act and it also involves fact-finding in relation to the status of the land and the first defendant for the purposes of the GST Act. It is impossible to conclude that this aspect of the defence must fail.

1. In part, the resolution of this dispute turns on questions of the proper application of the Legal Profession Act and the GST Act. There is no doubt that a court may, on an application for summary judgment, decide a point of law, even though that may involve careful and lengthy consideration: Nichol v Discovery Africa Ltd [2016] FCAFC 182 at [134] per Greenwood J, McKerracher, Moshinsky JJ and Jefferson Ford Pty Ltd v Ford Motor Co of Australia Ltd [2008] FCAFC 60 at [23] per Finkelstein J. In Jefferson Ford at [23] Finkelstein J stated

"On questions of law, the judge should conduct an inquiry into their merit, not for the purpose of resolving them (though this can be done - see Rosser v Austral Wine & Spirit Company Pty Ltd [1980] VicRp 33; [1980] VR 313 at 320) and also not simply to determine whether the argument is hopeless, but in order to decide whether it is sufficiently strong to warrant a trial. If the judge is satisfied that he (or she) is able to resolve any contested legal issue at a summary hearing and without undue delay, it may be better all around if that be done. If not, then at least the merits must be tested."

1. The facts are not sufficiently clear to permit the resolution of these contested legal issues at a summary hearing and without undue delay. I am unable to determine that the defendants' arguments are hopeless.
2. The plaintiff is unable to satisfy the Court that the defendants do not have a defence to the plaintiff's claim or part of that claim. For the foregoing reasons, the plaintiff's interlocutory application for summary judgement must fail. The application is dismissed. I will hear the parties as to what consequential orders are sought.