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[2026] QSC 46
General information, not legal advice.
Supreme Court of Queensland
2026-03-17
McCafferty J
Original judgment source is linked above.
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - where the applicant in BS No 3729 of 2025 (mortgagor) obtained a commercial loan secured by a mortgage, the respondent in BS No 3729 of 2025 later becoming the sole mortgagee (mortgagee) - where the mortgage contained an indemnity clause for the mortgagee's benefit - where the mortgage further provided that, in circumstances where the mortgagee "apprehends the potential for a claim" against the mortgagor, the release of the mortgage may be on "any terms that the [mortgagee] sees fit" - where the parties had entered into a forbearance arrangement and agreed upon a settlement date for redemption of the mortgage - where on the settlement date the mortgagee provided the mortgagor with a proposed deed of settlement and release and indicated that it would not settle until the deed was executed - where the proposed deed contained an indemnity clause for the mortgagee's benefit which was more expansive than the indemnity within the mortgage - where the indemnity clause also required the mortgagor to indemnify numerous persons and entities unrelated to the mortgagee - whether the terms of the mortgage, properly constructed, permitted the mortgagee to require a release of claims against persons and entities that were not mortgagees as a condition of settlement - whether the terms of the mortgage, properly constructed, permitted the mortgagee to require execution of the proposed deed containing the expanded indemnity as a condition of settlement
REAL PROPERTY - TORRENS TITLE - MORTGAGES, CHARGES AND ENCUMBRANCES - RIGHTS, LIABILITIES AND REMEDIES OF MORTGAGOR - REDEMPTION - where the applicant in BS No 3729 of 2025 (mortgagor) obtained a commercial loan secured by a mortgage, the respondent in BS No 3729 of 2025 later becoming the sole mortgagee (mortgagee) - where the parties agreed upon a settlement date for redemption of the mortgage - where on the settlement date the mortgagor was ready, willing and able to redeem by tendering the full balance of the loan - where on that date the mortgagee provided the mortgagor with a proposed deed of settlement and release and indicated that settlement would not proceed unless the proposed deed was executed - whether the steps taken by the mortgagor on the settlement date were sufficient to allow redemption - whether the mortgagee refused to redeem a valid tender on the settlement date for reasons unsupported by the mortgage - whether the mortgagee's refusal to accept a valid tender should deprive it of interest from the date of refusal
Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295, cited
Çukurova Finance International Ltd v Alfa Telecom Turkey Ltd (Nos 3 to 5) [2016] AC 923, considered
MAG Financial and Investment Ventures Pty Ltd v El-Saafin (2022) 70 VR 400; [2022] VSCA 286, cited
Mount Bruce Mining Pty Ltd v Wright Prospecting (2015) 256 CLR 104; [2015] HCA 37, cited
Overton Investments Pty Ltd v Cuzeno RVM Pty Ltd [2003] NSWCA 27, applied
Saafin Constructions Pty Ltd (in liq) v MAG Financial and Investment Ventures Pty Ltd [2021] VSC 489, followed
Sev.En Global Investments Pty Ltd v Global Loan Agency Services Australia Nominees Pty Ltd (2024) 60 WAR 367; [2024] WASC 424, cited
D J Ananian-Cooper for the applicant in BS No 3729 of 2025 and for the respondent in BS No 4354 of 2025
S J Carius for the respondent in BS No 3729 of 2025 and for the applicant in BS No 4354 of 2025
Cronin Miller Litigation for the applicant in BS No 3729 of 2025 and for the respondent in BS No 4354 of 2025
Elliott May Lawyers for the respondent in BS 3729 of 2025 and for the applicant in BS No 4354 of 2025
[1] In April 2022 Evolve Wealth Corporation Pty Ltd sought a commercial loan from Blue Streak Capital Pty Ltd, a mortgage manager. Blue Streak provided an indicative offer of finance which permitted it to nominate the proposed lender. QB Finance Pty Ltd and SF Mortgage Pty Ltd were subsequently nominated as lenders and advanced funds by way of loan to Evolve Wealth in the sum of $450,000 (the loan). The loan, together with interest, was repayable within 24 months.
[2] The loan was secured by a mortgage (the mortgage) over a property located at 1/1 Hornet Place, Burleigh Heads (the property). As registered, the mortgage recorded Evolve Wealth as mortgagor and QB Finance and SF Mortgage as mortgagees. SF Mortgage subsequently assigned its entire interest in the loan and mortgage to QB Finance, who then became the sole mortgagee. Blue Streak's role as mortgage manager remained.
[3] The loan was not repaid by Evolve Wealth within the required timeframe. Notwithstanding this default, the parties ultimately agreed to proceed to settlement. After being deferred once, the date chosen for settlement was 23 May 2025. On this day Evolve Wealth, as mortgagor, sought to redeem its mortgage by tendering the amount of $517,448.74, representing payment of the loan as advised by QB Finance.
[4] The tender was not accepted. QB Finance indicated that it was unwilling to accept the payment to discharge the mortgage unless it was accompanied by a deed of settlement and release (or proposed deed). The possibility that QB Finance might require a deed was first raised with Evolve Wealth, via their respective solicitors, on 13 May 2025. A copy of the proposed deed was first provided on the scheduled day of settlement.
[5] On 26 May 2025 Evolve Wealth rejected the proposed deed, demanded urgent settlement and reserved its rights. QB Finance, via its solicitors, indicated that if Evolve Wealth wished to reserve its rights then it would only release the mortgage if one of two conditions were satisfied:
(a) Evolve Wealth pay an additional sum of $110,000 as a post-settlement security for the costs QB Finance may incur in dealing with any claim or complaints that Evolve Wealth may make, or
(b) Evolve Wealth execute the proposed deed in the form provided on 23 May 2025.
[6] Evolve Wealth and QB Finance subsequently commenced their respective proceedings. In proceeding number 3729 of 2025 Evolve Wealth seeks declaratory and injunctive relief, the effect of which is that QB Finance accepts its tender and redeems the mortgage. In proceeding number 4354 of 2025, QB Finance seeks a declaration that Evolve Wealth is in default of the loan and orders for possession of the property.
[7] For the reasons which follow, in my view, on 23 May 2025 Evolve Wealth made a proper tender in an amount specified by QB Finance. The requirement imposed by QB Finance to execute the proposed deed was not supported by the terms of the mortgage on its proper construction. In these circumstances, QB Finance failed to accept a proper tender and is not entitled to interest from this date. QB Finance was also not entitled to request payment of an additional sum by way of security on 26 May 2025.
[8] The consequence is that Evolve Wealth is entitled to the relief it seeks. QB Finance's application must necessarily be dismissed.
[9] Before embarking on a consideration of the relevant issues and my conclusions, it is appropriate to set out the facts in more detail.
[10] The mortgage was registered on or about 28 April 2022. At the time of registration, QB Finance and SF Mortgage held the mortgage as tenants in common, QB Finance as to 10% and SF Mortgage as to 90%. The mortgage was the subject of two assignments. On 28 February 2023, QB Finance assigned its 10% interest in the loan and mortgage to SF Mortgage. SF Mortgage held a 100% interest in the loan and mortgage until 29 January 2025, on which date it re-assigned its 100% interest in the loan and mortgage to QB Finance.
[11] The terms are contained within the mortgage memorandum. Relevant to the present proceedings are the following:
amount owing means the balance, accrued but unpaid and uncapitalised interest, and any deferred fees and charges payable to the credit provider.
balance means the unpaid amount of credit, unpaid further advances, and unpaid capitalised interest.
collateral security means any current or future guarantee, encumbrance, charge, mortgage, negotiable instrument, agreement or other document held or taken by or given in favour of the credit provider or entered into by any transaction party as security for the payment of, or otherwise in connection with, all monies due to the credit provider.
(a) money that the credit provider pays, excluding the amount of credit, at a transaction party's direction; or
(b) money that the transaction party has failed to pay to the credit provider when required by this memorandum, and which the credit provider chooses to capitalise, including overdue interest and rollover fees; or
(c) money that the credit provider pays or becomes liable to pay as a result of, or in relation to, an event of default or the risk of an event of default; or
(d) money that the credit provider pays, but which the transaction party was liable to pay, whether under this memorandum, under the law, or a security held by another person in relation to the security property, or under the law; or
(e) loss or damage the credit provider suffers because of an event of default or threatened event of default; or
(f) costs, including legal and administrative costs incurred, whether internally or externally, by the credit provider and which are recoverable under this memorandum, or under the law, against the transaction party; or
(g) money recoverable by the credit provider from the transaction party under this memorandum, or under the law, excluding the amount of credit and uncapitalised accrued interest.
5.2 The transaction party indemnifies the credit provider against every expense incurred, including legal costs, internal costs, and any other loss suffered by the credit provider that relates to:
5.2.2 any failure by any transaction party to pay money to the credit provider as required by this memorandum; or
5.2.3 any failure by any transaction party to perform any obligation imposed by this memorandum.
6.1 The securing party gives the credit provider this mortgage over the mortgaged property so that it secures the amount owing as well as all monies due by any transaction party under a collateral security and may be enforced against the mortgaged property if there is an event of default, or any other failure to strictly comply with the obligations imposed by this memorandum or any collateral security on any transaction party.
9.1 As further security for the performance of all obligations imposed on any transaction party under this memorandum or any collateral security the transaction party grants the credit provider a further charge over all of the transaction party's property acquired before or after it enters into this memorandum.
9.2 The further charge will take effect if there is an event of default.
17.1 The transaction party must pay the credit provider all internal and external costs and expenses, enforcement expenses, including legal fees and costs, that the credit provider incurs, pays or becomes liable to pay because of, or in relation to:
17.1.6 any proceeding, whether before a court, tribunal, arbitral body, administrative body or other decision-making body, in which the credit provider becomes involved that is concerned with:
17.1.6.1 the rights or obligations of the credit provider or any transaction party under this memorandum;
17.1.6.2 any security granted to the credit provider under this memorandum; or
17.1.6.3 an event of default under this memorandum.
17.2 All costs and expenses that a transaction party must pay the credit provider under this memorandum:
17.3 By way of example only, and without limiting a transaction party's obligation to pay the credit provider's costs and expenses under this memorandum, the transaction party must pay the credit provider the:
17.3.11 costs and expenses incurred by the credit provider defending, prosecuting, or intervening in, any proceeding or part of any proceeding, whether or not a transaction party is a party to the proceeding, where the proceeding relates to:
17.3.11.2 any actual or purported right or security given, or actual or purported obligation imposed, by this memorandum;
19.1 The guarantee and indemnity, mortgage, Charge, Charge of Property, power of attorney provisions and further charge under clause 9 are irrevocable and continuing securities.
19.2 Those securities survive the repayment to the credit provider of the amount owing or the settlement of any account between the transaction party and the credit provider.
19.3 The transaction party is not entitled to a release or discharge of those securities while there remains an amount owing or the credit provider apprehends the potential for a claim against the transaction party under this memorandum, including if, in the credit provider's opinion, there is a prospect of:
19.3.1 litigation involving the credit provider that might give rise to a right to recover damages, costs or expenses against the transaction party; or
19.3.2 a payment received by the credit provider being taken back as a preferential payment; or
19.4 Any release or discharge of those securities may be on any terms that the credit provider sees fit.
19.5 The credit provider may demand that the transaction parties release all known and unknown, existing and future claims against the credit provider that relate to, or arise out of, the transaction contemplated by this memorandum.
[12] The amount advanced under the loan fell due on 28 April 2024. Evolve Wealth did not repay the amount repayable and was in default. This generated substantial correspondence between Blue Streak, as manager, and Evolve Wealth. It is unnecessary to rehearse its detail. The result was that on 26 September 2024 Evolve Wealth and SF Mortgage agreed upon terms by which SF Mortgage would forbear on enforcement of the loan and mortgage until 28 October 2024.
[13] Evolve Wealth failed to repay on 28 October 2024. This failure generated further substantial correspondence comprising various exchanges between Evolve Wealth (by its director Mr Bruce) and SF Mortgage's solicitors, Elliott May. It also included communications directly between Evolve Wealth and Blue Streak. The general tenor of the correspondence commenced with a series of complaints by Evolve Wealth which sought various disclosures and explanations from Blue Streak and Elliott May. It ended with Evolve Wealth appointing solicitors and settlement of the loan being scheduled between the solicitors. It is necessary to traverse some of this correspondence.
[14] On 14 November 2024, Blue Streak sent an email to Evolve Wealth advising that the forbearance date had expired on 28 October 2024 and requesting confirmation as to when a refinance settlement, which I infer was the subject of an earlier communication, was to occur. Evolve Wealth responded to this email the same day in terms which included the following:
"Thank you for your email regarding the anticipated timeline for settlement with ANZ. I would like to take this opportunity to clarify my position and ensure there is no ambiguity.
I am pleased to inform you that the refinance process with ANZ is complete, and the loan documents have already been signed. ANZ has confirmed that settlement can proceed at any time upon my instruction. However, I have made it explicitly clear to ANZ that I am intentionally holding off on directing settlement until all outstanding matters with Bluestreak [sic] Capital have been addressed to my full satisfaction.
I am awaiting a comprehensive response from your legal representatives, Elliott May, which I trust will adequately resolve the issues raised in my previous correspondence. Given the severity and importance of these matters, I will not be proceeding with the refinance settlement until I have received satisfactory answers and a resolution to all outstanding concerns. This approach ensures that both parties are operating in good faith and that any potential conflicts or discrepancies are addressed transparently before moving forward.
I appreciate your cooperation and look forward to your swift action in resolving these matters. Once everything has been addressed to my satisfaction, I will promptly notify ANZ to proceed with settlement."
[15] This correspondence was forwarded by Blue Streak to its solicitors, Elliott May, shortly after it was sent. Elliott May provided a response on behalf of what it referred to as its client to Evolve Wealth on 21 November 2024. It is not immediately apparent whether the client was SF Mortgage, who is identified in the correspondence heading, or Blue Streak. What is clear is that the correspondence occurred before QB Finance was assigned the loan and mortgage by SF Mortgage.
[16] On 17 January 2025, Evolve Wealth sent further correspondence to Blue Streak. This correspondence refers to a forbearance letter dated 9 December 2024 and asserts a failure to address critical issues which Evolve Wealth had previously alleged with regard to conduct on the part of Blue Streak and Elliott May. Evolve Wealth sent further correspondence on 25 January 2025 which again sought a response to matters previously raised.
[17] On 30 January 2025, the day after the loan and mortgage were assigned to QB Finance, Elliott May responded to Evolve Wealth. This correspondence set out Evolve Wealth's history of defaults. It also recommended Evolve Wealth obtain independent legal advice.
[18] On 6 February 2025, Evolve Wealth sent a letter to Elliott May headed "Final Demand - Notice of Assignment Transactions, Financial Misconduct, and Fiduciary Breaches". The letter advanced various allegations. It focused on the notice of assignment by which SF Mortgage assigned the loan and mortgage to QB Finance and requested disclosure of documents relating to the notice of assignment. It asserted that if disclosure was not provided injunction proceedings would be commenced to prevent "fraudulent repossession" together with other actions including formal complaints to various regulatory bodies.
[19] On 28 February 2025, Evolve Wealth sent further correspondence to Elliott May. It was of a similar theme to the 6 February 2025 correspondence. It recorded that approved refinance had been in place since 31 October 2024 and asserted that the refusal to provide the disclosure sought has "actively sabotaged my ability to settle the debt in good faith." Disclosure was again sought and, consistent with the earlier correspondence, the letter also contained a threat to commence injunction proceedings to prevent "fraudulent repossession" and referrals to various regulators. It also identified that "should any attempt be made to repossess my property" immediate action would be taken against various individuals and entities, including QB Finance, seeking "financial damages, injunctive relief, and regulatory referrals."
[20] On 3 March 2025, Evolve Wealth was given notice that the loan and mortgage had been assigned to QB Finance and was provided with a copy of the assignment. The assignment recorded, at clause 2, that SF Mortgage had "assigned all of its right, title and interest in, under or arising from, and all choses of action in any way relating to or arising from, the Loan Agreement" to QB Finance "effective from 29 January 2025." In separate correspondence also sent on 3 March 2025, QB Finance's solicitors informed Evolve Wealth of the payout figure for the loan, then $498,348.08, and nominated a bank account in the name of the entity Create Capital Pty Ltd (Create Capital) for payment.
[21] On 25 March 2025, Blue Streak emailed Evolve Wealth directly seeking confirmation that the loan would be paid by 27 March 2025. Evolve Wealth responded on 28 March 2025, copying in Elliott May. In this response Evolve Wealth sought, by 29 March 2025, details concerning Create Capital's legitimacy, proof of the notice of assignment and a breakdown of added costs. Elliott May responded on 31 March 2025. In that response the firm recorded that they acted for QB Finance.
[22] On or before 8 May 2025, Evolve Wealth retained Fraser Lawyers to act on its behalf. On this day Fraser Lawyers wrote to Elliott May informing them that Evolve Wealth had secured finance which would allow the loan to be paid in full within the next seven days. The letter also sought, relevantly, confirmation of any pre-settlement requirements, an estimated payout figure and a statement of account detailing relevant charges as at that date.
[23] Elliott May responded to Fraser Lawyers' correspondence on 13 May 2025. This correspondence recorded that the " ... indicative projected payout figure as at 16 May 2025 is $515,248.75". It also recorded that "it is likely our client will require any payment in discharge of our client's mortgage to be on a full and final basis and pursuant to the terms of a Deed of Settlement and Release between our respective clients". The identified basis for this was that QB Finance did not "intend to be put in a position where it discharges its security position, only to be subsequently forced to incur substantial additional costs as a result of [Evolve Wealth's] attempts to continue to agitate the matter post settlement." No proposed deed was provided. It was likely not yet in existence. The correspondence records that Elliott May were "in the process of preparing" the document and would provide it once approved by QB Finance.
The events the week prior to the proposed settlement
[24] On 15 May 2025, Elliott May sent further correspondence to Fraser Lawyers requesting that Evolve Wealth urgently confirm whether it intended to proceed with "discharging" the loan the following day and asserting that "our client requires a Deed of Settlement given your client's previous allegations against our client and its representatives, which will take time to prepare". No copy of the proposed deed was provided.
[25] On 19 May 2025, Fraser Lawyers wrote to Elliott May advising that their firm would create the PEXA workspace and invite Elliott May in preparation for settlement and that they were otherwise unaware of the allegations referred to in the earlier correspondence.
[26] The PEXA workspace was created on 20 May 2025. Elliott May joined the workspace the same day and added payment directions for the amount and destination of funds at settlement, in the total sum of $517,772.14. This figure, which included legals, was provided by Blue Streak to Elliott May on 20 May 2025 in an email sent at 12.18 pm. It is important that this communication was indeed the second notification from Blue Streak to Elliott May that day regarding the payout figure. The earlier email was as follows:
[27] On 21 May 2025, Elliott May wrote to Fraser Lawyers confirming their understanding that settlement was scheduled to occur on 23 May 2025 and seeking urgent confirmation whether Evolve Wealth agreed to proceed on the basis of a Deed of Settlement "as outlined in our previous correspondence." Again, no proposed deed was provided.
[28] On 23 May 2025, four relevant events occurred.
(a) First, the amount of $520,000 was paid into Fraser Lawyers' trust account for the purposes of settlement.
(b) Secondly, at 11.30 am Elliott May sent further correspondence to Fraser Lawyers which asserted that "our client will require any payment in discharge of our client's mortgage to be on a full and final basis and pursuant to the terms of a Deed of Settlement and Release between our respective clients". This correspondence attached, for the first time, a proposed deed, and informed Fraser Lawyers that upon "receipt of the fully executed Deed by your client, our client will proceed to finalising the PEXA workspace in readiness for settlement".
(c) Thirdly, at 2.41 pm Fraser Lawyers signed the financial statement schedule in the PEXA Workspace, verifying that funds were available to meet the payment directions.
(d) Fourthly, at 2.49 pm Fraser Lawyers responded to Elliott May's correspondence. This correspondence asserted that source funds had been loaded and that Evolve Wealth were ready, willing and able to settle. It rejected the demand for execution of the proposed deed as there was no identified basis for making the execution of such a deed a condition of settlement. It requested that Elliott May sign off in the PEXA workplace and release the relevant instruments so that settlement could proceed.
[29] It is necessary to set out some parts of the proposed deed. The proposed parties were QB Finance, referred to as "the Mortgagee", and both Evolve Wealth and Mr Bruce, collectively referred to as the "Transaction Parties." The proposed deed contained the following:
"The Transaction Parties have made numerous allegations against the Mortgagee (which are denied by the Mortgagee), including:
"1.1.7 'Mortgagee's Released Parties' means the Mortgagee, Blue Streak Capital Pty Ltd, SF Mortgage Pty Ltd, or any of their agents, servants, employees, office holders, legal representatives and related entities."
"1.1.8 'Transaction Party's Released Claims' means any and all claims, causes of action, rights, or the like which the Transaction Parties and/or the Transaction Party's Released Parties may now have, or which but for this Deed, could, would or might have had at any time in the future against the Mortgagee and/or the Mortgagee's Released Parties, whether now known or unknown, in respect of or arising in any way out of the matters recited in this Deed, including but not limited to the Mortgage, the Advance, the Amount of Credit, the New Amount of Credit, the PPSR Security Interests, the Events of Default, the Assignments, the Property, the Allegations and the Debt save for any claims arising from a breach of this Deed."
2.1.1 The Transaction Parties hereby release, and discharge, the Mortgagee, and the Mortgagee's Released Parties from the Transaction Parties' Released Claims.
2.1.5 The Transaction Parties agree not to at any time from the date of this Deed or in the future disclose any facts, allegations, correspondence, or other matters or details relating to or arising out of the subject matter of this Deed, the dispute, or the facts upon which the dispute is founded to any person or entity, except as required by law or to a personal representative, legal representative or other person to enable the relevant party to comply with the obligations set out in this Deed.
2.5 The Transaction Parties and the Transaction Party's Released Parties agree to indemnify, keep indemnified, and forever hold harmless, the Mortgagee and the Mortgagee's Released Parties from and against all asserted claims, claims or demands which now or hereafter may be made against the Mortgagee or any of the Mortgagee's Released Parties by the Transaction Parties, the Transaction Party's Released Parties or anyone on behalf of or claiming through or under them in respect of or arising in any way out of or related to any of the matters recited in this Deed, including but not limited to the Transaction Party's Released Claims."
Events immediately following proposed settlement date
[30] Settlement did not proceed. On 26 May 2025, Fraser Lawyers wrote to Elliott May. That correspondence noted that QB Finance had refused to settle on 23 May 2025 on the basis that the proposed deed had not been executed, notwithstanding that Evolve Wealth had tendered the full redemption sum on that date and that source funds had been loaded to the PEXA Workspace. It again rejected the legitimacy of requiring a deed and asserted that any insistence on such a condition was an impermissible clog on Evolve Wealth's equitable right of redemption. This correspondence demanded immediate settlement and reiterated that Evolve Wealth was in the position to settle. Elliott May responded the same day. That correspondence identified that the requirement for a deed was provided for by clauses 19.4 and 19.5 of the mortgage. It also included the following:
"Should your client wish to reserve his rights and require our client to lodge any release / discharge of its Mortgage, our client will require payment of the total amount owed to it in full, being approximately $517,448.75 (Debt) in addition to the sum of $110,000.00 by way of substitute security in accordance with the principles enunciated in Project Research Pty Ltd v Permanent Trustee of Australia Ltd (1990) 5 BPR 11 (being the total sum of $627,448.75). The $110,000.00 (only) is to be paid to our firm's trust account post-settlement as security for the costs that it incurs in dealing with any further claims or complaints your client may seek to make.
Alternatively, and should your client intend to finalise this matter on a full and final basis (on the terms set out in the Deed), our client will require the Deed to be executed by your client and returned in the manner set out in our email to your office dated 23 May 2025."
[31] Evolve Wealth commenced its proceeding on 22 August 2025. This was followed, on 29 September 2025, by QB Finance's proceeding.
Were the steps taken by Evolve Wealth on 23 May 2025 sufficient to allow redemption?
[32] The logical starting point to determine the dispute is to consider whether the steps taken by Evolve Wealth on 23 May 2025 were sufficient to allow redemption. Its position on this issue is uncomplicated. Its contention is that it, by its solicitors, created the PEXA workspace and had available the amount of $520,000 for the purposes of settlement on 23 May 2025. Settlement did not proceed on that date because QB Finance's solicitors did not sign off within the PEXA workspace and release the relevant instruments.
[33] There was no real issue that PEXA was the agreed mechanism through which settlement could be achieved. It was the method used for the original settlement of the loan. The parties also acted consistently with this. Within PEXA Elliott May accepted the settlement date and time and uploaded the loan payout amount.
[34] QB Finance disputes that the tender was valid. Its main contention is that the purported tender was based upon a payout figure advised on 20 May 2025 and the amount was insufficient. I do not accept this contention. Fraser Lawyers had available $520,000 for settlement. The relevant payout figure had been uploaded by Elliott May. While it may be accepted that Evolve Wealth did not request an updated payout figure, it was not required to do so.
[35] But even then, any update to the payout figure could only have reflected some additional legal costs. This is because the payout figure advised on 20 May 2025 is expressed as being "up to 27 May 2025", that is, several days past the scheduled settlement date. Whatever further monies were owing, if any, could only have been additional legal costs which were likely minimal, particularly given the payout figure was purportedly advised to include legal costs. This is consistent with Elliott May's correspondence on 26 May 2025 which identified the debt owing as approximately $517,448.75.
[36] In my view, the reason why settlement did not occur on 23 May 2025 was not because of insufficient funds or an inability on the part of Evolve Wealth to tender those funds. Settlement did not proceed because Elliott May did not sign the financial settlement schedule within PEXA that would have allowed it to proceed. Elliott May refused to do so because its client, QB Finance, required that the proposed deed be executed before settlement occurred. So much was made clear in Elliott May's correspondence to Fraser Lawyers on 23 May 2025 that "upon receipt of the fully executed deed by your client, our client will proceed to finalising the PEXA workspace in readiness for settlement." The issue is whether QB Finance was entitled to make that demand.
Was QB Finance entitled to make execution of the proposed deed a condition of settlement?
[37] Evolve Wealth contends that QB Finance was not entitled to require execution of the proposed deed as a condition of settlement. Its principal argument is that the proposed deed exceeded what QB Finance was permitted to require under clause 19 of the mortgage. QB Finance maintains that clause 19.5 entitled it to act as it did. To determine this issue it is necessary to ascertain the correct construction of clause 19.
[38] The principles of construction are uncontroversial. The rights and liabilities arising under a contractual provision are determined objectively by reference to its text, context and purpose. In the context of a commercial contract the relevant task is that identified in Mount Bruce Mining Pty Ltd v Wright Prospecting[1]:
" ... it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract." (citations omitted)
[39] In undertaking this task, the primary duty of a court construing a contract is to ascertain meaning from the words of the contract. As Leeming JA said in Cherry v Steele-Park[2]:
"In a familiar passage, Gibbs J referred in Australian Broadcast‑ing Commission v Australasian Performing Right Association Ltd to the 'primary duty' of a court construing a
written contract to ascertain the legal meaning of a document 'from the words
of the instrument in which the contract is embodied'. As I have said, '[v]ery
often, nothing in the context will come close to displacing the ordinary
grammatical meaning of the legal text' ..." (citations omitted)
[40] QB Finance submits that clause 19.5 must be read in context. This context includes the entirety of clause 19, and, specifically, the second component of clause 19. To paraphrase its salient aspects, it provides that Evolve Wealth is not entitled to a release of the mortgage security if, in QB Finance's opinion, there is a prospect of litigation involving it that might give rise to a right to recover damages, costs or expenses against Evolve Wealth.
[41] Clause 17 is also relevant to the construction of clause 19. Clause 17 is a broad provision which obliges Evolve Wealth to pay QB Finance's costs of various matters. It extends to legal fees and costs that QB Finance "incurs, pays or becomes liable to pay because of, or in relation to" the matters identified in clause 17.1.6. That includes any "proceeding" concerned with the rights or obligations of QB Finance under the mortgage, any security granted to QB Finance, or any event of default under the mortgage. QB Finance submits that clause 17.2 has the effect that costs payable under each of the provisions of the mortgage, including under clause 17.1.6, are a further advance and recoverable as an "amount owing" under the mortgage by operation of clause 6.1.
[42] In substance, the purpose of clause 19.5 is to ensure that, if the credit provider apprehends a prospective dispute, it is not to be left without security unless the dispute is effectively extinguished. When read in context, clause 19.5 confers a level of discretion to QB Finance in terms of what it may require in order to release the mortgage. This submission must be taken to mean that the terms of the deed are in the discretion of QB Finance. It is, however, accepted that any apprehended dispute must have a connection to the mortgage, and the claim, as the term appears in clause 19.5, must relate to or arise out of the transaction contemplated by the memorandum.
[43] It may be accepted that the mortgage memorandum confers a level of discretion onto QB Finance as to what it may require from Evolve Wealth before releasing the mortgage. That submission does not, however, answer the practical question raised by Evolve Wealth about whether the content of the proposed deed in fact exceeded what clause 19.5 could authorise.
[44] In advancing this argument, Evolve Wealth places emphasis on the identity of persons captured by the release and the requirement that Evolve Wealth indemnify those persons. They were not limited to QB Finance. Rather, they extended, by clauses 1.1.7, 1.1.8, 2.1.1 and 2.5, to the "Mortgagee's Released Parties". As defined, this class included SF Mortgage, who while still falling within the definition of credit provider in the mortgage no longer held any interest in the mortgage at that time, and Blue Streak, who was never a credit provider. It also extended to any " ... agents, servants, employees, office holders, legal representatives and related entities" of QB Finance, SF Mortgage and Blue Streak.
[45] Evolve Wealth also emphasises the confidentiality obligations within clause 2.1.5 which, it contends, would operate to prevent it from making a complaint to a regulatory authority about any of the released parties.
[46] In my view, Evolve Wealth's contention is correct. The proposed deed exceeded what was authorised by clause 19.5. On its proper construction, clause 19.5 permitted QB Finance to require a release of claims within the meaning of that term. That would extend to claims that QB Finance "apprehends the potential for". That is not without limitation. The release could only be for claims that met the description of clause 19.3, namely those in which QB Finance holds the opinion that there is "a prospect of ... litigation involving the credit provider that might give rise to a right to recover damages, costs or expenses against the transaction party." The "allegations" in Recital L, to which the release related, went beyond those matters.
[47] Clause 19.5 did not permit QB Finance to require a release for parties that were not credit providers. There is no rational reason why the clause should permit it to. At the time it was sought, SF Mortgage was no longer a credit provider. Its rights had been assigned to QB Finance. But even accepting that it strictly met the definition of credit provider under the mortgage, the proposed deed also sought to include other persons and entities beyond credit providers.
[48] There is also no reason why clause 19.5 should be construed as permitting QB Finance to require an indemnity, for its benefit or for the benefit of the "Mortgagee's Released Parties". The mortgage already contained an indemnity clause for QB Finance's benefit. By clause 5 of the mortgage, Evolve Wealth agreed to indemnify QB Finance against every expense incurred "including legal costs, internal costs, and any other loss suffered by the credit provider" for certain events. Accepting that such events did not extend to, for example, proceedings brought by a regulator, there is no basis for clause 19.5 to be read in such a way as to permit QB Finance, seemingly in its own discretion, to demand an indemnity from Evolve Wealth beyond that which the mortgage had already provided for, let alone one in a form that purported to indemnify non-credit providers. That is not what a reasonable businessperson would have understood the provision to mean.
[49] In these circumstances, in refusing to redeem the mortgage unless Evolve Wealth executed the proposed deed, QB Finance, via its solicitors, refused to redeem a valid tender on 23 May 2025 for a reason which was not supported by the mortgage.
Was there, in any event, an apprehension within the meaning of clause 19.3?
[50] In the event that my construction of clause 19.5 is wrong and that QB Finance's preferred construction is correct, on my assessment of the evidence I find that there was no basis upon which QB Finance could have apprehended or held the opinion that there was potential for a claim against it that might give rise to a right to recover damages, costs or expenses against Evolve Wealth. I find this for the following reasons.
[51] In advancing its preferred construction of clause 19.5, QB Finance contended that on 23 May 2025 it apprehended the potential for a claim. While not expressed precisely in this way, in substance its contention was that this apprehension permitted it, within clause 19.5, to require that the proposed deed be executed in the form provided. This apprehension was said to have existed on the proposed settlement date because Evolve Wealth's solicitors had made a general reservation of its rights.
[52] The only identified basis upon which the apprehension could have arisen was the correspondence sent by Evolve Wealth prior to 23 May 2025, in particular the letter of 28 February 2025 and the threat "to take immediate, aggressive legal action". The difficulty with relying on this correspondence is that, in its proper context, it is apparent that Evolve Wealth's grievances or allegations were almost exclusively directed towards persons or entities other than QB Finance.
[53] So far as QB Finance is mentioned as a possible target of the aggressive legal action, that, too, must be considered in its proper context. That context was made clear in the sentence in which the passage appears. Critically, the words preceding those quoted were "should any attempt be made to repossess my property". Plainly read, that language suggests that Evolve Wealth was pre-empting proceedings being commenced for repossession. It was not threatening its own proceedings. It is also apparent that Evolve Wealth was not directing its allegations to QB Finance. Earlier in the 28 February 2025 correspondence Evolve Wealth asserts that it holds "Elliott May Lawyers and Bluestreak [sic] Capital fully accountable for the severe consequences of this deliberate obstruction, including the financial distress and legal jeopardy ... caused." This is consistent with evidence given by QB Finance's solicitor who accepted that Evolve Wealth had not made any legal threats other than of reporting various persons and entities to regulators.
The relevance of the events of 26 May 2025 and seeking security?
[54] The conclusions I have reached on the evidence have the consequence that QB Finance was not entitled to the additional sum by way of security. In any event, Evolve Wealth's position is that the fact that the additional sum was sought after the tender was refused prevents QB Finance from subsequently seeking the additional sum under the mortgage. Reliance was placed on the following passage from the reasons of Hodgson JA (with whom Handley and Stein JJA agreed) in Overton Investments Pty Ltd v Cuzeno RVM Pty Ltd[3]:
"Another relevant matter is that the mortgagee failed to give a payout figure which bears any reasonable relationship to the amount truly required to pay out the mortgage. Where a dispute has arisen or is reasonably anticipated, a mortgagee is entitled to require not merely payment of the amount secured by the mortgage but also payment or security for the probable costs of any contest. If the mortgagee does not specify a payout figure which bears some reasonable relationship to the amount truly owing and anticipated costs, then this may amount to unreasonable conduct or misconduct which disentitles the mortgagee to costs subsequently incurred in determining the rights of the parties. Furthermore, where the mortgagee does not require payment or security for the probable costs of any contest, and a question later arises as to whether the mortgagor's tender was sufficient to entitle the mortgagor to redemption, the mortgagee cannot then claim that the tender was insufficient because it did not include provision for those costs: I know of no direct authority for that proposition, but in my opinion it follows from the principles I have discussed." (citations omitted)
[55] No contrary authority was identified by QB Finance. I accept this statement of Hodgson JA as correct. In this case, in circumstances where QB Finance refused a valid tender on 23 May 2025, the amount of which it had advised, it could not seek to subsequently contend that the tender was insufficient because it did not include the additional sum sought as security.
[56] If I had found in favour of QB Finance in respect of the matters above, it would have been necessary to consider an alternative argument raised by Evolve Wealth that clauses 19.3 and 19.5 and the proposed deed are impermissible clogs on the equity of redemption. Given the conclusions I have reached, it is not necessary to consider that argument.
[57] It is necessary to deal with two further matters. The first is whether QB Finance's refusal to accept what I have found to be a valid tender should deprive it of interest from the date of refusal. Evolve Wealth contends that the general rule is as stated by Riordan J in Saafin Constructions Pty Ltd (in liq) v MAG Financial and Investment Ventures Pty Ltd[4]:
" ... if a creditor refuses a valid tender, it will not be entitled to interest from the date of the refusal except to the extent that: (a) the debtor has saved interest it would have been liable to pay under its refinancing arrangements; or (b) the debtor has earned interest on the money set aside for its repayment."
[58] QB Finance contends that there is no general rule as Riordan J found. It relies upon the decision of the Privy Council in Çukurova Finance International Ltd v Alfa Telecom Turkey Ltd (Nos 3 to 5)[5], in particular the following passage at [42]:
"The conclusion ... is that equity can and should respond by a special order as to interest or costs in exceptional situations where the mortgagee has by words or conduct rejected, made impossible or delayed repayment of the mortgage debt, and that such a situation may exist where there is a tender or offer of repayment, particularly one backed by monies actually paid into court or an account."
[59] Çukurova was considered by Riordan J in Saafin. In fact, in identifying the statement of principle I have set out, his Honour gave a detailed analysis of various authorities. I agree with the assessment of those authorities as supporting the general rule identified by his Honour.[6] Saafin was recently followed by Hill J in Sev.En Global Investments Pty Ltd v Global Loan Agency Services Australia Nominees Pty Ltd[7]. That general rule as stated by Riordan J also appears to have gone undisturbed on appeal.[8] I consider the general rule as representing the law.
[60] The second matter is QB Finance's application. In circumstances where I have found that Evolve Wealth was entitled to redeem the mortgage upon payment of the amount tendered on 23 May 2025, QB Finance's application should be dismissed.
[61] Evolve Wealth is entitled to the relief it seeks. QB Finance's application must be dismissed. I propose to hear the parties as to the appropriate form of orders and on the issue of costs.
[1] (2015) 256 CLR 104 at [47] (French CJ, Nettle and Gordon JJ).
[3] [2003] NSWCA 27 at [63].
[4] [2021] VSC 489 at [357].
[8] MAG Financial and Investment Ventures Pty Ltd v El-Saafin (2022) 70 VR 400; [2022] VSCA 286 at [7]- [11], [145] (McLeish, Sifris and Walker JJA).
(2017) 96 NSWLR 548
(2022) 70 VR 400
(2015) 256 CLR 104
(2024) 60 WAR 367