Heritage and People's Choice Limited v Bofilios [2025] NTSC 42

Allfox Building Pty Ltd v Bank of Melbourne (1992) NSW Conv R 55-634; Australia and New Zealand Banking Group Limited v Oldroyd & Anor [2025] NTSC 20; Bayblu Holdings Pty Ltd v Capital Finance Australia Limited [2011] NSWCA 39; Consolidated Press Holdings Ltd v Wheeler (1992) 84 NTR 42; Fancourt v Mercantile Credits Limited [1983] HCA 25; General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125; Hamwood & Ors v Murdoch [2010] NTSC 62; Harvey v McWatters [1948] NSWStRp 58; (1948) 49 SR NSW 173; Heller Financial Services Ltd v Solczaniuk [1989] NTSC 36; Hunter v Hunter & Ors [1936] AC 222; Indigenous Business Australia v Kani [2012] NTSC 24; Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161; Milton Park Country Club Pty Ltd v Yasuda Trust Australia Ltd (Supreme Court (NSW), Bryson J, 8 March 1991, unrep); Murphy v Abi-Saab (1995) 37 NSWLR 280; New Zealand Banking Group Ltd v Comer (1993) 5 BPR 11, 748; Outback Civil Pty Ltd & Anor v Francis [2011] NTCA 3; RAMS Mortgage Corporation Ltd v Skipworth & Anor [2007] WASC 24; Shew & Ors v Police and Citizens Youth Club & Ors [2013] NTSC 15; Sportsbet Pty Ltd v Moraitis [2010] NTSC 24, referred to

Croft & Hay, The Mortgagee's Power of Sale, 3rd ed.,2013

Tyler, Young & Croft, Fisher and Lightwood's Law of Mortgage, 3rd Aust. ed., 2013

Halbury's Laws of Australia, [295-7370] Mortgagee's action for possession (C) Proceedings for Possession.

Heritage and People's Choice Limited v Bofilios [2025] NTSC 42

HERITAGE AND PEOPLE'S CHOICE LIMITED (ACN 087 651 125)

• [1] The Plaintiff makes application for an order of possession in respect to the property at 26 Muckaninnie Court, Moulden in the Northern Territory[1] ("the Property") by originating motion dated 21 February 2025 and summons on originating motion dated 21 February 2025.
• [2] As is practice for possession matters, proceedings are commenced pursuant to r 45.05 of the Supreme Court Rules 1987 (NT) which provides for a special procedure. Although commenced by originating motion, the proceeding is commenced in anticipation of orders being made retrospectively dispensing with the requirement to require an appearance, and authorising the plaintiff to commence the proceeding by originating motion.[2] The relevant orders are designed in part to save time and expense for the parties.
• [3] The Defendant was duly served with the Court proceedings and appeared in person. The Defendant contests the Plaintiff's application, and the Plaintiff seeks summary disposition. In respect to determining whether the matter was amenable to summary judgment I directed parties to distil their objections, and any replies, into informal documents.[3]
• [4] In this proceeding the Plaintiff has relied on the affidavits of: Rachelle Tilbury promised 20 February 2025 and 8 April 2025, Daniel Carroll promised 21 February 2025, Ronda Carroll promised 25 March 2025, and Wendy Jones made 28 April 2025, received de bene esse for the purpose of the application. The Defendant in turn relied on the affidavits of John Bofilios made 2 April 2025 and 30 April 2025 which are similarly received de bene esse.
• [5] Subject to the Defendant's issues raised below, the facts are set out as follows. The Defendant is the registered proprietor of the Property. On 18 December 2012 the Plaintiff and the Defendant entered into three loan agreements. Two of the loan agreements were for monthly payments of principle and interest.[4] The third loan agreement was for a set period of monthly interest only repayments, extendable for a further period/s in which interest only would be payable.[5] The loan agreements were secured by a mortgage over the Property[6] in favour of the Plaintiff over the whole of the Property. The loan agreements were also secured by a second mortgage over another property at 68 McInnis Circuit Driver, in the Northern Territory ("the Driver property").[7] The Mortgage incorporated provisions contained in the Memorandum of Common Provisions (MCP) recorded in the Registrar General's Office as CP No. 371843. Pursuant to the loan agreements the Defendant agreed to make certain monthly repayments. The MCP provides for the circumstances of default and action which would be taken thereafter.
• [6] In 2024, relevant default notices were issued to the Plaintiff in respect to defaults under the loan agreements, and enforcement action, including court proceedings, was commenced in respect to the Driver property. The Defendant was given notice of that default by way of:

(a) Cover letter dated 3 April 2024 from the Plaintiff's solicitors indicating a default and demanding payment of $272,710.63;

(b) Notice pursuant to s 88 of the National Credit Code indicating a default in respect to the three loans in the amount of $272,710.63 (comprising $70,085.08, $95,520.16 and $106,590.59) plus enforcement expenses of $514.80; and

(c) Notice of Exercise of Power of Sale given under s 89(2) of the Law of Property Act 2000 (NT) indicating the amounts owing on the loans at as 2 April 2024 (by reference to balance and interest) plus enforcement expenses (in the same amounts as the s 88 notice).

The Defendant failed to pay the amounts due by the required deadline in the notices. Pursuant to clause 26.3 of the loan agreements, and clause 19.3 of the MCP, on a failure to comply with the default notice, the Defendant became liable to pay the balance owing under the agreements immediately. The 2024 court proceedings were discontinued with leave of the Court on 27 June 2024.

• [7] On 5 December 2024 the Plaintiff issued the default notice and the exercise of power of sale notice relevant to these proceedings in respect to the Property. Those notices comprised:

(a) Cover letter dated 5 December 2024 from the Plaintiff's solicitors indicating a default and demanding payment of $991,956.80;

(b) Notice pursuant to s 88 of the National Credit Code indicating a default in respect to the three loans in the amount of $991,433.20 (comprising $332,252.06, $304,238.93 and $354,942.21) plus enforcement expenses of $523.60; and

(c) Notice of Exercise of Power of Sale given under s 89(2) of the Law of Property Act 2000 (NT) indicating the amounts owing on the loans at as 5 December 2024 (by reference to balance and interest) plus enforcement expenses (in the same amounts as the s 88 notice).

• [8] As noted above, the amount owing on the loan agreements had been accelerated by the prior failure to comply with default notices, and the accelerated amounts owed were reflected in the 5 December 2025 default notices and notice of exercise of power of sale. On 16 January 2025 the Driver property was sold.[8] Proceeds of that sale were applied to the loan balances, loan 90201387 was discharged in full and the remaining funds were applied to reduce loan account 90201386. The Defendant was notified of the same by way of email on 21 January 2025. As of 8 April 2025 the total amount owed by the Defendant, according to the Plaintiff's records, was $609,682.24 (comprising amounts of $316,110.13 and $293,572.11 respectively).[9] Ms Tilbury deposes that, save for a few nominal payments in the amount of $5, the Defendant has not made any payments to either of the loan accounts since June 2018.[10] Further, Ms Tilbury deposes that the estimated value of the Property is approximately $450,000 to $460,000.[11]
• [9] Prima facie, and subject to further discussion below, on the basis of the materials filed by the Plaintiff, in respect to service of the default notices and notice of exercise of power of sale, the Plaintiff would be entitled to an order of possession on its application.
• [10] However, the Defendant resists the application. His "defence" was initially set out in his affidavit of 30 April 2025. That affidavit sets out, in a somewhat confusing format, the history of the Defendant's grievances with the Plaintiff over an extended period, including details of various complaints to the Australian Financial Complaints Authority ("AFCA"). At paragraph 47 of his affidavit the Defendant concludes with the statement "At this point in time I can tell the court that I dispute the amount that HPCL claims I owe".

• [11] As noted above, the matter proceeded on application by the Plaintiff for a summary determination. The principles to be applied are the same as those which apply in respect to an application for summary judgment, notwithstanding an expedited process was utilised.
• [12] Although the principles in respect to summary judgment are well established it is useful to briefly restate them. The starting position is that the power to summarily dismiss an action is an exercise of the court's inherent jurisdiction, to protect itself from an abuse of process.[12] On hearing the application the Court may give judgment as is appropriate, unless the defendant satisfies the Court of the claim, or part of the claim, there is a question that ought to be tried or there is some other reason to proceed to trial. The process is intended to apply only to cases where it is clear there is no real question to be tried and where there can be no reasonable doubt that the plaintiff is entitled to judgment.[13] The power to order summary judgment must be exercised with exceptional caution[14] and will only be enlivened where the plaintiff's case is "so clearly untenable that it could not possibly succeed".[15] As Luppino M (as he was) stated in Shew & Ors v Police and Citizens Youth Club & Ors:[16]

A defendant will be allowed to defend a case if there are facts which, if true, would constitute a defence to the plaintiff's claim. The Court is reluctant to try a case on affidavit where there are facts in dispute. An important issue is whether the defendant's account of the facts has sufficient prima facie plausibility to merit further investigation.

• [13] The purpose of the process is to prevent a defendant, who has no defence, from defending an action merely to delay the plaintiff in enforcing their rights. Summary judgment is unavailable where relevant facts are in dispute between the parties or some difficult question of law has to be decided, and in such cases the defendant is entitled to trial.[17]
• [14] In respect to discretionary relief, in Shew, Luppino M held:

[t]o the extent that discretionary relief is sought, it may be inappropriate to grant that on a summary judgment application because all evidence may need to be heard before the Court can decide whether the grant of discretionary relief is appropriate.

(B) The "ordinary rule" in Inglis and Exercise of the Discretion to Order Possession

• [15] The Plaintiff submits that, assuming the assertions raised by the Defendant were to be accepted, a mortgagee will not be held out of exercising its powers of possession and sale merely because the amount due is in dispute, and that a mortgagee will not be restrained from exercising those powers unless the amount claimed is paid into Court. That principle, the pay-in rule or the "ordinary rule" which applies in respect to the restraint of the exercise of a mortgagee's power of sale, was restated in Inglis v Commonwealth Trading Bank of Australia:[18]

As a general rule an injunction will not be granted restraining a mortgagee from exercising powers conferred by a mortgage and, in particular, a power of sale unless the amount of the mortgage debt, if this is not in dispute, is paid or unless, if the amount is disputed, the amount claimed by the mortgagee is paid into court; and this rule will not be departed from merely because the mortgagor claims to be entitled to set off the amount of damages claimed against the mortgagee.

• [16] In Harvey v McWatters,[19] it was said that this rule operates to supplement the ordinary requirement of an undertaking as to damages on an interlocutory application. In Fisher and Lightwood's Law of Mortgage, the authors note that the requirement for payment into Court as a condition of a grant of an injunction to restrain a sale by a mortgagee is an aspect of the general equitable rule that the mortgagor must offer to redeem before he can bring the mortgagee before the Court.[20]
• [17] The Plaintiff in support cited Australia and New Zealand Banking Group Limited v Oldroyd & Anor, which in turn cited Hamwood & Ors v Murdoch,[21] in which Brownhill J noted the principle involved an application for an injunction restraining a mortgagee from exercising its power of sale, but noted "nevertheless, that situation is analogous to the present situation". [22]
• [18] Hamwood was a case of a disputed application for possession. The defendant, in opposition to the application, had filed a summons seeking dismissal of the plaintiff's motion and other orders. The defendant had not applied for an interim injunction restraining the plaintiffs from exercising a power of sale.[23] A number of arguments were raised including that the notices were defective and invalid, and that it was harsh, oppressive or unconscionable that the plaintiffs be permitted to have possession.
• [19] In Hamwood, Luppino M found, in respect to the claims of harsh, oppressive or unconscionable conduct, there was no evidence of such conduct in the proceeding, but agreed as a general proposition that where there was established an arguable case of a mortgagee taking unconscientious advantage of a special disadvantage of the mortgagor, and the mortgagor was vulnerable to exploitation, there can be the foundation for an interim injunction restraining the exercise of a mortgagee's power of sale.[24] In what appears to be obiter, Luppino M stated that in such cases of an injunction it would be inconceivable that a mortgagor should not be required to at least pay something (in that case the undisputed amounts) into court.[25]
• [20] In Olyroyd, Brownhill J noted that the general rule was that a mortgagee will not be restrained from exercising a power of sale under the mortgage merely because the amount due is in dispute, and the mortgagee will only be restrained if the mortgagor pays the amount into court.[26] That is a correct statement of the ordinary rule from Inglis. However, there is judicial doubt as to the strictness of its application and exceptions apply. As noted in Fisher and Lightwood, the mortgagee need not offer to redeem, and therefore need not pay into Court, where it is alleged that the power of sale is not properly exercisable.[27] Examples given by the authors, in Fisher and Lightwood, of exceptions to the rule are: where the validity of the mortgage is in issue, or there is a question whether or not there has been a breach or a question as to whether or not the notice was effective[28], or where the power of sale is being used for an improper motive.[29] In Bayblu Holdings Pty Ltd v Capital Finance Australia Limited, Campbell JA confirmed that there is a long recognised exception where the dispute goes to whether the power of sale has arisen at all.[30] Further, there are doubts as to whether the principle applies to a mortgagor seeking to defend a mortgagee's claim for possession, as opposed to a mortgagor actively seeking an injunction or otherwise seeking to bring the mortgagee before the court for relief on motion.[31] In Butt, the author states:[32]

The payment-in rule strictly applies only to actions to restrain a sale or proposed sale. It does not apply, for example, where the mortgagor is seeking to defend a mortgagee's claim for possession, Australian and New Zealand Banking Group Ltd v Comer (1993) 5 BPR 11, 748 (seemingly approved by NSWCA in Murphy v Abi-Saab, 20 July 1995, page 15) or where the mortgagor is seeking to set aside a default judgment for possession (at least where the value of the land is adequate to protect the amount outstanding under the mortgage).

• [21] In New Zealand Banking Group Ltd v Comer, Young J, after citing Inglis and Harvey v McWatters in support of an application to have money paid into court, held that any such submission in the circumstances was misconceived and stated:

Whatever be the scope and rationale of the rule, it seems to me absolutely impossible to import that rule of equity or of the statutory injunction into a purely common law case such as the present where a bank is suing for possession of land. In such a case, there is no room for any principle, no matter what it is, that a person who disputes the amount of a debt to a bank has to pay into court the admitted balance before the court will listen to his defence.

• [22] I therefore doubt whether the rule from Inglis applies in these types of proceedings. Even if I am wrong in that regard, although the Defendant disputes the amount he owes, if he is correct, there will be doubt as to the correctness of the relevant default notices, and therefore as to their validity, and therefore as to whether the power of the exercise of sale has become exercisable, such that an exception to the general rule applies. I would not require payment into Court.
• [23] On the issue of defective default notices, in Hamwood, after referencing the case of Websdale,[33] Luppino M stated:[34]

Websdale dealt with the statutory notice required before a mortgagee's power of sale could be exercised. Although one of the notices in the current case purports to be given under the equivalent Northern Territory legislation (section 89 of the Act), the other notices are notices of demand pursuant to the Loan Agreement and Mortgage. Although there is some scope for application of the aforesaid principles to the current case it needs to be noted, as Mr Roper pointed out, that the section 89 notice is not required to be given as a pre-requisite to an order for possession. It is only a pre-requisite to the exercise of the power of sale. Without conceding that there is any defect in any of the notices that have been given, Mr Roper submitted, correctly in my view, that if there is a defect in the section 89 notice, that is not fatal to an order for possession as there is nothing to prevent the Plaintiffs from giving a further, and valid, notice pursuant to section 89 of the Act.

• [24] In Indigenous Business Australia v Kani,[35] Luppino M, relying on Hunter v Hunter & Ors,[36] held that pre-conditions to the exercise of a power of sale, and by extension an order of possession, should be strictly complied with, as to service and form. In Kani, Luppino M found that the defective service of the notice of the exercise of power of sale meant that the power of sale had not crystalised (i.e. was not presently exercisable) and therefore an order of possession served no useful purpose. That was a factor which weighed in the discretion to order possession.
• [25] In respect to the interaction between defective notices and the exercise of discretion to order possession, in Kani, the Court held that, although a defect in the power of sale is not an impediment to an application for an order for possession, such an order is not as of right, and it remains a matter for the discretion of the Court. Relevant to the exercise of that discretion is the purpose for which possession is sought. If possession is sought to facilitate the power of sale, an impediment to the exercise of that power, will impact on the exercise of the discretion. In the exercise of a judicial discretion there is a requirement to balance competing interests.[37]
• [26] This application is not a direct application by the Defendant to restrain the Plaintiff in respect to the exercise of its power of sale, although that may be its practical effect, through resisting the application for possession. There is nothing preventing the Plaintiff from exercising its power of sale if s 89 of the Law of Property Act 2000 (NT) has been complied with, and presumably if the Defendant wishes to challenge that in separate proceedings then that is a matter for him. However, for practicality's sake an order of possession is normally gained before the power of sale is exercised to remove occupiers and aid in the sale of the property, and it is assumed that is the case in this proceedings. As noted in Kani an order for possession is not as of right, it remains a matter for the discretion of the Court, and relevant to the exercise of that discretion is the purpose for which possession is sought. In most, if not all cases, possession will be sought for the purposes of facilitating the power of sale, and any impediment to the exercise of the power of sale will impact on the exercise of the discretion in respect to an order for possession.
• [27] In this case there may or may not be an impediment to the exercise of the power of sale. It is not, as was the case in Hamwood, where service of the notice of the power of sale was clearly defective. There is no dispute as to service. Rather, there is, at least, a dispute in respect to the amount owing by the Defendant. If the Defendant is correct, and he owes less than is claimed, that raises issues as to the correctness of the relevant notices, which are required to state the correct amount of arrears, and therefore the ability to take enforcement action, including by the exercise of the Court's discretion for any order for possession. As noted in Kani that discretion needs to be exercised judicially, balancing competing interests.
• [28] Aside from the Plaintiff's response to the Defendant's points of claim, which are set out below, it is the Plaintiff's position that it is suffering real prejudice in being held out of its entitlement to possession having regard to the facts that the Defendant has not made any payments on his loans essentially for seven years and there is now insufficient equity in the property to discharge the secured debt and accordingly the Plaintiff will suffer a shortfall after the sale of the property, which will increase with further delay. However, there has been no specific evidence as to why enforcement proceedings have only been commenced recently given no payments have been made to the loans since 2018. Reference is made in evidence to a number of AFCA complaints, and it is entirely possible that the Plaintiff's enforcement actions were delayed pending resolution of those complaints, which appear to date back to at least 2021. The default notices in respect to the discontinued 2024 proceedings were not served until April 2024 and the current default notices were not served until December 2024.
• [29] The Defendant raises seven points of dispute in respect to resisting the Plaintiff's application for possession, which are set out below, under the headings adopted by the parties.

Unaffordable Lending Practices contrary to the National Consumer Credit Protection Act 2009 (Cth) ("NCCP Act")

• [30] The Defendant claims that the Plaintiff has breached the unaffordable lending provisions of the NCCP Act by originally granting him the loans in 2012.[38] Taking that at its highest, at best this claim would ground a claim for compensation,[39] and possibly a civil penalty, under the NCCP Act. The claim would be statute barred pursuant to s 178(2)(b) of the NCCP Act, since December 2018. I find this aspect does raise any defence in respect to the Plaintiff's application for possession. There is no relevant question to be tried on this aspect.

False and Unauthorised Transactions on the Loan Accounts

• [31] The Defendant claims there were anomalies in the manner in which the Plaintiff conducted transactions on his loan accounts, over periods of time, known as the "PRIN DR ADJ".[40] As far as can be made out, again taking it at its highest, the claim would appear to be that, at certain times after a payment of an amount against the loan by the Defendant, the Plaintiff debited the account for the same amount for a short period, and then re-credited it a short period of time later. There is no evidence as to the time between the debit and re-credit transactions and whether that would have affected interest calculated on the loans. Clause 16 of the loan agreement[41] provides that interest is calculated daily by multiplying the unpaid daily balance of the account at the end of the day[42] by the daily percentage rate, the daily percentage rate being the annual percentage applying divided by 365. As I understand the Defendant's argument, if a re-credit did not occur until the following day or subsequently, after the daily interest was calculated, it is possible the interest was calculated on an incorrect higher account balance. That may have had a cumulative effect given the number of transactions and the period of time. The Defendant deposes that this was discovered in March 2016, although there is no evidence of the period over which this was occurring or the effected accounts. The Plaintiff submitted that, at best, if proved, it could lead to a claim for mere damages of negligible amounts for the fleeting impact on the balance of the account albeit for a short time, but more likely, as determined by an AFCA complaint made by the Defendant, the Defendant did not suffer any loss at all. This matter was the subject of a complaint by the Defendant to AFCA, determined on 28 November 2024. The Defendant has selectively extracted parts of the AFCA Determination (Case 12-00-1058472) in his affidavit. That decision is publicly available on the AFCA decisions website, and given parts of it have been put in evidence, I have reviewed the publicly available document and relied on its contents.[43] It would appear that, in respect to the Defendant's AFCA complaint, evidence of disputed transactions were provided, between December 2012 and March 2016. The outcome of the AFCA Determination, extracted in the Defendant's affidavit, says in part "I am satisfied the transactions have not been shown to have caused the Complainant loss...what is clear, is the transaction records show each entry did affect the Outstanding balance - either increasing it (PRIN DR ADJ) or decreasing it (Payment). I am therefore satisfied these were financial entries which more likely than not did impact the balance of the account, albeit for a short time". The relevant finding of AFCA, as set out in its published decision, is set out in full as follows:

The transactions have not been shown to cause additional interest

However, the transaction records do not show the time period between the PRIN DR ADJ debit and the subsequent Payment credit on each occasion.

The loan contracts relevantly say interest on the outstanding balance is calculated on a daily basis at 'the end of the day', which the contract defines as midnight South Australian time for the purposes of the interest calculations. The complainant correctly says:

Because the time of day that a transaction happens is not shown on the transaction list it may well be that a [debit] and the following [credit], could be done and dusted before 'the end of the day' when interest is calculated and there would thus be no impact on the interest calculation.

The complainant has said there are instances where there was an overnight difference between the debit and the subsequent credit. However, a review of the transaction records only shows:

• standalone 'Principal Debit Adj' entries where there has been a fee due to arrears or other enforcement charges imposed and
• paired 'Principal Debit Adj' and Payment entries (of the type causing concern to the complainant) which were all transacted on the same day on each occasion.

I am satisfied the adjustments caused by fees and charges to the account have not been identified as a cause of the alleged errors and the complainant accepts the account has been in arrears for several years.

However, as the complainant has accepted, where the entries which the lender says are internal accounting entries have been processed all on the same day, there is no differential in the outstanding balance as at midnight which could cause an incorrect interest calculation.

As my review of the transaction records did not identify any occasion where the debit and subsequent credit were processed on different days, I am satisfied the complainant has not substantiated there is any error which has affected the interest calculation during the relevant period December 2012 to March 2016.

• [32] The Plaintiff says any impact at best is negligible to none. Counsel for the plaintiff submitted that, even if it was accepted that the transactions affected the account balances, the amounts would only be negligible and it was still within my discretion to order possession given the circumstances of the matter as described above. Whilst the Defendant has not had the opportunity to fully present evidence, and full argument, in respect to these disputed transactions, the same issues appear to have been the subject of fairly substantial factual analysis by AFCA. That is a factor which is relevant to the exercise of my discretion in this matter. However, I cannot say there is no real question to be tried and there is no reasonable doubt the Plaintiff is entitled to judgment. True it is, the matter has been considered by AFCA, but it has not been considered and determined by this Court.

Unfair Contract Terms in respect to unilateral variations

• [33] The Defendant claims that the Lending Terms and Conditions which formed part of his loan contracts contained a clause allowing the Plaintiff to unilaterally make variations to any provision in the contracts without his consent. The Defendant appears to take issue with those parts of the loan agreement which provide for unilateral variation of interest rates, credit fees and charges, notification periods, and the ability to vary a condition which provides variation of any other term of the contract by giving 30 days' notice. This aspect, and the issues the Defendant has in respect to the fairness or otherwise of these clauses, has no bearing on the right of the Plaintiff to the order of possession. I find this aspect does not raise a defence in respect to the Plaintiff's application for possession. There is no relevant question to be tried on this aspect.

Allocation of proceeds from the Sale of the Driver property

• [34] The Defendant claims that the Plaintiff allocated proceeds of the Driver property incorrectly or otherwise not in accordance with his expectations. His expectations were that the proceeds of the property were to be applied to the arrears on the loans, such that the arrears were reduced to nil, and presumably he would be cleared to commence repayments. Instead, the Plaintiff applied the proceeds to one of the loans to discharge it and the remainder to reduce the balances on the others. The loans remained in default and the adjusted accelerated amounts remained due. In response the Plaintiff submits that, pursuant to the terms of the mortgage (Clause 21.1), it was entitled to apply the proceeds of the Driver property in its absolute discretion. Further, and in any event, the Plaintiff submits that, at the time of the sale of the Driver property, there were no arrears to pay down as the entire loan amounts had become payable. Taken at its highest, I see no grounds on which the Plaintiff's application for possession can be impeached on this issue. I find this aspect does not raise a defence in respect to the Plaintiff's application for possession. There is no relevant question to be tried on this aspect.

• [35] The Defendant claims that the Plaintiff had refused to accept a promissory note tendered as payment of the outstanding debt. In response the Plaintiff claims it was not obliged to accept it.[44] I agree. I see no grounds on which the Plaintiff's application could be impeached on this ground. There is no relevant question to be tried on this aspect.

Variation to the manner in which the Plaintiff calculated loan repayments

• [36] The Defendant claims that there was a variation to the manner in which loan repayments were to be made, namely in respect to the manner in which the Plaintiff calculated the minimum monthly loan repayments which were required. It seems the Defendant's issue was that the Plaintiff did not give notice of the change to the calculations, as claimed it was required to do under s 36 of the National Credit Code and clause 24 of the loan agreement.[45] This matter was also the subject of a complaint to AFCA by the Defendant (Case no. 804941). In that case, AFCA examined the circumstances giving rise to the complaint. The issue concerns the calculation of minimum monthly repayments in circumstances where the account loan balance exceeds the original loan amount (i.e. because no payments had been made for so long), the amount in excess of the original loan amount comprising the arrears. AFCA determined that arrears amounts are treated separately than future minimum monthly payments, because arrears are due and payable immediately. Minimum monthly payments are those amounts which the parties agree to pay over an extended period of time, to pay down interest and principal, not yet immediately due. Arrears are not taken into account for the purposes of minimum monthly payments on a loan, as to do so would have the effect of capitalising them and adding them to the loan amount. The AFCA Determination found no issue with the manner in which the Plaintiff calculated the minimum monthly payments. Additionally, as I understand the evidence, there have been little to no payments to the loans made in the last several years making the issue of the practical effect of the calculation of minimum monthly payments largely irrelevant. Even taking the Defendant's case at its highest, in the circumstances, the change in the calculation of minimum monthly repayments, or failure to give notice, would not impact on the order for possession and the correctness of the balances on the loan for the purposes of the notices. I find this aspect does not raise a defence in respect to the Plaintiff's application for possession. There is no relevant question to be tried on this aspect.

• [37] This aspect of the Defendant's case was also the subject of the AFCA complaint (case no. 804941). On the basis of the facts recounted in the AFCA complaint, which I accept here only for the purposes of attempting to understand the factual foundation of the Defendant's case, there had been no payments made by the Defendant since 2018. Hardship assistance had been provided by the Plaintiff to the Defendant between June 2018 and January 2019. Discussions were held in around 2019 in respect to the prospect of selling the Driver property or the Property or both. For whatever reason nothing occurred. That culminated in a decision by the Plaintiff not to charge interest on the loans between January 2019 to April 2021. That was described, in the AFCA decision, as a commercial decision by the Plaintiff and an act of goodwill to assist in the marketing and selling of the properties, for which the Defendant would receive a benefit of not having interest applied to the loans. On the Plaintiff's account, according to the AFCA complaint, although it waived interest charges over that period, it did not waive the contractual requirement to pay the minimum monthly payment under the loan agreements. It still required the Defendant to make the minimum monthly repayments. Although minimum monthly repayments would "normally" include components to pay down the principal and interest, in this instance, on the Plaintiff's case before AFCA, the monthly payment would go to reducing the principal. Thus, although payments were to be made, the principal would be reduced, which would ultimately be of benefit to the Defendant. The Defendant paid nothing over that period, neither the minimum monthly payment or the principal component of the minimum monthly payment.[46]
• [38] This part of the Defendant's claim takes issue with what he was led to believe would happen in respect to the interest free period, and in particular why he was required to pay the minimum monthly amount payments, when interest was not being charged. It is, at best as can be discerned, a claim that he should not have paid anything or only have been paying the principal component of the minimum monthly payment during that period and that any arrears cumulated in that period should exclude the interest component (i.e. or what would normally have been the interest component of the minimum monthly payment had interest been charged in that period). That would be interest over a 14-month period. There is no evidence of what that amount of interest may have been, but assuming a balance of at least $340,000[47] at 3% per annum, equates to interest of approximately $12,000 over 14 months. The amount of interest may have been more, or less.
• [39] The Defendant deposes that he subsequently took issue with the AFCA Determination and referred a number of things back for clarification or amendment, but no amendment was made. Further, the Defendant deposes on 6 June 2023 (two months after the AFCA Determination was made) he accepted the Determination, which he describes as a "conditional acceptance". Subsequently, the Defendant deposes that he discovered that a file note provided to AFCA by the Plaintiff was different to one he had previously been provided, and that a result the Determination contains falsehoods and voids his acceptance of the Determination. What those differences are and how they affect the Determination is unexplained.
• [40] Taking the Defendant's case as its highest, there are factual issues to be determined in respect to whether there was agreement or not make payments over the interest free period from January 2019 to April 2021. If the Defendant was required to make payments over that period, and he failed to do so, missed payments would form part of the arrears. That would impact on the calculation of arrears on the accounts, which in turn may impact the arrears demanded on the relevant default notices.

• [41] On the above basis, I find that the Defendant does not have a defence in response to the Plaintiff's application in respect to the issues relating to the alleged unaffordable lending, unfair contract terms, allocation of proceeds of sale from the other mortgaged property, the refusal of the promissory note or the variation to the calculation of minimum monthly repayments. Those aspects are to be the subject of summary judgment in favour of the Plaintiff.
• [42] However, there is a factual dispute relating to the issue of the "PRIN DR ADJ" transactions and their effect on the account balances. Whilst that effect may have been small, or possibly nil, it is a fact which I require to be established prior to the exercise of the discretion to grant possession.
• [43] Additionally, there is a factual dispute whether the Defendant was required to make payments (monthly minimum payments or possibly principal only or any), during an interest free period from January 2019 to April 2021, which may have impacted on arrears calculations on the loan accounts. AFCA have found otherwise, or at least found that the Plaintiff was entitled to expect payment of the full minimum monthly amount during the interest free period. If the Defendant is correct, the default notices may be incorrect. However, the Plaintiff could re-issue notices with the correct amounts. Again, the determination of that factual issue bears on the exercise of my discretion and the issue needs to be properly resolved.
• [44] There is no doubt the Defendant is in significant arrears and has been in default for several years. The matter has been delayed for some years, possibly pending resolution of various AFCA complaints and the evidence reveals that the balance of the loans exceeds the equity in the Property. Further delay increases the detriment to the Plaintiff who is being prevented from enforcing its security. On the other hand, the Plaintiff has deposed that the Property is his family home for himself, his partner and his three young children, who will have nowhere else to live and, if possession is ordered, will need time to secure alternate accommodation.
• [45] I am of the view this is matter which is not appropriate, other than as indicated, to grant summary disposition for possession on the basis that there are unresolved factual issues concerning the correctness of arrears amounts and their effects on relevant notices required to exercise the power of sale. Those issues impact on the exercise of my discretion, as I cannot be certain the notices are correct or incorrect (or if they are incorrect whether the amounts are so negligible as to be irrelevant to the exercise of the discretion). Those matters require proper resolution and should be tested properly.
• [46] Therefore, I make the following orders:

(1) There shall be summary judgment in favour of the Plaintiff in respect to those aspects of the Defendant's claim comprising:

(a) Unaffordable lending;

(b) Unfair contract terms;

(c) Allocation of proceeds of sale from the other mortgaged property;

(d) The refusal of the promissory note; and

(e) Variation to the calculation of minimum monthly repayments;

(2) The remaining aspects of the Defendant's claim, namely:

(a) False and Unauthorised Transactions on the Loan Accounts (i.e. the PRIN DR ADJ transactions); and

(b) Withdraw of interest waiver period,

shall proceed to trial with orders for the filing of further evidence.

[1] Otherwise described as Certificate as to Title Register Book Volume 892 Folio 908 more particularly described as Lot 2468, Town of Palmerston from plan(s) S85/214A. Formerly Volume 660 Folio 227, the change in register details brought about by the transfer of the business of the original mortgagee to the current business namely Heritage and People's Choice Ltd. See the affidavit of Wendy Jones made 28 April 2025 at paragraphs [4-13].

[2] As provided by Rule 45.05(4) the relevant order under Rule 45.05(2) may be made on application after the proceeding is commenced. This type of expedited procedure does not prevent full consideration of matters in dispute as illustrated in Australia and New Zealand Banking Group Limited v Oldroyd & Anor [2025] NTSC 20.

[3] Known as Points of Dispute and Reply to Points of Dispute.

[4] Loan 1 (90201387) for an amount of $287,000 over a 30-year term. Loan 2 (90201384) for an amount of $261,000 over a 30-year term.

[5] Loan 3 (90201386) for an amount of $257,000, for an initial period of 2 years.

[7] Volume 689 Folio 045 being Lot 390 in Plan S 82/106A.

[8] The precise circumstances of the arrangement for the sale and application of the proceeds to the outstanding loan amounts is not addressed in affidavit materials filed by the Plaintiff other than at paragraph 9 of Tilbury's affidavit of 8 April 2025 where she states "sale of the McInnis Property was completed by the Plaintiff as mortgagee". Documents from the 2024 Court file indicate the property was voluntarily surrendered to the Plaintiff for sale in lieu of proceeding further with court enforcement proceedings. The Defendant by affidavit promised on 2 April 2025 takes issue with the manner in which the Driver property was sold and the value which was obtained for the sale. Those issues are not relevant to the application for possession.

[9] Tilbury affidavit made 8 April 2025 at paragraph [11].

[10] Tilbury affidavit made 8 April 2025 at paragraph [13].

[11] Tilbury affidavit made 8 April 2025 at paragraphs [14] - [16].

[12] Consolidated Press Holdings Ltd v Wheeler (1992) 84 NTR 42.

[13] Fancourt v Mercantile Credits Limited [1983] HCA 25 at [99].

[14] General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 130.

[15] Outback Civil Pty Ltd & Anor v Francis [2011] NTCA 3 at [10].

[16] Shew & Ors v Police and Citizens Youth Club & Ors [2013] NTSC 15 ("Shew") at [9] citing Sportsbet Pty Ltd v Moraitis [2010] NTSC 24 per Southwood J.

[17] Heller Financial Services Ltd v Solczaniuk [1989] NTSC 36 at [9].

[18] Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161 at 164 ("Inglis")

[19] [1948] NSWStRp 58; (1948) 49 SR NSW 173 at 177.

[20] E L G Tyler, P W Young, C E Croft, Fisher and Lightwood's Law of Mortgage (3rd Aust ed 2013, LexisNexis Butterworths) at [20.38].

[21] Hamwood & Ors v Murdoch [2010] NTSC 62 ("Hamwood").

[22] Australia and New Zealand Banking Group Limited v Oldroyd & Anor [2025] NTSC 20 at [64] ("Oldroyd").

[27] E L G Tyler, P W Young, C E Croft, Fisher and Lightwood's Law of Mortgage (3rd Aust ed 2013, LexisNexis Butterworths) at [20.38]. Also see Inglis at pp 164-165.

[28] Allfox Building Pty Ltd v Bank of Melbourne (1992) NSW Conv R 55-634 ("Allfox").

[29] Milton Park Country Club Pty Ltd v Yasuda Trust Australia Ltd (Supreme Court (NSW), Bryson J, 8 March 1991, unrep).

[30] Bayblu Holdings Pty Ltd v Capital Finance Australia Limited [2011] NSWCA 39 per Campbell JA at [58], referring to Harvey v McWatters [1948] NSWStRp 58; (1948) 49 SR NSW 173 and Allfox.

[31] See for example RAMS Mortgage Corporation Ltd v Skipworth & Anor [2007] WASC 24 at [89]- [94] and Murphy v Abi-Saab (1995) 37 NSWLR 280 per Gleeson CJ at 289.

[32] Butt, Land Law 6th Edition at p 677. Also see Croft and Hay, The Mortgagee's Power of Sale, 3rd Edition, p 90: "As the action for possession is a common law proceeding a defendant who disputes the amount of the debt due will not have to pay into court the admitted balance before his or her claim is heard". Also see RAMS Mortgage Corporation Ltd v Skipworth & Anor [2007] WASC 24 at [91]- [92]. See Also Halbury's Laws of Australia, [295-7370] Mortgagee's action for possession (C) Proceedings for Possession.

[33] Websdale v S & JD Investments Pty Ltd (1991) 24 NSWLR 573.

[35] Indigenous Business Australia v Kani [2012] NTSC 24 ("Kani").

[36] Hunter v Hunter & Ors [1936] AC 222, and Kani at [15] and [26].

[38] Contrary to ss 128 to 132 of the NCCP Act, a breach constituting civil penalties. There is also a related claim of a breach of the Criminal Code 1983 (NT), ss 28AK and 43 AGA.

[39] Pursuant to s 178 of the NCCP Act, compensation for contravention of a civil penalty provision.

[40] Described in the affidavit of Bofilios made 30 Aril 2025 at paragraph [68] as "principal debt adjustment".

[41] Annexed to the affidavit of Tilbury made 20 February 2025.

[42] Defined as mid-night South Australian time.

[43] Decisions were located using case numbers provided in the Defendant's affidavit. The Defendant is not identified, although the Plaintiff is, and the facts correspond precisely to the matters in this proceeding.

[44] See Rowe v National Australia Bank Ltd [2025] SASC 50 at [56] and the authorities referred to therein.

[45] Clause 24 of the loan agreement provides the Plaintiff may vary a number of conditions including the method of calculating the minimum repayment, but if any of the variations increase the borrower's obligations, 20 days' written notice is required. Clause 25 provides any other term of the loan agreement can be varied with 30 days' notice, subject to applicable law and any industry code of conduct.

[46] As the AFCA determination notes, in the context of the complaint, the Plaintiff subsequently sought to have the arrears reduced to the principal component only during the interest free period.

[47] Using the principal of $170,000 for the two interest and principal loans only, the interest only loan did not require any payments as principal was not going to be reduced.