Heritage and People's Choice Limited v Bofilios

National Consumer Credit Protection Regulations 2010 (Cth), r 106(4).

Heritage and People's Choice Limited v Bofilios [2025] NTSC 42; Whild v GE Mortgage Solutions Ltd [2012] VSC 212; Ward v Smart So Hoe Pty Ltd [2015] VSC 691; Hamwood & Ors v Murdoch [2010] NTSC 62; Indigenous Business Australia v Kani [2012] NTSC 24; Clarke v Japan Machines [1984] 1 QdR 404; Commonwealth Bank of Australia v Moir [2024] WASC 319, referred to.

Heritage and People's Choice Limited v Bofilios (No 2) [2025] NTSC 82

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

• [1] This is the hearing of an application for an order for possession commenced by the Plaintiff, and which was partially determined on a summary basis on 24 July 2025. The remaining matters which were not capable of summary determination were referred to a full hearing to determine the following two issues:
  1. False and Unauthorised Transactions on the Loan Accounts (i.e. the PRIN DR ADJ transactions); and
  2. Withdraw of interest waiver period.
• [2] The parties were given the opportunity to file and serve further affidavit materials, to cross-examine witnesses and to make further submissions. The Plaintiff relied on affidavits previously filed in this proceeding, namely: Rachelle Tilbury made 20 February 2025 and 8 April 2025, Daniel Carroll made 21 February 2025, Ronda Carroll made 25 March 2025, Wendy Jones made 28 April 2025, and an additional affidavit of Emma Moore made 5 September 2025. The Defendant relied on affidavits previously filed in this proceeding and an additional affidavit of John Bofilios made 7 August 2025, which also annexed an affidavit of Colleen Bofilios made 6 August 2025. Those affidavits were taken as read.
• [3] The background to this matter is as set out in the previous reasons for decision in this proceeding.[1] As noted above, the two remaining issues for determination are the determination of issues relating to: the false and unauthorised transactions and the interest waiver period.
  1. False and Unauthorised Transactions
• [4] This aspect relates to certain transactions which were recorded on the Defendant's loans as "PRN DR ADJ" whereby following a payment made by the Defendant against the loan, an amount would be debited and then re-credited. Evidence in respect to this practice was given in the affidavit of Ms Moore, which can be summarised as:

(a) She ran reports on the Plaintiff's accounts system for the three accounts held by the Defendant (account numbers 90201384, 90201386 and 90201387) from inception to 4 September 2025.[2]

(b) When a payment is credited to a loan account (i.e. when a mortgagor makes a mortgage payment), it is followed by a debit and credit entry (system debit and credit). Those latter two entries are part of the background processing of the system and do not appear on normal loan statements. The system debit and credit are an internal means to keep track of payments due and made in the system. The system records a debit adjustment transaction to record that a payment is due and a credit adjustment to record the payment has been allocated in the system.

(c) When a loan repayment is made, namely the contractual payment, the system debit and credit will be the same as the contractual payment. If a loan re-payment is made which is more than the required minimum contracted payment, then the system debit and credit entries will each only reflect the contractually required payment (i.e. will be less than the loan repayment).

(d) The relevant report indicates that all system debit and credit transactions occurred either simultaneously or within one second of one another.

• [5] Ms Moore was not required for cross-examination. However, in submissions, the Defendant took issue with her affidavit to the extent that:

(a) There were no daily interest calculations in the report, only monthly amounts. Therefore, the records did not establish the time that interest was calculated in respect to account balances and which, it was submitted, made them useless.

(b) The reports have different typescripts and fonts.

(c) There were discrepancies with date and time payment formats.

• [6] As it was in the summary judgment application, the nub of the Defendant's case was a challenge to the correctness of the amounts said to be owed on default. These were stated in the relevant default notices and notice of the exercise of power of sale. In essence, the Defendant submitted that because of these additional entries, interest may have been calculated incorrectly. This would, in turn, have affected arrears calculations and ultimately the amounts which formed part of the stated default amounts on the relevant default notices. Presumably, it follows that the Defendant claims the default notices were invalid and therefore affected the Plaintiff's ability to exercise the power of sale, which in turn would affect any exercise of the discretion in ordering possession.
• [7] The Plaintiff relied on the evidence of Ms Moore to the effect that the transactions records indicated that the system debit and credits (for the same amounts) occurred either simultaneously or within a second, such that their existence had no bearing on the calculation of interest on the loans. As referred to in the summary judgment reasons,[3] the loan agreement provided that interest on the loans was to be calculated on the loan balances daily at midnight of each day.
• [8] The Plaintiff submitted that even if there were doubts about whether the amounts on the relevant notices were "out by a few dollars", that was no impediment to an order for possession. It was submitted that the law was settled, in that the overstatement of an amount due in a default notice does not necessarily invalidate the notice. In that respect, the Plaintiff relied on Ward v Smart So Hoe Pty Ltd,[4] where Ierodiaconou AsJ (citing Whild v GE Mortgage Solutions Ltd)[5] summarised the relevant principles:

(a) There is a fundamental distinction between the overstatement of an amount owed because of a correctly identified event of default as distinct from the inclusion of an act or event of default in the notice of default which did not exist at all.

(b) A default notice may be valid if it overstates the amount owed but the default is correctly identified.

(c) So long as the object of guarding the rights of the mortgagor is achieved and, in particular, no 'non-defaults' are relied upon, the courts will not adopt a narrow and pedantic approach in considering the validity of a notice of default. They are valid so long as they reasonably convey to the recipient the message that the section intends the borrower to receive and the borrower is not misled.

(d) A default notice that materially misleads the recipient as to the nature of the debt demanded will be invalid.

(e) A notice should specify with reasonable particularity and accuracy the facts of the default, the nature of the default, and the manner in which the default can be remedied. A notice which specifies that the mortgagor is in default on a particular day when in fact payments have been made between the date of the alleged default and the date of the notice is more likely to mislead than inform.

(f) A notice which misdescribes the month of default may be valid.

(g) A different approach applies to agreements regulated by legislation.

• [9] As to whether an error claimed in a statutory notice invalidates the notice, Luppino M (as he was) stated in Hamwood & Ors v Murdoch (footnotes omitted):[6]

Ms McLaren also relied on Websdale v S & JD Investments Pty Ltd ("Websdale"). She submitted that the case is authority for the principle that a notice which demands payment of principal which is not then due cannot be valid. This seems to rely in part on her submission based on the construction of the documents, that the Defendant was not in default or that principal was otherwise not due....

In any event the general principle in Websdale does not support Ms McLaren's contention in my view. That case involved a situation where the requisite notice contained both a correct assertion that the mortgagor had defaulted in the payment of interest and an erroneous statement that the principal was then outstanding. That was held to be defective resulting in a finding that the relevant statutory requirements had not been satisfied. The case is not authority for the proposition that an error in the amount claimed in a statutory notice invalidates the notice which appears to be Ms McLaren's point. This is clear from the judgment of Clarke JA where, as to the effect of referring to an incorrect amount alone in a statutory notice, he said:-

"The section requires the mortgagee to bring to the attention of the mortgagor the particular default and to require him to make it good. It does not in terms require the mortgagee, in a case in which it is claimed that the mortgagor is in default in the payment of interest or principal, to specify the particular amount outstanding. What it requires is that the mortgagee identify the particular default or defaults. In these circumstances it is difficult to see why, provided the default is correctly identified, the specification of a greater or lesser amount than actually due should affect the validity of the notice....in the absence of a requirement that the notice identify with particularity the precise amount outstanding, it will be good so long as it identifies correctly the defaults which the mortgagor is given the opportunity of remedying."

• [10] As a condition of the exercise of the power of a mortgagee's power of sale, s 89(1) of the Law of Property Act 2000 (NT) requires:

(a) a default in the payment of the principal money or interest (or a part of it[7]) secured by the instrument of mortgage.

(b) notice requiring payment of the amount which constitutes the default served on the mortgagor.

(c) the default to have continued for 30 days or more (or any other period more than 1 day as agreed) after service of the notice.

• [11] The provisions in s 89(1) of the Law of Property Act 2000 (NT) differs to varying degrees to those found in other jurisdictions. Namely, in respect to the requirement to state the amount that constitutes the default.[8]
• [12] In respect to s 89(1) of the Law of Property Act 2000 (NT) in Hamwood, Luppino M stated:

Subsection (1) is clearly stated to apply only in respect of the mortgagee's power of sale. There is no reference to the power to take possession. Even if section 89 applied to a mortgagee's power to take possession on default, it seems to me that, consistent with Websdale the notice will be sufficient if it specifies "the payment of the amount that constitutes the default". Although the default can be either principal or interest or both, in my view stipulating one global amount is sufficient.

• [13] However, Hamwood was not a case about the overstatement in the amount specified in a notice. Similarly in Kani, Luppino M (as he was) discussed the effect of an error in the relevant notice.[9] He noted that the pre-conditions to the exercise of a power of sale specified in a mortgage should be strictly complied with due to the drastic nature of the remedy, and did not see any reason why such a principle could not have application to an order for possession.[10] In Kani, the error was the erroneous reference to a clause in the mortgage (6.1.1.a instead of 9.1.1.a). Such a mistake was minor and not fatal.
• [14] However, Kani was not a case about an overstated amount in a relevant default or statutory notice. As illustrated in Whild, by an analysis of numerous authorities, the position is that:[11]

so long as the object of guarding the rights of the mortgagor is achieved and, in particular, no "non-defaults" are relied upon, the courts will not adopt a narrow and pedantic approach in considering the validity of a notice of default. They are "... valid so long as they reasonably convey to the recipient the message that the section intends the borrower to receive and the borrower is not misled".

• [15] Thus, a notice will not necessarily be bad merely because a greater sum is demanded. That does not mean that a mortgagee can demand what it likes, or that demands for larger amounts are always lawful.[12] A question of degree will be involved. Additionally, notices which are apt to mislead will be invalid.[13]
• [16] In these circumstances, the evidence was that the Plaintiff gave notice of default under the loan agreements on 5 December 2024, and demanded payment of arrears, fees and costs for each loan (including enforcement expenses) in the sum of $991,956.80. The Defendant also gave notice, under s 89(2) Law of Property Act 2000 (NT) and s 88 of the National Consumer Credit Code ('the Code'), of the amounts (balance principal and interest) due and owing on 5 December 2024 for each loan. This was along with enforcement expenses, totalling $991,956.80. Those amounts were accelerated amounts, with previous default notices having been served and therefore giving to the right to accelerate the amounts owing.
• [17] In respect to previous default notices, the Defendant had originally been served on 3 April 2024 with a default notice, a notice under s 89(2) of the Law of Property Act 2000 (NT) and the Code. The amount of the default was stated as $272,195.83. The Defendant had failed to rectify that default in the required time and therefore the amounts owing under the loans were accelerated. However, on 16 January 2025, a sale of one of the Defendant's properties was completed and the proceeds of that sale were applied to one loan which was discharged in full, with the remaining proceedings applied to another. As at 8 April 2025, the total owing by the Defendant was $316,110.13 in respect to one loan[14] and $293,572.11 in respect to another loan.[15] As at 8 April 2025, it was the Plaintiff's evidence that the Defendant, save for a few nominal payments in amounts under $5, had not made any payments to either of the loans since June 2018.[16]
• [18] On the evidence of Ms Moore, I am satisfied that the system debit and credits would have had no effect on the accounts' balances such that they would have influenced amounts of interest owing. Even if they had an influence and some of the daily interest calculations fell between a system debit and credit, such that daily interest was calculated excluding the amount of the loan repayment, the effect on the balances would have been small to negligible.
• [19] The most recent default notice served on the Defendant was dated 5 December 2024. That notice specified the default in sufficient terms such that the Defendant should not have been left in any doubt as to what was required to rectify the default. Even if the notice overstated the amounts due, as an effect of the system debits and recredits, I am not satisfied that would have been sufficient to invalidate the notice in terms of the factors to be considered as set out in Ward v Smart So Hoe Pty Ltd.
• [20] A similar situation arises in respect to the notice served pursuant to s 88 of the Code. Section 88(3) of the Code requires that the notice of default is to specify the default. Section 180(1) of the Code provides that information disclosed in a notice is taken to be correctly disclosed if it is within tolerances allowed by the regulations. Regulation 106(4) of the National Consumer Credit Protection Regulations 2010 (Cth) provides that, for the purposes of s 180(1)(a) of the Code, information disclosed about repayments payable is within permissible tolerances if it overstates the amount or amounts payable. Thus, any amount disclosed in the notice which is overstated (within permissible tolerances as provided) would not invalidate the notice pursuant to s 88 of the Code.[17]
• [21] I am of the view that there is nothing in the relevant notices which gives reason to find that they were invalid in terms of inhibiting the Plaintiff's exercise of the power of sale and therefore would give cause to an exercise discretion against an order for possession.
  1. Withdraw of Interest Waiver Period
• [22] This aspect of the proceeding relates to a period between January 2019 and April 2021, where the Defendant was granted an interest-free period on his loans. As described in the summary judgment reasons,[18] the Defendant takes issue with what he believed would happen in respect to the interest-free period. In particular, the Plaintiff's requirement that he pay the minimum monthly contractual repayments during that period (which would have included a payment designed to pay off amounts of principal and interest) despite there being no interest charged. It is the Defendant's position that he should not have been obliged to make loan repayments during that period. Therefore, any re-payments which were not made (it is understood to be all of them over that period) should not have formed part of the arrears on the loans, which ultimately informed the default notices. The nub of the Defendant's argument is reduced to a claim that the default notices, and in particular the April 2024 notices[19] which noted the arrears owing up until that date, were invalid because they overstated the amounts owing on the loans. That is, they took into account arrears which included missed loan repayments over the interest-free period between February 2019 and April 2021. In that regard, it is important to examine the context of what was happening in respect to the Defendant's loans at about that time.
• [23] In June 2018 there was an arrangement in place between the Plaintiff and Defendant which expressly allowed for the postponement of loan repayments during a formally granted "hardship period", presumably under the Plaintiff's hardship policy provisions.[20] No repayments were required during the hardship period, although it was made clear to the Defendant that interest and arrears would continue to accrue during that period.[21] During the hardship period, there was an expectation that one or both of the properties owned by the Defendant would be sold to make up arrears on the loans. It should have been apparent to the Defendant that[22] during a hardship period, loan repayments would be suspended but interest and arrears would continue to accrue. That period of hardship was expressed to end on 8 February 2019.[23]
• [24] Towards the end of the hardship period, the Defendant was still trying to sell his properties and attempted to get a further extension of the hardship period (which would have included no repayments during any extended period). There were three letters sent from the Plaintiff to the Defendant putting forward various proposals for an extension to hardship assistance, but all three were rejected by the Defendant.[24] Those letters proposed certain conditions which, if agreed, would lead to the postponement of repayments and the suspension of interest over the agreed period as stipulated. It would appear that the Defendant raised a number of issues with the Plaintiff on or about 6 March 2019, which resulted in further correspondence from the Plaintiff on 23 April 2019.[25] That correspondence noted that the Plaintiff had ceased charging interest on the loans as at 25 January 2019 but advised that, in the Plaintiff's view, the Defendant had failed to comply with the hardship arrangements as previously agreed. Notwithstanding a further proposal was put to the Defendant to clear the loans by sale (or otherwise) of his properties by 31 July 2019, that interest would continue to be suspended until 31 July 2019 and that, except as outlined in the proposal, the terms and conditions of the home loans would remain unchanged. The letter concluded that should the parties not agree by 8 May 2019, there would be no agreement as to a hardship, enforcement action may be taken, and interest would recommence on 8 May 2019. That proposal was not accepted by the Defendant. Yet a further proposal was made by the Plaintiff on 13 May 2019 on certain terms as to the sale of the properties and discharge of the loans. That proposal provided that interest would continue to be suspended until 31 July 2019 and that the Defendant would not be required to make monthly loan repayments before 31 July 2019. However, he was nonetheless encouraged to do so. Otherwise, the terms and conditions of the home loans and related securities would remain unchanged, with interest to recommence on 22 May 2019 if the proposal was not accepted. That proposal was not accepted. What happened between May 2019 and April 2021 is not abundantly clear. Certainly, a complaint to the Australian Financial Complaints Authority ('AFCA') was on foot and was followed by a subsequent complaint.
• [25] As best as can be ascertained from the evidence, during the period of negotiation and up until April 2021, in which the formal proposals for further hardship were being negotiated or AFCA complaints were on foot, the Plaintiff determined that it would not apply interest to the loans whilst negotiating as a sign of good will or good faith.[26] In April 2021, a further proposal for resolution was sought.[27] It would appear that the Defendant's financial situation had improved by then, such that he could possibly address the outstanding issues with his loans. That proposal set out the current arrears on the loans and proposed new monthly payment amounts. This was on the basis that all arrears would be recapitalised into the original term of the loan. That was not agreed to by the Defendant. The Defendant lodged a complaint with AFCA on 15 April 2021 in respect to the calculation of arrears from 26 January 2019 to 1 May 2021,[28] claiming that calculation on arrears should not have included an interest component as no interest was being charged. The AFCA complaint was not determined until April 2023, and it was determined in the Plaintiff's favour.
• [26] The Plaintiff's position is that, notwithstanding that there was no interest being charged during the relevant period, it still expected the minimum contractual payments against the loans to have been made by the Defendant. The Plaintiff did not waive the requirement to make contractual payments, and the contractual payments remained at whatever they had been set at previously. The Plaintiff submitted that, in the absence of agreement to enter into a hardship agreement which suspended loan payments, the Defendant's liability continued to accrue regardless. Further, the Plaintiff pointed to the most recently served default notices, comprising the full payout amounts of the loans (the accelerated amounts) as not having been affected by any incorrect amount of arrears. This was because the amounts comprise the total liability of the loans (taking into account the interest-free period in which no payments were made to reduce principal in any case).
• [27] The Defendant's position was that he did not receive any notification from the Plaintiff that he had to pay anything when the interest was suspended, and that he was led to believe that he did not have to make payments. The Defendant pointed to evidence of the Plaintiff's lack of follow-up with him throughout 2019 to 2021 in respect to outstanding payments of principal as indicative of that. The Defendant says that, had he been required to make payments during the period 2019 to 2021, the Plaintiff would have been chasing him for those payments, but it did not. Consequently, he did not owe the Plaintiff missed payments during that period, and the Plaintiff's inclusion of the payments in arrears in the default notices was wrong. The Defendant claims he did not owe what the Plaintiff alleges.
• [28] On the evidence, I do not find that the Plaintiff agreed to waive the contractual minimum payments on the relevant loans during the interest-free payment period. Following the expiry of the formal hardship period, it was clear that there were negotiations in respect to another period of hardship in which the requirement to make loan payments and interest would have been suspended. The Plaintiff had offered that through negotiations with the Defendant. However, there was never any agreement. At best, all that was done was the Plaintiff offered a non-binding, in good faith, interest-free period whilst further negotiations in respect of the loans and complaints were dealt with. It may have been that the Defendant thought that he did not have to make the loan payments, or that the Plaintiff was not actively chasing him for the payment. However, if that was his view, it is difficult to accept it as being reasonable. The extension to the hardship period, which was being sought by the Defendant through negotiations with the Plaintiff, which would have had the effect of further suspending loan repayments, was never ultimately agreed to.
• [29] Absent any agreement, the obligation to continue to pay the minimum contractual loan payments throughout the interest-free period continued to lie with the Defendant. The Plaintiff was therefore not wrong to include such payments in the total arrears in its default notices in April 2024, upon which the December 2024 notices were issued (i.e. the accelerated loan amounts). On that basis, the default notices are not invalid and in the exercise of my discretion I would grant the order for possession.

• [30] I therefore make the following orders:
  1. Pursuant to Rule 45.05(2):
     1. the requirements of Rules 5.03(1) and 8.02 are dispensed with; and
     2. the Plaintiff is authorised to commence this proceeding by Originating Motion in Form 5C.
  2. The Plaintiff take possession of the whole of the land comprised in Certificate as to Title Register Book Volume 660 Folio 327 (previously Volume 638 Folio 130), more particularly described as Lot 2468 Town of Palmerston from plan(s) S 85/214A and known as 26 Muckaninnie Court, Moulden in the Northern Territory of Australia.

[1] Heritage and People's Choice Limited v Bofilios [2025] NTSC 42 at [1-10].

[2] Affidavit of Emma More made 5 September 2025, Annexure 'A', p 7.

[3] See Heritage and People's Choice Limited v Bofilios [2025] NTSC 42 at [31]. Clause 16 of the loan agreement provides that interest is calculated daily by multiplying the unpaid daily balance of the account at the end of the day by the daily percentage rate, the daily percentage rate being the annual percentage applying divided by 365.

[4] Ward v Smart So Hoe Pty Ltd [2015] VSC 691 at [23].

[5] Whild v GE Mortgage Solutions Ltd [2012] VSC 212 ('Whild').

[6] Hamwood & Ors v Murdoch [2010] NTSC 62 at [22-23] ('Hamwood').

[8] For example, s 103 of the Property Law Act 1958 (Vic) refers to the "notice requiring payment of the mortgage money". Section 76(1) of the Transfer of Land Act 1958 (Vic) refers to "if default is made in payment of the principal sum secured... the mortgagee may serve on the mortgagor... notice in writing to pay the money owing". Section 57 of the Real Property Act 1900 (NSW) is more prescriptive as set out in Whild at [36]. Section 84 of the Property Law Act 1974 (Qld) requires a default in payment of the principal money or interest and notice requiring payment of the amount the failure to pay which constituted the default.

[9] Indigenous Business Australia v Kani [2012] NTSC 24 ('Kani').

[12] See Clarke v Japan Machines [1984] 1 QdR 404 at 412-3.

[16] Affidavit of Rachelle Tilbury made 9 April 2025.

[17] See Commonwealth Bank of Australia v Moir [2024] WASC 319 at [60].

[18] Heritage and People's Choice Limited v Bofilios [2025] NTSC 42 at [38].

[19] The April 2024 notices specified a default in terms of arrears owing up until the date of the notice. The December 2024 notice accelerated the loans to the full loan pay out amounts based on the April 2024 default. Section 93 of the Code provides that a default notice under s 88 of the Code must be given before a credit provider can enforce an acceleration clause.

[20] See Affidavit of Colleen Bofilios made 6 August 2025, Annexure '16', p 357, for examples of letters from the Plaintiff advising of the approved hardship which cover the period from 21 July 2018 to 27 September 2018. Further letters appear at Annexure '17', p 361, of that affidavit.

[21] Presumably that meant that interest continued to be applied to the principal amount, as well as to any amounts in arrears during that period, but payments against the loan would not be required.

[22] Because that, in fact, had been the case during the hardship period he had been granted.

[23] The hardship period ran from 1 December 2018 to 8 February 2019. Although, it appears hardship assistance may have been extended to 6 March 2019. See Affidavit of Colleen Bofilios made 6 August 2025, p 349.

[24] Affidavit of Colleen Bofilios made 6 August 2025, Annexure '19', p 367, and Annexure '20', p 370, which annexes letters of 5 February 2019 and 23 April 2019.

[25] Affidavit of Colleen Bofilios made 6 August 2025, Annexure '20', p 370, which responds to the concerns raised.

[26] See Affidavit of Colleen Bofilios made 6 August 2025, Annexure '23', p 403, which annexes an email dated 16 February 2021 from Mr Hunt to the Defendant.

[27] Affidavit of Colleen Bofilios made 6 August 2025, Annexure '24', p 416.