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1. Permanent Custodians Ltd seek possession of Mr Chesterfield’s residential property in Macgregor, ACT. Mr Chesterfield offered the property as security for a credit loan of $606,000 under a loan agreement signed on 13 September 2023. The loan was managed by Bluestone Home Loans (Bluestone) on Permanent Custodians’ behalf.

2. At that time, Mr Chesterfield was operating a roofing business, MGC Roofing. In 2024 Mr Chesterfield’s business, for various reasons, suffered some solvency issues and Mr Chesterfield began to experience financial strain. He was unable to receive the income necessary for him to make the repayments required to service the loan, and he fell into arrears throughout 2024. Mr Chesterfield was also facing difficult personal circumstances at that time.

3. In June 2024, Permanent Custodians served a default notice on Mr Chesterfield. In September 2024, it filed these proceedings seeking repayment of the total amount owing under the loan agreement and possession of Mr Chesterfield’s property. Mr Chesterfield did not file a defence, and default judgment was entered in favour of Permanent Custodians on 7 January 2025.

4. Thereafter, Mr Chesterfield pursued various means to resolve the issue of his outstanding debt and to avoid the loss of his home, including: (a) applying for an early release of his superannuation entitlements; (b) exploring refinancing of the loan; and (c) making a complaint to the Australian Financial Complaints Authority (the AFCA) regarding the conduct of Permanent Custodians.

5. Permanent Custodians pressed on with enforcement of default judgment in its favour until November 2025 when Mr Chesterfield successfully applied for a stay of the enforcement orders. He now applies for orders, alternatively, to: (a) set aside the default judgment; (b) allow instalment payments; (c) extend the stay of the enforcement; and (d) require Permanent Custodians to provide a letter of support to him for an early release of superannuation entitlements.

6. Mr Chesterfield reads his affidavits sworn on 5 January 2026 and 20 February 2026, and of Sherrie Mackey sworn on 5 January 2026. Permanent Custodians reads affidavits of Craig Brooks affirmed 8 November 2024 and Oliver King-Thornburg sworn 25 February 2026.

7. Mr Chesterfield is a father to two young children and has a supportive partner and mother who are assisting him. He is also navigating mental health issues arising from the failure of his business and breakdown of relationship with his father. He has now, by all accounts, a more secured footing in life than when he entered into the loan agreement.

Chronology of events leading to entry of default judgment

8. In or around January 2024, Bluestone sent Mr Chesterfield an email identifying arrears of $4,444.81 which had accrued on 8 January 2024.

9. On 6 February 2024, Mr Chesterfield emailed Bluestone saying he paid his monthly instalment and to check if he had paid the late fee. On 9 February, Bluestone advised the arrears were at $395.00 and noted the next instalment would be due on 6 March.

10. On 18 March 2024, Bluestone emailed Mr Chesterfield identifying arrears of $4,506.64 (the March Arrears). With no response, Bluestone emailed again on 22 March. Mr Chesterfield responded on 23 March that he could make payment by Friday 29 March.

11. On 16 April 2024, Bluestone emailed Mr Chesterfield identifying arrears of $4,338.53 (the April Arrears).

12. On 21 May 2024, Bluestone emailed Mr Chesterfield noting the March and April Arrears had not been paid. In its email, Bluestone stated: Should your account continue to be in arrears, our next course of action is to issue a Default Notice which may result in additional fees being added to your account. If you believe you may have difficulty in making this payment, please call us on 13-BLUE (2583) for further assistance. Alternatively, you can visit our website for more information.

13. On 11 June 2024, Bluestone emailed Mr Chesterfield advising arrears of $13,256.94 which presumably comprised the March and April Arrears, and arrears accumulated in May. The email again included the warning set out above.

14. On 20 June 2024, Permanent Custodians, through their lawyers, sent a letter of demand to Mr Chesterfield. The demand was in the amount of $13,623.28 and attached a notice under s 88 of the National Credit Code (Cth) and s 93 of the Land Titles Act 1925 (ACT).

15. On 2 July 2024, Bluestone emailed Mr Chesterfield seeking resolution of the arrears of $13,256.94 by August to “avoid legal action from commencing”.

16. On 25 July 2024, Bluestone emailed Mr Chesterfield about the arrears increasing to $18,287.07 and again raising the prospect of legal action.

17. On 6 August 2024, Bluestone discussed with Mr Chesterfield payment of $18,287.07 due on 9 August 2024. On 9 August 2024, a payment plan was arranged between the parties whereby Mr Chesterfield was seemingly required to pay $10,000 on that day, followed by $12,784.58 on 16 August 2024.

18. On 16 September 2024, Permanent Custodians filed its originating application after Mr Chesterfield did not make the second payment under the payment plan.

19. On 25 September 2024, Bluestone emailed Mr Chesterfield to note a discussion on the phone for a payment plan to clear arrears of $17,353.91 and the October instalment. It notes: Please keep in mind that our legal actions will continue until the full arrears + all legal fees are paid.

20. On 14 October 2024, Bluestone emailed Mr Chesterfield confirming an arrears balance of $21,805.23 and seeking a payment plan. It notes: Should any payment default in the agreed arrangement, the next course of action would be for us to proceed with enforcement activity which may result in additional fees being charged to your account.

21. On 30 October 2024, Permanent Custodians served Mr Chesterfield a copy of the originating claim and statement of claim.

22. On 14 November 2024, Bluestone emailed Mr Chesterfield, following a phone call, seeking payment of arrears of $26,986.94.

23. On 18 November 2024, Mr Chesterfield made a payment of $10,000 to the loan account, indicating the balance of the arrears would be paid by 22 November 2024.

24. On 22 November 2024, Mr Chesterfield extended the time for repayment of the balance of the arrears to 29 November 2024. Bluestone attempted to call him on that day without success when no further payment was made.

25. On 23 December 2024, Permanent Custodians sought default judgment which was entered on 7 January 2025 in the following terms: The plaintiff recover – (a) against the defendant $599,594.18, together with (b) Interest in the amount of $10,555.15; and (c) possession of the land in Section 85 Block 22 on Deposited Plan 2929 of MacGregor and contained in Certificate of Title Volume 418 Folio 76, known as 120 Osburn Drive, MacGregor in the Australian Capital Territory.

26. Prior to applying for default judgment, Bluestone communicated with Mr Chesterfield to the effect that enforcement action would continue but they did not give him any notice of their intention to proceed with an application for default judgment.

27. On 22 January 2025, Mr Chesterfield commenced the process of liquidating MGC Roofing.

28. On or around 10 February 2025, Mr Chesterfield applied to the ATO for the release of his superannuation. In response, the ATO required Mr Chesterfield to obtain a letter from Bluestone to support the release of those funds.

29. On 10 March 2025, Bluestone requested a full financial disclosure from Mr Chesterfield to process his request for a letter for a superannuation release.

30. On 12 June 2025, Permanent Custodians’ lawyer served, by post, a copy of the default judgment together with a form outlining enforcement options.

31. On 2 October 2025, Permanent Custodians sought, and received, an order for delivery of possession of land.

32. On 27 October 2025, Permanent Custodians served on Mr Chesterfield the default judgment providing for delivery of possession of the land.

33. On 29 October 2025, Mr Chesterfield wrote to Dentons, seeking a stay of the enforcement order to enable early release of his superannuation to cover the arrears.

34. On 3 November 2025, Bluestone wrote to Mr Chesterfield and declined his request for a letter supporting him to access his superannuation. Bluestone’s position was as it had obtained default judgment against him, it no longer had hardship obligations. Instead, Bluestone provided Mr Chesterfield with 30 days to refinance or a 4 month timeline to sell the property. They also advised him of his right to complain to AFCA.

35. On 7 November 2025, Mr Chesterfield lodged a complaint with AFCA which was decided on 8 December 2025. The AFCA rejected the complaint as a default judgment was entered, taking the matter outside of their jurisdiction.

36. The issues for my determination are: (a) Was there an entitlement to pursue enforcement action? (b) Is there a proper basis for setting aside the default judgment? (c) If not, is it appropriate to grant Mr Chesterfield any other relief in the form of a stay of the judgment or an instalment payment order? Was there an entitlement to pursue enforcement action?

37. The steps required of Permanent Custodians to establish an entitlement to pursue judgment for the loan amount and for possession of the land comprising security for the loan were: (a) to establish the relevant terms of the loan agreement; (b) to prove an event of default under the agreement; (c) to establish the debt due and payable by the borrower as a consequence of the default; and (d) to demonstrate a contractual entitlement to exercise its right to seek judgment for the debt and possession of the land.

38. There is no suggestion from a review of the material before me of any shortcoming in the documents relied upon by Permanent Custodians as demonstrating their right to proceed by way of enforcement action. Mr Chesterfield does not identify any relevant defect in the documentation. As a consequence, I am satisfied a prima facie entitlement to pursue enforcement action is established. My finding is, however, qualified on the basis neither of the parties placed in evidence before me a copy of the relevant loan agreement, and my assessment is based upon assertions concerning the terms of the loan agreement and the impact of a default event as they are set out in the statement of claim.

Is there a proper basis for setting aside the default judgment?

39. The court has a discretion to set aside a judgment obtained by default in appropriate circumstances: r 1128 of the Court Procedures Rules 2006 (ACT). As explained by Master Mossop (as his Honour then was) in Stormer Building Group Pty Ltd v Johnson [2014] ACTSC 23 at [10], there are no rigid requirements for a defendant in making such an application.

40. The Full Court of the Federal Court summarised the task in this way in Davies v Pagett [1986] FCA 186; 10 FCR 226 at 232 (Morling, Beaumont and Wilcox JJ): The fundamental duty of the court is to do justice between the parties. It is, in turn, fundamental to that duty that the parties should each be allowed a proper opportunity to put their cases upon the merits of the matter. Any limitation upon that opportunity will generally be justified only by the necessity to avoid prejudice to the interests of some other party, occasioned by misconduct, in the case, of the party upon whom the limitation is sought to be imposed. The temptation to impose a limitation through motives of professional discipline or general deterrence is readily understandable; but, in our opinion it is an erroneous exercise of the relevant discretion to yield to that temptation. The problem of delays in the courts, egregious as it is, must be dealt with in other ways: for example, by disciplinary actions against offending practitioners and by a comprehensive system of directions hearings or other pre-trial procedures which enable the Court to supervise progress - and, more pertinently, non-progress - in all actions.

41. In Stormer, four principles were identified by Master Mossop at [15] to guide the court’s discretion, three of which are relevant to this matter: In the light of the authorities to which I have referred, in my opinion, it is appropriate to separately consider in the context of this case: (a) whether or not an arguable defence on the merits is disclosed; (b) the reasons for the failure by the defendants to file a defence, including considering whether any notice of intention to file a default judgment was provided; (c) the extent of delay in the application to set aside the judgment…

42. Mr Chesterfield’s defence, if default judgment is set aside, is that Bluestone did not comply with its hardship obligations. Bluestone did not inform him, as the arrears were accruing, he should consider a hardship process. As he was unaware of the process, he could not make a hardship application. If he was aware of the availability of hardship processes, he could have accessed his superannuation to pay the arrears. He points to a letter the Australian Securities and Investment Commission sent to lenders which, among other things, states lenders should be “proactive” in assessing and assisting with financial hardship.

43. Mr Chesterfield also identifies certain matters which he says caused him to believe Bluestone would not pursue legal action against him: (a) He was in ongoing communications with Bluestone about repayments. (b) His financial statements did not show any arrears. (c) He explained to Bluestone his business was experiencing problems.

44. Mr Chesterfield explains why he was not making repayments with reference to his financial and personal incapacity: (a) MGC Roofing was a sub-contractor to his father’s business, React Metal Roofing Pty Ltd (React). Apparently under this arrangement, React would invoice customers and MGC Roofing would invoice React for materials and labour costs. His commitments to paying the arrears and agreement to payment plans was based on his own assessment that income would continue to flow from React. However, React ceased paying MGC Roofing’s invoices, leading to MGC Roofing claiming $90,762 in debt from React. (b) The breakdown in Mr Chesterfield’s relationship with his father affected his functional capacity. Mr Chesterfield felt abused by his father which was difficult for him to accept. He withdrew from life around him. (c) He has been diagnosed with ADHD which, on reflection, is a condition which could not have assisted him in identifying when issues become important.

45. Mr Chesterfield also takes issue with Permanent Custodians’ actions once default judgment was entered: (a) When Mr Chesterfield contacted Bluestone in March 2025, he was not informed of the default judgment made against him. He found out about the default judgment in June 2025. (b) Upon receiving the default judgment in June 2025, Mr Chesterfield contacted Bluestone who told him something to the effect of, “No, you are making payments” when asked if he was to do something. (c) His June 2025 annual statement, for the first time, showed arrears.

46. Permanent Custodians submit Mr Chesterfield has no basis to set aside the default judgment. In their submission: (a) Mr Chesterfield has failed to identify suggested grounds of a defence or matters that could potentially give rise to one. Instead, he admits to being in default and being unable to remedy the default. His reliance on hardship followed the default judgment being entered but at that point, Permanent Custodians had no obligation to consider any hardship request. (b) There is no sufficient explanation as to why Mr Chesterfield did not file a defence. Mr Chesterfield was on notice legal action would continue until the account was up to date. Permanent Custodians relies on a call log with Mr Chesterfield dated 14 November 2024 where this information was communicated to him. Furthermore, he was on notice he should seek legal representation if he had concerns. Permanent Custodians relies on its letter of demand and statement of claim which was served on Mr Chesterfield, which communicated this information to him. (c) There has been a 12 month delay between the entry of default judgment and his bringing of an application. No reason or explanation has been provided for that delay.

47. In assessing whether there is an arguable defence, the court need not go beyond an assessment of the facts as they may be found. No factual determination is required: Ryan v Adams (1993) 112 FLR 474 at 476 (Miles CJ). Mr Chesterfield takes issue with the failure of Permanent Custodians to proactively alert him to his options in the event of financial hardship. Permanent Custodians does not acknowledge any duty to act proactively in that regard, asserting instead that hardship was only raised by Mr Chesterfield after default judgment was entered, by which time, the lender’s hardship obligations no longer had application. Mr Chesterfield says in the context of negotiations concerning arrears, he advised Bluestone of the difficulties with his business. Section 72 of the National Credit Code provides: 72 Changes on grounds of hardship Hardship notice (1) If a debtor considers that he or she is or will be unable to meet his or her obligations under a credit contract, the debtor may give the credit provider notice (a hardship notice), orally or in writing, of the debtor’s inability to meet the obligations. Note: If the debtor gives the credit provider a hardship notice, there may be requirements (beyond those in section 88) that the credit provider must comply with before beginning enforcement proceedings—see section 89A. Further information (2) Within 21 days after the day of receiving the debtor’s hardship notice, the credit provider may give the debtor notice, orally or in writing, requiring the debtor to give the credit provider specified information within 21 days of the date of the notice stated in the notice. The information specified must be relevant to deciding: (a) whether the debtor is or will be unable to meet the debtor’s obligations under the contract; or (b) how to change the contract if the debtor is or will be unable to meet those obligations. (3) The debtor must comply with the requirement. Note: The credit provider need not agree to change the credit contract, especially if the credit provider: (a) does not believe there is a reasonable cause (such as family violence, illness or unemployment) for the debtor’s inability to meet his or her obligations; or (b) reasonably believes the debtor would not be able to meet his or her obligations under the contract even if it were changed. Notice of decision on changing credit contract (4) The credit provider must, before the end of the period identified under subsection (5), give the debtor a notice: (a) that is in the form (if any) prescribed by the regulations and records the fact that the credit provider and the debtor have agreed to change the credit contract; or (b) that is in the form (if any) prescribed by the regulations and states: (i) the credit provider and the debtor have not agreed to change the credit contract; and (ii) the reasons why they have not agreed; and (iii) the name and contact details of the AFCA scheme; and (iv) the debtor’s rights under that scheme. Civil penalty: 5,000 penalty units. (4A) Subsection (4) does not apply if the credit provider and the debtor agree to a change to the credit contract that defers or otherwise reduces the obligations of the debtor under that contract for a period not exceeding 90 days. (5) The credit provider must give the notice before the end of the period identified using the table. Period for giving notice If: The period is: 1 The credit provider does not require 21 days after the day of information under subsection (2) receiving the hardship notice 2 The credit provider requires information 28 days after the stated date under subsection (2) but does not of the notice under receive any information in compliance subsection (2) with the requirement 3 The credit provider requires information 21 days after the day of under subsection (2) and receives receiving the information information in compliance with the requirement Regulations may prescribe shorter periods for credit contracts (6) The regulations may provide for subsections (2), (3), (4) and (5) to have effect in relation to credit contracts prescribed by the regulations as if a particular reference in subsection (2) or (5) to a number of days were a reference to a lesser number of days prescribed by the regulations.

48. If Mr Chesterfield can establish his business difficulties were disclosed to Bluestone in the context of discussions concerning failure to meet his obligations under the loan, those communications are at least arguably the provision of a hardship notice within the meaning of s 72 of the National Credit Code, noting oral notice is sufficient. The giving of such notice triggers various rights and obligations for the lender including: (a) the right to request certain financial information s 72(2) of the National Credit Code; (b) the obligation to take the action set out in s s 89A(2) of the National Credit Code, before commencing enforcement proceedings, to: (i) give the debtor a notice under s 72(4)(b) of the National Credit Code in response to the debtor’s hardship notice, stating the credit provider and the debtor have not agreed to change the credit contract; and (ii) not commence enforcement proceedings until the expiry of a period of 14 days from the giving of such notice.

49. If the communications between Mr Chesterfield and Bluestone amount to the oral communication of a hardship notice, there is no evidence before me to suggest Permanent Custodians complied with its obligations under s 89A of the National Credit Code. On that basis alone, it seems to me to be at least arguable Permanent Custodians acted inconsistently with the National Credit Code in commencing enforcement action when it did and in effectively denying Mr Chesterfield the opportunity to seek to negotiate a change in the credit contract.

50. In addition, I note Mr Chesterfield’s assertion to the effect there was a failure by the lender to include any indication of arrears on his statements of account at the relevant time. A failure of that nature if proved may constitute a breach of s 34 of the National Credit Code, arguably providing a further basis for a defence to the action.

51. Permanent Custodians assert there can be no contest about the availability of an arguable defence in circumstances where Mr Chesterfield effectively admitted in communications his inability to meet the arrears. That argument overlooks the process clearly established by the National Credit Code to ensure borrowers are, in the context of communicating difficulty in meeting their financial obligations, appraised of their entitlement to at least seek a variation of the credit contract terms to enable them to address their capacity to meet repayment obligations. I am satisfied in this instance it is at least arguable Mr Chesterfield was denied that opportunity.

52. As to the issue of delay, there was clearly an extended period of time between the entry of default judgment and the action of Mr Chesterfield in seeking to have judgment set aside – a period of approximately 12 months. Mr Chesterfield was not idle in that period. Indeed, it appears that it took the lender approximately 6 months to even notify him default judgment had been entered. Upon being notified, Mr Chesterfield acted promptly, first in attempting to procure a stay of the enforcement action, secondly, in seeking the lender’s support to enable him to access his superannuation entitlements and finally in pursuing a complaint with AFCA. When those avenues were exhausted, he moved promptly in filing his application to set aside the judgment. In all the circumstances, I do not see any significant basis for criticism of Mr Chesterfield in terms of delay, particularly in circumstances where he was responding to the difficulties facing him without any legal assistance.

53. Finally, it is necessary to deal with the issue of prejudice to the lender in the event the default judgment is set aside. Permanent Custodians make no submissions in this regard. The only identifiable prejudice appears to me to be a financial one that is readily addressed with an appropriate costs order.

54. Taking all of the matters addressed above into account, I am satisfied it is appropriate in this case to set aside the default judgment. There is a proper basis for concluding there is evidence capable of proving facts which will amount to an arguable defence. There is an adequate explanation for the delay in bringing the application to set aside the judgment. There is no identified prejudice to Permanent Custodians other than the incurring of unnecessary legal costs, although the entitlement to costs should be limited to the period following the provision of notice of the entry of default judgment. I also consider the absence of express notice by the lender of its intention to pursue default judgment in the absence of a filed defence, in circumstances where communication in relation to arrears and payments was ongoing, to be a matter of relevance favouring the exercise of my discretion in this case.

55. It is not appropriate to address the request for an instalment order at this time.

Orders

56. The orders I make are as follows: (1) The default judgment entered against the defendant on 7 January 2025 is set aside. (2) The defendant is to file a defence and any counterclaim against the plaintiff within 14 days. (3) The defendant is to pay the plaintiff’s costs of the application and costs thrown away by reason of the setting aside of the default judgment accrued on and after 18 June 2025. (4) The proceedings are listed for further directions before the Registrar on 31 July 2026 at 9.30 am.

I certify that the preceding fifty-six [56] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Muller.

Associate: Date: