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[2026] NSWSC 970
Supreme Court of NSW
2026-08-13
Faulkner J
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Perpetual Corporate Trust Limited v Colevski Pty Ltd (No 2) [2026] NSWSC 970
Hearing dates: 7 August 2026
Date of orders: 13 August 2026
Decision date: 13 August 2026
Jurisdiction: Common Law
Before: Faulkner J
Decision: The Amended Notice of Motion filed on 2 July 2026 is dismissed.
The Defendants pay the costs of the Plaintiff and the Second Cross-Defendant (Matthews Folbigg Pty Ltd).
Catchwords: PROCEDURE – default judgment – application to set aside – whether arguable defence that contract unjust – no adequate explanation for failure to participate in the proceedings – application refused
Legislation Cited: Civil Procedure Act 2005 (NSW), ss 56, 57, 58, 59, 60
Contracts Review Act 1980 (NSW), ss 7, 11, 16
Uniform Civil Procedure Rules 2005 (NSW), rr 12.7, 36.16
Cases Cited: Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27
Lyons v Duke [2025] NSWSC 1396
Northey v Bega Valley Shire Council [2012] NSWCA 28
Nguyen v Taylor (1992) 27 NSWLR 48
Perpetual Corporate Trust Limited v Colevski [2025] NSWSC 387
Pham v Gall (2020) 102 NSWLR 269; [2020] NSWCA 116
Vacuum Oil Co Pty Ltd v Stockdale (1942) 42 SR (NSW) 239
Category: Principal judgment
Parties: Perpetual Corporate Trust Limited (Plaintiff/First Cross-Defendant)
Colevski Pty Ltd (First Defendant)
Goce Talevski (Second Defendant/First Cross-Claimant)
Keti Talevski (Third Defendant/Second Cross-Claimant)
David Dragi Trifunovska (Fourth Defendant/Third Cross-Claimant)
Lena Trifunovska (Fifth Defendant/Fourth Cross-Claimant)
Boka Colevska (Sixth Defendant/Fifth Cross-Claimant)
Krste Colevski (Seventh Defendant/Sixth Cross-Claimant)
Valentina Colevski (Eighth Defendant)
Matthews Folbigg Pty Ltd (Second Cross-Defendant)
Representation: Counsel:
M Collins (Plaintiff/First Cross-Defendant)
M Young SC (Defendants/Cross-Claimants)
K E Holcombe (Second Cross-Defendant)
Solicitors:
Dentons (Plaintiff/First Cross-Defendant)
DPL Lawyers & Advisory (Defendants/Cross-Claimants)
Moray & Agnew (Second Cross-Defendant)
File Number(s): 2023/00182505
Publication restriction: Nil
These proceedings commenced in the Possession List in June 2023 and have resulted in judgments against the Defendants, in most cases twice. The Plaintiff, Perpetual Corporate Trust Limited, is currently the mortgagee in possession of three properties, two of which are the subject of a sale campaign being conducted by expressions of interest. By Notice of Motion filed on 1 July and amended on 2 July 2026 the Defendants apply to have the judgments for possession set aside.
For the reasons which follow, no proper basis has been shown to set aside the judgments. The Amended Notice of Motion is to be dismissed with costs.
Perpetual Corporate Trust Limited is a lender. La Trobe Financial Services Pty Ltd acts as manager of some of the loans advanced by Perpetual, including the loan the subject of these proceedings.
The loan concerns three generations of an extended family and a corporate vehicle which is associated with at least some members of the family. The First Defendant is Colevski Pty Ltd. The Eighth Defendant, Valentina Colevski, was the sole director of company. There is no dispute that on about 30 September 2022 the company entered into a Loan Agreement with Perpetual pursuant to which it borrowed about $2,500,000. The money was advanced but has not been repaid. Colevski Pty Ltd has since been deregistered.
In addition to Valentina Colveski, the promise by the company to repay the money was guaranteed by six members of the extended family. There are three couples, each of which owns a family home and which are arranged as follows:
(a) Krste Colevski and Boka Colevska are from the oldest generation of the family and own a home at Wattle Grove in New South Wales; (b) Krste and Boka own the Wattle Grove property jointly with their son, Saso Colevski, and daughter-in-law, Valentina Colevski (the director of the company); (c) David Trifunovski and Lena Trifunovska are the parents of Valentina Colevski and own a home at Edmondson Park in New South Wales; and (d) another daughter of David and Lena is Keti Talevski who, together with her husband Goce Talevski, owns a home at Casula in New South Wales.
Without precision, I will refer to the six members of the family who guaranteed the loan as the “Guarantors”. I do not include Valentina Colevski in that definition even though she is also a guarantor. I will generally refer to her separately, as Valentina.
The other member of the family who is at the centre of the events which have happened is Christopher Colveski, sometimes referred to as Christopher Cole (I will refer to him as Christopher). He is the son of Valentina and Saso. It follows that David, Lena, Krste and Boka are Christopher’s four grandparents. Keti and Goce are his aunt and uncle. Christopher was a solicitor who, from August 2018, worked successively for seven different mid-sized firms until 12 July 2024 when his practising certificate was suspended. On 3 September 2024 his practising certificate was cancelled by the Law Society of New South Wales.
As at 2022 the four grandparents were retired pensioners, Goce Talevski was a vehicle trimmer technician and Keti Talevski was a warehouse worker. Valentina Colevski was an accounts receivable officer having previously worked at a bank as a teller.
At the start of 2022 the Wattle Grove property was mortgaged to Westpac to secure repayment of a loan of about $212,000. The Edmondson Park property was not subject to a mortgage but there was a caveat lodged on the title. The settlement documents refer to three caveators, namely Kingston & Partners, Summer Lawyers and Golottas Solicitors, Barristers and Conveyancers who were collectively owed about $120,000. The caveats of these firms may variously be related to the Edmondson Park property or one of the others. The Casula property was mortgaged to ANZ to secure loans of about $400,000.
On 10 March 2022 Colevski Pty Ltd was incorporated with Valentina Colevski as the sole director. According to the ASIC search in the evidence, in addition to Valentina all of the Guarantors were previously shareholders in the company together with Saso Colevski.
On 16 June 2022 a company called Charub Pty Ltd advanced a loan of $2,546,920 by which all of the debts referred to at [9] above were repaid. The mortgages and caveats were all discharged. In addition, about $1,600,000 was paid to Colevski Pty Ltd. It is unclear who was the borrower but Valentina and the Guarantors all gave guarantees to Charub. A new mortgage was given over each of the three properties to secure repayment to Charub. The loan from Charub was for six months only and required payment of a “high” interest rate.
There is evidence that Colevski Pty Ltd entered into a Loan Agreement with a developer by which some of the proceeds from the Charub loan were on-lent. The Loan Agreement appears to have been executed by Valentina on behalf of Colevski Pty Ltd.
On 13 October 2022 Perpetual lent $2,533,434 to Colevski Pty Ltd. Apart from fees of $466.37, the proceeds of the loan were used to repay Charub. The mortgages granted to Charub were discharged. The evidence makes clear that the loan from Perpetual was arranged because it had a lower interest rate than that which was payable to Charub. The loan from Perpetual was again guaranteed by the Guarantors and Valentina. A new first ranking mortgage was given over the three properties, each of which was subsequently registered. These proceedings concern recovery of the debts created by the loan and the guarantees and enforcement of the mortgages.
The Perpetual loan soon went into default. Letters of demand were issued in January and February 2023. Some of the Defendants have subsequently claimed that they did not receive these documents.
On 7 June 2023 the Statement of Claim was filed by which these proceedings were commenced. The Defendants are Colevski Pty Ltd, Valentina and the Guarantors. Perpetual sought orders for possession of the three properties and judgment for a debt which at that time was said to be $3,488,839.14.
On 14 June 2023 each of the Defendants was personally served with the Statement of Claim, in each case proved by an Affidavit of Service. Valentina was served at 7:55pm on that day.
The Defendants did not initially respond to the proceedings. On 21 July 2023 Perpetual obtained Default Judgments against all of the Defendants for the debt, together with orders for possession of the three properties. Writs for Possession were issued on 28 July 2023.
On 14 September 2023 the Court made orders staying the execution of the Writs, which orders were subsequently extended. The applications for the stay and the extensions were made by Christopher in the name of the firm of solicitors by whom he was employed at that time, Matthews Folbigg Pty Ltd.
On 17 May 2024 a Notice of Motion was filed on behalf of all the Defendants seeking to set aside the Default Judgments. The Notice of Motion was filed by a solicitor employed at Oakbridge Lawyers which by then was the firm which employed Christopher.
In support of the Motion was an Affidavit dated 16 May 2024 by Valentina. The Affidavit contained statements that she and the other Defendants were not aware that legal proceedings had been commenced against them. The following statement was made in paragraph 14 of the Affidavit:
“In or around June 2021, the Defendants were approached by a developer to seek whether the Defendants had any interest in investing in a development project which they were looking to acquire and construct…”
“22. I am aware that our previous solicitor that between September 2023 and December 2023, our previous solicitor had been very unwell and was admitted to the South Western Sydney Local District Mental Health Centre where he was diagnosed with and treated for depression, anxiety, bipolar disorder II and ADHD induced by trauma.
- | am informed and verily believe that our previous solicitors’ illness made it difficult for him to function with his day-to-day tasks and is the cause of his delays in communicating with the Defendants and the Plaintiff from the time he accepted service of the SOC on behalf of the Defendants (without being instructed to do so), and took away his ability to convey sound legal advice to the Defendants with respect to their options in these proceedings.”
Nothing was said in the Affidavit about any threat to Christopher. Nothing was said about the loan from Charub, the payment of the Westpac and ANZ mortgages or the sums claimed by the caveators. The Affidavit dated 16 May 2024 needs to be treated with caution because in her more recent affidavits Valentina has doubted that she made the Affidavit even though it is in her name.
On 20 May 2024, before the Motion could be heard, a Writ of Possession was executed at the Casula property. Later that day, or soon after, a Writ of Possession was executed at the Wattle Grove property.
The Motion was heard later that day by Lonergan J and dismissed. In reasons published on 21 May 2024 Lonergan J said that there was no draft defence nor any valid grounds of defence revealed in the Affidavit dated 16 May 2024. Her Honour also said that no adequate explanation was given for the delay in making the application and that parts of the Affidavit dated 16 May 2024 were not true.
On 23 May 2024 Valentina lodged a complaint with the Australian Financial Complaints Authority.
On 26 June 2024 a Notice of Motion was filed on behalf of the Guarantors seeking to have the Default Judgments set aside as against them. Those orders were made with the consent of Perpetual on 8 July 2024. Possession of the three properties was restored to the Guarantors.
On 12 July 2024 the Guarantors filed a Defence. By this time they were represented by Axe Legal. The Defence, soon followed by a corresponding Cross-Claim, sought declarations that the transaction documents for each of the Charub loan and the Perpetual loan were of no force and effect. Other relief was also sought. Amongst other things, it was alleged that each of the loans was unjust for the purposes of the Contracts Review Act 1980 (NSW) and that Perpetual and Charub had engaged in unconscionable conduct contrary to statutory prohibitions on such conduct. Particulars were given of the matters relied upon for those allegations. It was alleged that the Guarantors were never able to repay the Perpetual loan. Although it was alleged that the loan was obtained “at the instigation and recommendation” of Christopher, nothing was alleged about any threat to Christopher. It was further alleged that the loan was obtained for the benefit of Colevski Pty Ltd which it was said was Valentina’s company. The pleadings did not address the repayment of Westpac, ANZ and the caveators who had been repaid with the proceeds from the Charub loan.
On 22 August 2024 Perpetual filed an Amended Statement of Claim by which it added claims to be subrogated to Charub’s rights under its mortgages if, which was denied, the Guarantors were entitled to any relief in relation to the loan from Perpetual.
By their Cross-Claim filed on 10 October 2024 the Guarantors sued Matthews Folbigg as a new party to the proceedings. The firm was alleged negligently to have advised the Guarantors at the time the loan from Perpetual was advanced. The following summary of the claims made against Matthews Folbigg and the firm’s subsequent defence is taken from paragraphs 18 and 19 of my Judgment in these proceedings on 16 April 2025: Perpetual Corporate Trust Limited v Colevski [2025] NSWSC 387 (see further below):
“18 In addition to seeking reciprocal relief against the Plaintiff, the Cross-Claim filed by the Guarantors raises new claims against the Solicitor. The pleading against the Solicitor is overly elaborate. There are claims for negligence, breach of the contract of retainer and breach of fiduciary duty. The burden of the alleged breaches is that the Solicitor gave negligent advice to the Guarantors, failed to obtain proper instructions and/or provided inaccurate information to a broker, which permitted the loan to be advanced in circumstances where it would not otherwise have been advanced. It is also alleged that the Solicitor acted with a conflict of interest. Very extensive particulars are given about the dealings between the Solicitor and a mortgage broker, by which it is alleged that the Solicitor undertook the relevant negotiations on behalf of the Guarantors. These particulars reveal that the activity it is alleged the Solicitor undertook was undertaken almost entirely by Christopher Cole. Christopher Cole was an employee of the Solicitor for part of the relevant time. There is no dispute, at least as it is revealed in the Guarantors' own Cross-Claim, that Christopher Cole is a son of Valentina and thus the grandson of four of the Guarantors and the nephew of the other two.
- In its Defence to the Cross-Claim, the Solicitor admits a limited retainer by the Guarantors and say that it performed all of its obligations to the Guarantors through a different employed associate. The Solicitor accepts that Christopher Cole was an employed solicitor for part of the relevant time but disputes the authority of Christopher Cole in relation to much of his alleged conduct, saying that his involvement with the loan was generally beyond the scope of his employment.”
After previously giving notice, on 25 October 2024 Axe Legal filed a Notice of Ceasing to Act. In addition to the residential addresses at the three secured properties, the Notice specified an email address for each of the Talevskis and a mobile telephone number for each of the grandparents.
From November 2024 the solicitors acting for Perpetual and the solicitors acting for Matthews Folbigg sent numerous letters about the proceedings to the email addresses of the Talevskis and to the postal addresses of the three secured properties.
On 21 November 2024 the proceedings were listed for directions. No one appeared for any of the Defendants. In view of Valentina’s complaint to AFCA, the proceedings were stood over.
Shortly after, AFCA closed Valentina’s complaint.
On 12 December 2024 the proceedings were listed for directions. No one appeared for any of the Defendants.
On 14 February 2025 the proceedings were listed for directions. No one appeared for any of the Defendants. Perpetual and Matthews Folbigg were granted leave to file applications to have the Defence and Cross-Claim struck out. They were ordered to notify the Guarantors.
On 17 February 2025 the solicitors acting for Perpetual sent letters of notification to the Guarantors. On 18 February 2025 the solicitors acting for Matthews Folbigg did the same. On 7 March 2025 each of Perpetual and Matthews Folbigg filed a Notice of Motion which were served on 10 March 2025. On 13 March 2025 the solicitors acting for Perpetual sent a Notice of Listing to each of the Guarantors. On 13, 19 and 29 March 2025 the solicitors acting for Matthews Folbigg sent separate documents to each of the Guarantors notifying them of the listing of the strike out applications. They did so again on 4 April 2025. On 1 April 2025 there was a directions hearing before the Registrar but there was no appearance by any of the Defendants. On 14 April 2025 the solicitors acting for Plaintiff wrote to the Guarantors about the listing on 16 April 2025. On 15 April 2025 the solicitors acting for Matthew Folbrigg did the same.
On 16 April 2025 the strike out applications were listed before me for hearing. No one appeared for any of the Defendants. I heard the applications which placed reliance on Uniform Civil Procedure Rules 2005 (NSW) r 12.7 at the forefront. I found that the overriding purpose set out in s 56 of the Civil Procedure Act 2005 (NSW) warranted the Guarantors’ Defence being struck out and also the Cross-Claim. In doing so, I observed that apart from Perpetual’s claim as an unpaid secured lender, all issues in the case were raised by the Guarantors. If not before, upon them filing the Defence and the Cross-Claim they became subject to the duty specified in s 56(3) to assist the Court to further the overriding purpose and, to that effect, to participate in the processes of the Court and to comply with directions and orders of the Court.
The next day, on 17 April 2025, Valentina lodged another complaint with AFCA. It was closed by AFCA on 13 May 2025. On 14 May 2025 the Guarantors lodged a complaint with AFCA. It was closed by AFCA on 11 August 2025. On 9 October 2025 Boka Colevski lodged a complaint with AFCA. It was closed by AFCA on 19 January 2026. On 20 January 2026 Boka Colevski lodged another complaint with AFCA. By February 2026 AFCA had closed that complaint.
On 3 February 2026 Perpetual filed a Notice of Motion seeking default judgment against the Guarantors. On 4 March 2026 Default Judgment was entered against the Guarantors. The Default Judgment is for the claimed debt and for possession of the three properties. On 20 March and 1 April 2026 Writs for Possession were issued. On 15 April 2026 the Sherriff’s Office served Notices of evictions to occur on 25 May 2026.
On 22 May 2026 the Defendants applied for a stay of the Writs. The application was made on their behalf by a solicitor at Jus Legal Solutions. The Writs were stayed for seven days.
On 29 May 2026 the proceedings were listed before the Registrar. No one appeared for any of the Defendants. There is evidence that a solicitor had been arranged to appear but was prevented by a car accident. There appears to have been a mention of the case later that day by Christopher. The proceedings were listed again on 5 June 2026 when there was no appearance for the Defendants. The application for a stay was dismissed.
In June 2026 Perpetual caused Bankruptcy Notices to be served on Valentina and the Guarantors.
On 22 June 2026 the Defendants were evicted from the three properties.
On 1 July 2026 the Defendants filed the present Notice of Motion which was amended into its current form on 2 July 2026. It was first listed before me on 13 July 2026 when Saso Colevski sought to represent the Defendants. The application was adjourned until 30 July 2026 and again until 7 August 2026. By that time the Defendants were represented by solicitors and counsel.
Eleven affidavits were read in support of the application. The principal affidavits were sworn by Valentina. She completed secondary school in Australia and has previously worked as a bank teller and as an accounts receivable officer. Her husband, Saso Colevski, is a mechanic. She does not suggest that either she or her husband has any trouble reading or understanding English although she has a hearing impediment.
In her Affidavit dated 1 July 2026 Valentina says that Colevski Pty Ltd was incorporated by Christopher solely for the purpose of obtaining a loan and that she and the Guarantors do not know how they became shareholders. She does not deny that she is the director, nor does she explain how that came about. She gives some evidence about the three properties, not just the Wattle Grove property in which she has a joint interest. She annexes the transaction documents for the Perpetual loan. She makes no substantive mention of the Charub loan or the mortgages to Westpac, ANZ and the caveators referred to above. In paragraphs 25 and 26 she says:
“25. …[Colevski Pty Ltd] (of which I was the sole director and secretary) procured funds pursuant to the Loan for the purpose of property development being undertaken at 2 Fox Lane, Rockdale (the Rockdale Property) by the family of Christopher’s girlfriend at the time.
- I note that I, nor [Colevski Pty Ltd] or [the Guarantors] obtained the Loan for our own benefit or any other business enterprise. The loan was procured solely to provide funds for the development of the Rockdale Property.”
Valentina says that members of Christopher’s former girlfriend’s family subjected him to “significant pressure” leading up to the Perpetual loan being obtained. She says that she and the Guarantors were concerned for Christopher’s personal safety. In support of that evidence she annexes an email in which Christopher was told by someone from a building company to “stop antagonising the situation and stop being so difficult”. She says the matter has since been reported to the police.
After the evictions in 2024, Valentina says that the Guarantors instructed Axe Legal to act on their behalf, who took the steps necessary to have the Default Judgments set aside and to file the Defence and Cross-Claim. She says that Axe Legal ceased to act in October 2024 for want of funds to pay their fees. In paragraph 42 of her first Affidavit she says that:
“Following his withdrawal, the [Guarantors] sought advice from Mr Stojkovic [from Axe Legal] as to whether they were required to continue to attend Court. I am informed by the [Guarantors], and believe, that Mr Stojkovic advised them that given their financial circumstances, they did not need to attend Court and should rather lodge a complaint with [AFCA] to deal with this matter as it was more cost-effective.”
She says that she and the Guarantors did not wilfully fail to attend Court but relied on advice which they received from previous solicitors.
In her Affidavit dated 5 August 2026 Valentina gives some further details about the circumstances in which the Perpetual loan was entered into, stating that she was also concerned for the safety of her husband, Saso Colevski, who was incarcerated at the time. She says that Christopher’s mental health was deteriorating because of the stress and pressure he was subjected to. She says that she agreed to the loan because she was concerned about the safety of her husband and son, and also because her home loan with Westpac would be paid.
Valentina accepts in her Affidavit that she was personally served with some documents on 14 June 2023 which she briefly reviewed but did not fully understand. She noticed words like “claim” and “court” and felt overwhelmed. She contacted Christopher who said he would handle it. She received additional documents over the following year which she gave to Christopher. She trusted Christopher. She hid similar documents addressed to her parents-in-law because she did not want them to feel stressed.
She says that the Affidavit on the Court file which is dated 16 May 2024 and which has her signature is one which she does not remember swearing and she doubts the signature is genuine.
She further says that Axe Legal did not act for her when the application was successfully made to set aside the Default Judgment in June 2024 because the firm formed the view that there may be a conflict between the Guarantors and Colevski Pty Ltd of which she was the director. She was advised by Mr Stojkovic to obtain her own advice and representation. Despite that advice, Valentina says that she believed that nothing further was required of her because nothing was being communicated to her. She also says that she believed that the Default Judgment “would also automatically be set aside for me too, without me needing to do anything”. She says that had she had known that she needed to take steps to have the Default Judgment set aside, she would have done so. She also says that between April 2025 and January 2026 Christopher lodged the complaints with AFCA on behalf of her and the Guarantors. With the evictions which occurred in June 2026 Valentina says that she has lost faith in Christopher.
Each of the Guarantors swore a short Affidavit, five of which were dated 5 August 2026. Keti Talevski’s Affidavit was dated 1 July 2025. In their Affidavits, the four grandparents explain the limited education they received in Macedonia before coming to live in Australia. They came to Australia when they were young, sometimes minors, and have lived here for about 50 years but they claim not to be able to read or speak English, or only to an extent which is limited or not strong. They generally spent their working lives in factories, kitchens and hospitals and are now pensioners. Relevantly:
Boka Colevska says that she met with lawyers in 2022 for a meeting about the Perpetual loan because Christopher was “under pressure to get the money”. Advice was given in English which she did not understand but she signed documents. In 2023 some mail came to her home but as she does not read English well she gave it to Valentina and asked her about it. Valentina told her that it had something to do with the loan but that everything was fine. On 20 May 2024 Valentina told her that she had to leave the Wattle Grove property because of “bank problems”. She later learned that there was a default judgment against her and made an Affidavit in June 2024 so that a lawyer could get it set aside. She does not remember receiving any other documents. “For as long as I can remember, my grandson, Christopher, has attended to and managed all mail that is delivered to our home”. Christopher told her that he was dealing with it. On 22 June 2026 she was evicted again and now the Guarantors and Valentina have taken matters into their own hands “because we lost faith in Christopher”. She did not realise that matters needed to be attended to with the Court and she did not deliberately fail to attend.
Krste Colevski gives essentially the same evidence, some of it word for word. He does not, however, refer to Christopher being under pressure to raise money. He signed the documents because he was asked to and everyone else was signing. After being evicted from the Wattle Grove property on 20 May 2024 he was told for the first time that there were Court proceedings and that judgment had been entered against him, his wife and other members of the family. He made an Affidavit in June 2024 to get the judgment set aside and then he moved back into the property. He does not remember receiving any documents. “For as long as I can remember, my grandson, Christopher, has attended to and managed all mail that is delivered to our home”. In June 2026 they took the matter into their own hands “because we had lost faith in Christopher”.
Lena Trifunovska gives essentially the same evidence. She says that Christopher was “forced” to raise the money which was borrowed from Perpetual. Her evidence includes the description of an event in June 2023 when she was evidently personally served with a bundle of documents, which she briefly reviewed but did not understand. She subsequently received other documents in the mail which “seemed to relate to” the first bundle because they were being sent to her by a lawyer. Each time she received documents she told Christopher about them and he picked them up. He said that he would deal with the documents. She did not show any of the documents to her husband, David, because she did not want to put stress on him when he was unwell. She became aware of these proceedings in May 2024 when she found out that Perpetual had obtained a judgment against her. Christopher arranged to have the judgment set aside, after which she continued to receive documents and give them to Christopher. He did not tell her exactly what the documents were about. On 22 June 2026 she was evicted from her home and realised that Christopher was not taking care of the proceedings. She had lost faith in Christopher.
David Trifunovski gives similar evidence. Unlike the other grandparents, he ended up working for Telstra installing and repairing telephone lines and then became an independent contractor. He does not recall ever personally receiving any documents in relation to these proceedings although he remembers someone bringing documents to the house in June or July 2023 and giving them to his wife, who told him that she would give them to Christopher. He became aware of the proceedings and the judgment against him in 2024 but believed that Christopher took care of it.
The Affidavits of each of the grandparents includes a certificate by an interpreter.
Two affidavits have been sworn by Keti Talesvski. In the First Affidavit, sworn on 1 July 2026, she says that she finished secondary education in Australia and has worked over the years as a hairdresser and in retail. She does not claim to have any difficulty with the spoken or written English language. In late 2021 Christopher told her that he was subject to “significant pressure” to invest in a property development and that he would “place his life at risk” if he did not. She eventually agreed to participate in the loan because Christopher told her that the developer would take care of the repayments on the loan and that her home loan from ANZ would be repaid. Keti was personally served with documents in June 2023, which she briefly reviewed but did not fully understand. She noticed words like “claim” and “court” and felt overwhelmed. She gave them to Christopher, as she did with documents which she subsequently received. Christopher did not tell her about the substance of the documents and told her not to be concerned. She kept some copies of the documents, but she hid them from her husband because she did not want him to feel overwhelmed. By June 2026 she had lost faith in Christopher.
Keti Talevski swore a Second Affidavit on 27 July 2026 in which she states that she knew on 25 October 2024 that Axe Legal had ceased to act for her and the other Guarantors. She received an email from the Court on 19 November 2024 telling her that the matter was listed on 21 November 2024, which she gave to Christopher. He subsequently told her that the matter has been adjourned. She annexes to her Affidavit emails between Christopher and the solicitor acting for Perpetual in November and December 2024 which she says she was not aware of at the time and were not authorised by her. She was aware of Perpetual’s Notice of Motion seeking to strike out the Defence and Cross-Claim but Christopher told her that he would deal with it.
In his Affidavit Goce Talevski says that he was born in Macedonia and came to Australia as a newborn. He left school in Year 11, went to Tafe and commenced his own business providing auto trimming services which generates a modest income. He conducts his business at the Casula property. He says that he is a hands-on person. He does not claim to have any difficulty with spoken or written English. He went to the meeting in September 2022 at which the Perpetual loan documents were signed to raise money which Christopher was “forced” to raise. He knew that documents were delivered to the house but Keti took care of all the mail and he was not shown the Court documents. He first became aware of the proceedings in May 2024 when he was evicted from the Casula property. Keti told him that she knew about some Court matter but Christopher was representing them and it was under control. He provided an affidavit to assist Christopher have the judgment set aside. After possession of the property was restored to his family, Goce believed Christohper was dealing with the Court matter. He was evicted again on 22 June 2026 when he realised that Christopher was not taking care of the matter and it was not under control.
The Defendants also rely on two affidavits by their solicitor which explain the recency of his retainer by the Defendants as at 29 July 2026 and his taking $92,000 into trust on account of further legal expenses. He also annexes documents which evidence the legal career of Christopher which is described at [7] above.
Perpetual resists the application. At the hearing on 7 August 2026 it tendered a bundle of correspondence between various Defendants and AFCA between May 2024 and January 2026, which suggests more knowledge of the Court proceedings than stated in the Defendants’ Affidavits. Perpetual also tendered six affidavits sworn by the Guarantors on 28 June 2024 in support of the application brought by Axe Legal to have the first Default Judgments set aside. It is fair to say that the affidavits relied upon by the Guarantors for the present application are based on the earlier affidavits but updated to address subsequent events. The June 2024 Affidavits by the grandparents were accompanied by certificates from interpreters. There can be no doubt that as at June 2024 all six Guarantors were fully aware of the Court proceedings and the claims for possession made by Perpetual. There is no dispute that Keti and Goce Talevski, Boka and Krste Colevski and Valentina Coleviski were physically evicted from their home between May and July 2024, and that Lena and David Trifunovski had voluntary given up their home to provide temporary accommodation to Valentina.
In paragraph 36 of her Affidavit dated 28 June 2024 Keti Talevski said:
“Following the eviction from the Property, my husband and I, together with David Dragi Trifunovski, Lena Trifunovska, Boka Colevska, Krste Colevski and Valentina Colevski engaged another lawyer, Stefan Stojkovic, to represent us. We took these steps because we lost faith in Christopher.”
Perpetual also tendered an Affidavit dated 16 May 2024 by Valentina, which is referred to above. This is the Affidavit which Valentina disputes signing. Perpetual also tendered Valentia Colevski’s Affidavit dated 7 July 2026 about which there is no dispute. In that Affidavit she said that she, together with the Guarantors, “prepared and lodged” the complaints with AFCA without referring to Christopher’s involvement. She says that a basis for the complaints with AFCA was that “neither I or any of the other defendants benefited from the loan".
Perpetual also tendered some land title searches which show that since Krste, Boka and Valentina Coleveski purchased the Wattle Grove property in 1997 they have granted six successive mortgages over the property, of which the mortgage to Westpac was the fourth, Charub was the fifth and Perpetual was the sixth. Keti and Goce Talevski have granted five successive mortgages over the Casula property since they purchased it in 2000. The mortgage to Charub granted by David and Lena Trifunovski was the first mortgage which had been granted over the Edmondson Park property since they purchased it in 2018. There is no evidence about any mortgages granted over another property at Casula which the Trifunovskis owned before they purchased the property at Edmondson Park.
The responsible officer at La Trobe has sworn an Affidavit dated 28 May 2026 in which she says that no payments have been made on the loan since the proceedings commenced in July 2023. As at 26 May 2026 the outstanding loan balance was just over $5,300,000. In August 2022 the Edmondson Park property was valued at $1,000,000. Over the Defendants’ objection, I admitted into evidence a “Cotality valuation report from La Trobe’s internal system” for each of the Casula property ($1,260,000) and the Wattle Grove property ($1,840,000). There is no explanation about the process by which the Cotality documents were prepared on 26 May 2026 other than what might be inferred from the “RP Data” copywriting. Each Cotality document specifies the figure as an “estimate” within a range of approximately plus/minus 15% with “confidence” which is either “low” (Wattle Grove) or “medium” (Casula). Given the age of the Edmondson Park valuation and the minimum weight which can be given to the Cotality documents, I accept the Defendants’ submission that Perpetual has not demonstrated that it will suffer a shortfall after the sale of the three properties which constitutes prejudice caused by the delay in the proceedings to date. However, if the latest Default Judgments are set aside and further time is required to resolve the real issues in the case, there is a material risk that Perpetual will suffer a shortfall even though it ultimately succeeds. There is no dispute that none of the Defendants have any assets apart from the properties from which Perpetual might hope to make up any such shortfall. As already observed, Colevski Pty Ltd is deregistered.
The Defendants rely on UCPR 36.16 under which they submit the Court has a broad discretion. The discretion has to be exercised having regard to ss 56-60 of the Civil Procedure Act 2005.
The Defendants accept that they ceased to take a meaningful part in the proceedings from October 2024 (when Axe Legal ceased to act) until April 2025 (when the Defence and Cross-Claim were struck out for want of due dispatch) and until well after that time. They also accept that there were multiple attempts to contact them but submit that most of the communications never reached them but were sent to Christopher. Those communications which did reach them were disregarded in line with what they were told by Christopher.
The Defendants submit that this is a case where Christopher was both the person who caused the Defendants to enter into the transaction in the first place and then lulled them into a false sense of security that he was taking care of the proceedings when in truth he wanted to prevent a hearing which would discredit him.
As for Valentina, it is submitted that she did not involve herself with the proceedings because she had been advised to pursue a complaint with AFCA. Further, it is said that she was not an active party to the proceedings because the Default Judgment from July 2023 was never set aside.
The Defendants submit that there is an adequate explanation for their procedural defaults because Axe Legal ceased acting for them for want of funds and they relied upon Christohper Colevski.
The Guarantors submit that they acted promptly to make the present application once new Default Judgments were made on 4 March 2026.
They further submit that they have a bona fide defence to Perpetual’s claims. The Defence raises substantial and arguable issues. The list of issues includes “the circumstances in which the commercial loan was procured”, reliance upon a false accounting declaration, failure properly to verify material information, unconscionable conduct, the financial vulnerability of the Defendants and the absence of independent legal and financial advice. These issues are said to go to the validity and enforceability of the transaction.
The Defendants submit that they will suffer prejudice if they are not now permitted to defend the case because three families will lose their homes. In addition, Goce Talevski conducts his vehicle trimming business from home which means that he will also lose his place of work which will disrupt his income.
The Defendants say that the deposit of $92,000 into the trust account of their new solicitor demonstrates a determination to take the case forward to a hearing on the merits.
36.16 Further power to set aside or vary judgment or order
…
(2) The Court may set aside or vary a judgment or order after it has been entered if–
…
(b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or
…
There is no dispute that the Court has power to set aside the Default Judgments which have been entered in this case, including the Default Judgment against Valentina which was entered on 21 July 2023. Nor is there any dispute that the Court has power to set aside the Writs of Possession even though they have been executed and by such an order (or an ancillary order) restore possession of the three properties to the Defendants.
The power to set aside a default judgment under UCPR 36.16 is discretionary. In exercising that discretion, regard must be had to the overriding purpose of the rule, namely to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s 56(1) of the Civil Procedure Act 2005. For the purpose of furthering the overriding purpose, the proceedings are to be managed having regard to the objects specified in s 57(1), which objects include the just determination of the proceedings, the efficient disposal of the business of the Court, the efficient use of available judicial and administrative resources and the timely disposal of the proceedings and all other proceedings in the Court at a cost affordable by the respective parties. The power in UCPR 36.16 is to be applied as best to ensure the attainment of these objects.
In deciding whether to set aside default judgments, the Court must seek to act in accordance with the dictates of justice: s 58(1) of the Civil Procedure Act 2005. For the purpose of determining what are the dictates of justice in a particular case, the Court may have regard to the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities, the degree to which any lack of expedition has arisen from circumstances beyond the control of the respective parties, the degree to which the respective parties have fulfilled their duties under s 56(3) and the degree of injustice that would be suffered by the respective parties as a consequence of the order. Section 56(3) imposes a duty on parties to proceedings to assist the Court to further the overriding purpose and, to that effect, to participate in the processes of the Court and to comply with directions and orders of the Court.
Section 59 of the Civil Procedure Act 2005 provides that the practice and procedure of the Court should be implemented with the object of eliminating any lapse of time between the commencement of the proceedings and their final determination beyond that reasonably required for the interlocutory activities necessary for the fair and just determination of the issues in dispute between the parties and the preparation of the case for trial.
The Court is to consider whether any useful purpose is to be served by setting aside a default judgment and whether there is an adequate explanation for the circumstances in which the default judgment was obtained: Vacuum Oil Co Pty Ltd v Stockdale (1942) 42 SR (NSW) 239 at 243 (Jordan CJ, Davidson and Roper JJ agreeing). The central question is whether the Court is satisfied that it would be unjust to allow the default judgment to stand: Pham v Gall (2020) 102 NSWLR 269; [2020] NSWCA 116 at [108] (Payne JA, Leeming and McCallum JJA agreeing)). That question is to be answered having regard to the importance of finality: Northey v Bega Valley S**hire Council [2012] NSWCA 28 at [14] (Barrett JA)).
7 Principal relief
(1) Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following—
(a) it may decide to refuse to enforce any or all of the provisions of the contract,
(b) it may make an order declaring the contract void, in whole or in part,
(c) it may make an order varying, in whole or in part, any provision of the contract,
(d) it may, in relation to a land instrument, make an order for or with respect to requiring the execution of an instrument that—
(i) varies, or has the effect of varying, the provisions of the land instrument, or
(ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the land instrument.
In conformity with the authorities, the Defendants made their submissions in two stages, starting first with the question whether their guarantees might be found to have been unjust in the circumstances relating to them at the time they were granted to Perpetual. The Defendants submit that the Court may be satisfied that the Defendants have an arguable case at the first stage. They particularly rely on the threats made to Christopher and the vulnerability of the incarcerated Saso Colevski which they say induced them to give the guarantees in order to raise money to pay to the developer. They also rely on the impecunious circumstances of the Guarantors, their inability to repay the Perpetual loan from their own resources, the lack of advice which the Guarantors received and the grandparents’ limited education and English language skills. The Defendants do not mean these circumstances to be exhaustive. They submit that it is arguable that the Court’s power to grant relief under s 7 will be enlivened.
As for the second stage, the Defendants accept that the Court is unlikely to grant relief under s 7 where there is ignorance or innocence on the part of Perpetual: Nguyen v Taylor (1992) 27 NSWLR 48 at 71 (Sheller JA). Nothing material was said about this aspect of the case against Perpetual and certainly nothing specific. Instead, counsel for the Defendant made the following oral submissions:
“Now I appreciate that although technically speaking in relation to Contracts Review Act applications, it's possible to make orders without identifying any particular unconscionability on the part of the lender, but that doesn't normally occur. One has normally got to find some fault on the part of the lender because the Court seldom in its discretion makes orders against a completely innocent lender. But of course whether the lender really is completely innocent, or has failed in its due diligence, or has not as on constructive notice of some matters that it doesn't follow-up, or there are clear indications that it simply ignores, or that it's on actual notice of some problem which it then ignores.
Usually those matters don't come to light until the plaintiff has then put on evidence in answer to the contracts review style challenge, because only then does one see what was the application form, what was done to check the figures in the application form. What inquiries were made by the lender to see if the loan could properly be serviced. What was the exit strategy, did they ask for an exit strategy, what did they do to check the exit strategy, what documents were in their possession that might have or did put them on notice. So those are matters that it's not normally apparent until the evidence is on and often until there is then further notices to produce or subpoenas issued to further test the plaintiff's evidence. The extent to which, if at all, the plaintiff is then culpable in the unconscionability.”
“Once one has established [the first stage] then that gives the power for the Court to make an order, but the power is to be used in the Court's discretion. So it's almost like a discretionary defence that the plaintiff might then raise by saying: "Well, it's true that there was injustice in the circumstances in relation to these defendants cross-claimants, but I can show that I'm without sin, and it would be unjust for me to suffer as a result of unjustness which I'm not the author, because I can show that I did everything right. I made all of the necessary inquiries, and notwithstanding that, and the fact that everything seemed in order, apparently behind the scenes unbeknownst to me due to lies that somebody else told, it happened. So notwithstanding the injustice the Court shouldn’t make any order against me.
Now that, of course, is like most discretionary defences, it is ultimately going to rely on evidence that the plaintiff puts on to show that they did indeed do that. So it may be that they can do that. There are very few lenders that are successful in showing that they did everything right. Normally there's some inquiry that one failed to do, or some procedure one didn't adopt, but it's at least possible that the plaintiff might show that. But to the extent that the defendants can at this stage give evidence showing the strength of their case, they have done that, that evidence is there, and that would give the Court reason to believe that it's quite likely that the defendants would succeed on their cross-claim and defence, although that's subject to evidence that the plaintiff might put on in future that erodes those chances.”
The Defendants have not demonstrated that they have a reasonably arguable case in relation to either stage of the Contracts Review Act enquiry, let alone both. As for the first stage, every circumstance relied upon for the submission that the guarantees were unjust relates not to the circumstances in which money was borrowed from Perpetual in October 2022 but to the circumstances in which money was borrowed from Charub in June 2022. The circumstances in which the guarantees were given to Perpetual do not include the fact that Christopher and Saso Colevski were subject to threats because by October 2022 the Charub loan funds had already been paid to the developer. Instead, the circumstances in October include the fact that each of the Defendants was already subject to a guarantee in favour of Charub which was secured by a guarantee over the relevant property. The evidence does not reveal any change brought about by the Perpetual loan other than to lower the interest rate. Subject to the next paragraph, the Defendants have not pointed to any circumstance which warrants a finding that the Perpetual guarantees were unjust.
The Defendants have foreshadowed an argument that the use of the proceeds of the Perpetual loan to pay back the Charub loan was not an incontrovertible benefit to the Defendants because the loan from Charub may have in turn been vulnerable to a grant of relief under s 7 of the Contracts Review Act 1980. To this end, the Guarantors’ Amended Defence filed on 27 September 2024 contained allegations that the Charub loan was unjust for the same reasons as the Perpetual loan. By the Amended Defence the Guarantors sought s 7 relief in respect of the Charub loan, amongst other relief. Nonetheless, the Defendants cannot succeed in defending the claims made by Perpetual unless the Court finds that both the Charub Guarantees and the Perpetual Guarantees were unjust in the circumstances in which each respectively were made. Whilst it may be assumed in the Defendants’ favour that they have an arguable case in relation to the Charub guarantees they have not demonstrated so for the Perpetual guarantees.
Nor have the Defendants demonstrated a basis upon which it can be said that it would be just for the Court to exercise its discretion to grant relief under s 7, even if the Perpetual guarantees are found to have been unjust in the circumstances in which they were granted. There are two reasons for this. First, as just explained, Perpetual took the guarantees in circumstances where no change was brought about to the position of the Defendants other than to lower the interest rate. Nothing is said about Perpetual having any inkling about the Charub guarantees being vulnerable to relief under s 7 of the Contracts Review Act 1980 or the circumstances now relied upon for such a claim. Even if the Charub guarantees were unjust in the circumstances in which they were given, relief against Charub would have been in the discretion of the Court. To succeed on this stage of the enquiry the Defendants will therefore have to demonstrate both that relief would have been granted against Charub and relief ought now to be granted against Perpetual.
Secondly, apart from generalities like “failure to make enquiries” the Defendants have not identified a single matter to support the allegation that it is just for the Court to grant relief against Perpetual. Their submissions, as quoted above, accept that nothing has yet come to light. Their hope is that when they review Perpetual’s evidence they will identify something which will support their case in relation to the second stage of the s 7 enquiry.
The submissions appear to be underpinned by the proposition that once the Court finds a contract to have been unjust in the circumstances relating to the contract at the time it was made, one party will be entitled to an exercise of the discretion to grant relief in its favour unless the other party can prove that it is without sin. There is nothing in the Contracts Review Act 1980 which reveals an intention that the power to grant relief under s 7 operate that way. The statute contemplates that there will be an application for relief (s 16) which is to be made in accordance with the rules of the Court (s 11). For reasons of fairness, the UCPR requires an applicant to plead and particularise the matters relied upon for the relief which is claimed. Thus identified, the party which asserts that the Court ought grant the relief will bear the onus of proving the matters relied upon, including the matters relied upon for the exercise of the s 7 discretion in its favour: Lyons v Duke [2025] NSWSC 1396 at [56]-[57] (Parker J). It is in that light that the Defendants’ prospects of obtaining relief against Perpetual are to be viewed for the purposes of the current application.
As for the prospect of the claim for discretionary relief in relation to the Charub loan, the following submissions was made:
HIS HONOUR: “Because they will be subrogated to Charub's rights, so you'll have to vitiate those rights, so you'll have to hope that something falls out. How is that going to work in this case? Because Charub's not a party. So for the purposes of success against Perpetual, you've told me that Perpetual will put on some evidence, and you will have a look at it, and notices to produce, and see something there. There's not going to be any evidence from Charub, is there?”
YOUNG: “Probably not, unless Perpetual seeks to obtain it. Although it's possible that my clients might seek to put on evidence from people involved with the La Trobe loan. My clients, even if it's not clear from the evidence what advice they had, if any, there may have been some other middle person or adviser who can give some evidence about that.”
Having read the Defendants’ evidence on this application and listened to their submissions it seems clear that the Defendants are not yet aware of any basis upon which they can contend for a grant of relief against Perpetual or make the submission that Perpetual’s repayment of the Charub loan was not an incontrovertible benefit to them. Their case does not rise above the theoretical. It is fairly characterised as speculative.
For these cumulative reasons the Defendants have not demonstrated that there is a useful purpose to be served by setting aside the Default Judgments.
Nor is there an adequate explanation for the defaults which have occurred in these proceedings and which ultimately resulted in the Default Judgments being entered and the Writs of Possession issued and executed.
For the purposes of considering the defaults I have assumed in the Guarantors’ favour that up until 20 May 2024 they were not to blame for their failure to engage with the processes of the Court. Although there does not now seem to be any dispute that each of the Guarantors was personally served with the Statement of Claim (with the possible exception of Goce Talevski and Krste Colevski), and that at least Keti Talevski, Lena Trifunovska and Boka Colevska were aware that documents were being delivered to their houses which were sufficiently important to warrant the attention of Christopher and sufficiently stressful and overwhelming to warrant hiding from their husbands, it may be assumed that they relied upon Christopher to do that which was necessary. Without deciding the issue, it may have been reasonable for them so to do.
However, after 20 May 2024 there could have been no doubt in the mind of each of the Guarantors that they were Defendants in court proceedings by which Perpetual was seeking to take and sell their houses. They each understood the gravity of the case. On that day all three households were evicted, two by the Sherriff and the third in order to make room for others. Some of the Guarantors say that they found the evictions “shocking” which is not surprising. The grandparents all had to return to Macedonia. In June 2024 each Guarantor swore an Affidaivt in support of the application to have the first Default Judgments set aside, each of which addressed the prior knowledge of documents and their relevance to the case. The Trifunovskis flew out from Macedonia specifically to swear their Affidavits. Mr Stojkovic diligently arranged for an interpreter to interpret for the grandparents and certify their Affidavits. Each Affidavit reveals the deponent’s full knowledge of the proceedings.
From 20 May 2024 until mid-October 2024 the Guarantors were aware of activity on the case. This was the period when they were represented by Axe Legal. The Default Judgments were successfully set aside and each couple restored to the possession of their house. A Defence was filed. On 10 October 2024 each of the Guarantors verified the Cross-Claim which included allegations against Matthews Folbigg.
None of the Guarantors claims that after October 2024 he or she thought that the proceedings had been concluded and it is implausible that any of them did. No adequate explanation, or indeed any explanation, is given for the Guarantors’ failure to attend to the proceedings after October 2024. In two short paragraphs each of the Trifunovskis say that he or she understood that Axe Legal was continuing to act for them and that Christopher was assisting. Krste Colevski gives the same evidence. Boka Colevska simply says that she does not remember receiving any more documents and that Christopher managed the mail. None claims to have done anything to attend to the case. None claims to have made any enquiry or to have shown any interest in the case. In evidence which is typical of the Guarantors’ respective Affidavits, David Trifunovski says with dreamlike passivity that “Christopher never told me anything about the status of the proceedings”.
In paragraph 30 pf his Affidavit dated 5 August 2026 Goce Talevski says:
“Christopher never directly told me anything about the status of the proceedings or what any of the documents my wife apparently gave to him meant, or what steps I had to take, or what would have happened if I failed to take any steps regarding the documents. I do recall that I asked Christopher once or twice about the proceedings and he told me that he was dealing with it and it was under control.”
Keti Talevski addresses her involvement with the proceedings after October 2024 in her Affidavit dated 27 July 2026. She was aware that Axe Legal had ceased to act. She received some emails from the Court and the solicitors for the other parties which she “ran by” Christopher and then followed his advice that he would take care of them. Apart from that, she does not claim to have done anything to attend to the case, or to have shown any interest in the case. She received other emails from the Court and Perpetual’s solicitor but ignored them when she saw that they have been copied to Christopher. She says that she did not receive other Notices of Listings about which there is evidence.
In paragraph 20 of her Affidavit, Keti Talevski says:
“At the time, and as I deposed in my affidavit sworn on 1 July 2026, I placed my trust in Chris because he was a lawyer and my nephew.”
That evidence directly contradicts Keti Talevski’s statement in paragraph 36 of her Affidavit dated 28 June 2024 that she lost faith in Christopher after the evictions in May 2024. If, having been evicted in May 2024 and lost faith in Christopher at that time, Keti Talevski did no more to conduct these proceedings than assume Christopher was taking care of them, then her approval was not a reasonable one.
In considering the adequacy of these explanations for the Guarantors’ failure to participate in the processes of the Court after October 2024 the following matters are relevant. First, the Guarantors had already suffered eviction from their houses in May 2024. That circumstance, and the delay and expense already occasioned by it, warranted especial attention to the proceedings in the future. Secondly, the Guarantors each had an obligation under s 56(3) of the Civil Procedure Act 2005 which required them to assist the Court to further the overriding purpose and, to that effect, to participate in the processes of the Court and to comply with directions and orders of the Court. The attention required of them should not simply be viewed as that which was necessary to serve their own interests in defending Perpetual’s claims. Thirdly, as explained in my earlier Judgment on 16 April 2025 the Guarantors are in substance the moving party in these proceedings. By their Defence and Cross-Claim they have raised almost all the issues in the proceedings the just, quick and cheap resolution of which is the overriding purpose of the Court to facilitate.
For these reasons the Guarantors’ explanation for the defaults which have occurred fall well short of that which is required.
The application raises issues of prejudice on both sides, in each case attended by risks. Dismissal of the application will give rise to the risk of prejudice to the Defendants. The risk depends on whether they may succeed in their challenge to both the Perpetual guarantees and the Charub guarantees so as to be relieved of their obligation to indemnify Perpetual for the loan. The prejudice to the Defendants of permanently losing their homes needs to be seen in that context because, if the Default Judgments are set aside but the Defendants lose at a final hearing, their homes will be lost in any event. For the reasons given above the Defendants have not demonstrate material prospects in the case, which mitigates their risk of prejudice.
On Perpetual’s side there is a risk of prejudice if the Default Judgments are set aside and Perpetual then succeeds at a final hearing, albeit at some time in the future and after additional costs have been incurred. Bearing in mind that Perpetual is relevantly in the business of lending money for profit, Perpetual will suffer real prejudice in those circumstances if the proceeds realised from the sale of the three properties are insufficient to repay the loan, accrued interest and costs. The prejudice will be real whether or not the immediate sale of the properties would be sufficient to cover the current debt because even if Perpetual is already exposed to a shortfall, the shortfall will in all probability be greater in the future. In all probability the risk of prejudice to Perpetual is greater than it would have been had the Defendants previously attended to the proceedings properly and expeditiously over the last three years. The debt which Perpetual seeks to recover has grown during the past delays and unnecessary expense has been caused by the delays.
Apart from their submissions about the low weight to be given to the evidence about the value of the three properties, the Defendants submit that Perpetual is unlikely to be prejudiced because the case can be prepared promptly for a final hearing. The Defendants says that they have undertaken a lot of work in preparation of this application, including their Affidavits which address the circumstances in which they gave guarantees to Perpetual. I do not accept that argument. The Defendants’ pleadings were prepared by previous lawyers. Having regard to the submissions made on the application, it seems likely that the present lawyers will want to review and amend. The evidence in the Affidavits served by the Defendants to date is superficial. Very little is said about the circumstances in which the Defendants gave guarantees to Charub. The Defendants have foreshadowed the need for disclosure by Perpetual and possibly third parties to aid the Defendants’ search for something to show that it would be just for relief to be granted under s 7 of the Contracts Review Act 1980. There does not appear to be any material preparation of the Cross-Claim against Matthews Folbigg which the Defendants submit ought to be heard at the same time.
The consequences of the Defendants suffering prejudice (loss of their homes) would be far more significant than the consequences of Perpetual suffering prejudice (financial loss) but I consider that the risk of prejudice to Perpetual is far greater given the Defendants’ prospects.
It is also appropriate to say something about the position of Matthews Folbigg. By the Cross-Claim the Defendants allege that the firm was negligent and that it engaged in misleading or deceptive conduct in 2022. The allegations do not conform to those commonly made against solicitors who act for guarantors. The conduct which is said to give rise to the firm’s liability is in large part alleged to have been committed by Christopher who was employed by the firm at the time. As the firm’s Defence makes plain, the allegations give rise to some potentially complex issues of fact, together with some legal issues about the authority of Christopher. The Cross-Claim was struck out on 16 April 2025. I was informed from the Bar Table that Matthews Folbigg’s costs have since been assessed at approximately $70,000. The Defendants have not paid the costs. In addition to the potential prejudice of further unrecovered costs, revival of these proceedings at this late stage will expose the members of the Matthews Folbigg firm to the intangible prejudice of the stress from having to deal again with a professional negligence claim which they (and their insurers) might reasonably have considered to be concluded: Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27 at [100]-[101] (Gummow, Hayne, Crennan, Kiefel and Bell JJ).
There is at least as much prejudice on the side of Perpetual and Matthews Folbigg as on the side of the Defendants which has to be considered in the determination of the application.
The Court must seek to give effect to the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in the proceedings when exercising the power under UCPR 36.16: s 56(2) of the Civil Procedure Act 2025.
Dismissal of the Defendants’ application will facilitate a resolution of the real issues which is just, quick and cheap. It will be quick and cheap because it will preserve the Default Judgments which have already been obtained. The parties will not be put to the expense and delay of the further progress of the proceedings. Dismissal of the application will ensure the attainment of some of the objects of case management, particularly the efficient disposal of the business of the court, the efficient use of available judicial and administrative resources and the timely disposal of the proceedings and all other proceedings in the Court at a cost affordable by the respective parties. For the purposes of s 59 of the Civil Procedure Act 2005, it will not eliminate but it will ensure that there is no prolongation of the lapse of time between the commencement of the proceedings and their final determination which is already well beyond that which was reasonably required.
Dismissal of the application will also facilitate the just resolution of the real issues even though the Defendants’ allegations against Perpetual and Matthews Folbigg will not be decided on the merits. That is because the Defendants have already had two full opportunities to have the real issues resolved at a final hearing and they have not taken those opportunities. The just resolution of the real issues in this case does not require that the Defendants have a third opportunity in circumstances where they are in substance the moving party, further delay and expense will be occasioned, the Defendants have not demonstrated a reasonably arguable claim, I have found that the risk of prejudice to the Defendants does not outweigh the risk of prejudice to Perpetual and Matthews Folbigg, the objects of case management specified in s 7 generally require otherwise and, importantly, finality has already been achieved in the case. The just resolution of the real issues in the proceedings must have regard not just to position of the Defendants but also to that of Perpetual and Matthews Folbigg.
The Uniform Civil Procedure Rules contemplate that there will be circumstances where proceedings will be resolved without a final hearing. Pertinently, those circumstances include when a defence or cross-claim is not prosecuted with due despatch (UCPR 12.7) or where a defendant is in default (UCPR Part 16). The Defence and Cross-Claim were struck out and the Default Judgments against the Defendants were entered in conformity with those rules.
The Defendants have not demonstrated a basis for the Court to exercise its discretion to set aside the Default Judgments entered on 21 July 2023 and 4 March 2026.
In those circumstances there is no occasion to revisit the other orders of the Court and the execution of the Writs of Possession which are challenged by this application.
The Orders of the Court are:
The Amended Notice of Motion filed on 2 July 2026 is dismissed.
The Defendants pay the costs of the Plaintiff and the Second Cross-Defendant (Matthews Folbigg Pty Ltd).
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Perpetual Corporate Trust Limited
Colevski Pty Ltd (No 2)
[2009] HCA 27
(2009) 239 CLR 175
(1992) 27 NSWLR 48
(2020) 102 NSWLR 269