Plaintiffs v Defendants

1. The defendants have filed and rely upon the following:

(a) affidavit of Shuaip Kamber, in support of the Summons, sworn 4 December 2025;

(b) Summons filed 9 December 2025; and

(c) written submissions dated 10 March 2026.

1. The plaintiffs have filed and rely upon the following:

(a) writ (Writ) and statement of claim (SOC) dated 24 September 2024;

(b) amended statement of claim (ASOC) dated 12 March 2025;

(c) affidavits of Andrew John Minahan sworn 14 November 2024 and 14 March 2025;

(d) affidavit of Steven Pateman sworn 14 November 2024;

(e) affidavit of Michael Lenn sworn 13 February 2026; and

(f) written submissions dated 17 March 2026.

1. By Writ dated 26 September 2024, the plaintiffs brought proceedings against the first to third defendants. The indorsement of claim contained in the Writ was a statement of claim (the SOC).
2. In the SOC, the plaintiffs allege the following:

(a) on or around 14 July 2022, the plaintiffs, as lenders, and Kamber Invest Pty Ltd (Kamber Invest), as borrower, and the defendants, as guarantors and mortgagors, entered into an agreement in respect of a loan of $1,685,000 by the lenders to the borrower, to be repaid by 13 April 2023 (Loan);

(b) the Loan was secured by mortgages given by the following properties (Properties):

(i) Kamber Invest over the property at 21 Glendale Avenue in Templestowe (Glendale Av Property);

(ii) the second and third defendants over the land at 39-41 Yale Drive in Epping (Yale Dve Property); and

(iii) the defendants over Unit 2, 12 Glenmanor Close in Templestowe (Glenmanor Cl Property)

(c) under the Loan:

(i) the defendants guaranteed the obligations owed by Kamber Invest to the plaintiffs and, if in default, promised to indemnify the plaintiffs with respect to any losses;

(ii) events of default included instances where there was a failure to repay the Loan by 13 April 2023, there was a failure to meet any obligations under the agreement, and/or Kamber Invest was wound up or had a liquidator appointed; and

(iii) the costs and expenses of enforcing the agreement and mortgages - for which the plaintiffs were entitled to recover on an indemnity basis - were secured by the mortgages;

(d) events of default occurred in circumstances where:

(i) by 13 April 2023, the Loan had not been repaid by either of Kamber Invest or the defendants; and

(ii) on or around 16 August 2023, Kamber Invest was wound up in liquidation by order of this Court.

1. On 22 August 2024, the plaintiffs by their solicitors served default notices on the defendants under the terms of the Mortgage, s 76 of the Transfer of Land Act 1958 (Vic) (TLA) and s 103 of the Property Law Act 1958 (Vic) (Default Notices).
2. On 4 December 2024, Caporale JR made orders for substituted service of the Writ and SOC by post and email (Substituted Service Orders).
3. On 6 December 2024, the Writ and SOC were served in accordance with the Substituted Service Orders.
4. On 12 March 2025, the plaintiffs filed an amended SOC (ASOC). The only amendment made in the ASOC was to correct the certificate and title volume and folio in respect of the Glenmanor Cl Property in the prayer for relief. The details of that property were recorded correctly in paragraph 1 of the ASOC.
5. On 14 March 2025, the plaintiffs applied by affidavit for default judgment for debt and recovery of land.
6. On 14 March 2025, and on the application of the plaintiffs, the Court entered judgment in default of appearance against the defendants in the following terms:
   1. The First, Second and Third Defendants pay the Plaintiffs $1,769,094, $78,017.81 for interest and $11,302.60 for costs.
   2. The Plaintiffs recover possession of the land described in the indorsement of claim on the writ as 2, 12 Glenmanor Close in Templestowe, being the land described in certificate of title volume 11879, folio 809.
7. On 25 March 2025, the plaintiffs served the ASOC.
8. On 26 March 2025, the Court returned copies of the Default Judgment which recorded the date of judgment as 14 March 2025 (being the date of the application for default judgment).
9. On 9 December 2025, the defendants filed the Summons.
10. As at 13 February 2026, the debt owed to the plaintiffs by the defendants was approximately $2,498,000 plus enforcement expenses.

1. Rule 21.07 of the Rules provides that the Court may set aside or vary any judgment entered or given in accordance with Order 21.
2. In Lei v Zhang,[1] the Court of Appeal set out the principles relevant to an application to set aside a default judgment:

[A] court dealing with an application to set aside a default judgment has a broad discretion to be exercised according to the circumstances of the particular case. There are no universal rules governing the exercise of that discretion, but ordinarily it will be important to consider whether there is a reasonably arguable defence on the merits of the case, what reasons explain the applicant's default, how promptly the application to set aside was made after the default judgment came to the notice of the applicant, and whether a suitable award of costs or security would suffice to avoid prejudice to the party having the benefit of the judgment if it were to be set aside.[2]

1. The Default Judgment would appear to have been entered regularly,[3] and therefore, the defendants are required to satisfy the Court that it is appropriate to set aside the judgment in the exercise of the Court's discretion.
2. I turn to consider the matters that are ordinarily important considerations in an application to set aside default judgment.

Whether defendants have reasonably arguable defence on merits

(a) the Loan and Mortgage being in default by reason of Kamber Invest's failure to pay the Secured Money on 13 April 2023;

(b) the service of, and non-compliance with, the Default Notices; and

(c) the amount of the debt claimed by the plaintiffs.[4]

The Plaintiffs' conduct, including selling properties under value and refusing to remove caveats to allow arm's-length sales, caused significant financial loss. I intend to bring a substantial counterclaim.

I had an approved bank loan sufficient to refinance and pay out the Plaintiffs before the mortgagee sale occurred.

1. Accordingly, there are three limbs to the defendants' proposed defence:

(a) the plaintiffs sold the Yale Dr Property and the Glendale Av Property as mortgagee in possession at an undervalue;

(b) the plaintiffs refused to remove caveats on the Glenmanor Cl Property to allow arm's length sales to occur; and

(c) the defendants had loan approval in an amount sufficient to pay out the plaintiffs and the plaintiffs refused to wait to be paid out.

1. A mortgagee exercising a power of sale has an obligation of good faith under s 77(1) of the TLA, which is 'enhanced and strengthened'[5] by s 420A of the Corporations Act 2001 (Cth) (Act).
2. In MBF Investments Pty Ltd v Nolan,[6] the Court of Appeal summarised the principles governing the requirement in s 77(1) of the TLA that a mortgagee act in good faith in exercising a power of sale in the following terms:

(a) a mortgagee is not a trustee of the power of sale, which is given to the mortgagee to enable the realisation of the security interest;

(b) a mortgagee must act in good faith, that is conscionably, and cannot sell for a purpose other than that for which the power of sale is conferred;

(c) a mortgagee is not required to place the interests of the mortgagor above the mortgagee's interests in recovering the debt. For example, the mortgagee can sell the property at a time of the mortgagee's choice, even though the property might realise a higher price if the sale were postponed;

(d) the mortgagee cannot disregard the interests of the mortgagor by simply selling for a price which will cover the amount of the loan. The mortgagee must take reasonable steps to obtain the best price consistently with its right to enforce its security interest. This requires the mortgagee to consider how the property should be advertised and to allow an appropriate time between the advertisement and the sale;

(e) the mortgagee must also have regard to the interests of subsequent security holders; and

(f) if there is no doubt that the sale of the lots preferred by the mortgagor would be sufficient to discharge the debt owed to the relevant mortgagee and of any other security holders whose interest the mortgagee is required to consider, a failure to sell the preferred lots may breach the mortgagee's duty to sell in good faith.

1. Section 420A of the Act provides that a controller must take all reasonable care to sell a corporation's property for not less than its market value, or otherwise for the best price reasonably obtainable.
2. The defendants' claim is that the Properties were sold at an undervalue. They annex the front pages of the valuations undertaken on 31 August 2023. The Yale Dr Property, formerly owned by the first and second defendants, was valued at $2.4M.[7] The Glendale Av Property, formerly owned by Kamber Invest, was valued at $2M. The Glenmanor Cl Property, owned by the first, second and third defendants, was valued at $1.1M.
3. The plaintiffs make some criticisms of the valuations, including the fact that the Yale Dr Property valuation is on the basis of a subdivision into three units, even though that had not occurred at the time of the valuation. The plaintiffs also criticise the lack of reasoning process[8] used to arrive at the conclusions of the valuations. There is some merit to these criticisms.
4. What is missing from the defendants' evidence is an account of the sale process in relation to the sale of the Yale Dr Property and the Glendale Av Property and identification of defects in that process.[9] Also missing is evidence of the sale prices realised.[10] In the absence of that evidence, the defendants do not demonstrate a prima facie case of breach of duty by the plaintiffs with respect to the sale of the Properties.

1. The allegation that the plaintiffs refused to remove caveats on the Glenmanor Cl Property is not explained in the defendants' evidence. That the plaintiffs would have a caveat on the title is somewhat surprising in circumstances where they hold a second registered mortgage. There is no evidence as to the lodgement of caveats by the plaintiffs, the request by the defendants to remove them, or a refusal by the plaintiffs to remove them. In the absence of that evidence, I am not in a position to determine whether the defendants have any defence arising from the circumstances alleged, let alone a prima facie defence.

1. The defendants also claim that they had loan approvals sufficient to pay out the plaintiffs before the sales of the Yale Dr Property and the Glendale Av Property occurred. They annex two letters dated 10 August 2023 from Parker Private addressed to the directors of Kamber Invest setting out the indicative terms upon which Parker Private was engaged to procure loans, in respect of a first mortgage facility and second mortgage facility, respectively (Parker Private Letters).
2. The Parker Private Letters were signed on behalf of both Kamber Invest as borrower and the defendants as guarantors. The indicative terms included conditions concerning valuation of the Properties. The letters provided that the Lender(s) (who were not identified) reserved the right to withdraw or amend the indicative terms at any time without liability and in their absolute discretion. The valuations that are referred to above appear to have been procured for the purpose of the proposed loans.
3. Generally speaking, a mortgagor has a right to redeem the mortgage upon tendering the full amount due. If the mortgagee refuses the tender, the mortgagor may bring a suit (the redemption suit) to compel the mortgagee to receive the proper amount due, after taking an account, and to discharge the mortgage.[11]
4. The defendants' complaint is that the plaintiffs did not postpone the sale of the Yale Dr Property and the Glendale Av Property to allow Kamber Invest to refinance the plaintiffs' loan facilities. Once again, there is no evidence setting out the factual basis for the foreshadowed defence. Further, the defendants do not articulate a defence available to a guarantor arising from a refusal to postpone the sale.[12] The indicative terms are not the same as an unconditional tender - something which might have given rights to Kamber Invest as mortgagor and the defendants as guarantors.
5. At the hearing before me, the first defendant stated that on the day of the auction of the Yale Dr Property, he was told by the plaintiffs' real estate agent that he was not allowed to bid at the auction. He stated that he had loan approval to purchase the property in the form of the Parker Private Letters (which appear to have been prepared in support of a refinance and not a purchase). There is no evidence of these matters before me, nor articulation as to how that would give rise to a defence to their claim. According to the ASOC, Kamber Invest went into liquidation six days after the date of the Parker Private Letters, and prior to the valuations being completed - a matter that is likely to have disrupted a proposed refinance in any event.
6. I am not satisfied that the defendants have shown a prima facie defence arising from the allegation of refusal to postpone the sale of the Yale Dr Property and the Glendale Av Property to allow for a refinance.

1. The third defendant deposes to an inability to file a defence 'earlier' due to 'extreme financial hardship, mortgage enforcement by multiple lenders, and the collapse of [his] business and income'. The first defendant stated in oral submissions that he 'was not mentally there' at the time of service and could not deal with the Court process.
2. The reference to mortgage enforcement by multiple lenders suggests that the defendants were engaged in dealing with those lenders. Neither financial hardship nor lack of legal advice constitute an adequate explanation for the failure to file an appearance within the time prescribed by the (then in force) Supreme Court (General Civil Procedure) Rules 2015 (Vic) (2015 Rules).
3. The defendants do not have a satisfactory explanation for their failure to file an appearance in the time prescribed by the 2015 Rules.

1. The following chronology bears upon the question of delay:

(a) on 26 September 2024, the plaintiffs commenced these proceedings seeking orders for possession of the Glenmanor Cl Property and for debt;

(b) on 4 December 2024, Caporale JR made the Substituted Service Orders;

(c) on 24 December 2024, the defendants were deemed to be served in accordance with the Substituted Service Orders;

(d) pursuant to r 8.04 of the 2015 Rules and the Substituted Service Orders, the defendants had until 3 January 2025 to file an appearance;

(e) on 14 March 2025, the Default Judgment was entered; and

(f) on 9 December 2025, the defendants filed the Summons seeking to set aside the Default Judgment.

1. It can be seen from the chronology that there has been significant delay by the defendants in bringing the Summons. Almost eight months elapsed between the entry of Default Judgment and the filing of the Summons. The first defendant explained in oral submissions, that he had 'just given up' and took the view that nothing could help him. As with the defendants' explanation for the default, I do not consider that the defendants' explanation for the significant delay is adequate.

Whether costs or security would avoid prejudice

1. The fourth issue is whether a suitable award of costs or security would suffice to avoid prejudice to the party having the benefit of the judgment if it were to be set aside.
2. In a case concerning the enforcement of security and guarantees in the context of a default by the principal debtor that occurred around three years ago, I do not consider that an award of costs or security would suffice to avoid prejudice to the plaintiffs.

1. Having regard to all of the matters set out above, but particularly the lack of a prima facie defence having been demonstrated and the significant and largely unexplained delay in filing the Summons, in the exercise of my discretion, I am not satisfied that it is appropriate to set aside the Default Judgment.

1. I shall dismiss the Summons. My preliminary view is that the defendants should pay the plaintiffs' costs of and incidental to the Summons on a standard basis, but I shall list the matter for a further short oral hearing if either party has a different view.

K. T. R. DEVELOPMENTS PTY LTD (ACN 113 571 592) AS TRUSTEE FOR THE HARTMAN FAMILY TRUST

[1] [2020] VSCA 123, [21] (Kaye and McLeish JJA).

[2] Citing Kostakanellis v Allen [1974] VicRp 71; [1974] VR 596 , 605-6 (Gowans, Crockett and Harris JJ); Lubura v Nezirevic (2013) 42 VR 43, 44 [3] (Warren CJ).

[3] The ASOC would appear to have been served in the method provided for in r 6.12 of the Rules and again on 25 March 2025. In any event, the amendment was in the prayer for relief seeking the removal of a caveat which was not the subject of the Default Judgment. See also Commonwealth Bank of Australia v Suckling [2013] VSC 182, [31] (Ferguson J).

[4] Save to the extent affected by the proposed counter claim.

[5] Webster Investments Pty Ltd v Anderson and Webster Investments Pty Ltd v North Star Developments Pty Ltd [2016] VSC 620; (2016) 52 VR 610, [95] (Croft J).

[6] [2011] VSCA 114; (2011) 37 VR 116 , [100] (citations omitted).

[7] Unit 1 at 950k, unit 2 at 700k, unit 3 at 750k.

[8] Compare Mikita v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705, [85] (Heydon JA).

[9] Compare Artistic Builders Pty Ltd v Elliot & Tuthill (Mortgages) Pty Ltd (2001) 10 BPR 19,565 at 19,591, [126] (Campbell J).

[10] While there is a credit of $743,453.85 with the notation 'Payment received - disbursal of proceeds, 39-41 Yale Drive' in the 'Summary of Total Amount Claimed' that is not a sufficient basis to draw any conclusions regarding the sale price for the Yale Dve Property. This is likely to be the surplus funds after discharge of the first mortgage debt.

[11] Rowe v National Australia Bank Ltd [2019] WASCA 140; (2019) 56 WAR 1, [117].

[12] Compare Commonwealth Trading Bank of Australia v Inglis [1974] HCA 17; (1974) 131 CLR 311 and MacKinnon v Marnong Farms Pty Ltd [2015] VSC 415, [23]-[31] (Sifris J).