Salvo & Anor v Timeless Sunrise Pty Ltd & Ors [2025] VSC 337

(a) by loan agreement made on 21 February 2022, in which the second defendant is defined as 'Borrower', and the first and third defendants are defined as 'Guarantors' and 'Mortgagors', the plaintiff agreed to loan $16.1 million;

(b) by guarantees made on 21 February 2022, the first and third defendants each agreed to guarantee the due and punctual payment by the second defendant, defined as the 'Debtor', of all moneys becoming due and payable to the plaintiffs;

(c) by a second loan agreement made on 30 January 2023, in which the second defendant is defined as 'Borrower', and the first and third defendants are defined as 'Guarantors' and 'Mortgagors', the plaintiff agreed to loan a further $2 million;

(d) by further guarantees made on 30 January 2023, the first and third defendants each agreed to guarantee the due and punctual payment by the second defendant, defined as the 'Debtor', of all moneys becoming due and payable to the plaintiffs;

(e) each of the loans and the guarantees is secured by mortgages over properties owned by the first and third defendants;

(f) interest payments were made on the loans up until November 2023;

(g) on 7 February 2024, the plaintiffs issued a default notice under the two loan agreements in respect of the failure to make payments of interest; and

(h) the defendants did not pay the principal sums due under the loan agreements, or which became payable under the guarantees.

1. By writ and statement of claim filed on 12 April 2024 and amended on 2 August 2024, the plaintiffs seek against the defendants:

(a) possession of the real properties provided as security;

(b) repayment of the principal and accumulated interest for each loan; and

(c) costs on the indemnity basis.

1. The defendants filed a defence and counterclaim on 3 July 2024, which they amended on 9 September 2024. By the defence, the defendants make admissions in relation to the factual matters set out above. However, they also lay the groundwork for the allegation raised by their counterclaim that the plaintiffs acted unconscionably in entering the loan agreements, the guarantees and the mortgages the subject of the proceeding within the meaning of s 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth) ('ASIC Act'). The defendants seek various orders, including under the ASIC Act, in consequence.
2. By their proposed further amended defence and counterclaim, the defendants make allegations to support claims (in addition to the claim of unconscionable conduct) that:

(a) the plaintiffs have contravened the National Consumer Credit Protection Act 2009 (Cth) ('NCCPA Act'), specifically Schedule 1 ('National Credit Code'), giving rise to an entitlement on the part of the defendants to various orders in accordance with s 180 of the NCCPA Act; and

(b) various terms of the loan agreements were unfair terms within the meaning of s 12BG of the ASIC Act, and are therefore void, or susceptible of orders to vary the contractual terms or for redress.

1. The plaintiffs make application for summary judgment under ss 61 and 62 of the CPA on the ground that the defendants' amended defence and counterclaim has 'no real prospect of success'. Subject to s 64, the Court may give summary judgment under s 63 of the CPA if it is so satisfied.
2. The test under s 63 of the CPA is whether the amended defence and counterclaim has a 'real' as opposed to a 'fanciful' chance of success.[2] The authorities urge caution, and that regard be given to the overarching purpose under the CPA, when exercising the power to terminate a proceeding summarily given that, in consequence, the party against whom summary judgment is given will be deprived of the chance to pursue their claim or defence.[3] As such, the Courts should only exercise the power where it is clear that there is no real question to be tried.[4]
3. Even if there is no real prospect of success of the amended defence and counterclaim, under s 64 of the CPA, the Court may nevertheless decline to give judgment summarily if, having considered the circumstances of the case, it determines it is not in the interests of justice to do so or if the dispute is of such a nature that only a full hearing on the merits is appropriate.
4. The authorities also establish that if an application for summary judgment is refused, it is undesirable for the Court to give detailed reasons for so ruling.[5]
5. An application for summary judgment under the CPA must be made by summons supported by an affidavit verifying the facts of the claim and stating that it is the belief of the deponent that the defence to the claim has no real prospect of success. The defendants may 'show cause against the application by affidavit or otherwise to the satisfaction of the Court.'[6] Whilst it might be difficult to see how the defendants could resist summary judgment without supplying an affidavit at all, or one that provides sufficient evidence to show cause, the use of the words 'or otherwise' in the rule does not exclude the possibility. One example is where the party relies on their pleadings, especially if signed by counsel and where a proper basis certification is filed.[7]
6. As noted above, the defendants have sought leave to further amend their amended defence and counterclaim. The defendants may rely on the matters raised by their proposed further amended defence and counterclaim to show cause against the application, even prior to any leave being granted.

Should summary judgment be awarded against the defendants?

1. The defendants rely in opposition to the summary judgment application upon the affidavit of their solicitor, Mr Patrick Smith sworn 7 May 2025 ('Smith Affidavit'). In that affidavit, Mr Smith deposes, largely on the basis of information provided by Mrs Tina Brandi, the third defendant, and her husband, as follows.

(a) The monies loaned by the plaintiffs were principally used to refinance an existing facility with Secured Lending 1 Pty Ltd, which facility had been provided to permit the purchase, renovation or improvement of a residential property for investment purposes.

(b) Mr Samuel acted as broker for the plaintiffs, and dealt with Ms Brandi's husband. In an email from Mr Samuel to Mr Brandi, dated 14 November 2021, he informed Mr Brandi that the loan would need to be made to a company rather than Ms Brandi.

(c) Until a social engagement in November 2023, Mrs Brandi had never met Mr Samuel, and had never discussed refinancing options with him.

(d) Mr Brandi did, on numerous occasions, communicate to Mr Samuel the purpose of the loans as being to purchase, renovate or improve the residential property for investment purposes and to provide funds for personal, domestic or household purposes.

(e) Whilst a 'Borrower's and Mortgagors' and Guarantors' Declarations, Agreement and Directions' form was signed by Mrs Brandi in respect of the first loan, she did not sign any for the second, and she did not sign any declaration under reg 68 of the National Consumer Credit Protection Regulations 2010 (Cth).

(f) Mrs Brandi's personal circumstances are as summarised at paragraphs 42 to 44 of the amended defence and counterclaim. Those paragraphs allege that Mrs Brandi is a hairdresser by training, without relevant business or finance qualifications or expertise.

There is no other evidence filed by the defendants for the purposes of showing cause against the plaintiffs' application. Relevantly, the plaintiffs did not rely on any evidence in reply to Mr Smith's affidavit.

1. The plaintiffs submit that the defendants have failed to file 'cogent or admissible' evidence sufficient to discharge their onus on the application. In particular, they say the evidence given by Mr Smith in support of the unconscionable conduct claim is 'vague and inadequate', relying on double-hearsay and inadmissible opinion about the personal circumstances of Mrs Brandi that have been alleged as material facts in the amended defence and counterclaim. They say the material relied upon by the defendants contains suggestion and ideas, without the backing of substance that demonstrates the claims made by way of amended defence and counterclaim enjoy any real prospect of success.[8] They further submit that the proposed further amended pleading represents an afterthought and an opportunistic re-reading of the evidence by the defendants' representatives, and that the allegations made do not 'have any echo of authenticity'.[9]
2. In my view, the plaintiffs' submissions regarding the sufficiency of the defendants' evidence to show cause against the application overstates what is required. The rule contemplates that a defendant may show cause by affidavit or otherwise. The focus, therefore, is not limited to the affidavit filed in opposition. Here, the defendants rely on the evidence of Mr Smith, as well as the documents exhibited to the plaintiffs' solicitors' affidavit filed in support, and upon the existing and proposed further amended pleadings, each of which has been settled by Counsel. It has not been submitted that Mr Smith's evidence is 'inherently incredible', and as no cross-examination took place at the hearing, the Court must assume the evidence would be accepted at trial.[10]
3. I am satisfied that there is material sufficient to show that the unconscionable conduct allegations in the amended defence and counterclaim enjoy a real, as opposed to fanciful, prospect of success for the following reasons.

(a) The amended defence and counterclaim, which has been settled by Counsel, pleads the material facts to demonstrate Mrs Brandi's lack of business experience, including that she is a hairdresser with a certificate 3 qualification (having completed secondary schooling up to year 10).

(b) The Smith Affidavit:

(i) provides evidence that despite Mrs Brandi being the director of the corporate defendants, she was not involved in negotiations with the plaintiffs' broker about the loans the subject of this proceeding;

(ii) exhibits WhatsApp messages which suggest that the broker had not even met Mrs Brandi before November 2023, close to two years after the first loan was entered; and

(iii) exhibits emails which the defendants submit show that the plaintiffs, via their agent, sought to structure the loans in a way that avoided the operation of the National Credit Code.

While this evidence is challenged in the plaintiffs' submissions, the plaintiffs did not file any evidence in reply which addresses these matters.

(c) The defendants also relied on the documents, comprising a two page bank statement and a letter from NAB, exhibited to the plaintiffs' solicitor's affidavit to expose a dispute regarding the extent to which the plaintiffs enquired as to the defendants' ability, particularly that of Mrs Brandi, to service and repay the loans. The defendants submit that there was no inquiry as to Mrs Brandi's income, or how she would repay the loans deriving income as a hairdresser.

(d) The defendants also raise the prospect that the plaintiffs agreed to advance the loans solely on the basis of the value of the secured properties. The defendants submit that it is arguable that the loans therefore constituted asset based lending, and that without an exit plan, such lending may be unconscionable.

(e) While the plaintiffs rely on the certificates of independent legal advice, prepared by the plaintiffs and given by a solicitor engaged by the defendants in respect of the loans in order to undermine the defendants' claims, I accept the defendants' submission that the existence of the certificates are not determinative.[11] Whether there is unconscionable conduct despite the existence of such a certificate will depend on the determination of the Court of this factual dispute with the benefit of the evidence at trial relevant to the circumstances surrounding the certificates' preparation, issue and signing.

1. The defendants also raise, by their proposed further amended defence and counterclaim, the allegation that the National Credit Code applied to the loans and has been breached by the plaintiffs. They say, relying on evidence adduced in the Smith affidavit, that the agent knew the purpose of the loans was to refinance credit that had been provided wholly or predominantly to purchase, renovate or improve a residential property for investment purposes, and to provide funds for personal, domestic or household purposes. They say such a purpose attracts the protection of the National Credit Code. The plaintiffs have not filed any evidence that undermines the asserted purpose, which in any event is a factual dispute that should be determined at trial. There is also a dispute about the proper construction of the loan agreements for each loan and whether the third defendant, Mrs Brandi, is in fact a borrower,[12] such that the National Credit Code applies, rather than only a guarantor. In their submissions, the defendants point to clauses of the loan agreements which support their construction. In the event that the National Credit Code applies, which is, in my view, at least arguable, there are factual disputes that will need to be resolved to establish any alleged breach of it by the plaintiffs, and the defendants' entitlement to relief, if any. These issues are not suitable for determination on a summary judgment application.
2. The defendants also raise, by their proposed further amended defence and counterclaim, the allegation that the loan agreements contain unfair contract terms within the meaning of the ASIC Act. They submit, based on a reading of the loan agreements and the circumstances of their execution (some of which circumstances are in evidence), that the loans are arguably standard form contracts. They then point, as one example of an unfair term, to clause 4 of the loan agreements which enables the plaintiffs to determine whether a default has occurred, where such determination is binding on the defendants and triggers enforcement rights under the loan terms. The defendants point to other examples as well.
3. The defendants also submit that the default notice issued by the plaintiffs was:

(a) wholly ineffective, because it did not provide the prescribed period of notice under the National Credit Code (assuming they can establish it applies); or

(b) defective, due to its non-compliance with the specific jurisdictional requirements for notices under the legislation which it was given in respect of the properties located in Victoria and Queensland.

The effects of this depend on whether the asserted non-compliances can be established, and whether they are substantive or technical and inconsequential defects.

1. I am satisfied that the defendants raise arguable defences and counterclaims which should be determined at trial after an examination of the relevant evidence in detail. They have shown cause against the plaintiffs' application through:

(a) the Smith Affidavit;

(b) the existing and proposed further amended pleading (which has been settled by Counsel); and

(c) their submissions made in response to the plaintiffs' evidence.

Given the extent of the factual disputes that will arise, it is not appropriate to determine the plaintiffs' claims against the defendants in this proceeding on a summary basis. The threshold for granting summary judgment is a high one, and appropriately so, given what is sought has the effect of depriving the other party of their right to a trial.

1. For the foregoing reasons, I decline to order summary judgment in favour of the plaintiffs. I will order that the plaintiffs pay the defendants' costs of and incidental to their summons.

JOSEPH SALVO (ATF THE J & J SALVO SUPERANNUATION FUND)

JOSEPHINE ANNE SALVO (ATF THE J & J SALVO SUPERANNUATION FUND)

TIMELESS SUNRISE PTY LTD ATF DAVINA FAMILY TRUST (ACN 126 299 634)

[1] The summons seeks orders under ss 62 and 63 of the Civil Procedure Act 2010 ('CPA'), however, it is assumed that in respect of the defence, relief is sought under s 61 as well.

[2] Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158; (2013) 42 VR 27, 39 [29] (Warren CJ and Nettle JA) ('Lysaght').

[3] Lysaght 40 [35] (Warren CJ and Nettle JA), 42 [40]-[42] (Neave JA).

[4] Lysaght 40 [35] (Warren CJ and Nettle JA).

[5] Ticco Pty Ltd v Complete Family Healthcare Services Pty Ltd [2005] VSCA 221, [34] (Hollingworth AJA_,_ Charles JA agreeing).

[6] Supreme Court (General Civil Procedure) Rules 2015 r 22.05(1).

[7] Portbury Development Pty Ltd v Ottedin Investments Pty Ltd & Ors [2012] VSC 490, [27].

[8] Transcript of Proceedings, Salvo & Anor v Timeless Sunrise Pty Ltd & Ors (Supreme Court of Victoria, S ECI 2024 01737, Goulden AsJ, 20 May 2025) T2.21-T2.25 ('Transcript').

[10] Webster & Anor v Lampard [1993] HCA 57; (1993) 177 CLR 598, 602-605, 611 (Mason CJ, Deane and Dawson JJ).

[11] Stubbings v Jams 2 Pty Ltd [2022] HCA 6; (2022) 276 CLR 1.

[12] Pursuant to s 5(1)(a) of the National Credit Code, it only applies to a natural person borrower.