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[2025] NSWSC 1355
General information, not legal advice.
Supreme Court of NSW
2025-11-17
Meek J
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Sydney Von Somogy v Digital Valley Pty Ltd (ACN 163 959 411) [2025] NSWSC 1355
Hearing dates: 14 November 2025
Date of orders: 14 November 2025
Decision date: 17 November 2025
Jurisdiction: Equity - Duty List
Before: Meek J
Decision: Upon the usual undertaking as to damages, the Defendant is restrained from exchanging contracts or taking any enforcement action in respect of the property, until further order.
Catchwords: CIVIL PROCEDURE — Interlocutory injunctions — Application for interlocutory injunction restraining mortgagee defendant from taking any enforcement action with respect to property owned by mortgagor plaintiff
COMMERCE — Agriculture — Farm Debt Mediation Act 1994 (NSW) — Prohibition on “enforcement actions” — Plaintiff submits the prohibition applies to a farm in which steps have been taken to prepare for cattle grazing and on which other cattle are agisted — Discussion regarding the definition of “farming operation” — Regard to the purpose of the legislation — Determined there is a prima facie case the prohibition applies
CIVIL PROCEDURE — Whether plaintiff should be required to pay moneys into Court as security — Seemingly $950,000 equity in the subject property — Discussion of “Inglis principle” and exceptions — Determined that plaintiff not required to pay moneys into Court and that undertaking based on equity in property is sufficient
PRACTICE — Judgments and reasons —Encouragement to legal practitioners to notify Court, in the context of a busy Duty List, if, upon reflection, reasons are not required expeditiously
Legislation Cited: Corporations Act 2010 (Cth)
Farm Debt Mediation Act 1994 (NSW)
Local Land Services Act 2013 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; [2006] HCA 46
Beecham v Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618
Constantinidis v Equititrust Ltd [2010] NSWSC 299; (2010) 14 BPR 27,217
Edmonds v Barrington Winstanley Group Pty Ltd [2023] NSWCA 166
Eltran Pty Ltd v Westpac Banking Corp (1990) 25 FCR 322; [1988] FCA 712
Goater v The Commonwealth Bank of Australia [2014] NSWCA 265
Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161; [1972] HCA 74
Lawloan Mortgages Pty Ltd v Young [2008] NSWSC 1180
Miles v Ficuga Pty Ltd (1996) 131 FLR 171; (1996) 20 ACSR 156
Varga v Commonwealth Bank of Australia (1996) 7 BPR 15,052
Texts Cited: Explanatory Note to the Farm Debt Mediation Amendment Bill 2018
The Hunter River Times, “Wybong Hall Heart of the Community” (Webpage) (15 January 20212) (see endnotes for accessible link)
Category: Procedural rulings
Parties: Mark Edward Sydney Von Somogy (First Plaintiff)
PamaAG Pty Ltd (Second Plaintiff)
Digital Valley Pty Ltd (ACN 163 959 411) (Defendant)
Representation: Counsel:
D Southwood (Plaintiffs)
A Hopkins (Defendant)
Solicitors:
Carneys Legal (Plaintiffs)
File Number(s): 2025/00439409
Wybong is a small rural locality in the NSW Hunter Region, with a rich history of diverse activities including, for a period of time, holding the record for the World’s Biggest Barn Dance. [1] An urgent application before the Court has tested the limits of diversity of the community’s rural activities, specifically whether agistment of cattle and, more particularly, preparation of land to commence cattle grazing constitutes “farming operations” for the purposes of the Farm Debt Mediation Act 1994 (NSW) (FDM Act).
On Friday, 14 November 2025, I heard the return for acute injunctive relief sought by Mark Sydney Von Somogy (Mr Sydney). He had approached the Court seeking to restrain Digital Valley Pty Ltd (defendant) from selling a property located in Wybong (property) pursuant to its powers as mortgagee, or alternatively, if a sale had occurred, taking any consequent steps. The property is owned by PamaAG Pty Ltd (PamaAG), a company of which Mr Sydney is the sole director.
The plaintiffs appeared on Friday by Mr Southwood of counsel and the defendant was represented by Mr Hopkins of counsel. Minimal evidence was adduced by the plaintiffs and no evidence adduced by the defendant. The main issues were:
whether there is a prima facie case that s 8 of the F**arm D**ebt M**ediation Act 1994 (NSW) (FDM Act) prohibits the defendant in circumstances outlined below from taking enforcement action in respect of the property;
the balance of convenience of the proposed interlocutory injunction restraining the defendant from taking enforcement action in respect of the property until further order; and
if an interlocutory injunction were to be granted, the appropriate undertaking of damages and security, if any, to be paid into court.
Following a contested interlocutory hearing, I made the orders sought by the plaintiffs.
Mr Hopkins, in accordance with his instructions, asked for reasons for my decision. What follows is my reasons. I note I had been duty judge last week and will continue this week. The volume of cases listed in the last week, on Friday and today has meant there has been very limited time to prepare the reasons for judgment.
When Mr Sydney, then self-represented, approached me as Duty Judge on Thursday, he presented an initiating document in irregular form, seeking the restraint detailed above. Having then established that the property was owned by PamaAG, to regularise the matter, I indicated to Mr Sydney that I considered the form of originating process should be described as a summons with him as the first plaintiff and PamaAG as the second plaintiff.
In addition to the summons, I granted leave to Mr Sydney to file in Court an affidavit sworn by him the same day, a request for fee deferral and a valuation report which I marked as e****xhibit P1.
In questioning Mr Sydney, it was clear that he understood the notion of giving an undertaking as to damages. I drew his attention to the provisions of r 25.8 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), and he was willing to give such an undertaking.
Relevantly, I made a restraining order in the following terms:
[Order 7] Upon Mr Sydney Von Somogy giving to the Court the usual undertaking as to damages pursuant to r 25.8 UCPR, orders that the Defendant and any of its agents, advisors or representatives be restrained from exchanging any form of document that may lead to the sale of the land known as [redacted], or in the event that an exchange has taken place at this time (1:00pm on 13 November 2025) be restrained from taking any further steps consequent upon that exchange to progress final execution of such document or contract, such restraint to be enforced up to an including 5pm on 14 November 2025.
Mr Southwood read an affidavit of Mr Sydney and relied upon a number of documents which were marked as exhibits. This included exhibit P1 from the prior day’s listing; various loan/security documents (marked exhibit P2); and a bundle of documents of rate notices, a search, invoices, a Property Identification Certificate (PIC) letter and details of property assigned to the PIC (marked exhibit P3).
Mr Hopkins objected to paragraphs 7 and 11 of Mr Sydney’s affidavit. Paragraph 7 was self-evidently an expression of Mr Sydney’s intent and I read it as such. Paragraph 11 deposed to what Mr Sydney sought to do on the property as follows:
Immediately on settlement and ownership I sought to pasture improve the land, remove unused vines and arranged to move cattle over the land. The cattle have continued to occupy the land ever since.
Mr Hopkins submitted that that wording should be read as a statement of intention or belief as to what Mr Sydney intended to do as opposed to something that he had actually done.
I did not agree that that was necessarily the purport of paragraph 11. However, to avoid dispute over the matter, I permitted Mr Hopkins to cross-examine Mr Sydney, which occurred.
Mr Hopkins on the part of the defendant adduced no evidence. However, he informed the Court that although he did not have evidence about the matter, he was instructed that there had not been an exchange of contracts at that stage: [2]
Essentially, what I'm instructed is that my client obtained possession of the property and changed the locks some months ago and that there was a marketing campaign. The neighbour is the most promising buyer on my instructions and is keen to exchange but as of yesterday and - sorry, as of today's date, there hasn't been an exchange but there is a continued agitation for an exchange by that party.
Mr Hopkins also objected to tender of the valuation report on the basis that it had been obtained by the plaintiffs and not the defendant, it lacked UCPR compliance and was obtained for the purposes of the proceedings. [3]
The property is approximately 28 km west of Muswellbrook and is north of Denman. The valuation report valued the property at $2.75 million as at 1 March 2024. It was valued on an “as is” basis. Mr Hopkins stated that the defendant does not accept that the property has a market value of $2.7 million (or $2.75 million). When I asked what value he contended the property had, without seeking to avoid the question, he simply intimated that, on his instructions, a sale would result in some form of shortfall to his client. [4] However, he did not elaborate on the basis for that.
I permitted the valuation report to be relied upon. I will say something further about the content of the report below. However, dealing with admissibility, the mere fact that the report had been obtained by the plaintiffs and not the defendant per se says little if anything about its reliability.
The report was prepared by Dean Galanos, a certified practising valuer. The valuation is described as an “as is” current market value. It contains elaborate information including detail of sale evidence and an explanation of methodology (direct comparison).
The property was inspected on 7 December 2022 and the date of the valuation is as at 1 March 2024. On its face, the report was not prepared for the purposes of these proceedings but rather for the purposes of the plaintiff obtaining a loan from the defendant.
The precise deficits of UCPR compliance were not outlined by Mr Hopkins. However, in any event, it is a valuation that has been prepared by a qualified valuer and, for the purposes of an interlocutory hearing, I consider that it was material upon which I could act.
What follows is a recounting of certain of the relevant facts bearing upon my decision. Self-evidently, they are drawn from the materials adduced. Other than very limited cross-examination of Mr Sydney by Mr Hopkins on a discrete part of his affidavit evidence, there has been no opportunity nor occasion to test the evidence. My findings are in that context, obviously findings for interlocutory purposes and not the sort of concluded or final findings that would occur on a final hearing.
In late 2020, Mr Sydney was looking for land in the Hunter Region near Denman. He located the property and negotiated with a controller of the property, with a view to acquire it. In late 2021, he agreed to a position in principle to acquire the land and intended to use it for agricultural activities.
In March 2022, he formed PamaAG with himself as sole Director for the purposes of being a primary producer (farmer) on that land and for other agricultural farming pursuits. He indicates the intention and history of PamaAG is that it solely undertakes farming activities.
On 10 March 2022, PamaAG obtained an ABN registration. [5] The details of the ABN registration, according to a current search, describe the main activity of PamaAG as “corporate head office management” with additional activities including “grape growing (including table grapes and wine grapes)” and “breeding, farming or grazing – sheep, wool or lambs and grain”.
In late 2022, PamaAG contracted to buy the property. At or about that time, it appears that Mr Sydney arranged for Property Logic to prepare the valuation report for the property.
On 7 December 2022, the valuer inspected the property. The purchase was settled in early 2023, with the plaintiff obtaining funding from parties other than the defendant.
On 7 February 2024, the NSW Government issued an invoice to PamaAG pursuant to the Local Land Services Act 2013 (NSW) for rates in respect of the property, which rates included amounts referable to animal health, a meat industry levy and a special purpose pest management charge.
On or about 4 March 2024, PamaAG entered into a deed of a loan with the defendant to borrow $1.3 million for a period of 12 months. Interest for the first six months was stated to be pre-paid. There was a lower rate of interest of 15% per annum and a higher rate of 24% per annum. Mr Sydney guaranteed the loan. In support of the loan, PamaAG as borrower gave to the defendant a first registered mortgage over the property. Mr Sydney states the purpose of the loan was to reduce prior investor commitments on the land and to assist with the upkeep and management of the land.
In late 2024, PamaAG contemplated refinancing the loan but experienced some difficulty, particularly with financing scams, and ultimately did not refinance it.
On 20 October 2025, Mr Sydney emailed David Grabovoc (said to be the director and owner of the defendant), apologising for delays in refinancing, explaining the complications regarding that and attaching ‘a farmer initiated farm debt mediation notice’ (mediation notice) requesting a mediation.
There appears to be a facility pursuant to s 18B of the FDM Act for such a notice to be issued, and for the creditor to respond to it.
According to Mr Sydney, the property had been intensely farmed with cattle since 1960 but also with vineyards by well-known owners Penfolds and Rosemount. Mr Sydney asserts that, since 2008, the landowners had been paying local land service annual fees to the government for veterinary support to actively farm the land.
The valuation report sets out the following in respect of the property:
The subject property comprises some four (4) Torrens Titled allotments of rural land encapsulating a total (contiguous) holding of 109.12 ha, and located within an established rural / grazing locality.
The subject land is at present vacant and largely pasture un-improved (save for access tracks, water courses in part, and boundary fencing); although appears to have been utilized for broadacre pasture (grapes under vine) in the past. The land is mostly gently undulating in underlying topography; with vegetative coverage ranging from fully cleared to lightly / moderately timbered in part.
There are at present no improvements erected upon the land; but the current town planning controls do otherwise permit housing entitlement (minimum lot size of 80ha). In terms of water rights / access, the land has partial creek frontage and a dam (of undisclosed capacity).
…
The highest and best use of the land is at present considered to be for rural (light grazing) use or for agistment purposes; although broadscale agricultural (cropping) may also be possible given previous use. Sale of individual lots (subject to adequate right of way creation) is also prolific in rural localities within 3 – 4 hours driving distance of Sydney) as “lifestyle” lots.
We further note that the applicant has agreed terms enabling due diligence investigations for potential use of the land as a solar farm which (if satisfactorily concluded) would generate an estimated potential income of $300,000 pa.
I have reproduced paragraph 11 of Mr Sydney’s affidavit regarding the use of the property above.
In light of the way that the contest about interlocutory relief unfolded, I permitted Mr Hopkins to briefly cross-examine Mr Sydney addressing what operations were happening on the property. In addition, I asked a number of questions to attempt to clarify what was occurring (permitting counsel to object to my questions if they wished to do so).
The oral evidence of Mr Sydney may be summarised as follows: [7]
The vines on the property have been removed to some degree, although there remain some vines yet to be removed. He accepted that such vines that are on the property are not being currently grown or cultivated by the plaintiffs and no grapes are being produced.
Seemingly, a local person, Mark Hopkins, has about 45 of his own cattle agisted on the property.
The plaintiffs have no cattle being “farmed” (or, as I understand it, grazed) on the property.
The “main activity” on the property other than agistment relates to the plaintiffs attempting to prepare the land in order to bring their own cattle on to the property.
The land has a carrying capacity in terms of cattle of about 240 to 270 head of cattle.
The preparation has involved fox baiting, wild dog hunting, clearing the fence lines and slashing.
The delay in respect of the above preparation of the land to bring cattle onto the land has been due to a neighbour shareholder dispute. Nonetheless, the plaintiffs intend to bring approximately 100 head of new cattle onto the land in March/April 2026 to acclimate them for calving in August/September 2026.
The pasture improvement is a form of ongoing activity which has not been fully completed and Mr Sydney intends to continue to improve the pasture on the property.
The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief… The second inquiry is… whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.
As mentioned above, the parties were also in dispute regarding whether the plaintiffs should be required to pay into Court a particular amount before an injunction could be granted.
During the hearing on Friday, reference was made to the so-called Inglis principle, drawn from the High Court decision Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161; [1972] HCA 74 (Inglis), and the ‘ordinary’ requirement of paying money into court where there is a default in payment under a mortgage.
In Inglis, Barwick CJ at 168 and Menzies and Gibbs JJ at 169 agreed with Walsh J’s decision. Walsh J at 164 said:
A general rule has long been established, in relation to applications to restrain the exercise by a mortgagee of powers given by a mortgage and in particular the exercise of a power of sale, that such an injunction will not be granted unless the amount of the mortgage debt, if this be not in dispute, be paid or unless, if the amount be disputed, the amount claimed by the mortgagee be paid into court.
… If the debt has not been actually paid, the Court will not, at any rate as a general rule, interfere to deprive the mortgagee of the benefit of his security, except upon terms that an equivalent safeguard is provided to him, by means of the plaintiff bringing in an amount sufficient to meet what is claimed by the mortgagee to be due.
The benefit of having a security for a debt would be greatly diminished if the fact that a debtor has raised claims for damages against the mortgagee were allowed to prevent any enforcement of the security until after the litigation of those claims had been completed.
In my opinion the fact that such claims have been brought provides no valid reason for the granting of an injunction to restrain, until they have been determined, the exercise by a mortgagee of the remedies given to him by the mortgage.
During the course of argument, I drew counsel’s attention to Goater v The Commonwealth Bank of Australia [2014] NSWCA 265 (Goater) in which Ward JA explained the exceptions to the Inglis principle.
In particular, Ward JA identified exceptional circumstances as including a dispute as to whether a right to exercise the power of sale has arisen:
However, as noted in Fisher & Lightwood at [20.38], the mortgagee need not offer to redeem, and therefore need not pay into Court, where it is alleged that the power of sale is not properly exercisable (see Inglis at 164-165). Examples given by the authors of exceptions to the rule in Inglis are where the validity of the mortgage is in issue, or there is a question whether or not there has been a breach or a question as to whether or not the notice was effective (Allfox Building Pty Ltd v Bank of Melbourne (1992) NSW Conv R 55-634), or where the power of sale is being used for an improper motive (Milton Park Country Club Pty Ltd v Yasuda Trust Australia Ltd (Supreme Court (NSW), Bryson J, 8 March 1991, unrep)). Campbell JA in Bayblu Holdings Pty Ltd v Capital Finance Australia Limited [2011] NSWCA 39 at [58] confirmed that there is a long recognised exception where the dispute goes to whether the power of sale has arisen at all (referring to Harvey v McWatters and Allfox).
Mr Southwood submitted that there was a prima facie case on the evidence that the defendant was prohibited from selling the property or taking “enforcement action” as defined in the FDM Act in the circumstances that arose.
Mr Southwood accepted that there was default under the facility. Principally, he developed an argument based on the provisions of the FDM Act that the scheme of the Act requires a creditor (in this case, said to be the defendant) in respect of a farm debt to either participate in a mediation with the debtor or farmer and/or to obtain an exemption certificate under the scheme of the Act.
Mr Southwood identified various parts of the FDM Act which, for relevant purposes of his argument, included:
The definitions of creditor, enforcement action, farm, farm debt, farm mortgage and farmer in s 4:
creditor means a person to whom a farm debt is for the time being owed by a farmer.
enforcement action, in relation to a farm mortgage, means taking possession of property under the mortgage or any other action to enforce the mortgage, including the giving of any statutory enforcement notice, or the continuation of any action to that end already commenced, but does not include:
(a) the completion of the sale of property held under the mortgage in respect of which contracts were exchanged before the commencement of this Act, or
(b) the enforcement of a judgment that was obtained before the commencement of this Act.
farm means land on which a farmer engages in a farming operation.
farm debt means a debt incurred by a farmer for the purposes of the conduct of a farming operation that is secured wholly or partly by a farm mortgage.
farm mortgage includes any interest in, or power over, any farm property securing obligations of the farmer whether as a debtor or guarantor, including any interest in, or power arising from, a hire purchase agreement relating to farm machinery, but does not include:
(a) any stock mortgage or any crop or wool lien, or
(b) the interest of the lessor of any farm machinery that is leased.
farmer means a person (whether an individual person or a corporation) who is solely or principally engaged in a farming operation and includes a person who owns land cultivated under a share-farming agreement and the personal representatives of a deceased farmer.
4AB Farming operation
(1) A farming operation is a business undertaking that primarily involves one or more of the following activities:
(a) agriculture (for example, crop growing and livestock or grain farming),
(b) aquaculture,
(c) the cultivation or harvesting of timber or native vegetation,
(d) any activity involving primary production carried out in connection with an activity referred to in paragraphs (a)–(c).
(2) A farming operation does not include a business undertaking that primarily involves wild harvest fishing or the hunting or trapping of animals, birds or reptiles in the wild.
(3) The regulations may declare that any business undertaking of a specified kind is, or is not, a farming operation for the purposes of this Act.
Application of Act
(1) This Act applies in respect of creditors only in so far as they are creditors under a farm debt.
(2) This Act does not apply in respect of:
(a) a farmer whose property is subject to control under Division 2 of Part X of the Bankruptcy Act 1966 of the Commonwealth, or
(b) a farmer whose property is the subject of a bankruptcy petition presented by any person, or
(c) a farmer, being a corporation, that is an externally administered corporation within the meaning of the Corporations Act 2001 of the Commonwealth.
(3) This Act does not apply in respect of a farm debt secured by a farm mortgage if:
(a) the farmer is in default under the farm mortgage, and
(b) the farm mortgage secures all or part of the balance outstanding under an earlier farm mortgage, and
(c) the farmer and the creditor have previously entered into a mediation agreement under this Act in relation to the farm debt.
Exemption certificate required for enforcement action
(1) A creditor must not take enforcement action in respect of a farm mortgage unless an exemption certificate granted to the creditor is in force in respect of the farm debt concerned.
Maximum penalty:
(a) for a corporation—2,500 penalty units, or
(b) for an individual—500 penalty units.
(2) Enforcement action taken by a creditor in respect of a farm debt in contravention of this Act is void.
(3) This section does not invalidate any statutory enforcement notice or other process given, served or executed in order to fulfil a condition precedent to the taking of any enforcement action, but operates to prohibit the taking of the action concerned and the enforcement by a court or tribunal of any such notice or process.
(4) Subsection (3) does not affect any proceedings authorised under section 15 (5) to be continued or concluded after the expiry of an exemption certificate.
Despite the property’s Vineyard history, Mr Southwood accepted that there were no grapes being grown on the property at the moment and there was no intention for that to occur.
Mr Southwood submitted that the agistment of cattle constitutes a farming operation, although, he indicated that in the limited time available, he had been unable to find any authority decisively determining that agistment is or is not a farming operation. In this regard, he submitted that the inclusion of a person who owns land cultivated under a share farming agreement as part of the definition of “farmer”, supports (or is consistent with) the argument that agistment constitutes a farming operation.
Further, he submitted the preparatory steps to run cattle on the property constitutes a farming operation.
With regard to the balance of convenience, Mr Southwood referred to the valuation of the property, being $2.75 million as at March 2024 and the debt amount owing, being $1.8 million. He submitted that, if the lender acts consistently with its mortgagee’s duty, even if it was sold for much lower, for example around $2 or $2.1 million, it is likely to be a sufficient sale price to cover the payout amount due and any subsequent loss the mortgagee may incur by being unable to sell the property in the near term.
Mr Hopkins, early in the hearing, seemingly accepted that there was a low threshold for establishing that there is a prima facie case the FDM Act applied, intimating his stronger argument laid in the contest regarding the balance of convenience and the undertaking of damages. However, a bit later, he submitted that the evidence did not give rise to a prima facie case that the terms of the FDM Act were engaged in the sense of there being a “farming activity” (his word) or “farming operations” (the wording of the Act) on the property.
Nonetheless, even with that change (or slight nuancing) of his submissions, he continued to accept that there was a low threshold to establish the applicability of the Act to the present circumstances.
In particular, Mr Hopkins submitted that the agistment of cattle did not qualify as a farming operation. Further, he submitted that if vines had been removed from the land and there was a future intention for some cattle to be pastured on the land, that was not a farming activity (i.e. more strictly a “farming operation”).
He submitted that if, as he contended, I found there was no farming operation, then the application should be dismissed.
Mr Hopkins during the course of the hearing drew my attention to the decision of Barrett J in Constantinidis v Equititrust Ltd [2010] NSWSC 299; (2010) 14 BPR 27,217 (Constantinidis). I was grateful for him to draw my attention to any relevant authority. Initially, he had thought that the decision supported the proposition that an intention to commence a farming operation did not engage the terms of the Act. I arranged for copies of the decision to be printed and we had a brief opportunity to consider it towards the end of the hearing on Friday.
Constantinidis involved an application pursuant to s 418A(2) of the Corporations Act 2010 (Cth) for declaratory relief challenging the validity of the appointment of a receiver of property and seeking removal of such receiver and manager. Relevantly, the plaintiff contended that the first defendant had appointed the receiver in contravention of s 8(1) of the FDM Act.
Barrett J addressed the requirements to the operation of the enforcement prohibition at [11]:
The s 8(1) prohibition operates to preclude action by a person who, at the time the action is taken, is a “creditor” to whom money is, at that time, owed under a mortgage which is at that time a “farm mortgage” by a person who is, at that time, a “farmer”. Thus, the prohibition does not operate unless all of “creditor” status of the person taking action, the “farm mortgage” status of the mortgage under which money is owed to that person and the “farmer” status of the person owing the money exist at the time the action is taken.
- When one comes to the definition of “farm debt” and the question whether a particular debt is today a “farm debt”, however, it is necessary to look not only to the present but also to the past. This is because the definition of “farm debt” has regard to circumstances existing when the debt was “incurred”. In speaking of a debt “incurred . . . for the purposes of the conduct of a farming operation” and directing attention to the purposes for which the debt was incurred, the definition of “farm debt” necessarily pays attention to purposes existing at the past time when the debt was incurred. But that, it seems to me, is the only past aspect to which attention is directed. To the extent that the definition of “farm debt” refers to incurring by a “farmer” and security under a “farm mortgage”, it directs attention to the present status of the person who incurred the debt in the past and the present status of the mortgage by which the debt is secured.
- I am of the opinion, in particular, that one does not look for either “farmer” status or the existence of the mortgage at the time of the incurring of the debt. This is because the aim of the Act is to protect persons who are for the time being farmers from action under mortgages which for the time being exist over properties that are for the time being farm properties – but only where the secured debt incurred in the past was obtained for farming purposes. Applying the approach I consider to be correct, a person who is today a farmer and whose farm property stands today as security for a debt will be protected if the purpose of the original incurring of the debt was a relevant farming purpose (and whether or not the person was then a farmer), but not if the original incurring was for some non-farming purpose; while, if the original incurring was for a relevant farming purpose but either the person by whom the debt is owed is not today a farmer or the security property is not today a farming property, the protection will not be attracted.
On the facts in Constantinidis, Barrett J found that the s 8 prohibition was not engaged because the relevant secured borrowings were made for the dominant or main purpose not of conducting a farming operation but rather for implementing a project of advantageous re-sale of the land. His Honour found that neither of the relevant debts was a “farm debt” and that the first defendant was not relevantly a “creditor.”
On balance, addressing Mr Hopkins’ tentative submission, it seemed to me that the decision in Constantinidis was influenced by the particular facts of the case and his Honour was not intending to state any firm or decisive proposition that taking preparatory steps for a farming operation could not engage the terms of the Act.
In any event, Mr Hopkins submitted that even if the Inglis principle is not immutable because of the application of the FDM Act, it would simply go toward the balance of convenience and the undertaking issue. [11]
Mr Hopkins then addressed the balance of convenience, submitting:
there is damage to the defendant in the sense that any enforcement action (including, relevantly, a sale) it is attempting to carry out will be delayed if the matter was adjourned to the new year and precluded until then; and
the financial position of the plaintiffs is such that there is no worthwhile undertaking as to damages.
Should I consider it appropriate to grant some relief to the plaintiff, Mr Hopkins provided what he termed his cascading options as to security to be paid into Court:
the entirety of the amount currently due of $1.8 million;
alternatively, a significant (unspecified) amount;
and, alternatively, the amount of interest accruing on the loan.
Further, he contended that if interest were ordered to be paid as a condition of the injunction, there should be liberty to apply to vacate the orders if the interest payment was not paid each week.
Mr Southwood accepted that the plaintiffs had no ability to readily proffer anything of financial value other than the equity in the property.
Mr Southwood frankly conceded that his clients would have great difficulty paying that amount of interest and that any order conditioned upon payment of such interest would in effect unlikely be met by his clients. Nonetheless, assuming $1,000 in interest per day to take a whole number, he submitted that even if the matter went for a further three months, approximately $90,000 would be tacked onto the amount owing, which is “well and truly within the margin of being covered by the market value of the property.” [12]
Evident from the above submissions, several issues were raised regarding whether there is a prima facie case. Having regard to the evidence, I am satisfied, for the purposes of this interlocutory application, that there is a prima facie case that the prohibition in s 8 applies.
As Rothman J observed in Lawloan Mortgages Pty Ltd v Young [2008] NSWSC 1180 (Lawloan) at [42], there is a degree of circularity in the definitions of the Act.
Nonetheless, whether certain relevant definitions in s 4 are met, and therefore whether s 8 is engaged, largely rests upon whether there is in this case a “farming operation”.
In particular, there is no serious dispute that PamaAG is a farmer as defined in s 4. Thus, whether there is a farm debt turns on two things: first, whether the debt was incurred for the purposes of conducting a farming operation; and, secondly, whether the debt is secured wholly or partly by a farm mortgage. As observed by Barrett J in Constantinidis, one must look to the past in answering the first of those questions.
There is little detail bearing upon the purpose of incurring the debt. Mr Sydney’s evidence is that the purpose of the loan was to reduce prior investor commitments on the land and assist with the upkeep and management of the land. The in principle agreement to initially acquire the land, as mentioned above, “formalised in [his] mind a focus on agricultural activities”. I accept for the purposes of this application that there is an arguable case that the debt was incurred to further the conduct of a farming operation.
However, such a debt will only be a farm debt if it is secured wholly or partly by a farm mortgage. In accordance with Barrett J’s comments above, in determining whether that is the case, one looks at the present situation. A farm mortgage includes, relevantly, any interest over any farm property. A farm, in turn, means a land on which a farmer engages in a farming operation.
As detailed above, Mr Southwood says there is a current farming operation on two bases. The first is agistment. On an interlocutory basis, I admit of the possibility that agistment falls within the definition of “farming operations”.
Legislatively, what has been encompassed within “farming operation” has been refined over time. The term “farming operation” was defined in slightly different terms before 3 September 2018: [13]
(a) farming (including dairy farming, poultry farming and bee farming), pastoral, horticultural or grazing operations, or
(b) any other operation prescribed by the regulations for the purposes of this definition.
This was the relevant definition in Miles v Ficuga Pty Ltd (1996) 131 FLR 171; (1996) 20 ACSR 156 (Miles) where the subject property had a substantial stand of timber used for logging purposes, which Dowd J said did not constitute a farming operation. The property was also being used to graze cattle owned by a neighbour. His Honour had to assess whether the defendant owner of this property, an operational trustee company, with annual returns showing the principal activity to be a “trustee company”, met the definition of a “farmer”. His Honour considered that farming activity carried on by another person (i.e. the neighbour), which was the only available evidence, did not assist the defendant in showing that it is a farmer. His Honour also concluded that the defendant did not carry on a “farming operation”.
Agistment was also commented upon by Rothman J in Lawloan at [45] and [48]:
- … The context of the definitions would exclude from being a farmer, a person who, other than on a formal or commercial basis, allows other persons to graze cattle on their land.
…
- In the context of s 4 of the Farm Debt Mediation Act, the term “operation” seems to involve the carrying on of an activity or undertaking: see Lawrence v Lloyd [1930] SASR 194 at 198, per Richards J. While it is unnecessary to give any conclusive or exhaustive definition of the term “farming operation”, in its context the term may include an operation that is not business or commercial in its purpose, but does not include a mere acquiescence, without formal arrangement, in another person grazing cattle on land that is subject to the mortgage. On any understanding of the ordinary meaning of the term “operation” such an acquiescence does not involve the land owner in a “grazing operation”.
On its face, Miles does not appear to support the proposition that agistment is sufficient to constitute "farming operation" as defined in the FDM Act. However, the focal point of his Honour’s analysis was whether the defendant company was a farmer (i.e. solely or principally engaged in a farming operation) in circumstances where there was no other evidence of its farming activities or status. There is no real dispute in the matter before me that PamaAG is a farmer under s 4. Mr Hopkins did not contend otherwise. The position communicated to me by Mr Southwood is that PamaAG is involved across a number of farms, some of which grow grapes. [14] However, the precise details regarding that are unclear as it was confirmed that the only property PamaAG owns is the property the subject of the application.
In any event, Rothman J in Lawloan, some 12 years after Miles, did not seem to adopt an unqualified conclusion that agistment cannot in any circumstance constitute a farming operation. Specifically, his Honour seemed to contemplate that an agistment arrangement that is formal or commercial, or even “not business or commercial in its purpose” may be a farming operation. The particular line his Honour drew in the context of the case before him was where it is a “mere acquiescence, without formal arrangement, in another person grazing cattle on land that is subject to the mortgage”.
To give effect to the articulated purpose of the FDM Act, Young J construed the legislation favourably to the farmer in Varga v Commonwealth Bank of Australia (1996) 7 BPR 15,052. His Honour said at 15,056:
One must construe the Act to fulfil its purpose. The purpose was to prevent persons being driven off their farms because of inability to pay debt where it was possible for the debt to be rearranged after a bona fide mediation process. To fulfil the purposes of the Act, one must construe it, to my mind, favourably to the farmer, and unless compelled by the language, not permit the overriding purposes of the Act to be defeated by technicalities…
… The proposed amendment also extends the definition of farming operation to include aquaculture, timber and native vegetation cultivation or harvesting and activities involving primary production carried out in connection with those farming operations. The definition excludes wild harvest fishing and the hunting or trapping of animals, birds and reptiles in the wild.
For the purposes of this interlocutory application, it is not necessary for me to determine whether agistment generally, or agistment in this particular case, may constitute farming operations, in any final or concluded way. Further, in the urgent timing of the matter, there was no opportunity for counsel to address me further regarding any principles arising out of these cases.
Nonetheless, in light of the relevant caselaw and legislative history I have been able to identify in the short time I have had, the circumstances of the case, the submissions put by counsel, and the (limited) evidence before me, I admit of the possibility on an interlocutory basis that agistment falls within the definition of farming operations.
However, my finding of a prima facie case of farming operations is not limited to or even principally based on the agistment of the property.
Specifically, I am satisfied for interlocutory purposes that the preparatory work deposed to by Mr Sydney to enable the plaintiffs to bring cattle onto the land is arguably within the meaning of a “farming operation.” The recent issuing of the PIC to my mind is consistent with the progression of the process of the plaintiffs bringing their own cattle onto the property. That these activities would fall within the ambit of “farming operation” is also supported by the beneficial nature of the legislation and the extension of the definition of “farming operation” in 2018, particularly the addition of “any activity involving primary production carried out in connection with [those farming operations]”.
The plaintiffs’ intent regarding the matter is to have the dispute with the defendant mediated. That appears to be the reason why Mr Sydney issued, on behalf of PamaAG, the mediation notice. Mr Sydney gave evidence that at no stage has the defendant (or their advisors or any obligers under the loan agreement) issued PamaAG a notice of mediation under the FDM Act.
Overall, I am satisfied there is a prima facie case that PamaAG is engaged in a “farming operation” such that “enforcement action” is or should be prohibited until the mediation which the plaintiffs seek takes place or the defendant obtains an exemption certificate.
Having regard to Mr Hopkins’ submission, I do not consider that the decision of Barrett J in Constantinidis precludes that finding. Neither do I consider that Miles or Lawloan preclude that finding. In any event, I accept the submission of Mr Southwood that, on the facts here, this is not merely a case of intention to commence a farming operation but rather one in which actual steps have in fact been taken in anticipation of cattle grazing.
On the balance of convenience, whilst it is true that the defendant would be precluded from taking enforcement action for a number of months, I consider there is sufficient equity in the property to cover the increased indebtedness.
The risk for the plaintiffs is that PamaAG would lose this particular property that it has purchased and carried out preparatory works on.
Despite fervent attempts of Mr Hopkings to persuade me that the valuation of the property was not sufficiently reliable to provide comfort that there is equity in the property for interlocutory purposes, I reject his submissions in that regard.
I have already briefly addressed the valuation report. Since the time of the valuation report, it is clear that work has been done on the property to prepare it for grazing cattle. Subject to one matter that I will come to, I see no rational reason why I would proceed on the basis that the property has decreased in value.
Though Mr Hopkins was given an opportunity to adjourn, to place before the Court evidence that might bear upon the matter, including the value of the property, on express instructions he declined to seek any such adjournment. Without commenting on that forensic decision, it simply leaves the Court in a position in which the evidence prima facie suggests the property is valued at $2.75 million and that an increase in the debt on the property by reason of accruing daily interest will not make a significant inroad into what is an apparent equity of $950,000 in the property.
Ordinarily, the Court will condition injunctive relief on the basis of an undertaking as to damages. The importance of an undertaking as to damages is that it addresses the risk of the defendant’s loss if final relief is ultimately not granted to the plaintiff.
The principle that a mortgagor must give a meaningful undertaking as to damages or pay money into court is not absolutely mandatory or inflexible. Indeed, in Goater, Ward JA cited the decision of Eltran Pty Ltd v Westpac Banking Corp (1990) 25 FCR 322; [1988] FCA 712 as an example where the Court proceeded on the basis that an injunction might be granted without an undertaking as to damages if there is evidence that the mortgage property is likely to remain adequate security for the mortgage (which was not the case in Goater).
Whilst I have required the plaintiffs to provide an undertaking as to damages, as I indicated during the course of the contested hearing, I proceed on the basis that, other than the equity in the property, neither of the plaintiffs have any particular existing financial resources to meaningfully underpin the undertaking.
Further, in light of that and the broader circumstances of the case, I do not consider that the plaintiffs should be required to pay any moneys into court in the way of security. I consider, by analogy to exceptions to the Inglis principle as detailed by Ward JA in , the general rule does not immutably apply in this case.
When matters were left on Friday afternoon, Mr Hopkins requested reasons for judgment. The hearing had occurred in the context of a busy Duty List. I indicated that I would provide oral reasons which would have to be transcribed. In the middle of very busy Duty Lists, judges will do their very best to prioritise matters and provide, expeditiously, reasons for judgment if requested.
I requested my Associate to notify the parties that I would provide reasons for judgment at 9:30 AM on Monday morning to allow sufficient time for that to occur prior to the main commencement of the duty list at 10 AM.
Generally, if a judge indicates that he or she will deliver reasons for judgment, legal practitioners or occasionally parties will attend to receive the reasons.
Though Mr Hopkins requested, in accordance with his instructions, that I provide reasons, and though I indicated I would do so on Monday morning (to ensure that parties have, as soon as possible, available reasons for my decision), a little to my surprise, there was no appearance of anyone by or on behalf of the defendant.
On the other hand, a representative on the part of the plaintiff (who had not requested reasons) attended and took notes of my reasons. I do not know why there was no attendance on behalf of the defendant to receive the reasons that had been requested by it. If, for whatever reason, a party who has requested reasons, on reflection, does not require them to be provided urgently, it would assist to inform the Court of that fact, to enable it to regulate priorities during busy Duty Lists.
The orders made on Friday are as follows:
THE COURT:
(a) a hearing has been conducted today in circumstances where it is the first return of a summons filed yesterday; (b) the Defendant was given opportunity to seek an adjournment for a short period of time to place before the Court any evidence or submissions so that any contested interlocutory application would not take place today but instead be deferred for a short period of time; (c) the Defendant, when it was made clear that if no adjournment was sought today and it chose to a contest the matter today, the ensuing contested interlocutory hearing would be the main (but not necessarily the only) opportunity to have a contested hearing on the matter proceeded to contest the matter; (d) that in the above context it is not to be expected that there would be another contested interlocutory application simply as a matter of course; and (e) notwithstanding 1a-d above if there is good reason (such as a material change of circumstances) the Defendant is at liberty to seek to vary or discharge the injunctive relief.
**********
The Hunter River Times, “Wybong Hall Heart of the Community” (Webpage) (15 January 2021) https://hunterrivertimes.com.au/wybong-hall-heart-of-the-community/ accessed 29 November 2025.
T 3.45-.50.
T 24.
T 4.30-.42.
Exhibit P3.
T 17-18.
See T 14-19.
Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; [2006] HCA 46 at [65] per Gummow and Hayne JJ, referring to Beecham v Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622-623 per Kitto, Taylor, Menzies and Owen JJ.
See 163.
At 164-5.
T 5.2-.6.
T 31.4-.7.
See Edmonds v Barrington Winstanley Group Pty Ltd [2023] NSWCA 166 at [115]-[116] per Stern JA (Meagher and Leeming JJA agreeing at [1] and [2] respectively).
T 22.34-.35. See also affidavit of Mark Edward Sydney Von Somogy sealed 13 November 2025 [7], [8].
Sydney Von Somogy
Digital Valley Pty Ltd
(2006) 227 CLR 57
(1968) 118 CLR 618
(1990) 25 FCR 322
(1972) 126 CLR 161
(1996) 131 FLR 171
It seems that Mr Sydney had not been on the property for about two to three months and was unaware that locks had been changed on the property.
He has recently become aware of a marketing campaign regarding the property, having been sent a link by someone two weeks ago, but does not know the particular details. His understanding is that Jay Shepherdson of JTS Realty was the relevant agent, presumably an authorised agent of the mortgagee. [6]
Subsequent to 20 October 2025, Mr Sydney said he heard stories that a neighbour, Adam Evans, had made a statement that he had acquired the property at a huge discount to value after the mediation notice had been issued by Mr Sydney.
On 3 November 2025, Mr Sydney, having received no reply to his email to Mr Grabovoc, requested his solicitor from Carneys Legal to write to the defendant’s lawyers to stop any escalation of enforcement and follow up the request for mediation.
On 5 November 2025, Matthew Bransgrove, on behalf of the defendant, responded, asserting that the FDM Act did not apply but granting five days for Carneys Legal to respond with information supporting the farming nature of the land.
Some time prior to 10 November 2025, it appears that PamaAG caused an application to be made for the property in respect of a PIC. The application was seemingly made by Morgan Tucker of Sandleton Investments PL. Mr Southwood indicated (and this does not seem to be disputed) that Mr Tucker was an authorised representative of PamaAG in respect of the PIC. The address for Mr Tucker is the same address as the address for service for PamaAG in the mortgage.
On 10 November 2025, the District Registrar of the Local Land Services Hunter Region, on behalf of the NSW Government, notified Mr Tucker that the PIC had been issued and provided it to Mr Tucker.
On 12 November 2025 at 6 PM, Mr Sydney heard from a local contractor that Mr Evans had spruiked how he had ‘exchanged’ the property on 11 November 2025. That led to the urgent application to myself as Duty Judge last Thursday, 13 November 2025.
Currently, the loan indebtedness is approximately $1.8 million. Mr Hopkins contends that interest is accruing at 24% per annum. He calculated that the amount due is $1,264 a day. Mr Southwood for his part accepted that, if the rate of 24% per annum applies, the daily amount specified by Mr Hopkins is arithmetically correct.
Lastly, there is a particular matter which was not the subject of any submissions by Mr Hopkins but which I consider ought properly to be addressed. In the concluding part of the valuation, there are a number of aspects that bear upon the valuer’s assessment of the valuation. According to the report, the valuer considers that if the property was sold under forced sale conditions under less favourable market circumstances than at the time it was valued, a discount of 25% to 30% would apply.
Precisely what that means would no doubt need to be explored. However, 25% of $2.75 million is $687,500 and 30% of $2.75 million is $825,000. Assuming for the moment that a discount of that size were applicable on a forced sale, that suggests that a sale amount of approximately $1.925 million to $2.063 million might be achieved.
Other than alerting me to the fact that there was some form of marketing underway, Mr Hopkins expressed he did not seek to adduce evidence regarding the course of that. Further, as noted, Mr Hopkins did not make any specific submission about that part of the valuation report.
It is very difficult for the Court to make a proper assessment of the justice of the matter between the parties when it is provided with very little evidence as to the details of the default, the actions taken by the mortgagee and mortgager (including notices issued and responses) and where the defendant makes a forensic decision not to place before the Court any evidence regarding what it has done to take possession of the property. Relevant information that would have been helpful to the Court includes whether agents have been engaged and what marketing has occurred (particularly, the timing of any marketing campaign).
As a consequence of the conscious forensic decision made by the defendant, evidence of factors that may bear upon whether the property is likely to be sold for any significant value less than $2.75 million have not been adduced.
In those circumstances, whilst I admit of the possibility that a sale by the defendant as mortgagee may depress the price somewhat, I do not consider I can necessarily proceed on the basis that the value of the property at the current point of time is significantly less than the abovementioned appraised value.
In the absence of any application by the defendant to place evidence before the Court, including evidence that the current value of the property would give rise to a shortfall to the defendant, I consider that, at least for the period through to the early part of the new year, there is a sufficient amount of equity in the property to cover the defendant’s debt and any accumulating interest.
I consider that that mitigates the risk that an undertaking of damages is of no worth. I should make clear that I regarded that as being a material consideration. If, for example, there was evidence of a compelling nature that there was a very much smaller amount of apparent equity in the property or the equity position was ‘line ball’, then my preparedness to grant injunctive relief would have been different.
The orders that I have made permit the issue regarding the injunctive relief to be revisited, though not as a matter of course (because there has already been a contested interlocutory hearing). However, I made it clear that the orders may be reviewed if there is good reason to do so, which may include, for example, a material change of circumstances.