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[2025] NSWSC 850
General information, not legal advice.
Supreme Court of NSW
2025-08-01
Hamill 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: TTW Financial Pty Ltd v TSF Group Pty Ltd & Ors [2025] NSWSC 850
Hearing dates: 29 July 2025
Date of orders: 01 August 2025
Decision date: 01 August 2025
Jurisdiction: Common Law
Before: Hamill J
Decision: At [43], but in summary:
(1) Set aside the default judgment except the judgment for possession of the land.
(2) Orders for distribution of proceeds of any sale of the property.
(3) List the matter for final hearing on 11-12 September 2025.
(4) Case management orders at [43].
Catchwords: CIVIL LAW – application to set aside default judgment – judgment for possession and repayment of money lent and interest – debt to private lender secured by guarantee and mortgage – whether arguable defence – where previous defence struck out – applicability of National Credit Code – whether arguable that transaction a “sham” – where loan to company secured by property owned by individual who was the sole director – whether attempt to resurrect same defence that was previously struck out – relevance of delay – extent of prejudice to plaintiff – where application to set aside judgment related only to amount of interest – no contest as to principal sum – no contest that lender entitled to sell property – whether arguable defence of unconscionability
Legislation Cited: Contracts Review Act 1980 (NSW)
National Consumer Credit Protection Act 2009 (Cth)
National Credit Code (Cth)
Uniform Civil Procedure Rules 2005 (NSW), r 36.16(2)
Cases Cited: Brackenridge v Bendigo and Adelaide Bank Ltd [2021] SASCA 129
Commonwealth Bank of Australia v Wales [2012] NSWSC 407
Dai v Zhu [2013] NSWCA 412
Equititrust v SLJM Pty Ltd [2010] NSWSC 1059
Magnate Projects Pty Ltd v Youma Constructions (No 2) Pty Ltd [2005] NSWCA 331
National Australia Bank Ltd v McCarthy [2014] NSWSC 1819
Perpetual Trustee Company Limited v Albert and Rose Khoshaba [2006] NSWCA 41
Pham v Gall [2020] NSWCA 116
Pope v Aberdeen Transport Co Pty Ltd [1965] NSWR 1550
Raftland Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia (2008) 238 CLR 516; [2008] HCA 21
Reinehr Industrial Lease & Finance Pty Ltd v Jordan (Court of Appeal (NSW), 4 June 1974, unrep)
Stubbings v Jams 2 Pty Ltd (2022) 276 CLR 1; [2022] HCA 6
Texts Cited: N/A
Category: Procedural rulings
Parties: TTW Financial Pty Ltd (Plaintiff)
TSF Group Pty Ltd (First Defendant)
Stephen James Moore (Second Defendant)
Tweed Heads Pty Ltd (Third Defendant)
Representation: Counsel:
A Oakes (Plaintiff)
T Cleary (Second Defendant)
Solicitors:
EXC Law (Plaintiff)
Woods Lawyers (Second Defendant)
File Number(s): 2025/00065370
Publication restriction: N/A
This case involves default on a loan agreement secured by a guarantee and mortgage over real property in Strathfield and came before the Court on Tuesday this week in circumstances of some urgency. While the urgency had diminished to a degree by the time the matter was heard, it remained important to resolve the current issue quickly.
By an amended notice of motion filed 17 July 2025, Stephen James Moore (the second defendant) sought several orders in relation to proceedings in which TTW Financial Pty Ltd (the plaintiff) obtained default judgment and a writ of possession after Faulkner J struck out the original defence following a brief hearing on 17 April 2025. The orders made by Faulkner J were made by consent after his Honour pointed out some of the problems with the defence as it was originally filed. In addition to striking out the defence, his Honour noted that the plaintiff intended to move immediately to obtain default judgment and granted leave for the plaintiff to apply for the issue of a writ of possession on terms that the writ lie in the Registry for 14 days.
Events have somewhat overtaken the orders originally sought in the notice of motion and Mr Moore no longer seeks most of those orders. In particular, the parties reached agreement that an auction of the Strathfield property, which was scheduled for 26 July 2025, should be delayed and that a real estate agent acceptable to Mr Moore will take over the marketing campaign and conduct the sale of the property at the delayed auction.
Essentially, at this point, Mr Moore seeks an order that the default judgment be set aside and that he have leave to file an amended defence within 14 days. He also seeks orders as to the distribution of the proceeds of the sale of the property and a number of ancillary or facilitative orders. He does not seek to prevent, or further delay, the auction. Nor does he now attempt to somehow set aside the writ of possession after its execution. He does, however, seek an order that he be allowed to stay at the property pending the sale to ensure it is presented in its best light to potential purchasers and because he says he currently does not have a home.
The plaintiff opposes the making of the orders and submits the defences raised in the proposed defence are untenable, not reasonably arguable or otherwise destined to fail. It points to what it says is the unexplained delay in the second defendant acting to seek to set aside the default judgment and to the prejudice it may face if the judgment is set aside.
The parties filed a joint court book of 528 pages including affidavits by the second defendant and the plaintiff’s solicitor, and three exhibits were tendered including earlier loan and guarantee agreements (Ex 1 and 2) and a new proposed defence (Ex B) which was hot off the press.
There was no dispute between the parties as to the principles governing the application to set aside the judgment.
Rule 36.16(2) of the Uniform Civil Procedure Rules 2005 (NSW) provides the court with a discretionary power to set aside or vary a default judgment, except for a default judgment delivered in open court. In exercising its discretion, the court must consider whether it is in the interests of justice to provide the applicant with an opportunity to defend the matter “on the merits”: Dai v Zhu [2013] NSWCA 412 at [83], citing Reinehr Industrial Lease & Finance Pty Ltd v Jordan (Court of Appeal (NSW), 4 June 1974, unrep).
An applicant is required to demonstrate that they have a “bona fide defence”, meaning that there is “an arguable or triable issue” which has been asserted in good faith: see, for example, Dai v Zhu at [89]-[92]. The court requires affirmative evidence, generally in the form of an affidavit, and the mere assertion by an applicant that they have a defence with merit, or the receipt of legal advice to that effect, is insufficient*: Magnate Projects Pty Ltd v Youma Constructions (No 2) Pty Ltd* [2005] NSWCA 331 at [54]-[55]. In National Australia Bank Ltd v McCarthy [2014] NSWSC 1819, Hall J summarised some of the principles as follows:
“73 In Magnate Projects Pty Ltd v Youma Constructions (No 2) Pty Ltd [2005] NSWCA 331, Hodgson JA (with whom Campbell AJA agreed), considered that the circumstances require ‘a reasonably clear case of merits to be shown’. His Honour observed that:
‘52. If that defence depends on facts, then there should be some evidence of those facts; and the circumstances may be relevant to the quality of the evidence that is required to show a defence on the merits in particular cases. Among such circumstances could be the degree of the applicant’s default, and hardship to the respondent.
...
55. Assertions in the affidavit of Mr Nassif that was read, to the effect that he believed that the defence and cross-claim ‘have merit’ or that the cross-claim is ‘valid’, do not in my opinion appropriately support any assertions of fact so as to amount to evidence supporting a defence on the merits or a cross-claim.’
74 In National Australia Bank Ltd v McCann [2010] NSWSC 766, Davies J, citing Magnate Projects, supra, held that an affidavit verifying a Defence is not sufficient evidence on an application to set aside default judgment:
‘In my opinion, it is quite insufficient for Ms McCann in the present case simply to swear that she believes the facts in the Defence are true to show, in the circumstances of this case, that there is a Defence on the merits to the claim. An affidavit verifying a Defence where the deponent swears to a belief that the allegations of fact in the Defence are true is not sufficient.’ (at [43])
75 It has been held that where a defence sought to be advanced involved oral representations on which the defendant relied to his or her detriment, what is required, at least, is some evidence as to the conversations in which the alleged representations were made: National Australia Bank v Priestley (No 3) [2012] NSWSC 1171 at [11].”
The court is not required to determine the strength of the defence or the likelihood of it succeeding in order to find that an applicant has a bona fide and arguable defence: Reinehr Industrial Lease & Finance Pty Ltd v Jordan and Magnate Projects Pty Ltd v Youma Constructions (No 2) Pty Ltd at 52.
The court will also consider the explanation for, and the extent of, any delay on behalf of the applicant in seeking to set aside the default judgment, as well as any prejudice caused to other parties as a consequence of that delay: Pham v Gall [2020] NSWCA 116 at [55]-[56] and [98]. As noted by Payne JA in Pham v Gall at [98]:
“the more egregious the delay in seeking to set aside an undefended judgment, the greater the burden of persuasion that will be required of the applicant.”
Finally, the court may take into account the reason for the default, considering the strength of the proposed defence in assessing the sufficiency of the explanation (Pham v Gall at [112] and [158]), and whether the respondent provided any indication of their intention to seek default judgment: Commonwealth Bank of Australia v Wales [2012] NSWSC 407 at [24] citing Pope v Aberdeen Transport Co Pty Ltd [1965] NSWR 1550.
In the present case, the real issue is whether there is an arguable defence. However, I will first deal with the delay and the potential prejudice to the plaintiff each of which is also relevant to the decision I have reached.
To appreciate the force in the plaintiff’s arguments, it is best to begin, as its counsel (Mr Oakes) began, with a brief chronology of relevant events. I will include some dates to which Mr Oakes did not refer in his very helpful opening remarks, and note that some of the dates may not be precise and are based on evidence scattered throughout the documents and affidavits in the court book (Ex A):
2010 – Mr Moore and his (now) ex-wife purchased the Strathfield property.
April 2018 – the couple commenced a major renovation on the property.
2020 – Mr Moore and his wife separated.
21 February 2024 – Mr Moore, as sole director of TSF Group Pty Ltd (the first defendant) entered into a loan agreement with AMAL Trustees Pty Ltd. At the same time, Mr Moore executed a deed of guarantee and indemnity and a mortgage using the Strathfield property as security for the loan. The term of the loan was six months (Ex 1).
28 March 2024 – Mr Moore entered a second mortgage for a much smaller short-term loan at punishing interest rates with a different lender.
2 July 2024 – the Strathfield property was first listed for sale. Real estate agents’ estimates of its value varied wildly, ranging from between $8,000,000 and $13,000,000. Over the next 12 months there was limited interest in the property and it did not sell.
12 September 2024 – the loan agreement, deed of guarantee and mortgage upon which the current proceedings are based were executed.
17 December 2024 – the plaintiff’s solicitor sent a notice of default and demand to the defendants via express post and email. I note in passing that counsel for the second defendant (Mr Cleary) acknowledged at the hearing that part of the defence asserting that this notice was not properly served was not pressed.
18 February 2025 – the plaintiff filed its statement of claim seeking judgment for possession of the Strathfield property and judgment in the sum of $6,305,000 plus interests and fees.
13 March 2025 – the second defendant filed a defence.
17 April 2025 – Faulkner J struck out the defence and made other notes and orders as set out at [2] above.
28 April 2025 – Faulkner J ordered “all defendants” to give possession of the Strathfield property to the plaintiff.
29 April 2025 – the plaintiff’s solicitor wrote to Mr Moore’s previous solicitor seeking information concerning the occupancy of the Strathfield property but no response was received.
1 May 2025 – the plaintiff filed for and obtained default judgment and filed a notice of motion for a writ of possession. Its solicitor wrote to the second defendant’s previous solicitor serving the various orders.
Had the objective of this application been to set aside the writ of possession or seek to further delay the auction, the prejudice to the plaintiff would have been a matter of great significance. However, the parties now appear to be working together to achieve the best purchase price. As the chronology shows, Mr Moore had been seeking to sell the property even before he (and/or his company) entered the loan agreement, guarantee and mortgage. Much of the ancillary relief he sought (or seeks) in the current application was (or is) calculated to ensure that the best sale price is achieved. The plaintiff agreed to postpone the auction. It also agreed, subject to approval of the agency agreement, to retain the real estate agent of Mr Moore’s choice. Mr Moore’s affidavit suggests he has not had much luck with the agents he has engaged over the last 12 months.
The plaintiff pointed to the “presumptive prejudice” arising from the delay and to some costs already incurred, and likely to be incurred, resulting from the delay, additional steps in the litigation caused by the default, and arranging for the sale of the property.
The extent to which this ultimately results in prejudice to the plaintiff will turn on the price for which the property is sold. The parties agreed that there is no current, or necessarily accurate or reliable, valuation or appraisal. Even so, Mr Oakes more or less accepted in argument that the amount that will be recouped upon the sale of the property will exceed the amount of the current debt but not necessarily “by a huge amount”. [1] Meanwhile, interest will continue to accrue on the debt, at least at court rates, if not at the generous rates agreed to in the loan agreement.
Another relevant consideration in this regard is the fact that the Court can give the parties an expeditious hearing date. Unless the second defendant somehow attempts to delay or interfere with the sale – an unlikely scenario given his interest in selling the property which he accepts he cannot get back – the prejudice to the plaintiff in allowing the defendant to litigate its belatedly formulated defence is not a compelling consideration in the circumstances of this case.
“[T]he default judgment was for approximately $7.1 million and there is around $800,000 in [fees] [2] and interest that would be subject to a live dispute.”
As noted earlier, the second defendant withdrew any suggestion that the notice of default and demand was not properly served.
In short form, the defences relied on and articulated in the proposed defence tendered on the application (Ex B) arose under (1) the National Credit Code (Cth) (the Code) and the National Consumer Credit Protection Act 2009 (Cth), (2) the law of unconscionability and (3) the Contracts Review Act 1980 (NSW).
The second and third of those matters were not pleaded in the defence that was struck out by Faulkner J. The first matter was pleaded in the original defence but in different terms. Mr Oakes submitted, amongst other things, that the “supposed defence is simply a resurrection of the defective defence pleaded on 13 March 2025.”
“71 I find that Mr and Mrs Hakim were not debtors within the meaning of the Consumer Credit Code with respect to the provision of credit and the credit contract into which they entered on 12 December 2007.
72 The Consumer Credit Code, s 6(1) contains a number of cumulative elements for the operation of the Code. The first is that the debtor is a natural person ordinarily resident in the jurisdiction or a strata corporation formed in the jurisdiction.
73 Since the debtor was SLJM and it is not a natural person nor is it a strata corporation, the Code does not apply to this transaction and it is unnecessary to consider the other elements and, in particular, whether the credit was provided wholly or predominantly for personal, domestic or household purposes.”
The plaintiff relies on the fact that the loan agreement, on its plain terms, evidenced a loan to the first defendant company, TSF Group Pty Ltd, and submits that Mr Moore is not the borrower or debtor in any relevant sense. It stresses that it was for precisely this reason that the defendants consented to the order striking out the pleading in April.
Mr Cleary submitted, in conformity with the revised pleading, that the arrangement was a “sham” in the sense that it masked the reality of the situation which (it will be contended if the matter proceeds to trial) becomes clear when the three relevant documents – that is, the loan agreement, deed of guarantee and mortgage – are read together. He relied on the fact that Mr Moore was the guarantor and mortgagor, the registered owner of the property subjected to the mortgage, and that he was the sole director of the company nominated as the borrower. He referred to cases supporting “the tendency of contemporary Australian law to favour substance over form”: Raftland Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia (2008) 238 CLR 516; [2008] HCA 21 at [151] (“Raftland”). Mr Cleary acknowledged the “dirth” of applications that have raised the issue and conceded he was unable to find an authority that supported his contention.
Mr Cleary accepted that these arguments may not meet with success at the trial, but submitted it was at least arguable and that there was enough evidence before the Court to conclude that there was a triable issue. He also made what I considered to be a somewhat ambitious submission that this argument received some support in the definitions within clause 1.2 of the deed of mortgage which provided that “the singular includes the plural and vice versa”.
The plaintiff noted that Raftland concerned sham arrangements set up in the context of revenue cases. Mr Oakes submitted that it made little sense that the second defendant would structure the loan, guarantee and mortgage in this way, thus avoiding the provisions of the Code, and then be permitted to argue that “he intended to enter into an arrangement which would have the Code apply and, on his case, make the arrangement non-compliant and potentially void.”
Putting aside the submission concerning clause 1.2 of the deed of mortgage, upon which the pleading is not dependant, and which is merely a matter concerning the construction of the terms of the documents, I am satisfied that the second defendant has an argument that the provisions of the Code apply to the transaction, or series of transactions. Whether the case of Raftland applies, or whether it is distinguishable on the basis that it concerned a “sham argument [which] really captures itself more in the context of anti-avoidance provisions”, [3] will be a matter to be determined once the evidence on both sides is tendered and tested.
Given my conclusion as to the arguments concerning the applicability of the Code, it is not necessary to go into much detail in relation to the defences relying on general concepts of unconscionability and the provisions of the Contracts Review Act.
Mr Oakes was correct to submit that this was not a case of drastically unequal bargaining power. Mr Moore had been conducting the business of an architect and involved in property developments for a number of years. He had a solicitor when the documents were executed. Further, the arrangement he entered with the plaintiff was an attempt to re-finance and on better terms than the loan agreement evidenced by Ex 1.
There was an interesting enough debate as to whether the arrangement between the parties was properly categorised as “purely asset lending” and Mr Cleary relied on what was said by the Court of Appeal in Perpetual Trustee Company L**imited v Albert and Ros**e Khoshaba [2006] NSWCA 41 at [128] where the potentially “fruitless” nature of such an enterprise was highlighted. Conversely, Mr Oakes referred to Stubbings v Jams 2 Pty Ltd (2022) 276 CLR 1; [2022] HCA 6 where Kiefel CJ, Keane and Gleeson JJ noted (at [4]) that the lender’s submission that there was “nothing inherently unconscionable about asset‑based lending” was conceded. It should be noted their Honours went on to hold that, in all of the factual circumstances of that case, enforcing the guarantee was unconscionable.
I accept that the evidence presented on this aspect of the case was not extensive and that there is some uncertainty surrounding the role of the intermediary (Sam Niu) through whom the plaintiff and the second defendant came to create legal relations. It may be that the evidence will not establish any form of agency but on Mr Moore’s evidence on this application, certain inferences may be available. If no connection between Mr Niu and the plaintiff is established, questions will arise as to whether the plaintiff “knew or ought to have known” that the second defendant was not in a position to service the repayments for the loan.
Ultimately, I am satisfied there was sufficient material in the second defendant’s affidavits on the motion to give rise to an arguable case of unconscionability or under the Contract**s Review Act.
I am satisfied that the second defendant has established that he has an arguable case to obtain some relief at a final hearing of the matter. I am not persuaded that the delay was so egregious, or that the potential prejudice to the plaintiff was so substantial, that the second defendant should be denied the opportunity to litigate the issues that will be raised by the proposed amended defence.
I am not persuaded that it is necessary or desirable to make any of the ancillary orders sought by the second defendant. These include an order that the second defendant be permitted to re-enter the property. The case has reached the stage where the plaintiff (now as the mortgagee in possession) is entitled to possession of the property. Any arrangement to allow Mr Moore to re-enter pending the sale or final hearing will have to be made by consent. I will not make any such orders, despite the sympathy that Mr Moore’s current circumstances may invoke.
It remains in the best interests of both parties that the sale occur expeditiously and at the highest price. Co-operation between the parties will facilitate this and is to be encouraged. As the owner and designer of the renovations, Mr Moore has some expertise and ideas as to how to present the property to achieve a formidable return. However, his involvement will have to be by agreement between the parties. The plaintiff has possession and is entitled to sell the property to recoup the principal of the loan advanced almost a year ago.
I will order expedition of the trial and fix a hearing date. The available dates were canvassed at the hearing of the motion and 11-12 September 2025 was suitable to the plaintiff. Regrettably, the defendants’ solicitor may need to brief alternative counsel.
I have considered the parties’ submissions as to costs and decided that the costs of and incidental to the notice of motion should be costs in the cause.
For those hastily assembled reasons, I make the following orders: [4]
THE COURT NOTES
(A) The plaintiff has appointed Shane Sullivan of Horwood Nolan as agent for the sale of the property situated at and known as 9 Shortland Avenue, Strathfield NSW 2135 (the Premises).
(B) The plaintiff has agreed with the second defendant that the auction of the premises will take place not less than four (4) weeks from the date of Horwood Nolan’s appointment.
(C) The plaintiff has agreed with the second defendant to provide the second defendant supervised access to the Premises for the purpose of removing his personal belongings and assisting the agent in the preparation of the Premises for sale, with such access only to occur on prior arrangement and with written consent of the plaintiff (not to be unreasonably withheld).
THE COURT ORDERS
(a) the expenses of and incidental to the sale (including without limitation real estate agent fees and expenses, conveyancing fees and expenses, cleaning fees, marketing fees, costs for any remedial works, and fees and expenses of AL Restructuring). (b) the principal amount of the loan ($6,305,000) to be paid to the plaintiff, (c) the balance to be paid into Court pending the outcome of the trial. 12 The parties have liberty to apply on 3 days’ notice.
**********
Tcpt (29/7/25) p 21.
This was transcribed as “these” but my note was that the word used was “fees”.
Tcpt (29/7/25) p 11.
The parties sought to amend the timetable I had originally proposed to better suit the parties’ convenience. I made orders in accordance with their agreed position.
TTW Financial Pty Ltd
TSF Group Pty Ltd & Ors [2025] NSWSC 850
(2008) 238 CLR 516
(2022) 276 CLR 1
1 May 2025 – the second defendant met with his then solicitor and says that a barrister was present via audio visual connection who said they “can have a look at preparing a cross-claim over the weekend”.
2 May 2025 – the plaintiff’s solicitor was advised of an offer of $9,000,000 on the Strathfield property and was provided with a contract but told that there was a six-month delay in the proposed settlement and that the contracts had not formally been exchanged.
5 May 2025 – the second defendant says he contacted his then solicitor who told him that the barrister was waiting on some documents to prepare the cross-claim.
27 May 2025 – a Deputy Registrar of the Court issued the writ of possession.
13 June 2025 – Mr Moore’s new (and current) solicitor wrote to the plaintiff’s solicitor advising that he was now instructed in the matter.
16 June 2025 – the plaintiff’s solicitor wrote to the second defendant’s solicitor setting out various significant dates including the date of the notice of default (17 December 2024) and the date that the writ of possession was issued (27 May 2025).
10 July 2025 – the writ of possession was executed.
17 July 2025 – the current notice of motion was filed.
While that is an incomplete chronology of events, it will serve for the purpose of the present application.
The plaintiff emphasised the lack of any cogent or reasonable explanations for the delays between the orders of 17 April 2025 and the filing of the notice of motion seeking to set aside the default judgment. For example, the evidence is vague as to what Mr Moore did after the conferences on 1 and 5 May 2025 at which it must be assumed or inferred that he was made aware of the need for urgent action. His affidavits are silent on the steps he took after 5 May 2025 and before his new solicitors contacted the plaintiff’s solicitors on 13 June 2025. There was then a further, largely unexplained, delay of a month before the notice of motion was filed.
Against those matters, it is not disputed that Mr Moore has, throughout the period covered by the foregoing chronology, suffered from a range of health problems. It is not necessary to detail those problems but his affidavits provide some details and there is a letter confirming some of his medical conditions from his treating doctor. I proceed on an acceptance that he has some cardiac issues and a disabling back condition causing severe pain and requiring quite strong painkilling medication. I also accept that he saw a neurosurgeon on 16 July 2025 and is booked for “back surgery” on 22 August 2025 and will be in hospital for three to four days. Exactly how these medical issues impacted on, or caused, the delays between May and July is not entirely clear. However, I am prepared to proceed on an assumption that they may have had some impact on Mr Moore’s seemingly dilatory response to his predicament. Even so, the extent of the delay and vagueness of the explanations tend to militate against granting the relief to an extent.
On the other hand, the lengths of the delays were not particularly egregious and a defence was initially filed in a timely fashion even though it was struck out. It is also significant that Mr Moore now seeks only to litigate the amount of interest to be paid, and there is no suggestion that the auction or sale of the property will be delayed further. If the sale goes to plan, the plaintiff should be able to recoup the principal sum relatively soon.