NNW Financial Pty Ltd v Confos

The plaintiff filed a statement of claim on 7 April 2025 in which it seeks possession of a property in the Sydney suburb of Dover Heights. A defence was filed on 26 May 2025, which substantially admits all of the allegations made in the statement of claim, but denies the relief sought because of the allegations made by the defendant in a cross-claim filed on 27 May 2025.

Although the admissions made in the defence are put in a slightly unusual manner, the defendant’s position is made clear in the cross-claim:

The defendant had legal representation up to 20 April 2026 when a notice of ceasing to act was filed. The defendant did not appear at the hearing. In an affidavit dated 28 April 2026, Mr Hugh Farquhar (a solicitor acting for the plaintiff) sets out recent communications with the defendant. At one stage it was envisaged that an application for an adjournment would be made by the defendant, but this never transpired.

When the matter began, and there was no appearance by the defendant, the defendant was ‘called’ outside the court. There was no response. I asked the plaintiff’s legal representatives to try and make contact with the defendant in case he had intended to come to court but was late for one reason or another.

Mr Farquhar was able to speak to the defendant on the telephone. A file note of the conversation was tendered (Exhibit A). Mr Farquhar told the defendant that the hearing could be adjourned to give him time to come to court, but he replied:

I took the view that the defendant did not wish to apply for an adjournment and did not wish to defend the proceedings or at least pursue his cross-claim. I therefore allowed the matter to proceed as permitted by r 29.7 of the Uniform Civil Procedure Rules 2005 (NSW).

Without pursuit of the cross-claim, the plaintiff’s claim was effectively admitted. Despite this, I asked counsel for the plaintiff to take me through the evidence so that I could be satisfied that the plaintiff could prove its case.

The plaintiff relied on the following affidavits:

Ms Sabatino is a process server. Mr An is a director of the plaintiff company. Ms Lim is a solicitor who acted for the plaintiff in the various transactions involved. Mr Edwards is a solicitor acting for the plaintiff in these proceedings.

The following is a summary of the transactions giving rise to the relief claimed by the plaintiff.

The defendant was the sole director and shareholder of a company called Dover Heights Holdings Pty Ltd (DHH). By a Loan Agreement executed by the parties on 17 May 2024 the plaintiff loaned DHH the sum of $8,550,000. The loan was for a period of six months and carried an interest-rate of 10%.

The funds were advanced to the defendant on 21 May 2024 with the whole of the interest payable, of $427,500, deducted on the advance. I note that the loan agreement envisaged a different interest rate (20% compounding) if there was a default in repayment. I note further that the defendant’s pleadings and cross-claim make no allegation that the larger interest-rate was a penalty.

Under the Loan Agreement repayment was to occur after six months, namely on 16 November 2024. No repayment occurred. The warranties in Schedule 2 of the Loan Agreement include the acknowledgement that the borrower “has sought and obtained independent legal advice in respect of this agreement from legal advisers of its own selection ...”

In addition to the Loan Agreement the defendant executed, on the same day as the Loan Agreement, a Deed of Guarantee. Under this deed:

The Benefiting Party is the plaintiff. The Principal Obligor is DHH. The Principal Agreement is the Loan Agreement. The Guarantee also provides for the guarantor providing an indemnity for all losses suffered by the plaintiff.

A third document executed on 17 May 2024 was a General Security and Mortgage Deed. Under this deed the defendant agreed to grant a mortgage over the Dover Heights property. Notably, by cl 3.2, the mortgage in favour of the plaintiff is to be “a first ranking mortgage over the Security Property …” The ranking is confirmed in the Certificate of Title. I mention this fact because I was made aware that there is a separate matter which has been heard, but the decision is reserved, relating to a claim by a lower ranked mortgagee (Century 311 Pty Ltd).

Clause 7.1 sets out “Events of Default” which include failure to repay the amount owing under the Loan Agreement. Clause 8.1 deals with “Enforcement” and states at 8.1(c) that the Secured Party (the plaintiff):

The final relevant document is the mortgage over the Dover Heights property. The plaintiff is the mortgagee. The defendant is the mortgagor. The mortgage specifically incorporates the General Security and Mortgage Deed into the mortgage document.

As stated above, the loan, or any part of it, besides the interest deducted at the outset, was never repaid. On 31 January 2025, the plaintiff’s solicitors sent the defendant and DHH a Notice of enforcement setting out the relevant documents and stating that there had been an event of default. The notice informed the defendant that all of the secured money was immediately due and payable.

Also on 31 January 2025, the solicitors for the plaintiff sent to the defendant and to DHH a Demand and Notice to Pay pursuant to s 57(2)(b) of the Real Property Act 1900 (NSW). Section 57 is a necessary first step before a mortgagee can exercise the power to sell given by s 58. Again, the various transaction documents were referred to in the Demand and Notice to Pay. The notice states that if the debt is not paid the mortgaged property may be sold.

Turning to the pleadings, the statement of claim sets out all of the transaction documents, the various notices and the allegation of the amount then owing to the plaintiff and the entitlement to possession.

The defence fundamentally admits all of the plaintiff’s allegations but denies the right to possession, or any other liability, because of the allegations made by the defendant in the cross-claim.

The allegations in the cross-claim arise from relief claimed pursuant to the Australian Securities and Investments Commission Act 2001 (Cth), the Contracts Review Act 1980 (NSW) and the general law relating to unconscionability and inequality of bargaining power as between the parties. The Loan Agreement, the Deed of Guarantee, the General Security and Mortgage Deed and the mortgage were all alleged to be unjust, the result of undue influence or unconscionable. Accordingly, none of the agreements or deeds were enforceable.

The failure of the defendant to appear and advance his cross-claim means that the cross-claim falls away, and the litigation is left only with the allegations made in the statement of claim. Even though these allegations are mostly admitted I am nevertheless satisfied they have been proved through the evidence relied upon by the plaintiff.

The plaintiff must therefore succeed in its action. I make the following orders as sought by the plaintiff: