No Procedural Irregularity

The Defendant alleged several irregularities, including that the writ referred to payment of “$0.00”, the affidavit of service initially filed was unsworn, and the proper basis certificate contained an inconsistency.

The Court rejected those arguments and held that the judgment had been regularly entered. Nevertheless, the issues demonstrate how avoidable defects in court material can provide an unrepresented defendant with additional grounds for challenge and increase the cost and complexity of enforcement.

An Arguable Defence

The Court found that the Defendant had an arguable defence based on unconscionable conduct.

The allegations included that the Lender had taken advantage of his vulnerable circumstances and that the transaction may have involved asset-based or predatory lending, with insufficient regard to the borrower’s ability to repay.

Significantly, the evidence included a bank statement showing that the borrower company had only $0.03 in its account at drawdown. There was also no evidence before the Court that the Lender had obtained financial statements, profit and loss accounts or an accountant’s letter before advancing the funds.

The Court held that questions concerning serviceability, vulnerability, the Lender’s knowledge and the circumstances of the independent legal advice required determination at trial.

The Defendant also relied upon the National Credit Code. Although the loan had been made to a company, the Court was not satisfied that the defence was unarguable.

Importantly, the Court observed that neither party had addressed in detail whether the guarantee and associated documents might bring the Defendant within the Code’s protection.

For lenders and their advisers, the point is clear: potential consumer credit and unconscionability issues should be analysed before enforcement proceedings are commenced, not after they emerge in a contested set-aside application.

Failure to Establish Prejudice

The Lender argued that setting aside the judgment would cause material prejudice through delay, enforcement risk and further costs. Alternatively, he sought an order requiring the Defendant to pay the full amount owing into Court.

The difficulty was that there was no evidence of the property’s value, the amount owing to the first mortgagee or the equity available to the Lender.

The Court therefore held that the alleged enforcement risk could not be quantified and declined to require payment into Court.

The lesson is an important one: if prejudice or deterioration in security is relied upon, it should be proved by evidence, not merely asserted.

"Snapping On" Default Judgement

The most significant criticism concerned the speed with which the Lender moved for default judgment.

The Defendant was served on 23 October 2025. His appearance was due by 3 November. Material seeking default judgment was filed on 6 November – only two business days later – and judgment was entered on 14 November.

The Court described the judgment as having been “snapped on”.

Although acknowledging the Lender’s entitlement to rely upon the Rules, the Court emphasised that procedural rights operate against the overarching obligations imposed by the Civil Procedure Act 2010 (Vic).

No attempt had been made to ask the Defendant whether he intended to defend the proceeding or to alert him to the consequences of failing to appear.

The Court observed that a simple enquiry may have corrected his misunderstanding about the “$0.00” notation and revealed his intention to defend. It also noted that the practice of “snapping on” judgment has been “much derided in the authorities” and is inconsistent with the obligations imposed by the CPA.

The practical lesson is straightforward: the entitlement to seek default judgment does not necessarily mean doing so immediately is the best forensic or commercial course.

A short enquiry may avoid a set-aside application and place the lender in a materially stronger position if judgment is ultimately required.

Outcome

The default judgment was set aside, with costs of the application ordered to be costs in the cause.

The substantive dispute, including the unconscionability and National Credit Code issues, will now need to be determined.

Key Takeaways for Lenders

For lenders and their lawyers, the decision highlights five practical lessons:

1. Investigate substantive risk before enforcing. Serviceability, loan purpose, borrower vulnerability, independent legal advice and consumer credit issues should be considered at the outset.

2. Do not rush to default judgment merely because the Rules permit it. Particularly with an unrepresented defendant, a brief enquiry may avoid unnecessary litigation.

3. Ensure court material is correct before filing. Procedural defects may not invalidate judgment, but they create avoidable arguments and cost.

4. Prove prejudice with evidence. If enforcement risk is relied upon, obtain evidence of value, prior-ranking debt and available equity.

5. Keep the overarching obligations in view. Procedural deadlines do not operate in isolation.

Speed is important in mortgage enforcement, but speed should not be confused with strategy. This case demonstrates that moving immediately to default judgment can be counterproductive where a short preliminary enquiry, a fuller assessment of the underlying transaction and better-prepared evidence could have left the lender in a substantially stronger position.

DISCLAIMER: This article is current as at September 2026. It is general in nature and does not constitute legal advice. Specific advice should be obtained for your particular circumstances.