The Case

The Defendant sought summary judgment to recover an alleged post-sale shortfall after exercising its mortgagee power of sale. Default and sale were not in dispute.

The Supreme Court of Tasmania rejected the application because the defendants raised real factual controversies and arguable legal issues about how the shortfall was calculated, and whether key components of the claimed debt were properly recoverable.

The Plaintiff advanced funds to the Defendant under a facility agreement secured by mortgage over residential land in New Norfolk, with guarantees from the Defendant defaulted. The Plaintiff exercised its power of sale, and the property was sold. The Plaintiff then sued for a shortfall, interest at the contractual rate, and indemnity costs under the documents. The Defendants denied that any shortfall was payable and challenged the lender’s calculation and enforcement steps.

Legal Issues

The question was whether The Plaintiff could show the Defendants had no defence to the shortfall claim. The Court had to decide whether the alleged shortfall could be determined summarily where there were disputes about:

• The accuracy and evidentiary footing of the loan balance and sale proceeds;

• Whether the lender complied with good-faith obligations in exercising the power of sale (including how sale decisions affected the alleged loss);

• Whether GST was incorrectly treated in a way that inflated the debt; and whether legal costs added to the loan account were recoverable given the Defendants’ reliance on statutory protections under the Legal Profession Act 1997 (Tas).

Court’s Reasoning

In rejecting the application for summary, the Court emphasised that summary judgment is only appropriate where it is clear there is no real question to be tried. It also should not be granted where there is a serious conflict of fact, questions of credit, or contested issues of law requiring fact-finding.

The Plaintiff did not meet its burden because the material revealed multiple live disputes.

1. The lender’s figures were inconsistent: the pleaded shortfall and the affidavit calculations did not align, and the loan statement evidence did not clearly support the pleaded “money due and owing” at the relevant date. That discrepancy alone raised a genuine issue for trial as to the correct “starting point” for any shortfall.

   
   

2. The Defendants advanced an arguable case that the lender’s conduct in exercising the power of sale, including how it treated GST on the sale, may have inflated the claimed debt. The Court noted that the GST question turned on both statutory construction and factual matters (including the nature of the land and the debtor’s GST status), making it unsuitable for summary determination on the material before the Court.

   
   

3. The Defendants raised a real issue about legal costs charged to the loan account. Given the size of the legal costs component and the Defendants’ reliance on statutory notice/assessment provisions, the Court considered that resolving whether those costs formed part of any recoverable “debt” involved mixed questions of fact and law that should be determined at trial, not on an interlocutory application.

   
   

The Plaintiff could not demonstrate that the Defendant had no defence. The proceeding therefore needed to continue in the usual way.

Lender Takeaways

This decision is a reminder that default does not automatically translate into quick judgment.

To succeed on summary judgment in a shortfall case, your evidence needs to “close every door” before the hearing, including:

1. A clean, consistent shortfall calculation (pleadings and affidavits must match, and the ledger/statement must prove the pleaded balances).

2. A defensible record of the sale process and good-faith decision-making, anticipating attacks on the sale price and sale conduct.

3. A clear, evidenced position on GST treatment and why it does not overstate the debt.

4. A properly supported basis for recoverable enforcement/legal costs, especially where statutory notice or assessment regimes may be engaged.

   
   

If those matters are not provable, expect the Court to find that there are real questions to be tried, and summary judgment will likely fail, increasing time, cost, and leverage risk.

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