Australian Mortgage Finance Services Pty Ltd v Patel [2026] NSWSC 1085

Century 311 Pty Ltd v Confos; Confos v Century 311 Pty Ltd [2026] NSWSC 1115

In Australian Mortgage Finance Services Pty Ltd v Patel [2026] NSWSC 1085, the lender obtained possession and defeated the guarantors’ cross-claim. In Century 311 Pty Ltd v Confos; Confos v Century 311 Pty Ltd [2026] NSWSC 1115, the guarantee and indemnity were declared void and the mortgage was set aside. The different outcomes provide practical guidance on reducing the risk of failed enforcement and financial loss.

Both decisions involved firms within our group. Summer Lawyers acted for the successful lender in Patel, while Cadre Moss acted for the successful guarantor in Confos. The outcomes give lenders a useful comparison of what supports enforcement and what can put their security at risk. This article explains the lessons from the published judgments.

Patel and successful enforcement

On 4 September 2026, Fagan J granted possession to Australian Mortgage Finance Services, dismissed the cross-claim and ordered indemnity costs. Summer Lawyers acted for the successful plaintiff, which held an assigned second mortgage securing a $500,000 loan to SSMM Pty Ltd. Mr and Mrs Patel guaranteed that loan and mortgaged their home.

The documents identified sale of the property as the repayment plan. Before settlement, the original lender, ASCF Funding Solutions Pty Ltd (ASCF), held one Zoom meeting with both guarantors and questioned each individually about the transaction, pressure and the proposed sale. Their answers and the documents supported the Court’s findings about their understanding. The Court rejected their pleaded challenges based on unconscionability, unfair terms and unjustness.

Patel at [1]–[2], [7]–[17], [30]–[32], [44]–[59].

Confos and the loss of security

On 16 September 2026, Campbell J rejected Century 311’s enforcement claim, declared Mr Confos’s guarantee and indemnity void under the Contracts Review Act 1980 (NSW), set aside the mortgage securing the $1.5 million loan and ordered Century 311 to pay his costs. Cadre Moss acted for Mr Confos.

The Court found that Mr Confos was under the actual undue influence of his cousin and godson, Mr Adgemis, and could not exercise independent financial judgment. He received no real commercial benefit, lacked truly independent legal and financial advice and had no realistic way to repay the loan beyond selling his home. The original lender knew about the dependency and who was really benefiting from the transaction.

What explains the different outcomes

The comparison is particularly useful because both matters involved corporate borrowers, personal guarantees, residential security and enforcement by an assignee. Those features did not determine the result. The evidence about the people, the transaction and the lender’s knowledge did.

Patel at [17], [25], [30]–[32], [49], [57]–[59]; discussion under Unconscionable conduct in equity. Confos at [110]–[138].

A property sale can be a legitimate repayment plan

In Patel, both guarantors understood that the home would be sold to repay the bridging loan. Confos does not establish that a loan becomes unenforceable simply because repayment depends on selling the security. The Court considers the arrangement as a whole, including whether the guarantor is acting freely, what they understand and what the lender knows.

No single document or factor decides the case

Patel does not remove the need to consider independent advice. Confos does not require every guarantor to receive loan proceeds. Equitable unconscionability, unfair terms and unjust contracts have different legal tests. In Confos, the Court considered the circumstances of entry into the contract, whether it was unjust when made and whether to exercise its discretion to grant relief. Lack of lender knowledge does not necessarily prevent relief under the Contracts Review Act, although it weighs significantly in the lender’s favour.

What Patel means when a lender faces a challenge

Patel supports enforcement on the facts and terms the Court considered. Lenders still need to understand the particular challenge and the evidence required to answer it.

1. Identify the actual challenge.

A defence based on special disadvantage, a challenge to an unfair term and an application under the Contracts Review Act require different analysis. In Confos, the Court assessed unjustness under that Act. Evidence that establishes the debt or the guarantor’s general understanding may not answer an allegation that the decision to sign was produced by undue influence.

2. Check what advice was actually given.

In Patel, the Court accepted that legal advice had not been given, despite the signed declarations. Other evidence of understanding and the circumstances known to ASCF supported enforcement. That does not make advice unnecessary or a false declaration harmless. In Confos, the absence of truly independent advice was one of the reasons the transaction was unjust.

3. Read the interest findings in context.

Patel involved discount interest of 19.8% a year and a standard rate of 39.6% a year. The lender retained $99,000 to cover the agreed 12-month term at the discount rate. The Court’s discussion of the discount rate concerned that term; the documents also provided for the standard rate if the loan was not repaid. The Court treated the challenged interest terms as defining the main subject matter under section 12BI of the ASIC Act and also rejected unfairness on the facts. That does not put every interest clause beyond challenge.

4. Check the costs you can recover.

The Court rejected the challenge to the clause allowing reasonable enforcement costs. A lender should still be able to explain why the costs claimed fall within the clause and are reasonable. The indemnity costs orders in Patel were a separate part of the result. Neither the clause nor the orders guarantees recovery of every dollar spent.

5. Check the terms behind the interest rate labels.

The penalty argument in Patel was raised in closing submissions. It was not pleaded, and no application was made to amend the cross-claim. The Court considered it had no prospects under the standard and discount rate terms before it. Lenders should assess their own clauses rather than assume that using those labels resolves the issue.

6. Keep evidence of the agreed repayment plan.

ASCF had evidence that both guarantors understood and accepted sale of the home as the repayment plan. Calling a loan bridging finance is not enough. Confos involved dependency, lender knowledge, lack of real benefit and an unrealistic prospect of refinance. The evidence about the transaction must support the lender’s position.

Patel at [9]–[12], [17], [25], [28], [44]–[49], [56]–[58]; Confos at [114]–[129], [135]–[138].

Protect the recovery after settlement

The checks before settlement can reduce risk, but the file must also support enforcement. The Court will need evidence of what happened. The lender also needs enough value in the security to recover its debt.

Preserve the complete evidence.

Retain applications, searches, valuations, advice confirmations, guarantor communications, interview notes or recordings, funds-flow directions and the reasons for credit approval. Keep the record of how concerns were identified and resolved. In Confos, the lender called its solicitor, who had not been actively involved in negotiating the loan; Mr Margi, who could have addressed critical matters, was not called. Documentary proof of the debt did not answer the challenge to the transaction.

Reassess extensions and variations.

Check whether the promised sale or refinance has progressed, how interest is reducing the equity available and whether circumstances have changed. Obtain the consents and advice needed to preserve guarantees and security. Only extend after assessing a credible revised repayment plan and the prospects of recovery.

Check what you are buying when taking an assignment.

Review the original credit assessment, signed documents, possible defences and access to witnesses and records. Confirm that the acquisition documents effectively transfer the debt, guarantees, indemnities and security rights, and that required notices are given. Do not assume a registered mortgage transfer alone carries every collateral obligation. Take those risks into account in the purchase price and documents.

Check the enforcement requirements promptly.

After default, confirm the debt calculation, contractual rights, required notices and service, priorities and available remedies. Assess any guarantor challenge before committing to an expensive strategy. In Patel, compliance with the preliminary enforcement notices was not disputed. In Confos, the successful cross-claim defeated the possession claim.

Measure success in money recovered.

A possession judgment is not payment. Update the net recovery estimate for prior claims, sale expenses, interest and legal costs. Decide whether enforcement, an agreed sale or a negotiated outcome is most likely to maximise recovery. Even an indemnity costs order does not establish that all costs will be recovered in cash.

Patel at [1]–[2], [26], [59]; Confos at [3], [20], [27]–[30], [131]–[138].

The lesson for lenders

Patel shows how clear terms and evidence that guarantors understood the transaction can support enforcement. Confos shows the risk of proceeding where a guarantor is under undue influence and the transaction is unjust. Before lending, establish who benefits, whether each guarantor is acting freely and how the loan will be repaid. Keep the evidence needed to answer those questions if the loan defaults.

At Summer Lawyers, our enforcement and recovery work focuses on proving the claim, addressing challenges and recovering money. Finance Law’s companion article, Pre settlement lending checks after Patel and Confos, explains how to address these risks before funds are advanced. Successful enforcement starts well before default.

Judgments discussed

Australian Mortgage Finance Services Pty Ltd v Patel [2026] NSWSC 1085, Fagan J, 4 September 2026. Century 311 Pty Ltd v Confos; Confos v Century 311 Pty Ltd [2026] NSWSC 1115, Campbell J, 16 September 2026. References above are to judgment paragraphs. The outcomes described are the orders made at first instance; the judgments do not establish the amounts ultimately recovered. General information only; obtain advice on your particular transaction. Further authority on assignment: Consolidated Trust Co Ltd v Naylor (1936) 55 CLR 423.

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.