First Mortgage Managed Investments v Oberlechner [2006] NSWSC 1397

In these proceedings the lender obtained orders possession of the properties by consent on proviso that the orders were stayed for a short while to allow the borrower to refinance. Unable to obtain refinance the borrower then sought to re-neg on the agreement (for judgment) and raise a defence based on the Uniform Consumer Credit Code and/or Contracts Review Act. The court was called upon to decide whether to set-aside the default judgment or lift the stay and allow the lender to take possession.

The loan arose after the borrower lost his job and was declared a bankrupt. He then refinanced his loans with the lender and paid out his debts in order to annul the bankruptcy. The borrower argued that this history meant the loan was provided for a predominantly personal, domestic or household purposes. Justice Rothman noted that ordinarily the purpose of a loan to discharge bankruptcy would be considered for personal, domestic or household use but as the borrower was solvent at the time (in terms of assets exceeding liabilities) the loan was not to predominantly discharge the bankruptcy but rather to ensure he did not lose his investment properties and accordingly the UCCC did not apply.

The defendant also sought to set aside the consent judgement on the argument the agreement was unjust pursuant to the Contracts Review Act. However the court held such a defence is not available unless the judgement can be set aside due to an irregularity, illegality or is against good faith. There were no facts to support any such finding and the consent judgement was affirmed and the stays lifted.

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