New South Wales Supreme Court CITATION : LAWTEAL PTY. LIMITED v. OFO; 10 CONWAY AVENUE, ROSE BAY PTY. LIMITED v. OFO [2006] NSWSC 365 HEARING DATE(S) : Thursday 1 December 2005 JUDGMENT DATE : 4 May 2006 JURISDICTION : Common Law JUDGMENT OF : Hall J at 1 DECISION : (a) That the appeal be dismissed. (b) That, pursuant to Part 39 Rule 20 of the Uniform Civil Procedure Rules 2005, the writ of possession issued in favour of the plaintiff in these proceedings on 30 March 2005 is renewed. (c) That the writ of possession referred to in (b) be stayed until 9.00 am, Tuesday 23 May 2006. The Court will hear submissions from the parties as to the form of orders as proposed and any ancillary matters arising in respect to such orders. CATCHWORDS : Mortgages - defendant in default under each of two mortgages - default judgment entered - writ of possession issued - stay - financial capacity to repay - relief under the Contracts Review Act 1980 (NSW) - Practice and procedure - application to set aside default judgment - nature of review proceedings conducted by an Associate Justice - affidavit evidence rejected on review application - appeal from decision of an Associate Justice - additional evidence adduced on appeal - benefit received under mortgages - obligation to repay principal - discretion ground based on utility of an order setting aside default judgment. Uniform Civil Procedure Rules 2005 LEGISLATION CITED : Contracts Review Act 1980 Supreme Court Act 1970 Modern Woodcraft Pty. Limited v. Nott (Young, J., unreported 7 March 1997) Comalco Aluminium Limited v. Ohtsu Tyre & Rubber Co. Australia Limited (1983) 8 ACLR 330 In the Will of Sheppard [1972] 2 NSWLR 714 Westpac Banking Corporation v. Abemond Pty. Limited (Santow, J., unreported 3 November 1994) Adams. Kennick Trading (International) Limited (1986) 4 NSWLR 503 Fleet v. Royal Society for Prevention of Cruelty to Animals (NSW) [2005] NSWSC 926 CASES CITED : Warren v. Coombs (1979) 142 CLR 531 Do Carmo v. Ford Excavations Pty. Limited [1981] 1 NSWLR 409 Australian Freyssinet Pty. Limited Marlan International Pty. Limited [2002] NSWSC 892 Martin v. Abbott Australasia Pty. Limited (1981) 2 NSWLR 430 Perpetual Trustee Co. Limited v. Khoshaba [2006] NSWCA 41 Elkotairi v. Permanent Trustee Co. Limited (2002) 11 BPR 20,841 St. George Bank v. Trimarchi [2004] NSWCA 120 Stutt v. Smith (1888) 10 ALR 159 PARTIES : LAWTEAL PTY. LIMITED v. TALILOTU OFO 10 CONWAY AVENUE, ROSE BAY PTY. LIMITED v. TALILOTU OFO FILE NUMBER(S) : SC No. 10118 of 2005; No. 10406 of 2005 COUNSEL : P: A. Rogers D: In person SOLICITORS : P: R.L. Kremnizer & Co. D: In person LOWER COURT JURISDICTION : Supreme Court (Associate Judge) LOWER COURT FILE NUMBER(S) : No. 10118 of 2005 LOWER COURT JUDICIAL OFFICER : Malpass, As.J. LOWER COURT DATE OF DECISION : 10/11/2005 LOWER COURT MEDIUM NEUTRAL CITATION : LAWTEAL PTY. LIMITED v. OFO [2005] NSWSC 984 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION POSSESSION LIST HALL, J THURSDAY 4 MAY 2006 No. 10118 of 2005 No. 10406 of 2005 LAWTEAL PTY. LIMITED v TALILOTU OFO 10 CONWAY AVENUE ROSE BAY PTY LIMITED v TALILOTU OFO JUDGMENT THE PROCEEDINGS 1 HALL, J: These proceedings were commenced in the Possession List against the applicant/defendant, Talilotu Ofo, in relation to two mortgages as follows:- (a) In proceedings No. 10118 of 2005 by Lawteal Pty. Limited in respect of a loan in the amount of $217,750 secured by mortgage dated 4 May 2004 (registration no. AA616494). (b) In proceedings No. 10406 of 2005 by 10 Conway Avenue, Rose Bay Pty. Limited as plaintiff in respect of a loan in the amount of $33,500 secured by mortgage dated 4 May 2004 (registration no. AA616495). 2 The total amount of loan monies secured by the two mortgages, accordingly, is $251,250. 3 Ms. Ofo, from an early date, fell into default under the provisions of each mortgage. The plaintiffs each sought an order for possession of the land described in the amended statements of claim and an order for payment of the principal sum due under the respective mortgages. 4 On 30 May 2005, a writ of possession was issued in favour of Lawteal and initially a stay on the writ of possession was obtained on 28 April 2005 operating to 6 May 2005. The stay has been subsequently extended by orders later made by the Court. 5 The appellant originally sought by way of notice of motion filed on 4 May 2005 an order setting aside the default judgment. The notice of motion was supported by an affidavit sworn by the appellant on 2 May 2005. 6 Ms. Ofo has since 4 May 2005 instituted three separate proceedings in respect of the default judgment. Accordingly, the present appeal represents the third level in this Court at which the plaintiff's rights under the mortgages have been considered. (a) The application to set aside judgment by notice of motion filed 4 May 2005 7 This application was heard on 27 May 2005 by Assistant Registrar Howe. Following submissions on behalf of the parties and in circumstances referred to below, the Assistant Registrar made four orders in the following terms:- (a) extend the stay on execution of the default judgment of 30 March to 9.00 am, Friday 17 June 2005; (b) defendant to serve evidence as to re-financing by 15 June 2005 and hand up on 17 June; (c) stood over to the Registrar's applications list at 9.00 am, 17 June 2005; (d) defendant's notice of motion of 4 May 2005 dismissed. 8 The last mentioned order dismissing the notice of motion is of particular relevance in these proceedings, as discussed below. (b) The notice of motion filed on 17 June 2005 seeking a review of the "decision" of the Assistant Registrar given 27 May 2005 9 The appellant filed an application for review of orders made by an Assistant Registrar. Applications for review are subject to the provisions of Part 45 Rule 19 of the Uniform Civil Procedure Rules 2005. The application and procedures in relation thereto are discussed below. 10 On 11 October 2005, Associate Justice Malpass dismissed the notice of motion which in terms sought, inter alia, a stay and/or an order setting aside the default judgment. (c) The present appeal 11 On or about 16 November 2005, the appellant lodged a notice of motion supported by an affidavit sworn on 16 November 2005. The notice of motion sought an order that the judgment of Associate Justice Malpass dated 11 October 2005 be "set aside" and a further stay on the writ of possession. AFFIDAVIT EVIDENCE 12 It will be necessary, in due course, to refer to the procedures, principles and other matters concerning the application before the Assistant Registrar, the application for review of the Deputy Registrar's orders and the present appeal from the order of Associate Justice Malpass dismissing the notice of motion and the present appeal to which the provisions of Part 45 Rule 45 and Rule 12 of the Uniform Civil Procedure Rules 2005 apply. 13 I observe at this point that, at each stage, Ms. Ofo sought, largely unsuccessfully, to rely upon affidavits before the Assistant Registrar and before the Associate Justice. In relation to the application heard by the Assistant Registrar, the affidavits were as follows:- (a) affidavit of Ms. Ofo sworn 13 May 2005. (b) affidavit of Christopher Hynes, solicitor, sworn 25 May 2005. 14 In the proceedings before Associate Justice Malpass, the affidavits were:- (a) affidavit of Ms. Ofo Sworn 7 September 2005. (b) affidavit of Mr. Hynes, solicitor, sworn 8 September 2005. 15 As events unfolded, the affidavits before the Assistant Registrar were only relied upon on the issue of delay. The abovementioned affidavits before Associate Justice Malpass were objected to and were rejected. In that respect, Associate Justice Malpass, in his judgment, stated at [23], [24] and [25]:- "23. One of the two affidavits was sworn by the plaintiff on 7 September 2005. It was a bulky affidavit. It contained considerable material that had not been placed before the Registrar and which was intended to address questions of the defendant having a defence on the merits. It was material that could have been expected to be available to the defendant prior to 27 May 2005 and it was not said that it was unavailable. 24. The other affidavit was a further affidavit sworn by Mr. Hynes on 8 September 2005. It purported, inter alia, to annex a draft of a proposed defence and cross-claim which was different to that which had been before the Registrar. 25. In undertaking the review, save for the transcript of the proceedings before the Registrar, the Court ultimately received only the material that had been placed before him." 16 I will consider below the question as to the Associate Judge's exercise of discretion to reject the affidavits. 17 Before turning to the relevant facts concerning the loan transactions, I observe that Ms. Ofo was legally represented by both solicitor and counsel before the Assistant Registrar and, as well, in the review of proceedings conducted by Associate Justice Malpass. In the proceedings before me, she appeared unrepresented. Mr. A. Rogers of counsel appeared on behalf of Lawteal and 10 Conway Avenue, Rose Bay Pty. Limited. I acknowledge Mr. Rogers' assistance and fair-minded approach during the course of the hearing of the present proceedings by way of appeal. FACTUAL MATTERS 18 The appellant, Ms. Ofo, was born in Samoa on 28 August 1949. She came to Australia in 1980 and married in 1982. 19 In July 1998, she purchased in her own name the property 21 Endeavour Street, Ruse. She paid a deposit of $10,000 and initially borrowed the balance from an entity, Sydney Homes Loans Pty. Limited. 20 In approximately June 2002, the appellant re-financed the property with an entity known as Liberty Funding Pty. Limited. The appellant also raised some funds from the Department of Housing Mortgage Assistance Scheme. 21 In 2004, Ms. Ofo, following financial difficulties, made contact with an entity, South Coast Finance Pty. Limited and in early March 2004 commenced to deal with a person associated with that company by the way of Steve Cockram. 22 A loan application through South Coast Finance Pty. Limited was made to an entity, Short Term Mortgages Pty. Limited following Ms. Ofo's introduction to an entity, Matrix Mortgages. Although the appellant signed documents in order to obtained a loan from Short Term Mortgages Pty. Limited, the finance application, for reasons undisclosed, did not proceed. Ms. Ofo completed her application dated 25 March 2004 on the letter head of Short Term Mortgages. The handwritten information in it described the property as "residential" and as not rented but, curiously, there is inserted in respect of gross rental the sum of "$15,600". The applicant's solicitor is identified in that form as Stanley A. Price. According to Ms. Ofo, Mr. Cockram provided her with Mr. Price's address and, according to her account, it was Mr. Cockram who arranged for her to see Mr. Price in relation to the loan subsequently obtained from Lawteal (see below). On the same date (25 March 2003), in a handwritten document addressed to "Matrix Mortgages", Ms. Ofo signed a letter in the following terms:- "Matrix Mortgages Dear Gabriel, I hereby declare that the purpose of this loan is to re-finance my property as a rental investment property. Yours sincerely Tali Ofo 25/3/2004" 23 On 5 April 2004, Short Term Mortgages Pty. Limited wrote to Ms. Ofo advising that an application for finance had been approved for the sum of $217,750 or 65% of valuation. The interest rate was specified at 13.75% reducing to 10%. The document was signed by Ms. Ofo on 5 April 2004. It contains an entry under the heading "loan purpose" which states, inter alia "… by signing this declaration, you may lose protection under the Consumer Credit Code". The document also contains an entry in respect of "broker's fee" which refers to Matrix Mortgages Pty. Limited. The document has a questionnaire also dated 5 April 2004 attached to it. In answer to the question "Do you understand what type of loan you have applied for?", Ms. Ofo has indicated in the affirmative and alongside the phrase "type of loan?" there is handwritten the word "investment". 24 A further question states, "Do you understand that this is a business or investment loan and you will lose your rights under the Consumer Credit Code?", Ms. Ofo has indicated in the affirmative. Also attached to the loan application is a document indicating the amount of consultant's fees, establishment fee, brokerage fee (Matrix Mortgages Pty. Limited) and, a brokerage fee for South Coast Finance Pty. Limited. 25 According to Ms. Ofo, Mr. Cockram subsequently advised that there was a problem with Matrix Mortgages and that they would put the application to one side and seek finance elsewhere. 26 On 19 April 2004, the plaintiff, Lawteal Pty. Limited wrote to the appellant care of "Stanley Price, solicitors" setting out details of a "loan offer". The letter confirmed that the application for a loan had been approved in the sum of $217,750 and set out provisions relevant to the loan transactions. The loan purpose was described as "business purposes (non-credit code)". The indicative interest rate was stated at 10% per annum and a late payment fee of 3.50% per annum calculated according to a schedule enclosed. The monthly payments of interest were stated to be $1,814.58 in arrears. The appellant signed the application for mortgage finance on the terms specified in the loan offer on 20 April 2004. In that application addressed to Lawteal, the purpose of the loan was described as "Business & Investment". (In the loan offer of 19 April 2004, the "Loan Purpose" is specified as "Business Purposes (Non-Credit Code")). The term of the loan was stipulated to be 12 months. 27 In evidence before me were the following documents:- (a) A declaration by borrower made by Ms. Ofo dated 20 April 2004 confirming that she had freely and voluntarily signed the documents specified which included the mortgage document, declaration by borrower, the Consumer Credit Code declaration and a declaration regarding the security property. (b) A memorandum to R.L. Kremnizer & Co., solicitors for Lawteal (first mortgagee) confirming receipt of legal advice and the appellant's understanding of the consequences of not making mortgage re-payments under the mortgage, AA616495G, dated 20 April 2004. (c) A Consumer Credit Code Declaration dated 20 April 2004 by the appellant declaring that the "credit" provided by Lawteal was to be applied "wholly or predominantly for business or investment purposes (or for both purposes)" . The document was witnessed by the solicitor who acted for Ms. Ofo, Mr. Price. 28 The appellant executed a comparable set of documents in respect of the loan from 10 Conway Avenue, Rose Bay Pty. Limited. 29 Correspondence took place before Stanley A. Price, solicitor, and R.L. Kremnizer & Co. In a letter of 21 April 2004, Mr. Price advised, inter alia:- "We confirm that the above property is our client's principal place of residence." 30 This letter is of some relevance as it provides the plaintiffs' solicitors with information that could be said to be inconsistent with the purpose stated in the loan applications although it could also be said that it is not necessarily inconsistent, as the property may have been both a home and an income-earning asset. 31 Mr. Price, in the letter dated 27 April 2004 addressed to R.L. Kremnizer & Co. stated:- "We are unable to furnish you with an accountant's certificate due to the fact that our client on her present income cannot possibly make the re-payments in terms of the mortgage and support herself at the same time. We have discussed this position twice with South Coast Mortgages and they have informed us they are presently doing a complete overhaul of her financial position for which they have already received written authority, and in this respect, they are arranging for our client's two sons to take up immediate employment and after a period of 3 months from now, they will then re-assess our client's financial position and if it then seems feasible that our client can continue to live in the house, then she will do so with her sons' financial contribution failing which the house will have to be sold and our client moved into rented accommodation with her two sons." 32 The letter continues, however, upon the basis that, notwithstanding the inability to verify Ms. Ofo's present income, the mortgage transactions will proceed, for the letter concludes, "we await to hear from you that you are ready to settle". 33 On 28 April 2004, R.L. Kremnizer & Co. wrote to Mr. Price stating, inter alia:- "We advise that we require confirmation that the borrower can meet interest payments without financial hardship or for the interest to be pre-paid for the term of the loan in order to proceed to settlement, as well as all outstanding requirements. We note that we do not yet have the following documents:- 1. Accountant's certificate. 2. Direct debit form x 2 – please forward a clear copy of these forms to our office. 3. Cheque directions." 34 On 4 May 2004, Mr. Price provided cheque directions which included the amount to be paid to Liberty Funding Pty. Limited in the sum of $183,922.83. 35 The cheque directions included a considerable number of payments including, Matrix Mortgage ($4,400) and Short Term Mortgages ($5,500) and South Coast Finance Pty. Limited ($3,000). 36 On 4 May 2004, Lawteal were sent a letter from Dennis Biggs, Chartered Accountant, dealing with the appellant's apparent capacity to meet repayments without substantial hardship. The letter stated:- "I certify that:- 1. I am a Chartered Accountant and a Registered Tax Agent. 2. I have been retained by Talilotu Ofo (sic) (mortgagors) to advice (sic) them of their obligations under this agreement and provide this letter. 3. I understand that the mortgagor has applied for an interest only loan of $217,750 with monthly payments of $1,812.58 over 12 months with an interest rate of 10% per annum. 4. Based on information given to me by the mortgagor, I am aware of what (sic) their income and expenses are. It appears to me that the mortgagor is able to meet repayments and can do so without substantial hardship. 5. This statement is not a guarantee of performance by the mortgagor but merely a statement that the mortgagor's current circumstances (as disclosed by them to me) indicates an ability to service the repayments. I am not aware of any circumstances affecting the mortgagor's ability to meet (sic) their commitments. I understand that this loan has been approved subject to various conditions contained in the Letter of Offer. This letter is provided to satisfy one of those conditions. Yours faithfully Dennis Biggs, FCA 4 May 2004" 37 A letter on the same date was written by Dennis Biggs to "Baccus Investments Limited" in respect of the loan of $33,500 in similar terms to the abovementioned letter, save for the amount of the loan, the payments and the interest rate (16.50% per annum). 38 The sequence of events as to Ms. Ofo's capacity to meet the mortgage interest payments as disclosed in Mr. Price's letter of 27 April 2004, and Mr. Biggs' letters dated 4 May 2004 give rise to obvious concern for they provide a basis for inquiry as to Ms. Ofo's true position in terms of her capacity to meet loan payments. On Ms. Ofo's case, she was introduced to Mr. Biggs through Mr. Cockram. There is no evidence as to what information Mr. Biggs had available to him as referred to in his letter of 4 May 2004. There is a question on the evidence as to whether any information was in fact supplied to the accountant. There is no evidence as to how the financial position stated by Mr. Price on 27 April 2004 could so radically alter between that date and 4 May 2004 as Mr. Biggs' letter suggests. There is, however, no evidence that in any way links the plaintiffs to the accountant. A question, however, arises on the documents as to whether or not the plaintiffs were put on inquiry or under an obligation to require of Mr. Biggs information which would explain how Ms. Ofo's financial position had changed from that so clearly stated in the letter from Mr. Price on 27 April 2004. The letters written by Mr. Biggs on 4 May 2004 are bland in their terms. They do not provide any details as to the "information" referred to in those letters. 39 On 4 November 2004, R.L. Kremnizer & Co., acting on behalf of Lawteal as first mortgagee, wrote to Ms. Ofo enclosing a notice pursuant to s.57(2)(b) of the Real Property Act 1900. The notice referred to defaults in respect of interest due and remaining unpaid as at 4 November 2004 together with costs in respect of mortgage AA616494 in the amount of $4,225.08. The orders made by the Assistant Registrar on 27 May 2005 40 The transcript of proceedings of 27 May 2005 records that the plaintiff relied upon the two affidavits identified above, one by the appellant, the other by her then solicitor, Christopher Hynes. The transcript reveals that counsel for the appellant stated that the affidavit evidence "I think, essentially, goes towards the explanation of the delay on the part of the defendant in this matter". Mr. Rogers of counsel stated "If it only goes to delay, I'm not troubled". 41 The transcript (pp.4-10) records submissions by both counsel. The submissions of counsel for the appellant dealt with the following:- (a) the question of delay and prejudice; (b) the validity of notices served under s.57(2)(b) of the Real Property Act 1900 and in that respect the provisions of s.80 of the Consumer Credit Code ; (c) the provisions of s.11(3) of the Code in relation to declarations as to credit applied wholly or predominantly for business or investment purposes (or for both purposes); (d) the Contracts Review Act 1980 (NSW) and its application to the case (including, in particular, Ms. Ofo's financial capacity to meet loan payments). 42 The transcript records the exchange between counsel for the appellant and the Assistant Registrar in which the Assistant Registrar identified what, by his assessment, were the difficulties that the appellant seemed to face in the application to set aside the default judgment. He also raised the question of the utility, in any event, of such relief given that the appellant remained under an obligation, in any event, for repayment of the principal monies. The transcript (p.11) then records:- "ASSISTANT REGISTRAR: Do you want to set aside the default judgment or do you want to extend the stay on the writ while you re-finance because, at this stage, I don't see any utility in setting aside the judgment? 43 Counsel then appearing for Ms. Ofo indicated that she had had difficulty explaining some of the concepts to her client and requested an adjournment. A short adjournment was granted. Following resumption, counsel confirmed that written instructions were being confirmed and that the appellant sought to stay the default judgment and would seek to refinance the property. It also recorded that she was also seeking further employment and requested a period of six months for arrangements to be made. 44 Following further discussion with counsel, the Assistant Registrar proceeded to make the first three of the orders set out in paragraph [7] above. The transcript records Mr. Rogers of counsel drawing attention to the fact that the Assistant Registrar should formally dismiss the motion "… otherwise it's theoretically still hanging around". The Assistant Registrar, without any objection from counsel for the appellant, then proceeded to make order 4 as stated in paragraph [7], namely, an order dismissing the appellant's notice of motion to set aside the default judgment. The proceedings were then adjourned to 17 June 2005. The review proceedings 45 Ms. Ofo was unrepresented at the time of instituting proceedings by way of review of the Assistant Registrar's orders. She filed a notice of motion in which in relation to "orders sought" she claimed relief in the following terms:- "1. I am the defendant that seek (sic) to set aside the judgment made on 11/10/05 to dismiss my case. 2. Your Honour, please I am also pleading to extend my further stay in the property." 46 In her affidavit in support of the notice of motion sworn 16 November 2005, Ms. Ofo stated:- "1. I am the defendant that request (sic) to set aside the judgment which (sic) made by Associate Justice Malpass on 11/10/05 to dismiss my case. Please, I also would like to request further stay (sic) in the property, while seeking fairness and justice for this matter. 2. I believe that the information contained in this affidavit is true." 47 The appellant then deposed to a number of matters in paragraphs [3] to [9] inclusive of the affidavit. In paragraph [7] she stated, inter alia:- "… however, I assure your Honour, it did not doubt that I firmly believe that I have been misled, with intention of keep pursuing my case. Even though I had realised I had signed many documents as persuaded, but in the end just before the loan finalised for settlement, I then stopped when I strongly suspected that I am mistreated. That means, I did not want to go ahead with the loan, but someone else had carried out the settlement, and distributed it straight away." 48 The judgment of Associate Justice Malpass of 11 October 2005 records the history of the proceedings, firstly, in relation to the affidavit evidence (and the basis upon which it had been received by the Assistant Registrar) and, secondly, to the matters referred to in paragraphs [42], [43] and [44] detailing the circumstances in which the order dismissing the proceedings was made. 49 It is significant that the Associate Judge at [16] of his judgment stated:- "… at the commencement of the hearing, the court sought to advise counsel for the defendant of its concern that the proposed review may be misconceived and that perhaps other action (including a fresh application to set aside the default judgment) may be the appropriate course to follow. The defendant was given a short adjournment for the purpose of a consideration of her position and the giving of instructions. 17. Following the short adjournment, the court was informed that the defendant was desirous of pressing ahead with the review. It soon became obvious that the defendant was endeavouring to have a fresh hearing of the application to set aside the default judgment (relying on material different to that which had been placed before the Registrar), rather than a review of the order." 50 Associate Justice Malpass then referred to relevant principles concerning a review and, in this respect, observed: • The decision of the Registrar stood until it was set aside. • A review is not a fresh hearing, with the parties being placed in the same position as they were before the Registrar. • A review is in the nature of a second look at the decision of the Registrar. • There must be a basis shown for setting aside the decision or orders of the Registrar. 51 The Associate Judge then, after observing that a review is usually conducted on the material before the Registrar, dealt with the question of further evidence or "fresh" evidence. As recorded earlier in this judgment, the Associate Judge refused to admit the further affidavit material. 52 After undertaking the review, the Associate Justice expressed the conclusion that no basis had been shown for disturbing what was done by the Assistant Registrar. 53 The reasons for that conclusion may be gauged by the matter arising from the submissions of counsel for Ms. Ofo, as recorded in paragraphs [27] to [35] of the judgment of the Associate Judge. These related to the circumstances that led, without objection by the appellant, to the dismissal by the Assistant Registrar of the application to set aside the default judgment. 54 In relation to this last mentioned issue, the Associate Judge made the following observations:- • Whatever consequences had flowed from what occurred before the Registrar "flowed from either the conduct of the defendant herself or her legal advisors" . • A decision not to pursue or proceed with the application to set aside the default judgment was made following a conscious decision made by Ms. Ofo after she had the benefit of a short adjournment in order that her legal advisors could confer with her. • The decision made by Ms. Ofo not to proceed with the application led to the making of the dismissal order. • The dismissal order was made in circumstances where there was no objection or opposition to the order being made. • In such circumstances, the dismissal order can only be regarded as either having been a consent order or an order not opposed by Ms. Ofo. 55 Having examined the transcript of the proceedings before the Assistant Registrar of 27 May 2005, I do not consider that the observations of the Associate Justice which I have recorded in the preceding paragraph can be said to be afflicted with error. Counsel for Ms. Ofo indicated, in effect, that the appellant had elected to seek a stay in order to re-finance. That was a decision arrived at at the end of submissions that had proceeded for some 10 pages prior to that point in time and prior to the short adjournment. Viewed in that context, it was clearly an election by Ms. Ofo to pursue that course (of obtaining an extension of the stay order in order to re-finance the loans) rather than to pursue the application for setting aside the default judgment. However, the evidence in Ms. Ofo's affidavit sworn 7 September 2005 did raise a number of factual matters referred to below which were of potential significance in terms of the Contracts Review Act. As to the review proceedings themselves, it became apparent, as the Associate Judge recorded in paragraph [17] of his judgment that "It soon became obvious that the defendant was endeavouring to have a fresh hearing of the application to set aside the default judgment (relying on different material to that which had been placed before the Registrar), rather than a review of the order". 56 Although the appellant did not amend or seek to file a fresh application to set aside the default judgment as referred to in paragraph [16] of the judgment of Associate Justice Malpass, a fair reading of his judgment indicates that the matter proceeded as if that was in fact the form of relief which Ms. Ofo was seeking in the review proceedings. ANALYSIS 57 In determining the present appeal, it is necessary to have regard to the nature of the review proceedings conducted by Associate Justice Malpass. The authorities on reviews make it clear that it is the Associate Justice who is exercising jurisdiction virtually for the first time: Modern Woodcraft Pty. Limited v. Nott (unreported 7 March 1997) per Young, J. (as he then was). There, the Court stated that whilst he or she is entitled to merely adopt what the Registrar has done, the Associate Justice is not bound to do so but, indeed, is bound to look at the matter afresh and make a decision on the material which is presented to the Associate Justice's court. Although the notice of motion did not in terms seek an order setting aside the default judgment, that is what it seems Ms. Ofo was seeking to achieve. 58 The Associate Justice had the full transcript of the proceedings before the Assistant Registrar and the evidence, such as it was, adduced before the Assistant Registrar. I have earlier observed that the affidavit evidence was utilised on only a very limited basis, in particular, in relation to the question of delay. 59 The power to review is not an appeal and is not subject to the restrictions that apply to appeals: Comalco Aluminium Limited v. Ohtsu Tyre & Rubber Co. Aust. Limited (1983) 8 ACLR 330. It is not necessary to demonstrate that there has been an error of principle in the order under review: In the Will of Sheppard [1972] 2 NSWLR 714; Modern Woodcraft Pty. Limited (supra). 60 An Associate Justice must, subject to what is stated below in relation to further evidence, make his or her decision based upon the material that was before the Registrar or, in this case, the Assistant Registrar. In Westpac Banking Corporation v. Abemond Pty. Limited (unreported 3 November 1994), Santow, J. (as he then was) observed at p.6 that there is a broader scope for a review than there is in comparison to an appeal from a Master (or now an Associate Justice). Santow, J. also observed:- "… in the latter (an appeal by way of s.75A of the Supreme Court Act 1970) there are inhibitions both as to the introduction of fresh evidence, only permitted with leave and the necessary requirement for finding an appellable error in exercising discretion, not merely an inclination to exercise it differently. Neither such inhibition apply to a review of a Registrar's decision. This is so, though there remains the desirability and practice, 'to look for some proper basis for disturbing the decision under challenge as well as the natural inhibition on unrestrained substitution of the reviewing court's views for the body with the advantage of having seen any witnesses and having dealt with the matter at the outset …" 61 In the present proceedings, the Associate Judge reviewed the relevant principles governing a review and the power to admit further evidence (at paragraphs [18] to [25]. The Associate Judge stated that he proceeded only upon the basis of the material that had been placed before the Assistant Registrar. 62 Leaving aside the circumstances in which the dismissal order was made by the Assistant Registrar as earlier discussed (and to which I will return), there does not otherwise appear to have been any basis identified for excluding reliance upon the affidavit of the plaintiff sworn on 7 September 2005 and that of Mr. Hynes sworn on 8 September 2005. The review application, as discussed above, whatever the deficiencies in the relief sought as expressed in the notice of motion, was effectively, seeking an order setting aside the default judgment. Certainly, no issue of prejudice seems to have arisen and, given the broad nature of the review and the facility for receiving evidence on a review, I consider that there was no sound basis for the Associate Justice to exclude reliance upon the two affidavits. It is to be noted that no specific ground or basis is stated in the judgment of the Associate Justice which led him to his decision in this respect, other than reference to the fact that the material could have been expected to have been available to the defendant prior to 27 May 2005 and it was not said that it was unavailable. 63 An examination of the transcript of the argument before the Assistant Registrar does reveal that submissions were made in relation to two matters going to a defence on the merits. The first was based upon the Credit Code (s.80). The second was based upon the Contracts Review Act 1980 (NSW). In particular, in the latter respect, it was submitted that no regard had been given to Ms. Ofo's ability to pay the loans which it was argued rendered the contracts "unjust" within the meaning of the Act. 64 The material in the affidavits sought to be relied upon for the purposes of the review contained material additional to that that was before the Assistant Registrar. That evidence largely related to the same subject matters but was in greater detail than the evidence which was utilised on a limited basis at the first hearing. In those circumstances and in the interests of justice, a full review would require, as a proper exercise of discretion, the admission of the affidavits that were excluded. Ms. Ofo's affidavit was plainly relevant to a number of factual issues that bore upon the question as to whether she had an arguable bona fide defence under the Contracts Review Act. That was a defence she had expressly relied upon before the Assistant Registrar. 65 The relevant principles in an application to set aside a joint judgment were stated in Adams v. Kennick Trading (International) Limited (1986) 4 NSWLR 503 at 506-507 by Hope, JA. There, observations were made in relation to the exercise of a discretionary jurisdiction to set aside a default judgment. Generally speaking, the Court on such an application seeks to determine whether there has been established a bona fide ground of defence and an adequate explanation for the failure to defend and any delay. 66 It is not without significance that in both the proceedings before the Assistant Registrar and in the proceedings before the Associate Judge, draft grounds of defence pleaded a ground based upon the Contracts Review Act. I have referred above to the particular submission that had been made in support of that ground, namely, the defendant's lack of financial capacity to meet payments that would be due under the mortgages. A related issue to be established in that respect was whether the plaintiffs had knowledge or information that suggested that that may have been the case. 67 Procedures governing appeals to the Supreme Court from the decision of an Associate Justice of the Court are governed by the provisions of Part 45, Rule 4 of the Uniform Civil Procedure Rules 2005 and in respect of such appeals the provisions of Part 45, Rule 8 to Rule 12. 68 In accordance with long-held authority, an appeal from a Master (now an Associate Justice), of the Court to a single judge is subject to the same principles as those governing an appeal from a Judge to the Court of Appeal: Fleet v. Royal Society for the Prevention of Cruelty to Animals (NSW) [2005] NSWSC 926 at [16] per Johnson, J. As his Honour there observed, subject to the impact of any fresh evidence that may be admitted in accordance with the Rules, an Associate Justice's findings of fact are to be followed by the Judge unless the facts found, or the inferences drawn, by the Master/Associate Justice are so flawed as to attract review by an appellate court under the principles in Warren v. Coombs (1979) 142 CLR 531 at 553; Do Carmo v. Ford Excavations Pty. Limited [1981] 1 NSWLR 409 at 420-421. 69 In certain circumstances on an appeal to a single judge, evidence may be adduced on the appeal. Some authorities indicate that "special grounds" are required: see for example Australian Freyssinet Pty. Limited v. Marlan International Pty. Limited [2002] NSWSC 892 per Barrett, J. However, in some circumstances, a broader approach has been adopted. In Martin v. Abbott Australasia Pty. Limited (1981) 2 NSWLR 430, Hunt, J. (as he then was) considered the extent to which parties were restricted upon a re-hearing on an appeal to a single judge to the material that was before the Master (now an Associate Justice). There, his Honour stated that the provisions of s.75A of the Supreme Court Act 1970 imposed a restriction for a particular purpose, namely, to ensure the parties do not withhold their full case on the occasion of the initial hearing. His Honour also stated that the particular nature of the issue decided in the interlocutory proceedings is relevant in considering whether further evidence should be received. Although evidence was permitted in that case to enable the successful plaintiff to adduce further evidence to meet a challenge to the sufficiency of the material before the Master, that is a different situation from that arising in the present case. 70 In these proceedings, I consider that, on this appeal, given what I consider to have been an erroneous ruling excluding the use of the two affidavits before the Associate Judge, it was necessary that the Court receive, in particular, the affidavit of the Ms. Ofo sworn 7 September 2005 for two purposes. The first was to permit a determination as to whether the Associate Judge was in error in excluding the affidavits for the purposes of the review hearing. The second was to evaluate the strength of Ms. Ofo's claim for relief based on a possible defence under the Contracts Review Act, which, though not clearly expressed, was a claim for an order setting aside the default judgment. 71 In determining whether or not the evidence does disclose a bona fide ground of defence, I have had regard to the affidavit material that related to Ms. Ofo's capacity to meet payments under the mortgages which was, on the evidence, very seriously in question prior to the mortgages being entered into. In this respect, I refer, in particular, to the strongly-worded letter from Mr. Price dated 27 April 2004 to R.L. Kremnizer & Co. and referred to in paragraph [31] above. 72 Additionally, in the affidavit sworn 7 September 2005 (paragraph [15]) Ms. Ofo states that she had no contact with the accountant, Mr. Biggs, whose correspondence is referred to in paragraph [36] above. If true, that raised a very serious and significant issue of fact. 73 The letter from Mr. Price dated 27 April 2004 to the plaintiff's solicitors stated, unequivocally, that an accountant's certificate could not be furnished due to the fact that Ms. Ofo's income could not possibly make the re-payments in terms of the mortgages. That is a very significant statement. The other matter of importance is that the accountant's certificate referred to in paragraph [36] is one drawn in the broadest terms and provides no detail as to Ms. Ofo's income or financial capacity. These are matters that would need to be appropriately considered by a financier who is proposing to advance a relatively significant amount of money by way of loan finance. 74 There are, of course, a number of countervailing factors, not the least of which is that Ms. Ofo was represented by Mr. Price who was a solicitor who could be regarded, at least, as "independent" from the plaintiffs. Whether or not Mr. Price had associations with any other relevant third parties is not an issue that I need further consider on this appeal. 75 In considering this appeal, I have had regard to a number of issues that are relevant to a possible defence available to the defendant, Ms. Ofo, arising under the Contracts Review Act and this, in particular, in light of the recent decision of the Court of Appeal in Perpetual Trustee Company Limited v. Khoshaba [2006] NSWCA 41 and, as well, to the Court of Appeal's judgment in Elkofairi v. Permanent Trustee Co. Limited (2002) 11 BPR 20,841 and St. George Bank Limited v. Trimarchi [2004] NSWCA 120. 76 In Khoshaba (supra), Basten, JA. at [122] observed that the provisions of s.9(1) of the Contracts Review Act requires that the Court have regard to all the circumstances of the case. This included the consequences which may arise in the event of compliance or non-compliance with, or a contravention of the contract where, as in that case (and as in the present case) there is a security. In particular, the fact that failure to meet a re-payment instalment may lead to sale of the security, was, his Honour stated, a relevant consideration. In Elkofairi (supra), the Court of Appeal held that a contract was unjust by reason of a combination of two circumstances. First, that the borrower was in a position of special disadvantage (although not known to the lender). Second, that the lender was "content to lend on the security of the security only", knowing that the borrower had no income or other assets, with the result that it was likely that the borrower would lose her home. In Khoshaba (supra), Basten, JA. also observed at [128] to engage in pure asset lending, namely to lend money without regard to the ability of the borrower to repay by instalments under the contract, in the knowledge that adequate security is available in the event of default, is to engage in a potentially fruitless enterprise, simply because there is no risk of loss. In some cases, particularly where the security is the sole residence of the borrower, there is a public interest in treating such contracts as "unjust", at least in circumstances where the borrower can be said to have demonstrated an inability reasonably to protect their own interests, for the purposes of, for example, the provision of s.9(2)(e) or (f) of the Act. 77 In considering whether Ms. Ofo has the basis for such a defence, it is important to have regard to the three staged process required under s.7 of the Contracts Review Act as identified by Basten, JA. in Khoshaba (supra) at [106] to [109]. 78 Whilst the affidavit evidence in this appeal suggests a possible basis for the application of the Contracts Review Act, the evidence is deficient in some important respects and limited in others:- • Whilst the appellant's evidence indicates that it was the finance broker's suggestion that the purpose of the loans be described as "business & investment", the extent to which Ms. Ofo was complicit in stating such a purpose is unclear. Her involvement in providing the description is not, of course, necessarily fatal to a Contracts Review Act defence. It depends upon the circumstances in which Ms. Ofo came to make it. • Her personal responsibility for mis-stating the purpose of the loan is, to some extent, diminished by Mr. Price's letter to R.L. Kremnizer & Co. dated 21 April 2004 in which a statement appeared, "We confirm that the above property is our client's principal place of residence". • There is an absence of evidence from the appellant as to any discussion that she had with Mr. Price following her consultation with him. One may infer that he gave her certain advice as to her financial standing and her capacity to meet mortgage payments, given his strongly-worded letter of 27 April 2004 to which I have referred. There is no reference by Ms. Ofo to any advice given on that particular matter. • In relation to the dismissal order made by the Assistant Registrar, there is a lack of evidence from the appellant to explain the circumstances in which instructions were given to counsel, at the conclusion of the proceedings, to seek a stay order and pursue the re-finance option and in which no objection was made to the dismissal order being made. 79 The transcript of 27 May 2005 (p.11) records, as earlier mentioned, counsel for Ms. Ofo stating "we seem to be having some difficulty explaining some of the concepts to our client and we'd just ask if we might have some time to perhaps have a conference with her?". There was no evidence led by Ms. Ofo as to her level of understanding or any difficulties that she had in comprehending what was occurring on 27 May 2005. Based on what was stated by counsel, as recorded in the transcript, it is quite conceivable, of course, that an explanation could have been provided as to why and how the dismissal order was made on an unopposed basis. 80 In evaluating whether the affidavit evidence established a bona fide defence, it is necessary to bring to account the circumstances that are potentially relevant in application of the Contracts Review Act. This is dependent upon factors such as:- (a) The extent to which Ms. Ofo can be regarded as a disadvantaged contracting party. (b) The issue of the disclosure of the "purpose" of the loan transactions as referred to above. (c) The fact that she was represented by a solicitor a fact, in turn, relevant to issues such as:- (i) the terms and conditions of the mortgages; and (ii) her financial capacity to meet the payments due under the mortgages. (d) The extent to which the plaintiff can be regarded as innocent or complicit in the representation as to the purpose of the loan. (e) The defendant's financial capacity and the communications she had on that matter with her solicitor and with any other third party relevantly involved in the transactions. (f) The lack of unequivocal knowledge in the plaintiffs of the defendant's actual capacity to meet repayments as at the date the mortgages were entered into. (g) Whether or not the correspondence with the solicitor and the chartered accountant was sufficient to have put the plaintiffs on inquiry as to the defendant's capacity before the mortgages were entered into. 81 In evaluating these matters, it is necessary to give due consideration to the particular facts of this matter, especially in light of issues raised in the abovementioned judgments of the Court of Appeal. As Basten, JA. in Khoshaba (supra) stated at [128], the Act does not permit intervention merely where the borrower has been foolish, gullible or greedy. Something more is required. The difficulty in the present matter is that the affidavit material does not, in my opinion, establish to the requisite standard whether or not Ms. Ofo does in fact have a defence against the plaintiffs by virtue of the Contracts Review Act that would found a right to an order setting aside the default judgment. The position, in this respect, has not been assisted by the way in which the Assistant Registrar came to make, unopposed, the dismissal order and the absence of evidence to explain why no opposition was made to the making of that order. 82 In determining whether or not material and adverse consequences flowed from the Associate Judge's ruling to exclude the affidavits to which I have referred, I have concluded that Ms. Ofo has not discharged the onus of establishing that what I have held to be an error made in the review proceedings to exclude the affidavits was one that warrants, on this appeal, intervention by way of an order setting aside the default judgment. 83 In determining this appeal adversely to Ms. Ofo, I have had regard to the fact that she has obtained the benefit of the loan monies in the sum of $251,250 derived from the loan transactions which were applied by her in the re-financing of her property. A Court in an application to set aside judgment in those circumstances is required to have regard to that benefit and the amount of it and that she would be required, in any event, to pay, at least, a reasonable of interest: see Elkofairi (supra) at [80] and [81]. Having regard to the evidence as to the approximate likely value of the property and the amount of the outstanding loan monies under the mortgages, as a matter of discretion these are matters that I am entitled to have regard to in determining the utility of an application to set aside default judgment. That matter, in my opinion, is an additional matter which would warrant the dismissal of the appeal. 84 The plaintiff has sought the exercise of the power to renew the writ of possession. In the circumstances, it is appropriate that I make an order to that effect: Uniform Civil Procedure Rules Part 39, Rule 20; Stutt v. Smith (1888) 10 ALT 159, 160. DETERMINATION 85 Not every erroneous ruling on evidence in the course of proceedings necessarily translates into an entitlement in a party to the proceedings to relief. Whilst I have determined that there was an erroneous exercise of the discretion at the review stage of these proceedings which prevented Ms. Ofo from relying upon the affidavits to which I have referred, it is has been necessary to evaluate the particular relevance and significance of that affidavit evidence in terms as to whether it establishes a bona fide defence in Ms. Ofo under the Contracts Review Act 1980 (NSW). 86 Application for relief under s.7 of the Contracts Review Act involves the three stage process described by Basten, JA. in Khoshaba (supra). Whilst there is evidence in the affidavit of Ms. Ofo sworn 7 September 2005 which would assist her in establishing certain primary facts in terms of the first of the three step process to which I have referred, the evidence overall does not, in my opinion, demonstrate that the discretionary power to grant relief under s.7 of the Contracts Review Act 1980 would operate to provide a defence that would satisfy the test to which I have referred that must be met before a default judgment can be set aside. 87 In this respect, the material factors include the dismissal order made on 27 May 2005 and the deficiency in the evidence in this appeal which would explain the circumstances in which that order was not opposed and the decision made to pursue the stay/re-finance option. 88 I propose orders as follows:- (a) That the appeal be dismissed. (b) That, pursuant to Part 39 rule 20 of the Uniform Civil Procedure Rules 2005 the writ of possession issued in favour of the plaintiff in these proceedings on 30 March 2005 is renewed. (c) That the writ of possession referred to in (b) be stayed until 9.00 am, Tuesday 23 May 2006. 89 I will hear submissions from the parties as to the form of orders as proposed and any ancillary matters arising in respect to such orders. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.