the terms of the deed of forbearance were accepted by the mortgagor, without any negotiation.

the mortgagor’s vulnerability and influence of the majority shareholder led to a material inequality of bargaining power at the time the loan was entered into and.

the mortgagor was unduly influenced by the majority shareholder of the borrower company, was not a director or shareholder of the borrower company, and was elderly (aged 77).

the loan and mortgage was unjust in their terms and liable to be set aside.

The mortgagor sought to set aside the consent judgment including on the following grounds:

Mortgagor’s submissions to set aside the consent judgment Shortly after the stay was granted, the mortgagor instructed a new solicitor who took steps to cancel the proposed auction for the security property, and then filed a summons seeking to set aside the consent judgment. The stay was granted on the condition that the mortgagor would sell the security property by way of a public auction. The day before the proposed execution of the writ, the mortgagor applied for a stay of the execution of the writ. A term of the forbearance was that the mortgagor agreed to provide consent judgment in favour of the lender, to be held in escrow, subject to the mortgagor complying with the terms of the arrangement.Īfter the mortgagor failed to obtain refinance for the agreed reduced settlement sum and subsequently defaulted under his obligations under the deed of forbearance, the lender took steps to file and enforce the consent judgment and a writ for possession was issued. Relevantly, the parties entered into a deed of forbearance to resolve possession proceedings which had been commenced by the lender. The decision deals with a very common factual scenario faced by lenders.

v Phoenicia Trading Pty Ltd and Gilmour NSWSC 1912 concerned a mortgagor’s application to set aside consent judgment, in circumstances where the mortgagor (in default of the mortgage) entered into a deed of forbearance with the lender and failed to comply with the terms of the forbearance.

The recent Supreme Court of New South Wales decision of His Honour Bellow J in Gustin Group Pty Ltd and anor.

Consent judgment