Background
Perpetual lent about $2.53 million to Colevski Pty Ltd in October 2022. The loan refinanced an earlier, higher-interest Charub loan and was secured by mortgages over three family homes at Wattle Grove, Edmondson Park and Casula, with guarantees from Valentina Colevski and six relatives. The loan fell into default, and Perpetual obtained default judgments and possession orders in July 2023.
The guarantors initially succeeded in having the 2023 judgments set aside and filed a defence and cross-claim alleging, among other things, that the loan arrangements were unjust under the Contracts Review Act 1980 (NSW). After their lawyers ceased acting, however, they did not prosecute those claims. Their defence and cross-claim were struck out in April 2025, further default judgments were entered in March 2026, and the occupants were evicted in June 2026.
The Court’s Holding
Faulkner J dismissed the defendants’ amended motion to set aside the default judgments, possession writs and related orders. The Court held that the defendants had not shown a useful purpose in reopening the case because their proposed Contracts Review Act case against Perpetual was speculative rather than reasonably arguable.
The matters said to make the guarantees unjust—particularly alleged pressure or threats concerning Christopher Colevski and the family’s vulnerability—related principally to the earlier Charub loan, not Perpetual’s October 2022 refinancing. Perpetual’s loan replaced the Charub debt at a lower interest rate, and the defendants identified no concrete basis for relief against Perpetual or for impugning the Charub guarantees in a way that would defeat Perpetual’s subrogated position.
The Court also found no adequate explanation for the guarantors’ failure to participate after October 2024, or for Valentina’s three-year delay in seeking to set aside the 2023 judgment. Finality, the lack of demonstrated merits, and prejudice to Perpetual and Matthews Folbigg Pty Ltd outweighed the defendants’ asserted prejudice from losing their homes.
Key Takeaways
- A party seeking to set aside a default judgment must show more than a theoretical proposed defence and provide an adequate explanation for the default.
- For Contracts Review Act relief, alleged injustice must be tied to the relevant transaction, and the applicant bears the onus of pleading and proving grounds for discretionary relief.
- Repeated non-participation after clear notice of proceedings can justify preserving default judgments despite the serious consequences of mortgage enforcement.
Why It Matters
The decision illustrates the weight NSW courts give to finality and case-management obligations where borrowers and guarantors have had prior opportunities to defend mortgage enforcement proceedings. It also confirms that a refinancing lender is not exposed to a viable unjust-contract claim merely because an earlier transaction may be challenged; concrete allegations connecting the lender to the asserted injustice are required.