SUPREME COURT OF VICTORIA
COURT OF APPEAL	
	
S EAPCI 2021 0131	

MAG FINANCIAL AND INVESTMENT VENTURES PTY LTD (ACN 625 790 623) & ANOR (according to the attached schedule)	Applicants	
		
v		
		
HASSAN EL-SAAFIN & ORS (according to the attached schedule)	Respondents	

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JUDGES:	McLEISH, SIFRIS and WALKER JJA	
WHERE HELD:	Melbourne	
DATE OF HEARING:	30 August 2022	
DATE OF JUDGMENT:	21 December 2022	
MEDIUM NEUTRAL CITATION:	[2022] VSCA 286	
JUDGMENT APPEALED FROM:	[2021] VSC 489 (Riordan J)	

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CONSUMER CREDIT – Credit protection – Whether loan agreement unenforceable by reason of s 39 of Consumer Credit (Victoria) Act 1995 – Whether loan agreement a ‘credit contract’ for purposes of Act – Whether loan a provision of credit to which National Credit Code applies – Whether credit provided to purchase, renovate or improve residential property – Credit must be provided for immediate purpose of debtor purchasing, renovating or improving residential property – Insufficient that ultimate purpose the purchase, renovation or improvement of residential property by third party – Loan provided to debtor to on-lend to third party to improve property – Loan not credit to which Code applies – Loan not a ‘credit contract’ for purposes of Act – Leave to appeal granted – Appeal allowed.

MORTGAGES – Tender – Whether judge erred in finding amounts tendered sufficient to discharge indebtedness – Whether mortgagor able to secure sufficient funds to discharge mortgage – No error shown. 

National Consumer Credit Protection Act 2009 (Cth) sch 1; Consumer Credit (Victoria) Act 1995 ss 39, 40.

Lauvan Pty Ltd v Bega (2018) 330 FLR 1, Jonsson v Arkway Pty Ltd (2003) 58 NSWLR 451, Mango Media Pty Ltd v Comitogianni [2011] NSWSC 152, Provident Capital Ltd v Bortolin Papa [No 1] [2011] NSWSC 460, discussed.

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Counsel	
Applicants:		Mr N De Young KC with Ms V Bell	
Respondents:		Mr I Upjohn KC with Mr B Mason	
	
Solicitors	
Applicants:		NOH Legal	
Respondents:		Hicks Oakley Chessell Williams	

McLEISH JA
Sifris JA
WALKER ja:
Introduction
1	This appeal concerns two matters:
(a)	the proper construction and application of s 5(1)(b)(ii) of the National Credit Code (‘the Code’), the relevant effect of which is that the provision of credit ‘to purchase, renovate or improve residential property for investment purposes’ is regulated by the Consumer Credit (Victoria) Act 1995 (‘the Consumer Credit Act’); and
(b)	whether a company had made an effective tender to a creditor for debts owed.
2	The factual circumstances in which these issues arose are complex. In 2015, the third respondent, Saafin Constructions Pty Ltd (‘the Company’), commenced the development of a four storey building comprising 25 apartments and two commercial tenancies (‘the Development’) in Arden Street, North Melbourne (‘the Arden Street Property’). The Development was beset with difficulties and has not been completed. The Company is in liquidation.
3	Most of the difficulties related to the financing arrangements between the Company and various financiers and other creditors. In 2018, the first applicant, MAG Financial and Investment Ventures Pty Ltd (‘MAG Financial’), obtained assignments of various loans, securities and other creditors’ claims. As a result, it asserted that an amount in excess of $8 million was owing by the Company to it, secured by a mortgage over the Arden Street Property, and a general security agreement over the assets and undertaking of the Company. 
4	One of the assigned loans MAG Financial relied upon was a loan by Balanced Securities Ltd (‘Balanced Securities’) in the sum of approximately $3 million (‘the Balanced Securities Debt’), secured by a first registered mortgage over the Arden Street Property (‘the Balanced Mortgage’). There was no dispute that this loan was owed by the Company to Balanced Securities, and no dispute that it was ultimately assigned to MAG Financial.
5	However, the Company disputed that various other loans that had been purportedly assigned to MAG Financial were in fact owing. In particular, it alleged that a loan made by Mr Mark Franek (‘Mr Franek’), the fifth respondent, was unenforceable by reason of provisions of the Consumer Credit Act. It also disputed certain other claimed loans. It thus asserted that the amount in fact owing to MAG Financial (as assignee) was much less than the approximately $8 million claimed. In June and July 2018, the Company tendered payment of the amount that it considered to be owing to MAG Financial. The tenders were effectively rejected. 
6	In circumstances that were unconscionable, MAG Financial sold the Arden Street Property to the second applicant, AAGG Developments Pty Ltd (‘AAGG’), for $4.5 million plus GST. The purchase price was never paid.
7	The trial judge made various findings including, relevantly, the following:
(a)	A loan agreement dated 15 January 2016 between Mr Wael El-Saafin (‘Wael’) and his wife, Ms Bayda El-Saafin (‘Bayda’), as borrowers and Mr Franek as lender (‘the Second Franek Loan’) was unenforceable by reason of s 39 of the Consumer Credit Act. MAG Financial, as assignee of the Second Franek Loan and the later general security agreement to which the Company was a party (‘the Franek GSA’), has appealed this finding (proposed ground 1). One consequence of this finding was that mortgages under the Franek GSA (‘the Franek GSA Mortgages’) were void in so far as they related to the Second Franek Loan. 
(b)	The Company was not indebted to Mr Amr Mekkya (‘Mr Mekkya’), the tenth respondent, or Mr George Sacca (‘Mr Sacca’), the eleventh respondent. The amount alleged to be owing by the Company to Mr Mekkya was $982,848.22 (‘Mekkya Debt’) and the amount alleged to be owing by the Company to Mr Sacca was $1.9 million (‘Sacca Debt’). The purported assignment of these alleged debts to MAG Financial was thus ineffectual. Accordingly, these are not and were not debts of the Company. There is no appeal against these findings.
(c)	Mr Stephen Robert Dixon and Mr Ahmed Bise, the sixth and seventh respondents (collectively ‘the Receivers’), purportedly appointed by Mr Franek pursuant to the Franek GSA, had not been validly appointed. Nonetheless, they were not in breach of duty and were not liable to the Company. There is no appeal against these findings.
(d)	The tenders made by the Company to MAG Financial in June and July 2018 (‘the Tenders’) were valid tenders and MAG Financial had failed to accept them. The failure to accept the Tenders had consequences for the interest rate payable thereafter. MAG Financial has appealed these findings (proposed ground 2).
(e)	The sale of the Arden Street Property to AAGG was in breach of duty and unconscionable. It was thus to be set aside. There is no appeal against these findings.
8	The trial judge did not determine liability with respect to two other debts said to be owed by the Company — a debt to New Concept Design ($174,000) (‘New Concept Design Debt’) and a debt to New Concept Homes Pty Ltd (‘the Builder’) ($521,000) (‘Builder Debt’). However, he held that if the Company was liable in relation to those debts, then they were assigned to MAG Financial on 20 June 2018. That assignment would have had the effect of securing them under the Franek GSA. There is no appeal against these findings.
9	Ultimately, the appeal is only concerned with two issues: first, the validity and enforceability of the Second Franek Loan (and the Franek GSA Mortgages), which turns on the construction of the Code; and second, the effectiveness of the Tenders. The grounds of appeal are, in summary, as follows:
(a)	Ground 1 is that the trial judge erred in concluding that ‘the First Franek Loan’ fell within the terms of s 5(1)(b)(ii) of the Code, properly construed. Thus, MAG Financial submitted, that loan was not regulated by the Consumer Credit Act. If that is so, then the Second Franek Loan (which refinanced the First Franek Loan) was also not regulated by the Consumer Credit Act and is enforceable, and the Franek GSA Mortgages are not void.
(b)	Ground 2 is that the judge erred in concluding that the Company was ready, willing and able to perform the Tenders. MAG Financial submitted that the Company had failed to establish that it would have had available to it sufficient funds to discharge its indebtedness to MAG Financial. As a consequence, it submitted, the Tenders were not effective and it was not obliged to accept them. If that is so, it is entitled to interest on the assigned loans at the original rates provided in the relevant loan agreements.
10	In our opinion, ground 1 is made out. The trial judge erred in concluding that the Consumer Credit Act applied to the First Franek Loan. As a consequence, it did not apply to the Second Franek Loan or the Franek GSA, and those agreements are enforceable. However, ground 2 is not made out. The trial judge did not err in concluding that the Tenders were effective. Our reasons for these conclusions are set out below.
11	The consequences are that the Company is indebted to MAG Financial in respect of the Balanced Securities Debt, which was assigned to MAG Financial, and the Second Franek Loan. However, the interest rate for each loan is adjusted as a result of MAG Financial’s failure to accept the Tenders. These amounts, together with the further amounts that are yet to be determined, are properly secured by the Balanced Mortgage and the Franek GSA in favour of MAG Financial as assignee.
12	It is necessary to set out the facts in some greater detail before dealing with each ground.
Relevant background
13	On 13 July 2001, the Company was registered as a corporation with the Australian Securities and Investments Commission (‘ASIC’). As at registration, the directors relevantly included Mr Mohamed El-Saafin (‘Mohamed’) and Mr Hassan El-Saafin (‘Hassan’), both of whom were also shareholders (each holding 17 shares), with Wael, the other shareholder, holding 16 shares.
14	On 21 August 2008, Wael and Bayda were registered as proprietors of 1 Nairne Terrace, Greensborough (‘the Nairne Terrace Property’).
15	By loan agreement dated 13 December 2011 between Trustworthy Nominees Pty Ltd (‘Trustworthy Nominees’) as lender, the Company and Mr Fadl El-Saafin as borrowers and Mohamed, Hassan and Wael (collectively ‘the El-Saafin Brothers’) as guarantors, Trustworthy Nominees agreed to lend the Company and Mr Fadl El-Saafin the sum of $250,000, secured (among other things) by a second mortgage over the Arden Street Property. 
16	On 20 December 2011, the Company was registered as proprietor of the Arden Street Property. 
17	On 17 December 2013, the City of Melbourne issued a planning permit to New Concept Design, a trading name of Mr Mekkya, for the construction of the Development. 
18	By an alleged email of 19 March 2014 to New Concept Design (copied to Wael), Mr El-Hissi of NOH Legal attached an allegedly signed investment loan agreement dated 1 March 2012 between the Company as developer and Mr Mekkya as investor (‘the Mekkya Loan Agreement’). The Mekkya Loan Agreement recorded that Mr Mekkya had agreed to lend the Company the sum of $750,000.
19	By investment loan agreement dated 8 August 2014 between the Company as developer and Dr Hegazy as investor, Dr Hegazy agreed to lend the Company the sum of $406,000 for a period of 18 months, at which time the Company would transfer to Dr Hegazy apartment 201 of the Development, as consideration. 
20	By an undated investment loan agreement executed in or about August 2014, between the Company as developer and Dr Atalla as investor, Dr Atalla agreed to lend the Company the sum of $350,000 for a period of 18 months, at which time the Company would transfer to Dr Atalla apartment 202 of the Development, as consideration. 
21	By loan agreement dated 15 April 2015 between Wael and Bayda as borrowers and Mr Franek as lender, being the First Franek Loan, Mr Franek agreed to lend Wael and Bayda the sum of $100,000 for a period of three months at an interest rate of $12,000 per month. The loan was to be repaid in full together with any outstanding interest by 12 July 2015. The loan was secured by a charge over the Nairne Terrace Property. 
22	By loan agreement dated 17 September 2015 between Trustworthy Nominees as lender, the Company as first borrower and Wael, Bayda and Hassan as second, third and fourth borrowers (‘the Trustworthy Loan Agreement’), the borrowers agreed to provide additional security for the previous loan (referred to in paragraph [15] above), which included a charge over the Nairne Terrace Property. 
23	By building contract dated 19 October 2015 between the Company as owner and the Builder as contractor (‘the Building Contract’), the Builder agreed to construct 25 dwellings and two commercial units at the Arden Street Property between 1 December 2015 and 1 June 2017 at a cost of $4.4 million. Mr Mekkya was the sole director and shareholder of the Builder. 
24	On 28 October 2015, Trustworthy Nominees lodged a caveat over the Nairne Terrace Property on the basis of the Trustworthy Loan Agreement.
25	By a further loan agreement dated 15 January 2016 between Wael and Bayda as borrowers and Mr Franek as lender, being the Second Franek Loan, Mr Franek agreed to lend Wael and Bayda the sum of $311,000, secured by a charge over the Nairne Terrace Property. The terms of the loan did not state what the purpose of the loan was; however, as we explain later in these reasons, there was evidence from Wael and Mr Franek about the purpose of the loan and the conversations in which that purpose was discussed. 
26	On 20 April 2016, Mr Franek lodged a caveat over the Nairne Terrace Property on the basis of the Second Franek Loan.
27	By written acknowledgment dated 30 May 2016, the El-Saafin Brothers declared that they had received an amount of $1.9 million as a loan from Mr Sacca and that ‘we are liable to return it back to him within one year from the date of this statement with any cost related to it’ (‘the Sacca Loan Agreement’).
28	By facility agreement dated 28 October 2016 between Balanced Securities as lender, the Company as borrower and the El-Saafin Brothers and Ms Lobna El-Saafin (‘Lobna’) as guarantors (‘the Balanced Facility Agreement’), Balanced Securities agreed to provide finance to the Company to assist with the refinance of, and the construction at, the Arden Street Property (‘the Balanced Loan’), on the following terms:
(a)	The facility limit was $6.2 million.
(b)	The interest rate was 11.95 per cent per annum.
(c)	The facility expired on or about 28 April 2018, being 18 months after the earlier of:
(a)	seven days after the despatch of mortgage documents to the borrower; or
(b)	the date of the initial drawdown.
(d)	The securities relevantly included:
(a)	a first registered mortgage over the Arden Street Property (the Balanced Mortgage); 
(b)	a second registered mortgage over 3 Ball Court, Bundoora (‘the Bundoora Property’); and
(c)	a general security deed granted by the Company and the El-Saafin Brothers.
29	By the Balanced Mortgage, which was executed on 28 October 2016, the Company mortgaged the Arden Street Property to Balanced Securities to secure the Balanced Loan.
30	Wael and Bayda failed to repay the First Franek Loan and the Second Franek Loan, and on 18 May 2017, Mr Franek, Wael, Bayda and the Company entered into two related agreements, being:
(a)	a deed of release and settlement (‘the Franek Settlement Deed’); and
(b)	the Franek GSA.
31	By the Franek Settlement Deed, Wael, Bayda and the Company agreed to terms including the following:
(a)	The Company would execute a standard form Law Institute of Victoria Contract of Sale of Real Estate and transfer to Mr Franek ‘Commercial/Office Space marked 002’ (‘Commercial Unit 002’) of the Development.
(b)	Subject to Wael, Bayda and the Company complying with that obligation, Mr Franek would pay the sum of $50,000 on execution of the Franek Settlement Deed, and a further sum of $50,000 on completion of the transfer and registration of Commercial Unit 002 on title.
(c)	Upon full compliance with the Franek Settlement Deed, Mr Franek, Wael, Bayda and the Company would mutually release and discharge each other from all matters relating to the Second Franek Loan.
(d)	The amount lent under the Second Franek Loan is defined as the sum of $311,000 and interest is defined as the sum of $26,000 per month.
32	By the Franek GSA, Wael, Bayda and the Company agreed to encumber all of their real and personal property in favour of Mr Franek, in order to secure their obligations under the Franek Settlement Deed.
33	On 14 June 2017, AMGS Properties Pty Ltd (‘AMGS’) was registered as a corporation with ASIC, with Mr Sacca and Mr Mekkya as the sole directors and shareholders, each holding 50 shares.
34	On 15 June 2017, Trade On International Pty Ltd (‘Trade On’) was registered as a corporation with ASIC, with Mr Sacca and Mr Mekkya as the sole directors and shareholders, each holding 50 shares.
35	By letter dated 29 December 2017 to Wael and Bayda, Mr El-Hissi stated that, in breach of the Franek Settlement Deed, Wael had failed to procure the Company to execute a contract of sale for Commercial Unit 002. On behalf of Mr Franek, Mr El-Hissi claimed $883,000 (being $311,000, plus interest of $26,000 per month for 22 months) was payable as a result of the breach, plus a refund of the $50,000 paid under the Franek Settlement Deed.
36	On 26 February 2018, Mr Mekkya lodged a caveat over the Arden Street Property claiming an interest under the Mekkya Loan Agreement.
37	In or about March 2018, there was a meeting at the Greenvale Shopping Centre attended by Mr Mekkya, Mr Sacca, Dr Hegazy and Dr Atalla in which there was a discussion about how the participants would be able to recover the amounts they had invested in the Development.
38	By emailed letter dated 22 March 2018 to the Builder, the Company provided notice of various defaults and of its intention to terminate the Building Contract in the event that the defaults were not remedied within 14 days. The default notice was issued substantially on the basis of the Builder’s alleged failure to complete the Development.
39	On 28 March 2018, a quantity surveyor certified that, as at 28 February 2018, the gross value of works performed was $1,057,084 and the gross cost to complete was $3,462,493. Accordingly, the Development was approximately 25 per cent complete.
40	Between 29 January and 31 March 2018, there were a number of communications between Mr El-Hissi and the Receivers regarding their potential appointment as receivers and managers of the Company. The communications resulted in a meeting on 4 April 2018 between Mr El-Hissi, Mr Franek, the Receivers and the Receivers’ solicitor (Mr Koroneos of Capstone Koroneos Legal) regarding the potential appointment.
41	By email of 5 April 2018, Mr Nair of Hicks Oakley Chessell Williams (the Company’s solicitor) served a termination notice on the Builder.
42	On 5 April 2018, and pursuant to cl 22 of the Franek GSA, Mr Franek signed a deed of appointment of the Receivers as joint and several receivers of the Company.
43	By email of 6 April 2018 at 4:36 pm to Mr El-Hissi, Mr Koroneos stated that his clients, the Receivers, would execute the appointment documents subject to the sum of $50,000 being paid into his trust account. At 5:53 pm, Mr Mekkya and Mr Sacca’s company, Trade On, paid $50,000 into the trust account of Capstone Koroneos Legal.
44	On 6 April 2018, Sloss J adjourned an application by the Builder for an urgent interlocutory injunction against the Company, and relevantly noted the following agreement:
2.	The Plaintiff agrees to allow the Defendant and its servants and agents to inspect the site at 65–67 Arden Street, North Melbourne (Site) on Wednesday, 11 April 2018 and Thursday, 12 April 2018, or at such other time reasonably notified to the Plaintiff’s solicitors in advance.
	3.	Until 23 April 2018 or further order:
(a)	neither party will carry out any work at the Site, other than any emergency repairs;
(b)	the Defendant agrees not to interfere with the Plaintiff’s works, plant, materials or equipment at the Site; and
(c)	the Plaintiff shall maintain a supervisor at the Site between 7:30am and 4pm each day.
45	By email of 10 April 2018 to Mr Nair, Mr Koroneos attached various documents including an ASIC Form 504, which recorded that the Receivers were appointed on 9 April 2018 pursuant to the terms of the Franek GSA.
46	By emailed letter dated 17 April 2018 to Mr Nair, Mr El-Hissi set out the non-exhaustive list of the breaches relied upon by Mr Franek in appointing the Receivers, being:
(a)	failure to provide an off-the-plan contract in accordance with the Franek GSA despite repeated requests from Mr Franek’s solicitors;
(b)	material adverse change, being the Supreme Court proceeding between the Builder and the Company;
(c)	material adverse change in the Company’s financial position, including the granting of security interests to Mr Mekkya and Mr Sacca; and
(d)	failure to disclose the existence of the Balanced Loan.
47	By deed of assignment of debt and securities dated 18 April 2018 between Balanced Securities as assignor and Mr Franek and/or a nominee as assignee (‘the Balanced Assignment Deed’), Balanced Securities assigned its interests under the Balanced Facility Agreement and the Balanced Mortgage to Mr Franek for the sums of $300,000 payable on 18 April 2018 and $2,493,079.80 payable on 18 May 2018. The Balanced Assignment Deed recorded the amount owing by the Company to Balanced Securities under the Balanced Facility Agreement as at 18 May 2018 to be $2,998,649.30.
48	On 26 April 2018, MAG Financial was registered as a corporation with ASIC, with Mr Franek as the sole director and shareholder, holding 12 shares.
49	By facsimile transmission dated 26 April 2018 to the Company, Balanced Securities provided notice of its intention to assign its debt and securities under the Balanced Facility Agreement and the Balanced Mortgage to MAG Financial, with the proposed assignment expected to take place on 4 May 2018.
50	By writ filed 27 April 2018 in County Court proceeding CI-18-01786, Mr Sacca claimed repayment of $1.9 million pursuant to the Sacca Loan Agreement.
51	By writ filed 27 April 2018 in County Court proceeding CI-18-01795 (‘the Mekkya Proceeding’), Mr Mekkya claimed repayment of $975,000 pursuant to the Mekkya Loan Agreement.
52	On 3 May 2018, Balanced Securities was paid $2,474,991.71 by a Commonwealth Bank of Australia bank cheque. This amount was funded by a transfer from the Commonwealth Bank of Australia bank account of AMGS.
53	By deed of assignment of contracts and securities dated 3 May 2018, Mr Franek assigned his rights under the Second Franek Loan, the Franek GSA and the Franek Settlement Deed to MAG Financial.
54	By notice of assignment of mortgages and security dated 4 May 2018 to the Company as borrower and the El-Saafin Brothers and Lobna as guarantors, MAG Financial provided notice of the assignment from Balanced Securities to MAG Financial pursuant to the Balanced Assignment Deed.
55	On 4 May 2018, Mr Franek instructed the Receivers to resign their appointment pursuant to the Franek GSA and, on behalf of MAG Financial, requested that they be appointed pursuant to the Balanced Facility Agreement.
56	On 7 May 2018, the Receivers resigned their appointment under the Franek GSA. On the same day, MAG Financial appointed the Receivers as joint and several receivers of the Company pursuant to the terms of the Balanced Facility Agreement.
57	By originating motion filed 8 May 2018 in Supreme Court proceeding S CI 2018 01685 (‘the Derivative Proceeding’), Hassan and Mohamed applied for an injunction restraining Mr Franek from appointing receivers and managers in respect of the Company and restraining the Receivers from acting as receivers of the Company.
58	By email of 8 May 2018 to Mr Nair, Mr Koroneos acknowledged receipt of the originating motion and stated that the Receivers had been appointed receivers and managers of the Company by:
(a)	Mr Franek during the period of 9 April to 7 May 2018; and 
(b)	MAG Financial from 7 May 2018, as assignee of the Balanced Facility Agreement.
59	By five emails between 9 May and 25 June 2018 to Mr Koroneos and Mr El-Hissi, Mr Nair repeatedly requested the payout figure necessary to discharge the amount owing under, relevantly, the Balanced Facility Agreement and to terminate the appointment of the Receivers.
60	On 15 May 2018, Mr Mekkya entered judgment in default of appearance (‘the Default Judgment’) in the Mekkya Proceeding against the Company in the sum of $982,848.22, being $975,000 plus interest of $4,808.22 and costs of $3,040 pursuant to the Mekkya Loan Agreement.
61	On or about 27 May 2018, there was a meeting between Dr Atalla, Mr Sacca, Mr Mekkya and Dr Hegazy at Tullamarine with respect to the repayment of their amounts invested in the Development.
62	By email of 29 May 2018 to Dr Atalla, Mr Mekkya attached a copy of the Default Judgment and stated that he was appointing a liquidator soon.
63	By valuation report dated 6 June 2018, Rann Property AdVal, on the instructions of MAG Financial, valued the Arden Street Property at $4.4 million.
64	On 8 June 2018, Hassan made a report to Victoria Police alleging that the Default Judgment was based on a ‘forged contract’, being the Mekkya Loan Agreement.
65	On 14 June 2018, the sum of $1,310,628.08, apparently in respect of the Second Franek Loan, was paid out of the Commonwealth Bank of Australia bank account of Trade On with the transaction description ‘Wdl Branch Fountain Gate’. On the same day bank cheques in the sums of:
(a)	$1,150,600 payable to Mr Franek; and
(b)	$159,998 payable to Mr El-Hissi’s firm, NOH Legal, for Mr Franek’s legal fees,
were issued out of the Fountain Gate branch of the Commonwealth Bank of Australia. 
66	By letter of approval dated 19 June 2018 to the Company, Mr Keith Blackney (‘Mr Blackney’), a mortgage broker at Black Arrow Mortgages, stated that Black Arrow Mortgages was prepared to provide a loan advance of $4 million to the Company subject to the conditions set out therein.
67	By four deeds of assignment, each dated 20 June 2018, it was agreed that the following debts would be assigned to MAG Financial on payment of the assignment consideration which, in each case, was the full amount of the debt, being:
(a)	the debt owed by the Company to Mr Mekkya in the sum of $982,848.22, being the Mekkya Debt, pursuant to the Default Judgment;
(b)	the debt owed by the Company to Mr Sacca in the sum of $1.9 million, being the Sacca Debt, pursuant to the Sacca Loan Agreement;
(c)	the debt owed by the Company to Mr Mekkya trading as New Concept Design in the sum of $174,000, being the New Concept Design Debt, purportedly pursuant to attached invoices (but no invoices were attached to the tendered copy); and
(d)	the debt owed by the Company to the Builder in the sum of $521,000, being the Builder Debt, pursuant to invoices issued under the Building Contract.
68	By four notices of assignment, each dated 25 June 2018, the Company was notified of each of the assignments to MAG Financial referred to in the preceding paragraph.
69	By correspondence of 25 and 26 June 2018 between Mr Nair and Mr Halse, Mr Halse provided the payout figure, being the sum of $8,250,990.83, together with a breakdown of such figure. Mr Nair contested the calculation of the payout figure, substantially on the basis that it incorrectly included amounts not owing.
70	By five letters to the Company, the El-Saafin Brothers and Lobna, each dated 26 June 2018, MAG Financial served default notices and demands pursuant to s 76 of the Transfer of Land Act 1958. MAG Financial demanded payment of $8,250,990.83, which it claimed was the amount due as at 25 June 2018 under the Balanced Facility Agreement and the Balanced Mortgage (with MAG Financial being the assignee of the rights of Balanced Securities). No reference was made to any debts or loan agreements other than the Balanced Loan.
71	By emailed letter dated 27 June 2018 to Mr Halse and Mr Koroneos, Mr Nair stated that he was instructed to tender the amount of $3,265,742.82 in satisfaction of the Company’s liabilities under the Balanced Facility Agreement in respect of which the Receivers had been appointed (‘the June Tender’). By email of the same day to Mr Nair (copied to Mr Koroneos), Mr Halse replied and stated that the amount of the security was $8,250,990.83 and accordingly, the proposed June Tender would not discharge such security.
72	On 27 June 2018, on the application of the plaintiffs in the Derivative Proceeding, Lyons J made interim orders restraining the Receivers and Mr Franek (including in his capacity as a director of MAG Financial) from taking steps to realise, sell or otherwise dispose of the ‘Securities’ (as defined in the Balanced Facility Agreement), and the guarantees granted under the Balanced Facility Agreement.
73	By letter dated 25 June 2018 to Wael, Black Arrow Mortgages stated that it ‘envisaged’ that the sum of $5 million would be available on or before 7 July 2018. The letter was in the following terms:
	We are awaiting confirmation that you have arranged the removal of all caveats on the properties.
	As discussed during our last meeting please forward to us requested details in relation to the residential properties.
	We envisage that the funds of: $5,000,000.00 (Five Million Dollars) will be available on or before Tuesday 7th August 2018.
	Thank you in anticipation.
74	By letter of approval dated 28 June 2018 to the Company (‘the Third Black Arrow Letter’), Black Arrow Mortgages confirmed that it was prepared to provide finance in the sum of $5 million to ‘80% [loan to value ratio (‘LVR’)] only of valuation’. This letter and the June Tender are considered in greater detail below.
75	On 3 July 2018, in the Derivative Proceeding, Kennedy J dissolved the interim orders of Lyons J upon the Receivers giving an undertaking not to sell the ‘Securities’.
76	On 5 July 2018, AAGG was registered as a corporation with ASIC, with Mr Mekkya as the sole director, and Mr Mekkya and Mr Sacca as the only shareholders, each holding six shares.
77	By contract of sale of real estate signed by Mr Mekkya on behalf of AAGG on 5 July 2018, and by Mr Franek on behalf of MAG Financial on 9 July 2018, MAG Financial sold the Arden Street Property to AAGG for $4.5 million plus GST.
78	By emails of 9 July 2018 to Black Arrow Mortgages, Wael offered the Nairne Street Property, the Bundoora Property, 2 Lynwood Crescent, Lower Plenty (‘the Lower Plenty Property’) and the Arden Street Property as security in support of the application for a loan.
79	By letters dated 16 and 19 July 2018 to Mr Halse, Mr Nair stated that the Company was ready, willing and able to tender the amount of $4,406,742.82 in satisfaction of what he described as the ‘Franek Debt’ and the ‘Balanced Securities Debt’ (‘the July Tender’). Mr Halse did not reply until 25 July 2018, after the settlement of the sale of the Arden Street Property.
80	On 17 July 2018, in the Derivative Proceeding, the Receivers undertook to the Court not to sell the Arden Street Property or the Lower Plenty Property.
81	By memorandum dated 18 July 2018, provided to the Court in accordance with the orders of Kennedy J made on 17 July 2018 in the Derivative Proceeding, counsel and the solicitor for Mr Franek and MAG Financial identified the precise basis on which the Receivers were entitled to sell the Arden Street Property and the Lower Plenty Property. The memorandum did not disclose that MAG Financial had entered into a contract on 9 July 2018 to sell the Arden Street Property to AAGG.
82	According to an adjustment statement, on 20 July 2018, the sale of the Arden Street Property was settled by the following documents:
(a)	a transfer of land dated 22 June 2018 from MAG Financial as mortgagee, to AAGG as transferee, for consideration of $4.95 million; and
(b)	an adjustment statement which included the following settlement statement:
SETTLEMENT STATEMENT	
Purchase Price	$4,500,000.00	
Less Deposit Paid	        $1,000.00	
	$4,499,000.00	
Plus Adjustments	     $15,708.42	
	$4,514,708.42	
		
CHEQUES	
City of Melbourne	$14,391.80	
City West Water	$3,770.62	
State Revenue Office	$42,813.91	
Vendor	$4,453,732.09	
Total	$4,514,708.42	
		
Cheques		
		
City of Melbourne	$14,392.80	
City West Water	$3,770.62	
State Revenue Office	$42,813.91	
Stamp Duty	$247,500.00	
LTO – transfer fee	$3,606.00	
LTO – Discharge of Mortgage fee	       $116.00	
	$312,199.13	
83	The date of the settlement is unclear because:
(a)	by email of 23 July 2018 at 4:38 pm to Mr Koroneos, Mr Halse stated that his client had ‘today’ completed the sale of the Arden Street Property; and
(b)	the settlement was not effected by a cheque to the vendor of $4,453,732.09, as referred to in the settlement statement, but by a mortgage dated 23 July 2018 from AAGG to MAG Financial over the Arden Street Property securing an ‘Advance’ of $4.5 million.
84	By email of 23 July 2018 at 6:31 pm to counsel and Mr Koroneos, Mr Bise stated that MAG Financial had allegedly sold the Arden Street Property ‘behind the receivers’ backs’.
85	By email of 24 July 2018 to Mr Nair, Mr Koroneos stated that the Receivers had no knowledge of, and were not involved in, the sale of the Arden Street Property.
86	On or about 27 July 2018, Mr Franek resigned as a director of MAG Financial and was replaced by Mr Mekkya. Mr Franek also transferred all of the shares in MAG Financial to Mr Mekkya.
87	By email of 3 August 2018 to Mr Nair, Mr Halse confirmed that Mr Ian Glavis and Mr Matthew Kucianski, the fifth and sixth defendants (‘the Administrators’), had been appointed as joint and several administrators of the Company. Accordingly, on the basis of his contention that the legal proceeding could not proceed without the written consent of the Administrators or leave of the Court, he invited the plaintiffs to discontinue the Derivative Proceeding.
The proceedings and the issues
88	The trial of this matter involved the hearing of four separate proceedings together. 
89	First, the Derivative Proceeding is a claim brought on behalf of the Company by the Company’s directors, being Hassan and Mohamed, against Franek, MAG Financial, the Receivers and others. Wael was joined to the proceeding. The El-Saafin Brothers, together with the Company, sought relief principally relating to:
(a)	the appointment of the Receivers as receivers of the Company;
(b)	the sale of the Arden Street Property to AAGG by MAG Financial as assignee of a mortgage executed by the Company in favour of Balanced Securities on 28 October 2016 (the Balanced Mortgage);
(c)	debts and security interests claimed against the Company by:
(i)	Mr Franek;
(ii)	MAG Financial;
(iii)	Mr Mekkya;
(iv)	Mr Sacca; and
(v)	the Builder.
90	By counterclaim in the Derivative Proceeding, the Receivers sought relief principally by way of declarations relating to their rights to indemnity, remuneration and expenses claimed against the Company and Wael.
91	Also by counterclaim in the Derivative Proceeding, MAG Financial, AAGG and the Builder sought relief principally by way of enforcement of debts and security interests claimed against:
(a)	the El-Saafin Brothers;
(b)	Lobna and Bayda; and 
(c)	the Company.
92	Secondly, by originating process filed 21 December 2018 in Supreme Court proceeding S ECI 2018 02987 by Trustworthy Nominees against Wael, Bayda, MAG Financial and others (‘the Trustworthy Proceeding’), Trustworthy Nominees relevantly sought orders that:
(a)	Wael and Bayda take all reasonable steps and execute all appropriate documents, including a mortgage between Wael and Bayda as mortgagors and Trustworthy Nominees as mortgagee over the Nairne Terrace Property; and
(b)	MAG Financial not proceed with the registration of mortgage AR674060A over the Nairne Terrace Property until after the registration of Trustworthy Nominee’s mortgage.
93	Thirdly, by originating motion filed 8 August 2019 in Supreme Court proceeding S ECI 2019 03648, by MAG Financial against Wael and Bayda, MAG Financial relevantly sought the following orders and declarations:
(a)	a declaration that MAG Financial has an equitable charge over the Nairne Terrace Property;
(b)	an order pursuant to s 81 of the Property Law Act 1958, or in the Court’s equitable jurisdiction, that the Court direct a sale of the Nairne Terrace Property; and
(c)	a declaration that MAG Financial is entitled to all monies owed to it by Wael and Bayda, together with its costs of and incidental to the proceeding and of the sale of the Nairne Terrace Property, from the proceeds of the sale of the Nairne Terrace Property, after satisfaction of the claims of the Westpac Banking Corporation pursuant to its registered mortgage AK741904L.
94	Fourthly, the Mekkya Proceeding, being Supreme Court proceeding S ECI 2021 00968, was the claim originally brought by Mr Mekkya in the County Court for relief against the Company by way of enforcement of an agreement between him and the Company in respect of which the Default Judgment was entered. Relevantly, the Company sought to have the Default Judgment set aside.
95	The parties agreed a list of issues for determination by the judge arising out of the four proceedings. The trial judge divided the issues into the following broad categories:
(a)	the breach of the Consumer Credit Act;
(b)	the Company debts;
(c)	the claims against the Receivers;
(d)	the Tenders;
(e)	the sale of the Arden Street Property;
(f)	the assignment of debts to MAG Financial; and
(g)	the Trustworthy Proceeding.
96	As already noted, the trial judge relevantly held that each of the First Franek Loan and the Second Franek Loan fell within the scope of s 5(1)(b) of the Code. As a consequence, the judge held that the Second Franek Loan was unenforceable by reason of s 39 of the Consumer Credit Act, and the Franek GSA Mortgages were void under s 40 of that Act in so far as they related to the Second Franek Loan. His Honour further held that the Company had effectively tendered the repayment of the amount due under the Balanced Facility Agreement in both June and July 2018, that MAG Financial had refused to accept the proposed tenders and that the refusal limited the interest payable pursuant to the Balanced Facility Agreement.
97	In the result, the judge relevantly declared that the Balanced Mortgage secured principal as at 27 June 2018 of $3,265,742.82 plus interest of $585,000, and declared that the Second Franek Loan was unenforceable and that the Franek GSA Mortgages were void in so far as they related to the Second Franek Loan.
Grounds of appeal
98	The grounds of appeal relate to the first and fourth of the agreed issues set out above, and are, in summary, as follows:
(a)	The trial judge erred in finding that:
(i)	the intention of the parties to the First Franek Loan was for the credit provided under that agreement to be applied towards the Development, such that it was credit provided to purchase, renovate or improve residential property for investment purposes, within s 5(1)(b)(ii) of the Code; and 
(ii)	as a consequence, the credit provided under the Second Franek Loan was provided wholly or predominantly to refinance credit that had been provided wholly or predominantly to purchase, renovate or improve residential property for investment purposes, and was thus credit to which s 5(1)(b)(iii) of the Code applied.
(b)	The trial judge erred by finding that the Company was ready, willing and able to perform the June Tender or the July Tender, such that it constituted an effective tender of the secured debt.
Ground 1: The Consumer Credit Act and the Code
99	The Consumer Credit Act regulates the provision of credit to consumers in Victoria. In summary:
(a)	s 39 provides that a credit contract is unenforceable if the annual interest rate exceeds 48 per cent; and
(b)	s 40 provides that a mortgage relating to a credit contract in respect of which the annual interest rate exceeds 30 per cent is void in so far as it relates to that contract.
100	A ‘credit contract’ is defined to have the same meaning as in the Code.
101	Section 4 of the Code provides that a credit contract ‘is a contract under which credit is or may be provided, being the provision of credit to which this Code applies’.
102	Section 5 of the Code is entitled ‘Provision of credit to which this Code applies’ and is in the following terms:
(1)	This Code applies to the provision of credit (and to the credit contract and related matters) if when the credit contract is entered into or (in the case of precontractual obligations) is proposed to be entered into:
(a)	the debtor is a natural person or a strata corporation; and
(b)	the credit is provided or intended to be provided wholly or predominantly:
(i)	for personal, domestic or household purposes; or
(ii)	to purchase, renovate or improve residential property for investment purposes; or
(iii)	to refinance credit that has been provided wholly or predominantly to purchase, renovate or improve residential property for investment purposes; and
(c)	a charge is or may be made for providing the credit; and
(d)	the credit provider provides the credit in the course of a business of providing credit carried on in this jurisdiction or as part of or incidentally to any other business of the credit provider carried on in this jurisdiction.
…
(3)	For the purposes of this section, investment by the debtor is not a personal, domestic or household purpose.
(4)	For the purposes of this section, the predominant purpose for which credit is provided is:
(a)	the purpose for which more than half of the credit is intended to be used; or
(b)	if the credit is intended to be used to obtain goods or services for use for different purposes, the purpose for which the goods or services are intended to be most used.
103	‘Residential property’ is defined in s 204 of the Code to mean, relevantly: 
(a)	land on which a dwelling is or will be affixed predominantly for residential purposes; or 
	…
	(d)	a share that: 
(i)	is in a company that is the legal owner of the land on which a dwelling is or will be affixed predominantly for residential purposes; and 
(ii)	gives the person who legally owns the share a right to occupy the dwelling; …
The judge’s reasons
104	After setting out the material facts, the legislative regime and the issues that were not in dispute, the judge regarded it as necessary to decide two issues under s 5(1) of the Code, as follows:
(a)	whether the credit was provided to purchase, renovate or improve residential property for investment purposes, or to refinance credit that had been provided predominantly for such purposes, as required by sub-s 5(1)(b) of the Code (‘the Residential Loan Purpose’); and
(b)	whether Mr Franek provided the credit:
(i)	in the course of a business of providing credit; or
(ii)	as part of or incidentally to any other business,
as required by sub-s 5(1)(d) of the Code.
105	The judge found that the second matter ((b) above) was satisfied. There is no appeal from this finding.
106	The judge found that the first matter ((a) above) was also satisfied. MAG Financial appeals this finding. The judge said:
	Accordingly, I find that the parties’ intention was for the credit under the First Franek Loan Agreement to be applied for the Residential Loan Purpose (being the Development), and for the Second Franek Loan Agreement to refinance the credit for the same purpose.
	…
	In determining the purpose of the provision of credit, ‘it is important to consider the substance of the transaction’ and ‘it is appropriate to consider what the money was used for’. All parties to the Second Franek Loan Agreement intended that most of the money would be used for the Development and most of the money was in fact applied for that purpose.
	Although there was no evidence on this question, it might be assumed that the loan monies applied to the Development would be shown, for accounting purposes, as loaned by Wael and Bayda to the Company. However, there is an air of unreality about finding that the purpose of the loan was limited to on-lending to the Company, particularly in circumstances where the parties’ accepted intention was that the money should be applied to the Development, and it was so applied.
	The substance of the transaction, which was known to all parties, was predominately to provide credit for the Development. To find that this ultimate purpose was diverted by the fact that the credit was channelled through the natural persons behind the related corporation would not be consistent with the broad and liberal interpretation of the Code as a piece of beneficial legislation.
	The approach of identifying the parties’ intention by reference to the ultimate purpose of loan money, despite such loan money being directed through related parties, is consistent with the authorities that have touched on this issue.
	…
	This is not a case where the loan money was provided to natural persons to do with as they choose; and they simply chose to on-lend it to a company. I do not consider the fact that the relevant residential property was owned by the Company affects the fact that the credit advanced under the Second Franek Loan Agreement was to refinance a loan applied for the Residential Loan Purpose. Accordingly, in my opinion, the requirement under sub-s 5(1)(b) of the Code was satisfied.
The parties’ submissions on the Consumer Credit Act and the Code
107	MAG Financial submitted that the critical focus under s 5(1)(b)(ii) was the provision of credit to the borrower (in this case, Wael and Bayda) and the necessary or required use of the funds by the borrower. MAG Financial accepted that the test as to purpose was objective. It also accepted that in the present case the funds advanced by Mr Franek were used for the Development. However, it submitted that that fact was not sufficient to bring the provision of credit within s 5(1)(b)(ii). It made the following submissions:
(a)	The trial judge erred in concluding that s 5(1)(b)(ii) of the Code applied because the parties intended that most of the money under the first loan would ‘be used for the Development’, ‘be applied to the Development’ or ‘to provide credit for the Development’ being carried on by the Company, with such monies being ‘channelled through’ or ‘directed through’ the borrowers. 
(b)	The trial judge did not properly consider or identify the ‘investment’ purposes of the loan to the borrowers, as required by s 5(1)(b)(ii). The Company was making the investment in the Development. But for the purposes of s 5(1)(b)(ii), the Company’s investment in the Development cannot be conflated with the ‘investment’ purposes of the loan by the credit provider (Mr Franek) to the borrowers (Wael and Bayda).
(c)	As the trial judge indicated at paragraph [117], there was no evidence of any arrangement or agreement between Wael and Bayda and the Company with respect to the loan funds, let alone evidence that the purpose of the loan to Wael and Bayda was for their ‘investment’ in the Development. The trial judge’s findings elided this essential question.
(d)	It might have been possible for the loan to Wael and Bayda to have had an ‘investment’ purpose in the Development; for example, if they were investing the loan funds in the Development as partners with the Company. However, contrary to the trial judge’s findings, the loan cannot have had a relevant ‘investment’ purpose under s 5(1)(b)(ii) where the purpose was merely for Wael and Bayda to make the loan funds available to the Company to enable the Company to progress the Development.
(e)	If the trial judge’s findings stand, it follows that any loan to natural persons for the purposes of those natural persons making the funds available to a company or trust which carries on residential property development would be covered by s 5(1)(b)(ii) — including all investments by natural persons in property trusts and companies listed on the ASX.
108	The gravamen of the oral submissions by MAG Financial was that there must be a connection between the debtor and the activity referred to in s 5(1)(b)(ii). In other words, it is the position of the debtor who obtained the credit that must be examined in order to ascertain whether the credit was provided for the purpose of the debtor, and not some third party, improving residential property for investment purposes.
109	In contrast, the Company submitted that the judge was correct in his approach to the construction of the Consumer Credit Act as beneficial legislation, and that the critical issue was the use to which the credit is put. It submitted that it was not necessary that the natural person borrowers themselves use the credit for development of residential property; it was sufficient that such use was effected by parties other than the borrowers. In other words, the borrowers were not required to directly improve the residential property for investment purposes themselves, so long as this was done, albeit by others. The Company submitted that the purpose attached to the credit, rather than the borrower: if the debtors were natural persons, and the ultimate destination of the funds was for the development, albeit through the Company, that was sufficient to bring the provision of credit within s 5(1)(b). It submitted that the Court ought to consider the ‘substance and reality of the transaction’, and that the particular legal structure adopted to achieve the purpose of investment in residential property — whether it be a partnership, a company, or a trust — was not relevant or disqualifying. 
110	The Company accepted that there was a line to be drawn, such that borrowing money to buy shares in an ASX listed company that invests in residential property and develops it would not fall within s 5(1)(b) — that would be investing in the company, not in property. In contrast, it submitted that where a natural person borrower invested in their own company, by on-lending the money without interest, that fell within s 5(1)(b). 
111	The Company relied on a number of authorities in support of the proposition that the use of an intermediary or alter ego, as in this case, did not render the section inapplicable. MAG Financial submitted that the authorities relied on by the Company were distinguishable. The authorities are discussed in greater detail below.
Analysis
112	The text of s 5(1)(b)(ii) of the Code requires attention to the use to which the credit is to be put: the credit must be provided ‘to purchase, renovate or improve’ residential property, ‘for investment purposes’. The word ‘to’ shows that this sub-paragraph turns on the immediate purpose for which the credit is provided. We accept that the section does not in terms identify, restrict or place any limitation on who ultimately makes use of the funds for the identified purpose. However, in our opinion, when read as a whole the section is inextricably tied to the debtor — that is, it is directed to the provision of credit to the debtor (as identified in paragraph (a)) and it is implicit in paragraph (b)(ii) that the credit is provided for use by the debtor to purchase, renovate or improve residential property for investment purposes. 
113	It is important to note that s 5(1)(b)(ii) does not turn on whether the credit is provided ‘for the purpose’ of purchasing, renovating or improving residential property, but whether it is provided ‘to purchase, renovate or improve’ residential property (emphasis added). The language suggests a direct and immediate connection between the provision of the credit and the act of purchasing, renovating or improving the property. The credit is itself to be used, necessarily by the debtor, to do the purchasing, renovating or improving. In contrast, s 5(1)(b)(i) is expressed in the language of ultimate purpose only.
114	Similarly, the credit is to be provided to purchase, renovate or improve the property ‘for investment purposes’. The investment purposes are evidently those of the person to whom the credit is provided, not a third party. The consumer protection object of the Code strongly points to that conclusion: it is the recipient of the credit, and not some other entity, whose investment purposes are to be protected. That indicates, again, that it is the consumer who is to do the purchasing, renovating or improving of the property, for those purposes.
115	Accordingly, in our opinion, it is not sufficient that the ultimate use of the funds, in the hands of someone other than the debtor, involves the improvement of residential property. Rather, it is necessary to focus on the purpose of the loan as between the borrower and the lender. 
116	We accept that, as beneficial legislation, the Consumer Credit Act is to be construed broadly. But it is also important to observe that the Act is not directed to any and all provision of credit. It is designed to protect a limited class of persons (natural persons and strata corporations) and limited classes of credit provided to those persons (namely those set out in s 5(1)(b) of the Code). A beneficial construction of s 5(1)(b)(ii) would go too far if it were to displace the limitation on the class of persons on whom protection is conferred (natural persons and strata corporations), by extending protection to a corporation outside that class which channels funds for its investment purposes through a natural person.
117	This is reinforced by the inclusion of paragraph (d) in the definition of ‘residential property’ in s 204 of the Code: a share in a company that owns the land on which a dwelling is or will be affixed that gives the owner of the share a right to occupy the dwelling. That is, the Code contemplates that where credit is provided to purchase a share of that kind in a company, that will fall within s 5(1)(b)(ii). That is a deliberately limited provision that brings within s 5(1)(b)(ii) only some investments in a company, namely those that involve the debtor obtaining a right to occupy the dwelling. It would circumvent that express provision if a person could borrow money, advance that money to a company for the company to improve residential property for investment purposes in circumstances where the debtor obtains no right to occupy the dwelling, and yet fall within s 5(1)(b)(ii) and gain the protection of the Consumer Credit Act. Such a broad construction of s 5(1)(b)(ii) would sit uncomfortably with that express provision in s 204.
118	The parties submitted, and we accept, that s 5(1)(b) requires consideration of the substance of the transaction and requires an objective assessment of whether the provision of credit has the relevant immediate purpose. The bulk of the authorities to which we were referred, and which were discussed by the trial judge, adopted that objective approach.
119	Considered objectively, we consider that in the present case the credit provided to Wael and Bayda by Mr Franek pursuant to the First Franek Loan was not provided for them to improve the Arden Street Property. Rather, it was provided for them to advance funds to the Company, and for the Company to improve the Arden Street Property. In that regard, we reject the submission that the trial judge erred in concluding, as a matter of fact, that the parties to the First Franek Loan intended the monies advanced to be used by the Company for the purposes of improving the Arden Street Property. That finding was supported by Mr Franek’s evidence and by Wael’s evidence. Thus it was open to the judge to reach that conclusion, having seen and heard the witnesses give evidence; it was not ‘glaringly improbable’ or contrary to compelling inferences. The fact that the terms of the First Franek Loan did not require Wael and Bayda to use the money for that purpose does not alter that conclusion.
120	Accepting that the purpose of the First Franek Loan was to provide money that was ultimately to be put towards the improvement of the Arden Street Property does not mean, however, that that loan fell within the terms of s 5(1)(b)(ii) of the Code. In our opinion, the purpose of the loan was not for Wael and Bayda to improve residential property for investment purposes. Rather, the immediate purpose was for them to provide funds to the Company, to be deployed by the Company to improve the Arden Street Property, of which it was the registered proprietor, for investment purposes. 
121	That is so even though all the parties intended that the funds advanced under the First Franek Loan would ultimately be used for developing the Arden Street Property (which, as we explain below, was a residential property within the meaning of that term in s 204 of the Code), and that at least a significant proportion of the funds were in fact so used. As we have said, the statutory question is not directed to the ultimate use of the funds, but to whether the immediate purpose of the loan is to provide funds which are themselves to be used by the debtor for the relevant purpose. The ultimate use to which the funds are actually put may be relevant in ascertaining the purpose of the loan, but it is not determinative. In the present case there was no dispute that the funds were in fact used by Wael and Bayda consistently with the intention of the parties — the funds were advanced to the Company, and the Company used them to develop the Arden Street Property. But that does not change the fact that the purpose for which the credit was provided was not for Wael and Bayda to develop the Arden Street Property for investment purposes. The credit was instead provided to them to lend money to a third party to undertake that development.
122	In our opinion, the authorities referred to by the parties do not require any different conclusion. To the contrary, they predominantly support the conclusion we have reached.
123	Our approach to the construction and application of s 5(1)(b)(ii) is consistent with the approach adopted by Gleeson JA in Lauvan. In that case the defendant, Mrs Bega, had entered into a loan facility agreement with the plaintiff for the express purpose of ‘assisting with short-term on-lending to family members for proposed commercial investment opportunities in the sum of $1,000,000’. Funds were subsequently advanced pursuant to that agreement to her son, who used them to assist his company, AB Veritas, to complete the purchase of seven units in a residential development in South Townsville. In respect of the question whether the credit was provided for a residential property purpose, so as to satisfy s 5(1)(b)(ii) of the Code, Gleeson JA held as follows:
	[A]lthough the money was ultimately used by Aidan Bega (through AB Veritas) for the purpose of purchasing residential property for investment purposes, the credit was not provided or intended to be provided to Mrs Bega to purchase any residential property for investment purposes. The credit was provided wholly for commercial purposes of Mrs Bega consistent with that stated in Recital A to the facility agreement.
124	Similarly, in this case, the credit was not provided to Wael and Bayda for either of them to ‘purchase, renovate or improve residential property for investment purposes’. The ‘substance and reality of the transaction’ was that credit was provided to Wael and Bayda for a commercial purpose, being to provide the funds to the Company (of which Wael was a shareholder, but Bayda was not) for its commercial purposes.
125	The parties also referred the Court to various cases concerning s 5(1)(b)(i) of the Code. We note at the outset that cases concerning the construction and application of that provision are of limited assistance in the construction and application of s 5(1)(b)(ii), for two reasons.
(a)	First, s 5(1)(b)(i) is framed differently from s 5(1)(b)(ii); it does not require that the credit be provided for the immediate purpose of undertaking a particular activity for a particular ultimate purpose. Rather, it is solely directed to the purpose for which the credit was provided. Thus a conclusion that the achievement of a purpose under s 5(1)(b)(i) through a trust did not take the provision of credit outside the scope of the Consumer Credit (New South Wales) Code (‘the NSW Code’) does not compel the conclusion that the same result would prevail under s 5(1)(b)(ii).
(b)	Secondly, s 5(1)(b)(i) does not concern residential property, which is a defined term. As already noted, there are strong textual reasons why the provision of funds to a company, channelled through a natural person, will take a transaction outside s 5(1)(b)(ii). No textual considerations of that kind are relevant to the construction of s 5(1)(b)(i).
126	Nonetheless, the parties having relied upon various cases concerning s 5(1)(b)(i), it is appropriate to explain in some more detail why we consider that they do not support the Company’s argument. 
127	In Jonsson, the borrower, Ms Jonsson, used loan funds to purchase a home for her parents. The facts are somewhat unclear, but it appears that the property was held on trust for Ms Jonsson’s parents as beneficiaries; the nature of the trust was unclear (and it may have been the case that Ms Jonsson was the trustee). The question for the Court was whether the Consumer, Trader and Tenancy Tribunal of NSW (‘the Tribunal’) had jurisdiction to hear and determine a matter under the NSW Code, adopted into law by the Consumer Credit (New South Wales) Act 1995 (NSW). The Tribunal had held that it did not have jurisdiction because the loan was not for a ‘personal purpose’ (being the statutory test relevant in that case under s 6(1)(b) of the NSW Code, which was analogous to s 5(1)(b)(i) of the Code). 
128	The Court held that the word ‘personal’ means ‘pertaining to the person’ and that it was broader than ‘household or domestic purposes’ (being the other two purposes mentioned in the relevant statutory provision). In that regard, Shaw J relied upon the principle concerning the construction of beneficial legislation, discussed above. The Court further held that there is a distinction between ‘consumer transactions’ and business transactions, and that the NSW Code was principally directed to the former, not the latter. Shaw J approved the approach of Gillard J in Linkenholt, namely that it is appropriate to consider the ‘substance and reality of the transaction’, including the ultimate use of the funds.
129	The Court observed that a transaction can be characterised as ‘personal’ if it is ‘designed to benefit the person by providing for [their] parents’ and that borrowing money in order to purchase a home for the borrower’s parents was a ‘personal purpose’ (as distinct from an investment purpose). The fact that the property was held on trust for the parents did not preclude that conclusion. In so far as the trust was concerned, Shaw J observed as follows:
	The Code should not, in my opinion, be interpreted so that it excludes non-business and non-investment borrowing to purchase a home and hold it on trust for one’s parents. The position may be different if the trust had a business or investment objective, as distinct from the provision of a benefit for a close family member.
	However, it has been noted in R P Meagher and W M C Gummow, Jacobs’ Law of Trusts in Australia, … ‘… the trust was not in its origin and perhaps never has been primarily a device of commerce. It was from earlier times and has continued to be an instrument of family settlement ¼’.
130	In addition to the fact that Jonsson concerned the equivalent of s 5(1)(b)(i), and not s 5(1)(b)(ii), and so is of limited assistance in the present context, there is an additional reason why Jonsson does not assist the Company’s case. It concerned the use of a trust as the vehicle to achieve the relevant purpose; it did not, so far as we can ascertain, concern the use of a company. Unlike a company, a trust is not a separate legal entity (although of course the trustee might be a company in a given case). The answer to the question whether s 5(1)(b)(ii) would apply if a trust were to be used for the improvement of residential property for investment purposes may thus be different from the answer to that question where a company is the entity that undertakes the improvement of the property. As observed in Jonsson, the answer might depend upon the nature and features of the trust. In the present case we are not called upon to consider how s 5(1)(b)(ii) might operate in circumstances in which a trust is used.
131	We thus consider that Jonsson is of limited relevance to the questions confronting this Court on this appeal.
132	The parties also referred us to Mango Media Pty Ltd v Comitogianni. In that case the defendant borrowed money from the plaintiff and signed a declaration to the effect that the loan was for business purposes, which, if correct, would have taken the loan outside the operation of s 6(1)(b) of the NSW Code (as noted above, being the equivalent to s 5(1)(b)(i) of the Code). The purpose of the loan was for the defendant to on-lend the money to a friend of his, Mr Hraiki, to invest in a commercial investment opportunity. Davies J concluded that the money was provided by the plaintiff to the defendant for personal purposes (ie to lend money to a friend), even though the ultimate purpose for which the funds were used was a commercial purpose. He observed that ‘the fact that Mr Hraiki may be using the money for property development or for the acquisition of property with a view to a return does not mean that the Defendant, in the circumstances, is doing the same thing’. 
133	By parity of reasoning, in this case the fact that the Company was going to use the money advanced to it to improve residential property for investment purposes does not mean that Wael and Bayda were doing the same thing. The subsequent use of the funds by a person to whom they were on-lent is not the same thing as the use of the funds provided by the initial lender to the initial borrower.
134	Mango Media was followed by Fullerton J in Provident Capital Ltd v Bortolin Papa [No 1]. In that case Mrs Bortolin Papa entered into a loan agreement with Provident Capital Ltd for the purpose of on-lending the funds to her son for his gymnasium business, which was operated through a company. Fullerton J held that the loan to Mrs Bortolin Papa was a loan for a personal purpose within the meaning of s 6(1)(b) of the NSW Code. Again, her Honour considered the purpose of the provision of the funds to, and the use of the funds by, the borrower, rather than her son’s ultimate purpose or use of the funds.
Does s 5(1)(b)(ii) apply to ‘large scale commercial property development’?
135	In light of our conclusion that the credit provided pursuant to the First Franek Loan was not provided for Wael and Bayda to improve residential property for investment purposes, it is not strictly necessary for us to consider MAG Financial’s additional argument that the Arden Street Property was not ‘residential property’ within the meaning of s 5(1)(b)(ii) at the time the First Franek Loan was made, because it was a ‘large-scale commercial property development project’. However, we record for completeness that we do not accept that argument.
136	As the High Court has often explained, the text of a provision is paramount in its construction, although of course regard is to be had to context, purpose and, where relevant, extrinsic materials. 
137	In the present case the relevant part of the definition of ‘residential property’ in s 204 is clear: it means ‘land on which a dwelling is or will be affixed predominantly for residential purposes’. Noting that the singular includes the plural, land on which more than one dwelling is or will be affixed will fall within the definition. There is no warrant for reading into the definition some limitation by reference to ‘large-scale commercial property development projects’, or some like concept. We accept the respondents’ submission that such a construction would involve the insertion of language into the statutory text that is ‘too big, or too much at variance with the language in fact used by the legislature’. We also accept the respondents’ submission that the construction advanced by MAG Financial is inherently uncertain. The reference in the second reading speech to ‘mum and dad investors’ plainly cannot result in the construction for which MAG Financial contends.
138	Further, even accepting that it is correct that the Code was not intended to apply to large-scale commercial property developments, that intention is achieved by other mechanisms. These include that the borrower must be a natural person or a strata corporation and that the regulations may provide that the Code does not apply if the amount of credit exceeds a particular amount. The National Consumer Credit Protection Regulations 2010 (Cth) currently provide that the Code does not apply to credit provided for the purpose of improving residential property for investment purposes, where the credit is not provided for the purpose of investment in a single residence and the total amount of credit exceeds $5,000,000. 
Conclusion on ground 1
139	Ultimately, in our opinion, the purpose of the First Franek Loan must be determined not by reference to the ultimate use of the funds after they were lent to the Company, but rather by reference to the immediate purpose for which the money was advanced to, and used by, Wael and Bayda. That purpose, and that use, was to lend or advance the borrowed funds to the Company for it to use for its commercial activities, that is, the Development; the credit was not provided for Wael and Bayda to improve residential property for investment purposes.
140	It follows that the appeal must be allowed on this ground. 
141	In light of that conclusion, various other findings made by the judge require reconsideration. The trial judge found that the Second Franek Loan was an agreement to refinance the credit provided under the First Franek Loan, and there was no challenge to that finding on the appeal. His Honour concluded that therefore the Second Franek Loan fell within s 5(1)(b) (implicitly, by reason of s 5(1)(b)(iii), which is concerned with refinancing of credit provided to improve residential property for investment purposes). However, if the First Franek Loan did not fall within s 5(1)(b)(ii), then the Second Franek Loan did not fall within s 5(1)(b)(iii). Thus neither the First Franek Loan nor the Second Franek Loan were subject to the Consumer Credit Act and neither agreement was unenforceable by reason of s 39 of that Act. It also follows that the Franek GSA Mortgages were not void in that connection pursuant to s 40 of that Act.
Ground 2: The Tenders
The June Tender
142	The judge found that ‘by the June Tender, the Company effectively tendered the repayment of the amount due under the Balanced Facility Agreement’. The judge said:
	By its failure to provide payout figures from 9 May to 25 June 2018; and its excessive demand for $8,250,990.83 for the discharge of the Balanced Mortgage, MAG Financial demonstrated that it was not prepared to accept a valid tender of the amount due under the Balanced Mortgage of $3,265,742.82. Further, the Plaintiffs’ proposal that MAG Financial provide the discharge of mortgage documentation contemporaneously with the payment of the amount due under the Balanced Mortgage did not excuse MAG Financial from refusing the proposed tender.
	In my opinion, on the balance of probabilities, I am satisfied that the Plaintiffs were able to borrow the necessary funds for the purpose of refinancing the Balanced Mortgage, for the following reasons:
(a)	I accept the evidence of Mr Blackney that he would have been able to broker the refinancing of the Balanced Mortgage. Mr Blackney is an experienced mortgage broker and has been prepared to broker loans for the Plaintiffs as required from June 2018 to April 2020. In particular, by letter dated 28 June 2018, Mr Blackney confirmed the approval of a loan of $5 million at an interest rate of 15% per annum. The terms of the loan offer did contain common conditions, but I accept his evidence that it was likely that these conditions would have been satisfied if MAG Financial had said it was prepared to accept the amount properly due under the Balanced Mortgage.
(b)	The conduct of the Plaintiffs from the appointment of the Receivers in April 2018 until disclosure of the settlement of the sale of the Arden Street Property in July 2018, was consistent with a mortgagor which was ready, willing and able to refinance the amount due under the Balanced Mortgage.
(c) 	The refusal by MAG Financial to provide payout figures, the eventual claim for a grossly excessive payout figure and the subterfuge to circumvent the Plaintiffs’ refinancing are consistent with MAG Financial knowing, or at least being very concerned that, if given the opportunity, the Plaintiffs would have refinanced the secured debt.
(d)	Any evidentiary difficulty in determining the hypothetical question of whether the Plaintiffs would have been able to raise the necessary finance is a product of MAG Financial’s unconscionable conduct in:
(i) 	refusing to provide a payout figure; 
(ii) 	providing a grossly excessive payout figure; and 
(iii) 	engaging in subterfuge to prevent the Plaintiffs from repaying the amount properly due under the Balanced Mortgage.
	In these circumstances, the Court adopts a robust approach ‘relying on the presumption against wrongdoers, the onus of proof, and resolving doubtful questions against the party whose actions have made an accurate determination so problematic’. The presumption against the wrongdoer is more commonly applied in the law of tort, but it is also available in the assessment of equitable remedies. The presumption against the wrongdoer ‘goes beyond where the wrong has positively made it difficult for the victim to prove its damages, and extends to where the wrong has thrust the victim into a difficult task of proving a past hypothetical’.
	Further, to the extent that the caveats lodged by Mr Franek and Mr Mekkya might be relevant to this question, I have already decided that neither party had a valid claim to support a caveat on the Arden Street Property. Accordingly, I do not consider that the Court should presume that these caveats would have had to have been paid out for the refinancing because to do so would be to permit ‘the blameable party … to take advantage of his own wrong’. Further, any refusal by the MAG Parties to discharge these caveats would have rendered them liable for damages consequent on such refusal pursuant to s 118 of the Transfer of Land Act.
143	The Third Black Arrow Letter is headed ‘Approval’ and provides for a Loan Advance of:
	$5,000,000.00 (Five Million Dollars)
	To 80% LVR only of valuation
The loan was for a period of 12 months secured by the Arden Street Property and guarantees.
144	The loan was subject to the following conditions:
	Black Arrow Mortgages to Execute
•	Subject to satisfactory title searches
•	Subject to due diligence on property debt
•	A Certificate of Currency will be required prior to settlement
•	Any Rates, Mortgages or caveats to be paid out of loan advance
•	The Lender reserves the right to request further information
•	Settlement within 21 to 25 working days
•	Fees of $8,800 to us in not any other procreation or brokerage fees payable to any other parties. Paid if loan not drawn down
	Borrower to provide the following information
•	Solicitor Details. For Loan Documents to be sent
•	Signed Acceptance (initialled each page) returned with Acceptance Fee
•	Signed consent form to conduct Veda Advantage Credit Check
•	100 Pts ID for all borrowers and guarantors
•	Council Rates Notice
•	Acceptance fee paid
145	The s 76 default notice and demand, issued by MAG Financial on 26 June 2018, in terms, expressly relied only upon the Balanced Facility Agreement and the Balanced Mortgage. It made no reference to any other debts allegedly or actually owed by the Company to MAG Financial. Likewise, the June Tender was, in terms, expressly directed to the discharge of the Balanced Mortgage, being the first mortgage on the Arden Street Property, and not to the payment of all amounts allegedly or actually owing. The Balanced Mortgage provided the basis on which the Receivers were appointed (or, more accurately, reappointed) on 7 May 2018 (see paragraph [56] above). The critical consequence, for the purposes of this appeal, is that if the June Tender was effective then interest on the Balanced Mortgage would not have continued to accrue and would be adjusted in the manner determined by the judge (in respect of which there is otherwise no appeal).
146	In that context, and as MAG Financial implicitly accepted in its submissions, the critical question is whether the Company was able to obtain sufficient funds to discharge the Balanced Mortgage. There is no question that it was ready and willing to do so. The amount tendered was $3,265,742.82. 
147	We are satisfied, having undertaken our own review of the evidence, that the Company was able to raise this amount in order to discharge the Balanced Mortgage, and that it would have done so but for the unconscionable conduct of MAG Financial (as the judge found, which finding was not the subject of any ground of appeal). Part of the unconscionable conduct was a failure to respond to numerous requests, over several weeks, for payout figures. 
148	We also observe that the judge’s conclusions on the availability of sufficient funds to discharge the Balanced Mortgage are likely to have been affected by impressions about the credibility and reliability of Mr Blackney formed by the judge as a result of seeing and hearing him give his evidence. Thus we consider that we ought not overturn his Honour’s findings of fact unless they are ‘glaringly improbable’ or ‘contrary to compelling inferences’. Mr Blackney’s oral evidence, relied on by the judge, was relevant, convincing and uncontradicted. There was no challenge to his credibility. As we explain further below, we see nothing in his evidence that was glaringly improbable or contrary to compelling inferences. It was open to the judge to accept Mr Blackney’s evidence, based on the considerable benefit of observing and assessing the witness as the evidence was given. Although we have read the transcript and conducted a full review of the evidence, we have not enjoyed such benefit. More generally, having reviewed the documentary and relevant oral evidence, and the submissions of the parties, we are of the opinion that it was open to the judge to make the findings that his Honour did, and we agree with those findings. 
149	MAG Financial submitted that there were numerous difficulties with the proposed refinancing. It submitted that the judge’s finding that it was ‘likely’ that the conditions in the Third Black Arrow Letter would have been satisfied if MAG Financial had said it was prepared to accept the June Tender was not open on the evidence; nor, it submitted, was there any evidence that the funds offered in the Third Black Arrow Letter would have been sufficient to enable the Company to perform the June Tender.
150	First, it was submitted that the proposed lender was unidentified and that the letters of offer suggested that Black Arrow Mortgages was to be the lender, a position denied by Mr Blackney. He was consistent in his evidence, that although Black Arrow Mortgages proposed the loan, it would be made by a third party lender or lenders, not by Black Arrow Mortgages. In relation to the identity of the lender his evidence was as follows:
And you have — you said you have a number of personalised lenders?---That’s correct. Yes.
Yes. Approximately how many do you have?---Probably between 30 and 50, depending on if they run out of money, you know. So between 30 and 50.
…
And let’s just take the last five years as an example. On average, how — what’s the value of the loans that you were involved in in total, in each of those years? ---I would say I roughly do about $100 m — nearly some years probably $30 m to $40 m and some up to $100 m, depending on what client base comes to me — in that time. If I get two large loans that flow up to $7 m each, I would probably do $50 m to $60 m in one year.
…
---Yes, I got a lot of people interested because everybody likes the North Melbourne address because it’s so close to the GPO. So I basically arranged funds, then I realised I had a few problems and they had to sort out their problems before they would come back to me for settlement.
So you were comfortable that you had identified lenders who were prepared to lend to Saafin Constructions?---Yes, yes.
…
Is it correct to say that you had funds available up to $5 m that you could lend if the company needed — called upon it?---That’s right.
…
Can you please explain what you mean by an ‘unconditional loan approval’?---Well, the — I had the funds. Basically, there’s no more information required. Everybody’s happy and we’re ready to settle.
…
Your companies do not lend any money, do they?---No. I personally don’t lend any money because that would be against ASIC rules. I put the loan document into the borrower’s name or their company — the lender’s name.
…
You also referred, consistently in your evidence, to these lenders that you say you have access to?---Yes.
Who are they?---Some are solicitors. Some are private people. Depending on the amount.
Can you explain to me why, in response to these subpoenas, there is no approval letter from any lender in the documents?---For — for this loan? 
For — in respect of any of the letters that you issued on behalf of Black Arrow Mortgage or The Private Mortgage Factory. All those amounts were subject to this loan. There is no approval letter from a lender?---Yeah, because one — one - - - 
Can you explain that?---I — I rang around obtaining the funds, and I gave a letter in regards to that because if I get a letter from a solicitor and they sign it, there will be another problem with caveat and costs.
There also amongst the subpoenaed documents, not one example of an executed loan agreement. Do you accept that?---Yes. Because then that loan agreement comes from the solicitor, not myself.
151	The judge accepted this evidence. We see no reason to depart from the view taken by the judge. Mr Blackney’s evidence is not glaringly improbable or contrary to compelling inferences. The criticism that the proposed loan was not supported by particulars of an identified committed lender does not detract from the weight to be attributed to Mr Blackney’s evidence, which was based on his considerable experience and expertise in the mortgage broking industry. Like the judge, we do not regard the failure to identify the ultimate lender as fatal to the otherwise valid tender.
152	Secondly, MAG Financial submitted that, on the valuation evidence available at the relevant time, the LVR was not sufficient to have enabled sufficient funds for the Balanced Securities Loan payout, the substantial fees and other amounts required to be paid at settlement.
153	In June 2018, MAG Financial had obtained a valuation of $4.4 million. That valuation was provided to Mr Blackney. At 80 per cent LVR, the amount available through Black Arrow Mortgages would have been $3,520,000. This, MAG Financial submitted, was insufficient to discharge the Balanced Securities Loan after the commission and fees associated with the loan. 
154	According to Mr Ricardo Gonzalo Zamora, a property dealer and real estate agent called to give evidence by the Company, the Arden Street Property had a value substantially higher than $4.4 million. He assessed the property as being worth between $5.25 million and $5.5 million. Mr Zamora regarded the valuation of $4.4 million as too conservative. However, that opinion was given in 2021 and was not available to Black Arrow Mortgages or Mr Blackney at the time the Company was negotiating with Black Arrow Mortgages for the provision of funds. 
155	More significantly, the evidence at trial was to the effect that Black Arrow Mortgages was prepared to procure the advancement of more than $3,520,000 if additional securities were provided. In cross-examination, Mr Blackney gave the following evidence:
	And do you see towards the bottom of the screen, it says, ‘Loan advance $5 m to 80 per cent LVR only of valuation’?---That’s correct, yes. 
	Can you please explain what that means, ‘to 80 per cent LVR only of valuation’?---Well, loan valuation. It’s loan valuation. So let’s say it’s $1 m. I can get my $800,000.
	So if further properties were to be provided to you as security?---Yes. 
	It would be 80 per cent of those further properties as well, that you would lend on the security?---That’s correct. I had a list of five or six other properties as well.
	…
	Registered first mortgage over 65–67 Arden Street?---Yes, that’s right.
	Was this the security that you had in mind when you said you would be prepared to lend up to $5 m - - -?---Yes.
- - - up to 80 per cent of the value of the property?---That is correct. But I was very confident that if there was a problem with the valuation that they would throw in any other properties as well. But when we did our drive-bys and I spoke to a few valuers, everybody was comfortable that $5 m was a comfortable figure.
156	As the judge found, MAG Financial never properly engaged with the Company in relation to the June Tender. In those circumstances, the occasion for those other properties to be evaluated and utilised as security, and for a final loan amount to be determined, never arose. Nonetheless, Mr Blackney’s evidence was clear: he considered that a loan of $5 million would be able to be provided to the Company. Again, it was open to the judge to accept that evidence and we see no reason to depart from his Honour’s conclusion that Black Arrow Mortgages was willing to provide the Company with sufficient funds to discharge the Balanced Mortgage. 
157	Next, MAG Financial submitted that under the terms of the proposed Black Arrow Mortgages finance, all caveats were required to be removed. There were four caveats:
(a)	Mr Franek — 6 October 2017 (‘the Franek Caveat’);
(b)	Mr Mekkya — 26 February 2018 (‘the Mekkya Caveat’);
(c)	Mr Al-Zubeidi — 17 April 2018; and
(d)	Property Capital Pty Ltd — 25 May 2018.
158	MAG Financial submitted that the trial judge had not considered what might have been required in order to procure the removal of the caveats. It further submitted that, if it succeeded on ground 1, the Franek Caveat posed an ‘insurmountable hurdle’ to any refinance. No explanation was given as to why that was so.
159	In relation to the caveats, Mr Blackney gave evidence that although the caveats had to be paid out, he was happy for the loan to be used for that purpose. In cross-examination and in relation to the fourth bullet point in the letter of offer (removal of caveats), Mr Blackney gave the following evidence:
	Let’s just work through this condition. The fourth bullet point. ‘Any rates, mortgages or caveats to be paid out of the loan advance’?---That’s correct. Yes. 
	This letter here in the security column only refers to the North Melbourne property?---Yes.
	Is it your evidence that for this proposed loan to be provided there was other security that would need to be proffered by - - -?---There was other securities available, but on this one we didn’t have to because I think the — it was a draw down situation where we paid out the first mortgage and then we gave them the money for the construction to finish and the draw down situation. And at the end the property was worth $12 or $13 million, by memory, and that’s how we got to the $9 million.
160	There are a number of points to be made about the removal of the caveats. 
(a)	First, the Mekkya Caveat did not secure any indebtedness; thus it can be put to one side. 
(b)	Secondly, the evidence supports the conclusion that the caveats were no real obstacle to the refinancing of the Balanced Loan. By paying out this loan, the financier would, by subrogation or assignment, stand in the shoes of Balanced Securities and hold the first mortgage over the Arden Street Property to secure this limited refinancing. Reading Mr Blackney’s evidence in its entirety, it is apparent that he was not concerned about the caveats. He was able to provide more funding, if required, upon the security of the other properties that were offered. 
(c)	Finally, the Supreme Court has wide powers in relation to the removal of caveats. The amount owing to Mr Al-Zubeidi was $100,000 and the amount owing to Property Capital Pty Ltd was $33,500; the Franek Caveat was related to the Franek GSA and was said to secure an amount of $1,140,000. These amounts could have been satisfied by the $5 million loan proposed by Black Arrow Mortgages. Further, to the extent that there is any uncertainty or dispute about the amounts owing under the Franek GSA, based on the New Concept Debt and Builder Debt (which are disputed and have not yet been determined by the judge), Mr Blackney’s evidence was that he could advance additional funds upon the provision of additional security, potentially up to $9 million. Thus we see no reason to think that the Franek Caveat would not have been discharged had the proposal for funding from Black Arrow Mortgages been put into effect. 
161	In relation to the remaining relevant conditions — satisfactory title searches and due diligence on the property debt — the judge accepted the evidence of Mr Blackney that it was likely that these conditions would have been satisfied if MAG Financial had said it was prepared to accept the amount properly due under the Balanced Mortgage. Again we agree with the judge’s conclusion on this issue.
162	For these reasons we consider the judge was correct to conclude that the Company was able to provide the funds necessary to discharge the Balanced Mortgage, pursuant to the June Tender. We have not found it necessary to rely on the presumption against a wrongdoer to reach this conclusion. The Company was able to perform the June Tender, but was prevented from doing so by the conduct of MAG Financial. That conduct, the trial judge found, included delaying the provision of a payout figure, providing a grossly excessive payout figure, and then refusing to accept the amount proffered in the June Tender. In those circumstances there was no obligation on the Company to formally pay or tender that amount.
163	The consequence of MAG Financial failing to accept the June Tender is, as the judge found, a change in the interest rate payable from that specified in the original loan to that payable under the new financing arrangements that would have been put in place had the June Tender been accepted. There was no challenge on the appeal to that aspect of his Honour’s reasons.
The July Tender
164	It is necessary also to consider the July Tender because it relates to both the Balanced Mortgage and the Franek Debt. After setting out the material facts and the submissions of the parties, the judge found that ‘by the July Tender, the Company effectively tendered the repayment of the amounts due under the Balanced Facility Agreement and the Second Franek Loan Agreement’. The judge said:
	In my opinion, the July Tender was effective for the same reasons as I have found that the June Tender was effective; and I reject the submissions of the MAG Parties and the Receivers for the same reasons that I rejected their submissions with respect to the June Tender.
	With respect to the contention that, by the time of the July Tender, the Company’s right to redeem the mortgages had been extinguished, I note the relevant principles as follows:
(a)	On the mortgagee entering into a valid contract of sale with respect to the secured property, the mortgagor’s right to redeem the mortgage is extinguished.
(b)	If the mortgagee does not act bona fide in the exercise of the power of sale and the purchaser had knowledge of such impropriety at the date of the contract, the mortgagor does not lose its equity of redemption by the entry into the contract.
(c) 	Further, if the purchaser was not aware that the mortgagee had acted in bad faith, the mortgagor would not necessarily lose its right of redemption but the matter would be ‘determined in accordance with the general principles by which disputes as to priority between competing claims are resolved, there is no principle which operates to postpone the right of the mortgagor to that of the purchaser’.
	As found in paragraph 432 below, MAG Financial’s conduct in entering into the contract of sale for the Arden Street Property was in bad faith and AAGG colluded in such conduct. Accordingly, I consider that, by the July Tender, the Company effectively tendered the repayment of the amounts due under the Balanced Facility Agreement and the Second Franek Loan Agreement.
165	In relation to the July Tender, the parties, for the most part, repeated their submissions made in relation to the June Tender. Neither the judge nor the parties addressed the amount we have found to be owing under the Second Franek Loan as part of the July Tender.
166	As noted above, the July Tender was directed to the discharge of both the Balanced Mortgage and the Franek Debt (and attached security including the Franek GSA). The Receivers were originally appointed under the Franek GSA and a month later reappointed under the Balanced Mortgage. 
167	The critical question on the appeal is whether the Company was able to obtain sufficient funds to discharge both the Balanced Mortgage and the Franek Debt. Again there is no question that the Company was ready and willing to do so.
168	The amount tendered by the July Tender was $4,406,742.82, rather than the excessive $8 million figure unreasonably demanded and required by MAG Financial. $4,406,742.82 was said to be the amount payable in relation to both the Balanced Mortgage and the Franek Debt, which was consistent with MAG Financial’s breakdown of the total amount owing set out in its solicitor’s letter dated 26 June 2018. MAG Financial did not argue that the amount of the July Tender was insufficient. The only question on the appeal was whether the Company could obtain funds to that amount. In our opinion, for the reasons given in relation to the June Tender, the Company was able to raise the amount tendered in order to discharge the Balanced Mortgage and the Franek Debt. It would have done so but for the unconscionable conduct of MAG Financial and others. Thus for substantially the reasons set out above in relation to the June Tender, we are of the opinion that it was open to the judge to make the findings that his Honour did. We agree with those findings. Again, the documentary evidence and the oral evidence of Mr Blackney is convincing, uncontradicted and conclusive.
169	In our opinion, the Company was able to perform the July Tender, but was prevented from doing so by the conduct of MAG Financial. That conduct included, by this point in time, the sale of the Arden Street Property in unconscionable circumstances, which sale has now been set aside by the judge, and the failure to properly and timeously engage with the Company in relation to its continuous and bona fide attempt to discharge the amounts properly owing under the Balanced Mortgage and the Franek Debt.
170	It follows that, notwithstanding success on ground 1, the failure to accept the July Tender has a consequent effect on the interest rate payable under the Franek GSA. The same adjustment as that undertaken in relation to the Balanced Mortgage will need to be undertaken.
Disposition
171	We will grant leave to appeal on ground 1 and allow the appeal on that ground.
172	We will grant leave to appeal on ground 2 but dismiss the appeal on that ground.
173	We will hear from the parties in relation to the appropriate form of order, costs and the further disposition of the proceedings.
---

SCHEDULE OF PARTIES
	MAG FINANCIAL AND INVESTMENT VENTURES PTY LTD (ACN 625 790 623)		First applicant	
				
	AAGG DEVELOPMENTS PTY LTD (ACN 627 341 128)		Second applicant	
				
	and			
				
HASSAN EL-SAAFIN		First respondent	
				
	MOHAMED EL-SAAFIN		Second respondent	
				
	SAAFIN CONSTRUCTIONS PTY LTD (ACN 097 500 751) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)		Third respondent	
				
	WAEL EL-SAAFIN		Fourth respondent	
				
	MARK FRANEK		Fifth respondent	
				
	STEPHEN ROBERT DIXON		Sixth respondent	
				
	AHMED BISE		Seventh respondent	
				
IAN GLAVIS		Eighth respondent	
				
	MATTHEW KUCIANSKI		Ninth respondent	
				
	AMR MEKKYA		Tenth respondent	
				
	GEORGE SACCA		Eleventh respondent	
				
	NEW CONCEPT HOMES PTY LTD (ACN 602 265 298)		Twelfth respondent	
				
	LOBNA EL-SAAFIN		Thirteenth respondent	
				
	BAYDA EL-SAAFIN		Fourteenth respondent