Zhou v Haider

[2025] ACTSC 348

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title: 

Zhou v Haider

Citation: 

[2025] ACTSC 348

Hearing Date: 

10 February 2025

Decision Date: 

8 August 2025

Before: 

Mossop J

Decision: 

See [113]

Catchwords: 

APPEAL – CIVIL LAW – Appeal from ACT Magistrates Court –

whether loan agreements should be set aside under the National

Credit Code – whether the Code applied to loan agreements –

whether appellant provided credit in the course of a business of providing credit carried on in this jurisdiction or part of or incidentally to any other business of the appellant carried on in

this jurisdiction – where the buying and selling of properties

lacked the regularity, continuity or system to allow it to be

characterised as a business at the relevant times – where the two loans themselves did not constitute a business – appeal allowed PRACTICE AND PROCEDURE – JUDGMENTS AND ORDERS – Date on which judgment takes effect – whether judgment should

be backdated to the date of the magistrate’s decision – r 1605 of

the Court Procedures Rules 2006 (ACT) – where backdating

would avoid exorbitant contractual interest rate applying after the

magistrate’s decision – where backdating would defeat a

contractual entitlement of the appellant and the additional interest would be a result of the respondents leading the magistrate into

error – judgment not backdated

Legislation Cited: 

Consumer Credit (Queensland) Act 1994 (Qld), app Court Procedures Rules 2006 (ACT), rr 1605, 5001 High Court Rules 1952 (Cth), ord 43 r 3

Income Tax Assessment Act 1936 (Cth), ss 25(1)(a), 26
Judiciary Act 1903 (Cth), s 37
National Consumer Credit Protection Act 2009 (Cth), s 6, Sch 1

– National Credit Code ss 5, 13, 35, 77

Cases Cited: 

Federal Commissioner of Taxation v Whitfords Beach Pty Ltd

(1982) 150 CLR 355
Edgelow v MacElwee [1918] 1 KB 205
Government Insurance Office of NSW v Healy (No 2) (1991) 22
NSWLR 380
Harmer v Hare (No 2) [2012] NSWCA 58
Hungier v Grace (1972) 127 CLR 210
Hyde v Sullivan (1955) 56 SR (NSW) 113
Lauvan Pty Ltd v Bega [2018] NSWSC 154; 330 FLR 1
McKensey v Hewitt [2004] NSWSC 636; 61 NSWLR 54
Mills v Federal Commissioner of Taxation [2012] HCA 51; 250
CLR 171

Najdovski v Crnojlovic (No 2) [2008] NSWCA 281; 51 MVR 334

Nicol v Allyacht Spars Pty Ltd (No 2) (1988) 165 CLR 306

Saafin Construction Pty Ltd v Madcap Financial and Investment

Ventures Pty Ltd [2021] VSC 489
Shakespeare Haney Securities Ltd v Crawford [2009] QCA 85; 2
Qd R 156
Simpson v Donnybrook Properties Pty Ltd [2010] NSWCA 229
Williams v ATM & CPA Projects Pty Ltd [2015] NSWSC 703
Zhou v Haider [2024] ACTMC 7
Zoef v Nationwide News Pty Ltd (No 2) [2017] NSWCA 2

Parties: 

Yuanjie Zhou (Appellant)

Nicholas Shahzad Haider (First Respondent)
Jenna Clare Fitch (Second Respondent)
Julie Theresa Fitch (Third Respondent)

Representation: 

Counsel

DA Smallbone with WDB Buckland (Appellant)

No appearance (First Respondent)
R Markham (Second and Third Respondents)

Solicitors

Accuro Maxwell (Appellant)
No appearance (First Respondent)

Adero Law (Second and Third Respondents)

File Number: 

SCA 28 of 2024

Decision Under Appeal: 

Court/Tribunal:	Magistrates Court of the ACT
Before:	Magistrate Lawton
Date of Decision:	7 May 2024
Case Title:	Zhou v Haider
Citation:	[2024] ACTMC 7

Court File Number: CS 9 of 2023

MOSSOP J: 

Introduction 

1․ 

The appellant, Yuanjie Zhou, also known as Joe Zhou, has appealed from a decision of

the Magistrates Court made on 7 May 2024: Zhou v Haider [2024] ACTMC 7.

2․ 

In the Magistrates Court, the appellant sought to recover money from the three

respondents which was alleged to be owing under a loan agreement. The first

respondent did not participate in the hearing before the magistrate. The other two

respondents asserted that the loan agreement and an earlier loan agreement should be

set aside pursuant to s 77 of the National Credit Code (the Code) set out in Sch 1 of the

National Consumer Credit Protection Act 2009 (Cth). The central issue before the

magistrate was whether or not the agreements were subject to the Code. The magistrate

found that they were subject to the Code and made an order under s 77(c) of the Code

setting both agreements aside. As a consequence, he dismissed the appellant’s claim.

3․ 

The appellant has appealed from the orders made by the magistrate.

Basic facts

4․	Before setting out the facts that were found by the magistrate, it is useful to briefly
describe the parties.
5․	The appellant is a businessman conducting a painting business and a steel business.
He also bought and sold real estate over the years prior to the two loan agreements. A
principal issue in the case was whether he did so in the course of a business.
6․	The first respondent, Nicholas Haider, was in a relationship with the second respondent,
Jenna Fitch. The relationship between Mr Haider and Ms Fitch was current when the first
agreement was entered into, but they had separated by the time of the second
agreement. The third respondent, Julie Fitch, is Jenna Fitch’s mother.
7․	The facts found by the magistrate were as follows:

The First Loan Agreement – 8 April 2021

8. On 8 April 2021, the Plaintiff entered into a loan agreement (“the First Loan Agreement”)

with all three defendants whereby the Plaintiff would loan them the sum of $100,000.

9. The agreement arose from discussions between the Plaintiff and the first Defendant for the purpose of renovation works at the Stirling Property. [The Stirling property was a residential property in Stirling, which was owned by the second and third respondents.]

10. This was a 6-month loan comprising of the Principal Sum, compounding interest on the outstanding balance of the Principal Sum calculated at 7.5% per month (lower rate) or 8.5% per month (higher rate), due on 8 September 2021.

11. Following the due date of 8 September 2021, any amount of the Principal Sum remaining would be subject to the higher rate, compounding monthly. The liability for the Third Defendant was limited to her interest in the mortgaged property being 1% interest.

12. It is noted that the Second and Third Defendant were not privy to the substantive details
of the loan agreement. The First Defendant conducted all negotiations with the Plaintiff.

13. However, the loan agreement was drafted by competent lawyers who were aware of the operation of the National Credit Code. By virtue of clause 3 of the Loan Agreements, the parties had agreed to the effects of where the Consumer Credit Code applies. This can be

considered as an admission that the parties recognised the Court’s discretion to determine

the enforceability of the loan agreements pursuant to s 77 of the National Credit Code and

s 180 of the National Consumer Credit Protection Act.

14. The Defendants made repayments in the sum of $7,500 and $8,500 on 23 June 2021

and 5 August 2021 respectively.

15. Interest continued to accrue between the period of 8 April 2021 and 17 February 2022

and as of 17 February 2022, the interest accrued was $68,394.52.

16. The parties agreed the full amount outstanding as of 4 February 2022 was $170,000.

The Second Loan Agreement – 17 February 2022

17. On 17 February 2022, the Plaintiff entered into another loan agreement (“the Second

Loan Agreement”) with all three defendants.

18. The Second Loan Agreement included the Principal in the First Loan Agreement as well

as any interest accrued, essentially extinguishing the First Loan Agreement.

19. On 18 February 2022, a payment in the sum of $90,000 was made to the Plaintiff. As a
result of this repayment the amount owing would be $80,000.

20. The Plaintiff demanded the repayment of the loan, but the Defendants failed to repay the principal. The Plaintiff lodged a caveat pursuant to special condition 1 of the Loan Agreement on the Stirling property.

21. On 10 November 2022, the mortgagee in possession of the Stirling property arranged for sale of the property and on 2 December 2022, advised that the proceeds of sale were insufficient to pay for the debts outstanding.

22. Thus, as of the date of the claim, the whole of the principal plus interest remains

outstanding.

8․	Contrary to the findings of the magistrate, the first agreement was entered into between
the appellant and the second and third respondents, Jenna and Julie Fitch. It was only
in the second agreement that the first respondent, Mr Haider, was an additional party.
However, that error is not of significance for present purposes.

The proceedings before the magistrate

9․	The proceedings before the magistrate were commenced on 20 February 2023. A
defence was filed on 17 May 2023. Evidence-in-chief was given by affidavit. The proceedings were heard before the magistrate on 27 February 2024. The appellant and
his wife gave evidence and were cross-examined. The second and third respondents
also gave evidence and were cross-examined. The first respondent, Mr Haider, did not
appear at the hearing. The magistrate reserved his decision. The magistrate’s decision
was delivered in writing on 7 May 2024.

The decision of the magistrate

10․	The magistrate’s reasons comprise 75 paragraphs over 10 pages.
11․	The magistrate (at [4]-[5]) identified the amounts claimed by the appellant and noted that
the fundamental issue was whether the appellant conducted a business of providing
credit or conducted a business incidental to which credit was provided under s 5 of the
Code so as to be a “credit activity” within the meaning of s 6 of the National Consumer
Credit Protection Act.
12․	He identified (at [6]) that, if the appellant were found not to have been governed by the
Code, the second loan agreement would be enforceable, and judgment should be
entered against the second and third respondents. If, on the contrary, the appellant were
found to have been conducting a business of providing credit or conducting a business
incidental to which credit was provided under s 5 of the Code, then the loan agreement
would be unenforceable, and judgment should be entered in favour of the respondents.
13․	So far as the application of the Code was concerned, the magistrate’s reasons identified
(at [31]-[32]) that there was a rebuttable presumption that the Code applied and that the
burden was on the appellant to establish that the Code did not apply. The reasons
indicate that this burden is under s 35 of the Code, but the reference was probably
intended to be to s 13.
14․	The magistrate identified (at [34]-[36]) that, so far as the application of s 5(1) was
concerned, the requirements in ss 5(1)(a), (b) and (c) were satisfied and the critical issue
was that provided by s 5(1)(d). Under that paragraph, in order for the Code to apply, it
was necessary to establish that:

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.

15․	The magistrate identified the appellant’s submissions that:
(a) the loan agreement was not a credit contract because there was no overlap

between the appellant’s business activities and the loan agreement; and

(b) the respondents, who submitted to the contrary, had conflated the appellant’s

business activities generally with the provision of credit in this case.

16․	The magistrate (at [39]) identified that the decision in Lauvan Pty Ltd v Bega [2018]
NSWSC 154; 330 FLR 1, quoting Williams v ATM & CPA Projects Pty Ltd [2015] NSWSC
703 at [70], required that, in order for there to be a business, there must be “repetition
and continuity of the activities which characterise the business”. The magistrate then
relied upon the decision in Shakespeare Haney Securities Ltd v Crawford [2009] QCA
85; 2 Qd R 156 for the proposition that even a one-off transaction or venture may be held
to be of a business character.
17․	The magistrate accepted (at [40]) that the loan agreements had no connection with the
appellant’s painting and steel businesses.
18․	The magistrate then found (at [41]-[42]):
(a) the loans had been furnished by the appellant personally not by either of his

businesses; and

(b) the appellant was an experienced businessman, operating three businesses

related to the construction of properties.

19․ The magistrate continued (at [43]-[48]):

43. The evidence is also clear that the Plaintiff, personally, engages in the repeated purchasing and selling of properties with a view to making profit. In other words, he conducts a business of purchasing properties for investment purposes. When taken to each of the properties he has purchased over the period both before and after the dealings in respect to

which the hearing related, he acknowledged that nearly all were for investment purposes …

44. Perhaps the clearest example of this is the Plaintiff’s purchase of 27 Colebatch St in

Curtin. He, together with the other directors of one of his businesses, in their personal capacity, purchased the property, carried out some minor gardening upon it, and then sold it some months later for a profit of some $340,000 over its purchase price.

45. Further, the Plaintiff has, in his affidavit evidence, deposed that he had retained the First

Defendant for the purposes of purchase and sale of property. The Plaintiff’s wife

corroborated this evidence and is also an experienced mortgage broker, with her own
business.

46. The Plaintiff would be readily able to identify properties with prospects of turning a profit and the entering into this loan agreement was in fact carrying out business activities as it was on this very basis that the First Defendant had offered to sell the Stirling Property to him. That was the very nature of the relationship between the Plaintiff and the First Defendant.

47. I also note the further evidence of the Second Defendant in respect to the relationship between the Plaintiff and the First Defendant (paragraph 25 of her Affidavit), in which the

First Defendant said to her words to the effect of “Don’t worry about the repayment of the loan, I just have to find [the Plaintiff] blocks [of land]”.

48. Thus, I find the Plaintiff personally conducted a business of purchasing investment

properties.

(Emphasis in original.)

20․	The magistrate then (at [49]-[51]) referred to three authorities relating to the meaning of
“incidental”: Lauvan, Mills v Federal Commissioner of Taxation [2012] HCA 51; 250 CLR
171 and Saafin Construction Pty Ltd v Madcap Financial and Investment Ventures Pty
Ltd [2021] VSC 489. The magistrate continued:

53. In the current proceedings, the Plaintiff had previous related commercial dealings with the First Defendant which provided the basis for the offer to sell the Stirling property. As submitted by the Second and Third defendants, the First Defendant was aware the Plaintiff was in the business of purchasing and selling properties for profit. He would not have known this but for the existing commercial relationship.

54. Even in the case of isolated loans, which the Plaintiff effectively argues this one is, the Court in Avery v Saree Holdings [2012] NSWC 463 [sic] has concluded that The Code does apply even where the loan was incidental to business.

55. I find the requisite degree of connection as endorsed by the relevant authorities apparent. The Plaintiff was acquiring a business asset, in the form of a credit contract, derived from a Principal asset, being the Stirling property. The Plaintiff would ordinarily buy and sell properties in the course of his investment property business, highlighting the requisite degree of connection.

56. On the evidence, the Plaintiff was lending to the Defendants personal capital that would usually be used in the course of business, being buying and selling properties. The Plaintiffs conduct, although he was investing in an asset, was of close connection to the Plaintiffs business notwithstanding the fact that the capital was not immediately required.

57. However, I find that the transaction was incidental to another business of the credit provider carried on in this jurisdiction per s 5(1)(d), being his personal investment property business. As noted previously, I consider the second Loan Agreement would also fall within s 5(1)(b)(iii) of the Code.

58. For completeness, I consider that the nature of the two loans, being short term, and with the intention of returning the Plaintiff a generous profit, would satisfy the criteria of having a commercial aspect to them such that in any case they would attract the application of the

Code even though being of a ‘one-off’ nature. That is, I consider the Plaintiff was a credit

provider under the Code for these two transactions.

59. Accordingly, the first and second loan agreements are declared to be credit contracts to

which The Code applies pursuant to s 5.

21․	Although the chain of reasoning reflected in these paragraphs is not particularly clear, it
appears to involve the following.
(a) The appellant bought and sold properties in the course of a property investment

business: at [48].

(b) The loans were incidental to that business because the Stirling property was of the

type that he would buy and sell and the credit contract was a “business asset”

derived from that property (at [55]) and/or because the money that was lent was

money that would otherwise have been used in the course of his investment

property business: at [56].

(c) In any event, the two loans, being short-term and intended to return a generous

profit, would satisfy the criterion of “having a commercial aspect to them” so as to

attract the application of the Code even though they were of a one-off nature: at

[58].

22․	Having reached the conclusion that the Code applied, the magistrate then went on to
consider what relief should be granted to the respondents. He ultimately concluded that
the first and second loan agreements should be set aside. For reasons which will become
apparent, it is not necessary to describe the process of reasoning adopted by the
magistrate that led to that result.

The Notice of Appeal

23․	The Notice of Appeal contains four grounds. Unfortunately, each ground is extensive,
containing both a generally articulated ground as well as numerous specific challenges.
The generally articulated grounds of appeal are as follows:

(1) The learned Magistrate erred in concluding that the National Credit Code applied to the

first and second loan agreements.

…

(2) In the alternative to ground 1, the learned Magistrate erred in finding that the first and second loan agreements were unjust and in failing to correctly direct himself in respect of and evaluate the degree of injustice.

…

(3) In the alternative to ground 1, the learned Magistrate erred in concluding that it was appropriate to set aside the first and second loan agreements in whole, without considering whether any alternative relief would do justice between the parties in all the circumstances. (Reasons at [5] to [7] and [74]-[75]).

…

(4) In the alternative to ground 1, the learned Magistrate erred in concluding that it was available to him and appropriate to set aside the first and second loan agreements in whole, in circumstances where the first respondent made no such application and led no evidence that either agreement was unjust as against him.

Ground 1

24․	If the magistrate erred in his conclusion that the Code applied and the Code did not in
fact apply, then that would be determinative of the appeal. The specific challenges to the
finding that the Code applied identified in Ground 1 include the following:

(a) The learned Magistrate erred in concluding that the appellant was, as at the date of entry into the first loan agreement and at the date of entry into the second loan agreement, conducting a business of real estate property investment.

…

(b) The learned Magistrate erred in concluding that the provision of funds to the respondents pursuant to each of the first or second loan contracts was incidental to the business of a real estate property investor that he found was carried out by the appellant.

…

(c) The learned Magistrate erred in concluding or in failing to provide adequate reasons for

concluding that the entry into either or both of the loan agreements “attract[ed] the operation

of the Code” despite being “one-off” transactions. (Reasons [58])

(d) The learned Magistrate erred in concluding that the second loan agreement was entered

into to refinance the previous credit, whereas the previous credit had already expired.

25․	As pointed out earlier (at [21] above), as far as can be discerned from the magistrate’s
reasons, he found that the Code applied on two distinct bases. First, that the loans were
incidental to the conduct of a property investment business. Second, that the loans
themselves involved the conduct of a business, despite their one-off nature.
26․	For reasons which I will explain, both of these conclusions were erroneous.

First basis of application — conduct of a property investment business

27․	The magistrate’s reasons did not disclose why he reached the conclusion that the
investment activities of the appellant were of a nature such that they should be
characterised as a business.

The terms of the statute

28․	The Code is set out in Sch 1 of the National Consumer Credit Protection Act. Section 5(1)
of the Code identifies when the provision of credit is governed by the terms of the Code.
It provides:

5              Provision of credit to which this Code applies

(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.

29․

In the present case, it is uncontroversial that paras (a), (b) and (c) are satisfied. The only

question is that raised by para (d) — whether one of the two conditions contemplated by

that paragraph is satisfied. The two alternative conditions are that the credit provider

provides the credit:

(a)	in the course of a business of providing credit carried on in this jurisdiction; or
(b)	as part of or incidentally to any other business of the credit provider carried on in

this jurisdiction.

What is required to be carrying on a business?

30․	In this case, the critical question is whether or not the loans were made “incidentally to
any other business of the credit provider carried on in this jurisdiction”. That in turn means
that, so far as the various purchases and sales of real property are concerned, the issue
is whether or not the appellant was carrying on a business involving the purchase and
sale of real property. The respondents say that he was. The appellant says that he was
not, and that he was merely making investments that did not amount to the carrying on
of a business.
31․	The locus classicus in Australia is the decision in Hyde v Sullivan (1955) 56 SR (NSW)
113. In that case, a farmer and grazier had made loans totalling £5,000 to a partnership
carrying on a business dealing with typewriters and accessories. For the purposes of
addressing a statutory defence that would arise if he was carrying on the business of
moneylending, the Full Court of the Supreme Court of New South Wales said:

Speaking generally, the phrase “to carry on business” means to conduct some form of

commercial enterprise, systematically and regularly, with a view to profit, and implicit in this

idea are the features of continuity and system.

32․	Upon examining the facts, the court determined that the farmer was not carrying on such
a business. Rather, he had made a series of loans to a personal friend who was carrying
on business in partnership. Further, the farmer was not holding himself out as a
moneylender.
33․	Hungier v Grace (1972) 127 CLR 210 involved an electrical contractor who had lent some
$287,000 to a timber merchant over a period of about six years. The arrangement had
sprung from the friendship between the two men. Barwick CJ accepted that the loans
had been made with an eye to profit, but the critical question was whether the electrical
contractor was carrying on the business of moneylending. He said (at 217), quoting
Edgelow v MacElwee [1918] 1 KB 205 at 206:

Whilst no doubt system and regularity are involved in the carrying on of a business, it does not necessarily follow that one who has transactions of the same kind systematically or regularly is carrying on a business in those transactions. One may systematically make regular deposits to a bank account but not be carrying on a business of doing so. In other words, system and regularity of making transactions are not in themselves definitive in this field. Their absence may well deny that a business is being carried on but their presence does not necessarily establish that it is.

34․	His Honour referred to the manner in which the rates of interest were struck being based
upon the level of profit to be shared between the parties, the inception of the transactions
between the parties, that there was no system on the part of the electrical contractor
other than to respond to the other party’s requests and no regularity but of the timber
merchant’s contriving: at 217-218. He concluded that the circumstances should be
analysed as the lending of money and not indicative of the carrying on of the business
of moneylending: at 219.
35․	Menzies J said (at 222):

“Business” is, of course, a word of great flexibility, but, in the relevant definition of “money

lender”, it ought not, I think, to be extended further than to cover what I would describe as

the carrying on of a course of money lending in an organized way with some continuity and

generality.

36․	His Honour pointed to the “extraordinary variation” in the rate charged on the loans and
the manner in which it was calculated, and concluded that the circumstances were “too
complicated for such a simplistic solution” as the loans being made in the course of
carrying on a moneylending business.
37․	Walsh J pointed to the fact that the timber merchant had proposed the loans and had
fixed the terms of the loans. He said that the fact there was only one borrower was not
decisive against a finding that the making of the loans constituted the carrying on of a
business, but it did provide a very strong indication against that finding when it was not
the lender who stipulated the terms for repayment of the loans: at 224.
38․	In Federal Commissioner of Taxation v Whitfords Beach Pty Ltd (1982) 150 CLR 355, a
company which owned land developed the land and sold it as residential lots. These now
form a suburb just north of Perth. The process of development was large scale, being intended to realise 2,200 residential lots. The question in issue related to the application
of the provisions of the Income Tax Assessment Act 1936 (Cth). For the purposes of one
of those provisions, there was a distinction to be drawn between the mere sale of an
asset at an enhanced value and a gain made in the operation of a business. Mason J (at
378-379) pointed out the chameleon-like quality of expressions such as “operation of
business”. In the course of his Honour’s reasons (at 381), he referred to the “repetitive
or recurrent characteristics that are regarded as the hallmark of business activity” (see,
to similar effect, at 383). His Honour’s reasons make it clear that there is the potential for
a “profit-making undertaking or scheme” to exist in circumstances where the activity does
not involve the carrying on of a business.
39․	Shakespeare involved an appellant who had acquired land in order to build a house on
it and then resell it at a profit. She proposed to live in the house until it could be sold, and
the house was placed on the market immediately after construction was complete. The
question was whether the Consumer Credit (Queensland) Code in the appendix to the
Consumer Credit (Queensland) Act 1994 (Qld) applied. In order for the Consumer Credit
(Queensland) Code to apply, the credit needed to be provided “wholly or predominantly
for personal, domestic or household purposes”. However, the statute provided that
investment by the debtor was not a personal, domestic or household purpose. Further,
there was a presumption that arose where the debtor had declared that the credit was to
be provided wholly or predominantly “for business or investment purposes”.
40․	In the course of addressing the operation of these provisions, Muir JA (with whom Mullins
and Douglas JJ agreed) referred (at [43]) to the decision in Hyde v Sullivan in support of
the proposition that: “In the context of statutory or contractual provisions referring to the
carrying on of a business, system, continuity and/or regularity are frequently identified
as necessary features of a business”. However, his Honour also referred (at [44]) to the
reasons in Whitfords Beach at 376-377 and 383, which identified that a one-off
transaction or venture may have a business character.
41․	In the statutory context with which his Honour was dealing, he said (at [46]-[47]):

In order to cause a borrowing for the purpose of constructing, holding and maintaining one’s

own house to be for a business rather than a personal or domestic purpose, there must be more than the mere enterprising realisation of an asset. To my mind, there needs to be a commercial aspect to the transaction.

…

Section 6(4), by excluding “investment” and not “business” activities from “personal,

domestic or household purposes”, suggests that investment purposes, in some

circumstances, may come within the scope of “personal, domestic or household”. As the

subsequent discussion shows, it is not necessary for a transaction to exhibit much in the way of financial sophistication for it to be regarded as investing or as establishing an investment.

(Footnote omitted).

42․ His Honour concluded (at [51]) that the credit was predominantly for investment

purposes, to permit the construction of a luxury house to be sold at a profit, and that was

far removed from “a normal domestic or household arrangement”. It was therefore not

“applied predominantly for personal, household or domestic purposes” and hence the

Consumer Credit (Queensland) Code did not apply.

43․	Although the case turns on its own statutory language, it does illustrate that it is possible
to draw a distinction between something which is an investment on the one hand and an
investment that is made in the course of carrying on a business on the other.
44․	Simpson v Donnybrook Properties Pty Ltd [2010] NSWCA 229 involved a claim about a
person who had sold two lots on a promise of a 3 percent commission. The issue was
whether or not he was a person whose business was to act as a real estate agent. The
submissions emphasised that what was involved was a single isolated case in relation
to the two lots. Young JA (with whom Hodgson and Macfarlan JJA relevantly agreed)
recognised (at [145]) that “all businesses start with one transaction and it can be the case
that that one transaction is intended to be the first of many”. However, his Honour
concluded that the primary judge was within his mandate to find that the transaction
involving the two lots was a one-off transaction and that the person was not carrying on
business as a real estate agent.
45․	Williams also involved a question about whether recovery of commission for services
performed as a real estate agent was prohibited. It is simply relevant to note the summary
of the test as articulated by Ball J (at [70]):

Whether a person carries on business as a real estate agent is a question of fact. In order to carry on business, repetition and continuity of the activities which characterise the business are necessary. However, an isolated activity with the intention of repeating it is sufficient. As Lopes and Kay LJJ said in Re Griffin; Ex parte The Board of Trade (1890) 60 LJQB 235 at 237, cited with approval by Barwick CJ in Fairway Estates Pty Ltd v Federal Commissioner of Taxation [1970] HCA 29; (1970) 123 CLR 153 at 165:

If an isolated transaction, which if repeated would be a transaction in a business, is proved to have been undertaken with the intent that it should be the first of several transactions, that is, with the intent of carrying on a business, then it is a first transaction in an existing business.

See also Simpson v Donnybrook Properties Pty Ltd [2010] NSWCA 229 at [145] per Young
JA (with whom Hodgson and Macfarlan JJA agreed).

46․	Lauvan involved a loan for the purposes of allowing the borrower to on-lend to family
members for proposed commercial investment opportunities. One of the lenders had a
primary business of operating hotels and the other was a trustee of a superannuation
fund with property and share investments. The lenders had also made six loans to parties
known to the lenders’ sole director or referred by parties known to him. Gleeson JA,
sitting as a trial judge, found that, although the loan was for commercial investment
purposes, the activities of the lenders were not sufficiently systematic, continuous or
repetitious to be characterised as a course of business of providing credit. Occasional
and discrete loans made as a result of some personal relationship or introduction do not
have the character of a system or the repetition or continuity to be characterised as a
business. In articulating those conclusions, his Honour made reference to the decisions
in Williams, Hyde v Sullivan and Shakespeare.
47․	The reasons provide a useful summary of the issues that arise as to the application of
the Code in such circumstances. At [261]-[271], Gleeson JA said:

Section 5(1)(d)

261. Section 5(1)(d) of the Code has three limbs. The provision directs attention to whether the particular credit to which the Code purports to apply, is provided in the course of a business of providing credit carried on by the credit provider, or as part of another business carried on by the credit provider, or incidentally to another business carried on by the credit provider.

262. Whether a person carries on a business is a question of fact. The expression “in the

course of a business carried on” should be given a similar meaning to the well-known

expression “carrying on a business”. That latter expression has been held to require

“repetition, and continuity of the activities which characterise the business”: Williams v ATM

& CPA Projects Pty Ltd [2015] NSWSC 703 at [70] (Ball J) and the cases cited therein.

263. Similar remarks were expressed by Muir JA in Shakespeare Haney Securities Limited v Crawford. His Honour said (at [43]) that, in the context of statutory or contractual provisions referring to the carrying on of a business, system, continuity and/or regularity are frequently identified as necessary features of a business, making reference to the comments in Hyde v Sullivan (1956) 56 SR (NSW) 113 at 119:

“Speaking generally, the phrase 'to carry on business' means to conduct some form

of commercial enterprise, systematically and regularly, with a view to profit and implicit

in this idea are the features of continuity and system.”

Nonetheless, his Honour also acknowledged that a "one off" transaction or venture may have a business character, citing Federal Commissioner of Taxation v Whitfords Beach Pty Ltd (1982) 150 CLR 355 at 376-377 and 383.

264. The words “incidentally to” in s 5(1)(d) may be taken to be an expression of wide import

but there must be some connection between another business of the credit provider and the particular loan that provides the credit which, in turn, involves questions of degree: Avery v Saree Holdings Ltd [2012] NSWSC 463 (Avery v Saree Holdings) at [93], citing Re Holmes; Ex parte Public Service Association (NSW) (1977) 140 CLR 63 at 77 (Gibbs J).

265. In Mills v Federal Commissioner of Taxation (2012) 250 CLR 171, a case involving s 177EA(3)(e) of the Income Tax Assessment Act 1936 (Cth), Gageler J (with whom French

CJ, Hayne, Kiefel and Bell JJ agreed) considered the meaning of “an incidental purpose” in the context of the statutory taxation regime. His Honour said at [66] that “[p]urpose is a matter for inference and incidentality is a matter of degree”.

266. In the present case, the evidence establishes that Lauvan’s primary business is that of

hotels through ARQ Nightclub in Darlinghurst. Mittabell is the trustee of a superannuation

fund with property and share investments. On Mr Danesi’s evidence, the plaintiffs have made

six loans. All the loans were made to parties known to Mr Danesi or referred by parties known

to him. One loan for $50,000 was made to Mr Danesi’s ex-partner, Ms Naomi Travers, as

she “needed some money”; and another loan was made to owners of the boarding house,

next-door to a boarding house owned by a friend of Mr Danesi. The loans to the Bega family comprised a $700,000 loan for refurbishment of the South Townsville Tavern; a $700,000 loan secured by a mortgage to Camiera Nominees in respect of a property at Buckland Street, Alexandria; the construction loan to STD; and the loan to Mrs Bega.

267. The plaintiffs submitted that they were not in any business together. That may be accepted, albeit the construction loan to STD was made jointly by the plaintiffs and the evidence of Mr Danesi can be understood as indicating that the position in relation to the other loans was the same.

268. As to the first limb of s 5(1)(d), I do not consider that the activities of the plaintiffs were sufficiently systematic, continuous or repetitious to be characterised as a course of business of providing credit: Williams v ATM & CPA Projects Pty Ltd at [70]; Hyde v Sullivan at 119;

Shakespeare Haney Securities Ltd v Crawford at [43]. The loans provided to Mr Danesi’s

ex-partner and the boarding house owner may be taken as being made on an isolated and sporadic basis. Occasional and discrete loans made as a result of some personal relationship or an introduction by persons known to the credit provider do not have the character of a system or repetition or continuity to be characterised as a business. The same may be said of the loans to the Bega family interests, which were a result of the introduction by Mr Stathakis, a mutual friend, of Peter Bega to Mr Danesi.

269. As to the second limb of s 5(1)(d), I do not consider that the credit provided by the plaintiffs was made as part of another business of the plaintiffs, such as hotels or property development or share investment. The loans in question were unrelated to those businesses. The position in this case may be distinguished from the type of case where a retailer provides credit to customers as part of the business of selling goods to the customer.

270. As to the third limb of s 5(1)(d), the sporadic and occasional use of the plaintiffs’ own funds (not otherwise required for the plaintiffs’ business) to provide credit on six occasions

over a number of years, does not seem to me to bear a sufficient degree of connection with

the plaintiffs’ respective businesses of hotels, property development and share investment

for those loans, specifically the loan to Mrs Bega, to be made incidentally to the businesses

of either or both the plaintiffs.

271. In my view, the plaintiffs have also established that the requirement in s 5(1)(d) of the

Code does not apply in respect of the credit provided to Mrs Bega.

48․

This passage and the authorities cited in it make clear that:

(a)	whether a person carries on a business is a question of fact;
(b)	the expression “in the course of a business” requires repetition and continuity of

the activities which characterise the business;

(c) system, continuity and/or regularity are frequently identified as necessary features

of a business;

(d)	a one-off transaction or venture may have a business character; and
(e)	in order for an activity to be incidental to another business, there must be some

connection between the other business of the credit provider and the particular

loan that provides the credit, and this will involve a question of degree.

The limited factual findings

49․	The finding of the magistrate was that the appellant “conducts a business of purchasing
properties for investment purposes”: at [43]. Later (at [46]), the magistrate found that “the
entering into this loan agreement was in fact carrying out business activities as it was on
this very basis that the [first respondent] had offered to sell the Stirling Property to him”.
There were no detailed factual findings as to what properties had been bought and sold
by the appellant. For the purposes of assessing the correctness of the magistrate’s
conclusions, it is necessary to examine the underlying evidence in more detail than was
done in the reasons of the magistrate.

Chronology of property dealings

50․	In 2012, the appellant and his wife purchased a home in Amaroo, where they lived.
51․	In 2017, the appellant and his wife purchased a home in Harrison. The Amaroo property,
where they had previously lived, was then retained as an investment property.
52․	In October 2020, the appellant and the other two directors of his steel framing business
purchased, in their personal capacities, a house in Curtin (First Curtin). When it was
purchased, the appellant had the intention of building a new residence on the property,
but he ultimately only had a single floor plan drawn up. The work carried out on the
property was limited to some cutting of trees and some gardening.
53․	In 2020 or 2021, the appellant purchased a vacant block in Taylor.
54․	In about March 2021, the appellant purchased another property in Curtin for investment
purposes (Second Curtin). He obtained development approval for the demolition of the
existing building and the construction of two new two-storey dwellings and a double
garage. The property was purchased with personal funds of over $100,000 to pay the
deposit, and the balance from a bank.
55․	In March 2021, the appellant attended the Stirling property, as he had been invited by
the first respondent to purchase it. He decided that he did not wish to purchase it.
56․	On 8 April 2021, the first loan agreement was entered into.
57․	In May 2021, the appellant and his wife sold the Amaroo property. The first respondent
acted as the real estate agent for the sale.
58․	In July 2021, the appellant and his two co-owners sold the First Curtin property. That
property had been purchased for $960,000 and was sold for $1,300,000. Once again,
the first respondent acted as the real estate agent on the sale.
59․	In July 2021, a default notice for the first loan agreement was served.
60․	In 2022, the appellant purchased a vacant lot in Googong with the intention of developing
the block.
61․	In the same year, the appellant’s wife purchased a property in Denman Prospect using
the couple’s joint funds.
62․	In February 2022, the appellant, through his solicitors, investigated the purchase of the
Stirling property. However, he was told that a significant amount would be repaid under
the first loan agreement due to a partial refinance of the property.
63․	On 9 March 2022, the second loan agreement was entered into.
64․	In 2023, the appellant purchased a vacant lot at Jumping Creek with the intention of
developing it.
65․	In summary, prior to the first loan agreement, the appellant had:
(a) purchased two properties (the Amaroo and Harrison properties) with his wife, as

family homes, keeping the Amaroo property as an investment property (sold after

the first loan agreement);

(b) purchased one property (the First Curtin property) with two other persons that he

knew through his business (sold after the first loan agreement at a profit); and

(c) purchased two properties in his own name (the Taylor and Second Curtin

properties).

66․

As at the time of the first loan agreement, he had:

(a)	two properties in his own name (the Taylor and Second Curtin properties);
(b)	two properties that he owned along with his wife (the Amaroo and Harrison

properties), one of which was the family home; and

(c) one property that he owned with two others (the First Curtin property).

67․	There was no evidence that his conduct in relation to the two blocks purchased in his
own name was intended by him to be the commencement of a business of trading in
land or land development.
68․	Prior to the second loan agreement, he had:
(a) sold, along with his wife, the Amaroo property and, along with the two other owners,

the First Curtin property; and

(b) purchased one other property (the Googong property).

69․	He therefore owned:
(a) three properties in his own name (the Taylor, Second Curtin and Googong

properties); and

(b) one property with his wife (the Harrison property).

70․	Prior to the second loan agreement, his wife also purchased the property in Denman
Prospect. There is no evidence linking his wife’s purchase to his conduct in a way that
might make it part of his business other than the use of joint funds.

Evidence of the appellant and his wife

71․	The appellant affirmed an affidavit in the proceedings below on 6 September 2023 and
he was cross-examined upon it. He identified that he was a director of
CTL Painting & Decorating Pty Ltd and also a director of Gordon Light Steel
Keel Pty Ltd. He also indicated that he had recently set up another company, but it had
not commenced trading yet.
72․	He arrived in Australia in 2007. He has completed school to Year 9 only. He has
described his English as “good enough for commercial usage only”. The loans made to
the respondents are the only loans that he has made. He is a painter by trade and his
daily income is earned from the painting business. He and his wife are the only
employees of the company, but the business has five subcontractors.
73․	The steel business conducted by Gordon Light Steel Keel Pty Ltd involves producing
and installing steel frames for residential construction. The company has about eight
employees and a turnover of $2-3 million annually.
74․	Neither of the companies lend money as part of their business. The respondents were
not clients of either business. The appellant knew the first respondent as a real estate
agent and had retained him for the purchase and sale of some properties. In March 2021,
the first respondent had invited the appellant and his wife to see the Stirling property. The first respondent invited the appellant to buy it and then invited the appellant to lend
him money to allow the renovation of the property to be finished.
75․	The appellant’s wife operates a business as a mortgage broker. However, that business
only operated from January 2023. She assists with the day-to-day operating of the
painting business, carrying out internal bookkeeping and being responsible for payables,
receivables and quarterly reporting.
76․	When the appellant and his wife were asked to attend the Stirling property by the first
respondent, the first respondent offered to sell it to them for $2 million. There was some
discussion about price, with the figure of $1.6 million being mentioned by the appellant.
The first respondent then asked if he could borrow $100,000 in order to complete
renovations on the property. The appellant's wife asked the first respondent why his wife
did not give him the money. The first respondent replied, “She does not trust me”. The
appellant’s wife said to the appellant in Mandarin that she was against lending money to
the first respondent and that “he needs to find a way himself”. Notwithstanding his wife
objecting to him lending money to the first respondent, the appellant ultimately did so.
77․	The magistrate characterised the activities of the appellant as involving the conduct of a
business of purchasing properties for investment purposes. Counsel for the respondents
emphasised that the appellant had purchased three investment properties and
considered a fourth in just a 12-month period, with the intention of developing and selling
properties for profit and relying on business relationships within the construction industry
to do so. He submitted that, shortly after the first loan agreement, the appellant sold two
properties and then bought a further two vacant lots to develop.

Conclusion

78․	The two critical dates are the dates when the two loans were made. That is because, in
order for the Code not to apply, the appellant must have displaced the presumption that
the credit was provided “incidentally to any other business of the credit provider carried
on in this jurisdiction”.
79․	The manner in which the issue arose complicates this issue. That is because the
respondents had not pleaded their defence in a manner that raised the case that they
ultimately put. They had pleaded that the appellant “provided the credit in the course of
a business providing credit within the jurisdiction of the Code”.
80․	In relation to the first loan agreement, did the appellant displace the presumption that the
credit contract was one to which the Code applied? In the circumstances of this case,
did the appellant establish that he was not conducting the business alleged by the
respondents, namely, a business of buying and selling residential property for profit?
81․	There is a distinction to be drawn between the making of an investment and the conduct
of a business. As pointed out in the decision in Lauvan, the conduct of a business
involves system, continuity or regularity. Although it was uncontroversial that each of the
acquisitions of real property had, to a greater or lesser extent, the purpose of being an
investment by the appellant, that of itself is insufficient to establish that the appellant was
conducting a business.
82․	It is relevant, in attempting to characterise the buying and selling of real property, to take
into account the fact that the appellant was engaged in two other activities which he
characterised as businesses. Each of those was carried out through a separate
company. Each had identified employees, and the painting business also had identified
subcontractors. The appellant and his wife were the only employees of the painting
business. The appellant was the sole director and shareholder of the company that
undertook the painting business. The appellant described himself as a painter by trade
and stated that he earned his daily income from the painting business. The steel
business involved two other directors and shareholders, Mr Chen and Mr He. The
administrative arrangements of that business were not the subject of evidence. Each of
these businesses has the features of system and repetition that allow them to be
characterised as businesses.
83․	So far as the property transactions prior to the first loan agreement are concerned, those
transactions do not have the characteristics of system, continuity or regularity to permit
them to be characterised as constituting a business:
(a) The 2012 purchase of the Amaroo property involved the purchase of a family home

to live in. It could not be indicative of being part of, or the commencement of, a

business.

(b) The 2017 purchase of the home in Harrison was once again the purchase of a

family home. That the Amaroo property was not sold at this time but maintained for

investment purposes was not indicative of it being part of, or the establishment of,

a business. Rather, it represented an asset that continued to be held by the

appellant and his wife.

(c) The 2020 purchase of the First Curtin property was done jointly with the two other

directors of the steel framing business. Each of the appellant and the other

directors were acting in their personal capacity and not through the business. It

was clearly an investment intended to make a profit, and the purchasers

contemplated the possibility that they may demolish the existing building and

construct a new home on the property. There was no evidence of any written

agreement between the co-owners or any indication that their joint venture was intended to extend beyond the single property. So far as the three owners were

concerned, there was not any system or regularity to their conduct sufficient to

allow the activity to be characterised as a business. Nor was it of such a scale and

duration as to permit the single investment project to be characterised as a

business.

(d) The 2020 or 2021 purchase of the property in Taylor was of a vacant block.

Although the block was purchased with a view to it being developed, that was only

occurring, or about to occur, at the time when the appellant gave evidence in 2024.

It was the first property bought by the appellant himself with a view to constructing

a house on it.

(e) In March 2021, the appellant purchased the Second Curtin property for investment

purposes and obtained a development approval to demolish the existing building

and build two new two-storey dwellings and a double garage.

84․	The three properties which might conceivably be aggregated to establish the existence
of a “business” of purchasing properties for investment purposes are the First Curtin,
Taylor and Second Curtin properties. So far as the evidence discloses, the deposits on
these houses were paid from the savings of the appellant and his wife (or, in the case of
the First Curtin property, from the savings of the appellant and his two co-owners) and
otherwise funded by loans secured by mortgages. There is almost no evidence of any
system by which the appellant sought out properties for purchase or development, other
than the evidence that the first respondent, as a real estate agent, sought the appellant
out in order to make sales. There is no evidence of how any administration relevant to
the acquisition, development or disposal of the properties was occurring at the relevant
time. The scale of the acquisition and development of properties was relatively modest,
and not inconsistent with a person making relatively straightforward real estate
investments using family funds. It is true that being involved in two land development
adjacent businesses is likely to have given the appellant additional exposure to and
knowledge of investment opportunities. However, the nature of the investment activities
as at 8 April 2021 were insufficient, in my view, to allow them to be characterised as the
appellant carrying on a business of purchasing properties for investment purposes.
85․	The changes that occurred between the first loan agreement and the second loan
agreement were that the appellant and his wife sold the former family home in Amaroo,
the three directors of the steel business sold the First Curtin property at a profit, and the
appellant purchased a vacant lot in Googong with the intention of developing it. I do not
consider that the appellant’s wife’s purchase in Denman Prospect is relevant to whether
the appellant was conducting a business. The evidence was insufficient to indicate that
this purchase formed a part of the appellant’s activities, and the only allegation was that
the appellant himself conducted a business, rather than a business in partnership with
his wife.
86․	While the sale of the First Curtin property and the acquisition of a further property in
Googong start to demonstrate a pattern of buying and selling properties for profit, that
had not occurred with the regularity, continuity or system which would allow it to be
characterised as the conduct of a business.
87․	While I accept that the purchase of properties after the date of the second loan
agreement may shed light upon whether or not the activities of the appellant at the date
of each of the agreements should be characterised as amounting to a business, the
evidence in this case (a purchase of a vacant lot in Jumping Creek) is not sufficient to
alter what would otherwise be the characterisation. It is notable that no evidence was
adduced in cross-examination of the appellant as to what his future intentions were in
relation to buying and selling further properties. Such evidence might have been
significant in characterising the transactions that had already occurred either as the
commencement of a business or, alternatively, as more time-limited and opportunistic
property investing.
88․	It is clear that the appellant and his wife have considerable entrepreneurial energy. It
may be that the appellant’s property investment and land development activities, if they
were to continue, would bear the features of regularity and system that would allow them
to be characterised as forming a business. However, at the two critical dates, I do not
consider that such a threshold had been met. The appellant’s activities demonstrated
the making of real property investments for personal gain, but not in a manner that
amounted to a business in itself. As a consequence, the magistrate erred in concluding
(at [48]) that the appellant “personally conducted a business of purchasing investment
properties”.

Second basis of application — individual transactions as a business

89․	The second basis for the application of the Code is reflected in the finding by the
magistrate (at [58]) that “the nature of the two loans, being short term, and with the
intention of returning the Plaintiff a generous profit, would satisfy the criteria of having a
commercial aspect to them such that in any case they would attract the application of
the Code even though being of a ‘one-off’ nature”.

90․ Earlier in the reasons (at [39]), the magistrate had referred to the decision in

Shakespeare, in which he described Muir JA as having endorsed “that even a one-off

transaction or venture may be held to be of business character, in citing Federal

Commissioner for Taxation v Whitfords Beach Pty Ltd (1982) 150 CLR 335”.

91․	Neither Whitfords Beach nor Shakespeare support the conclusion reached by the
magistrate. The issue in Shakespeare has been described earlier in these reasons (see
[39] above). The issue was whether the development of the (rather grand) single
residential house was for “personal, domestic or household” purposes. Muir JA found
that, in the statutory context there in question, the word “business” was used in
contradistinction to “personal, domestic or household”. It was in that context that the
existence of a “commercial aspect” to the constructing, holding and maintaining of a
person’s own house meant that it was outside the scope of “personal, domestic or
household” purposes: at [46]. The case is not authority for the proposition that, outside
the particular statutory context there in question, any dealing that has “a commercial
aspect” necessarily means that it is part of a “business”.

92․ Similarly, Whitfords Beach does not support a general proposition that a one-off

transaction or venture having a commercial or investment aspect indicates that it is

carried out in the course of a business. There are two reasons why that is the case.

93․	First, the issue in that case was different. It was whether the subdivision of the real estate
in question was merely the realisation of a capital asset, whether the profits derived
amounted to income for the purposes of s 25(1)(a) of the Income Tax Assessment Act,
or whether those profits were profit from “any profit-making undertaking or scheme”
within s 26(a). The passages in Whitfords Beach indicating that the characteristics of
repetition or recurrence essential for the carrying on of a business are not essential in
order to fit within the description in s 26 of “any profit-making undertaking or scheme”
reinforce, rather than detract from, those requirements when what is necessary to
establish is the carrying on of a business.
94․	Second, the ultimate conclusion in Whitfords Beach, that the land development project
gave rise to “income” as distinct from the mere realisation of a capital asset, must be
understood in the context of the facts of that case. That case involved a subdivision
project, described by Mason J as taking place “on a massive scale, involving the laying
out and construction of roads, the provision of parklands, services and other
improvements”: at 385. Contrary to what appears to have been the approach of the
magistrate, it does not determine that any single profit-making transaction or venture
constitutes the carrying on of a business.
95․	For these reasons, if the magistrate found (at [58]) that the making of the two loans
themselves constituted the conduct of a business, then that involved an error on his part.

Remaining grounds of appeal

96․	Having regard to the conclusions that the magistrate erred in finding that the appellant
conducted a business of property investment and erred in finding that the loans
themselves constituted the conduct of a business, the Code could have no application.
In those circumstances, it is not essential to address the various other grounds of appeal.

Conclusion

97․	Because the Code does not apply, the appeal must be allowed and the orders of the
magistrate set aside. As the provisions of the Code were the only ground upon which the
appellant could be denied his entitlement to enforce the loan agreements, judgment will
be entered in his favour.

Backdating?

98․	There was an issue between the parties as to the date at which judgment should be
entered in favour of the appellant. If entered with effect from the date when judgment
was given by the magistrate, then post-judgment interest of relatively modest proportions
would run. If only entered at the date of the judgment of the Supreme Court, then
contractual interest at the very high rate set under the second loan agreement would
continue up until that date and significantly inflate the respondents’ liability.
99․	Where a plaintiff obtains an award of damages or an increased award of damages as a
result of an appeal, it is necessary to determine when that entitlement takes effect.
100․	In Nicol v Allyacht Spars Pty Ltd (No 2) (1988) 165 CLR 306, the High Court considered
the operation of s 37 of the Judiciary Act 1903 (Cth), which empowers the High Court in
the exercise of its appellate jurisdiction to “give such judgment as ought to have been
given in the first instance”. It referred to ord 43 r 3 of the High Court Rules 1952 (Cth),
as then in force, which provided that the judgment of the court took effect from the date
on which it was pronounced unless the court otherwise ordered. The court found that
s 37 did not mean that the entitlement to damages found to exist should take effect from
the date of the first instance decision. The court addressed the issue of the delay since
the first instance decision by including an amount for pre-judgment interest.
101․	In Najdovski v Crnojlovic (No 2) [2008] NSWCA 281; 51 MVR 334, Basten JA noted that
the two options are that the judgment takes effect from the date of the delivery of the
judgment of the appeal court or that it is backdated to the date of the original decision.
The effect of backdating will allow post-judgment interest to run from that time until the
relevant amount is paid. There are competing approaches in relation to the
circumstances in which backdating will occur. In McKensey v Hewitt [2004] NSWSC 636; 61 NSWLR 54 at [40]-[43], Young CJ in Eq said that the power to backdate a judgment
should only be exercised where there is something exceptional in the facts. In contrast,
in Government Insurance Office of NSW v Healy (No 2) (1991) 22 NSWLR 380 at 387,
Kirby P said that the power to order that a judgment take effect earlier than the date on
which it would ordinarily take effect provided a power which allowed the court to “do what
is just in the particular case where the usual position … would produce unfairness”.

102․ In Harmer v Hare (No 2) [2012] NSWCA 58, the court acknowledged that, while the

power to backdate a judgment is not exclusively concerned with instances where there

has been a delay between the adjudication of the claims and the pronouncement of the

order, its exercise in other situations should be relatively circumscribed.

103․ In Zoef v Nationwide News Pty Ltd (No 2) [2017] NSWCA 2, these authorities were

reviewed. In that case, a plaintiff in defamation proceedings succeeded on appeal and

was awarded damages of $150,000 that had been assessed but not awarded by the

primary judge. He had not repeated his claim for pre-judgment interest in his notice of

appeal and hence sought that the judgment be backdated so as to allow him to recover

post-judgment interest for the period between the decision of the primary judge and the

judgment of the Court of Appeal. The court found that, in circumstances where it did not

permit reinstatement of the claim for pre-judgment interest, it was appropriate to have

judgment entered from the earlier date so as to take into account the fact that the

appellant had been deprived since the date of judgment in the court below of the

damages to which he was entitled.

104․	In the present case, the issue arises because of the exorbitant rate of interest set under
the second loan agreement. The default rate of interest that would apply if judgment were
entered as at the date of the judgment of the Supreme Court is 8.5 percent per month.
Although clause 5 of the second loan agreement provided that interest would compound
monthly, the Statement of Claim only claimed simple interest at the rate of 102 percent
per annum: see para 25 of the Statement of Claim. On the other hand, if the judgment is
backdated to the date of the magistrate’s decision, then the contractual interest rate
would cease to operate and post-judgment interest closer to a commercial rate of interest
would apply. That is variable, but in the range between 6 and 11 percent per annum.
(Although the second loan agreement includes a clause, clause 14, giving a contractual
entitlement to interest following judgment as an independent obligation, no reliance was
placed upon that clause in the present appeal.)
105․	Had the magistrate determined the proceedings according to law, the contractual rate of
interest would have been applicable up to judgment and the court rate would have applied thereafter. The fact that the appeal is by way of rehearing suggests that the
judgment should be entered as at the date of the judgment of the Supreme Court.
106․	The starting point must be the default position under the Court Procedures Rules 2006
(ACT). Rule 1605 is applied to appellate proceedings by r 5001. Rule 1605(2) provides
that an order takes effect on the day that the order is made. Rule 1605(3) provides that
the court may order that the order takes effect on an earlier or later date or at any earlier
or later time. The default position would therefore be that the order of the Supreme Court
would take effect on the day it is made.

107․ Having regard to the fact that the magistrate’s error arose from the submissions made

by the respondents, those same respondents cannot complain about the accrual of

interest during the period until the determination of the Supreme Court. The basis upon

which the court was invited to backdate the judgment was that to permit contractual

interest to run up until the date of judgment would be to countenance an unjust outcome

because of the high rate of interest payable under the agreement. Such an approach has

considerable attraction given the exorbitant rate of interest payable under the agreement

and hence the spectacularly imprudent nature of the loan so far as the respondents are

concerned. If it was open as a proper exercise of discretion to adjust the judgment date

so as to minimise the impact of the exorbitant rate of interest provided under the

agreement, then I would do so. However, in my view, having regard to the enforceability

of the loan agreement, it would not be a proper exercise of discretion to adjust the date

of the judgment in circumstances where to do so would defeat a contractual entitlement

of the appellant and where the accrual of additional interest occurred as a result of the

respondents having led the magistrate into error.

108․ The interest rate calculation is therefore:

(a) from 18 February 2022 (the day after the date of the advance identified in the

second loan agreement) until 20 February 2023 (the date upon which proceedings

were commenced), 368 days at the claimed rate of $223.56 per day equals

$82,270.08; and

(b) from 21 February 2023 until 7 August 2025 (the day before the date of the

judgment in the Supreme Court), 899 days at the claimed rate of $223.56 per day

equals $200,980.44.

109․	Added to the principal amount of $80,000, this gives a total of $363,250.52.
Costs

110․ In his statement of claim in the Magistrates Court, the appellant made a claim for

indemnity costs based upon clause 17 of the second loan agreement. The Notice of

Appeal reflects the claim for costs made in the Magistrates Court in that it seeks an order

that the respondents pay the appellant’s costs of the proceedings in the Magistrates

Court on an indemnity basis. Clause 17 provided that the borrower indemnify the lender

against all liabilities arising out of the lender’s exercise of its powers under the

agreement. Clause 17 applies to the exercise of powers by the lender as distinct from

costs incurred in recovery proceedings, which are dealt with in clause 19 and are only

recoverable “on demand”. Reliance upon clause 19 and the making of a demand were

not pleaded and therefore indemnity costs are not recoverable based upon that clause.

111․	In relation to the cost of the appeal, the Notice of Appeal simply sought an order that the
respondents pay the appellant’s costs of the appeal.
112․	In the circumstances, it is appropriate to order that the respondents pay the appellant’s
costs in both courts on a party and party basis.

Orders

113․ The orders of the Court are:

(1)	Appeal allowed.
(2)	The orders made by the Magistrates Court on 7 May 2024 are set aside and
the following orders made:

(a) Judgment for the plaintiff against the defendants in the sum of

$363,250.52.

(b) The defendants pay the plaintiff’s costs of the proceedings in the

Magistrates Court.

(3)	The respondents pay the appellant’s costs of the appeal.
(4)	Liberty to apply on seven days’ notice for any orders required to discharge or
vary the interlocutory orders made by the Supreme Court on 1 August 2024
and 15 October 2024.

I certify that the preceding one hundred and thirteen [113] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Mossop.

Associate:

Date: