SPV Capital Pty Ltd v Bhatt & Anor

[2026] NSWDC 346

NSW District Court

Built by Barristers,
For Australian Law.

1. MERCANTILE LAW — commercial loan agreements — O’Dea clause — default in repayment — default judgment entered against defendants at interlocutory stage — dismissal of cross claim by defendants alleging penalty term, unconscionability, and misleading and deceptive conduct within the meaning of s 21 of the Australian Consumer Law

An O'Dea clause providing for alternative high and low interest rates in a commercial loan agreement does not of itself constitute a penalty or unconscionable conduct; where the lender relies only on the lower rate, the borrower bears a heavy onus to demonstrate the penal nature of that rate, which requires cogent evidence beyond the mere assertion that the rate is high.
In assessing whether interest rates charged by a private lender of last resort are unconscionable, the court must consider the whole of the surrounding circumstances including the borrower's constrained options, the low-documentation and limited-security nature of the loan, and the elevated default risk to the lender; rates that appear high in isolation may be commercially justified by those risk factors.
A finance broker engaged by a borrower to source and negotiate loan facilities acts as the borrower's agent, not the lender's, notwithstanding that the lender pays the broker's fees or that the broker has a prior relationship with the lender; representations made by such a broker about future interest rate reductions do not bind the lender absent evidence the lender authorised or adopted them.