Blackbird First Mortgage Corporation Pty Ltd v Cam Engineering & Construction Pty Ltd

[2026] NSWSC 876

Supreme Court of NSW

Built by Barristers,
For Australian Law.

1. REAL PROPERTY — possession — proceedings by secured creditor for possession of land under registered mortgage — entitlement to possession not in dispute
1. CONTRACTS — secured loan — where defendants have defaulted in their obligations under the loan — where plaintiff seeks judgment for the sum of the outstanding debt — dispute as to the quantum of the defendants’ indebtedness — whether Dobb’s certificate provision satisfied — whether default interest rate provisions are void as a penalty

A doubling of the contractual interest rate upon default (here from 2% to 4% per calendar month, yielding approximately 60% per annum with compounding) is sufficiently disproportionate to shift the evidentiary burden to the lender to justify the uplift; absent evidence of increased cost of funds, risk-based pricing methodology, opportunity cost or other commercial rationale, the default rate will be struck down as a penalty.
Where a default interest clause contains both a penal rate component and a non-penal compounding mechanism, the penal element alone may be severed under a standard severability clause, leaving the compounding of interest at the standard rate operative — the court will not void the entire clause if the offending provision is readily excisable.
A Dobbs certificate clause requires a document that purports to state conclusively the amount owing; an affidavit exhibiting loan account statements that present alternative calculations based on different assumptions as to the applicable interest rate, and that include unexplained line-item debits, does not satisfy such a clause.