A lender cannot hold your property hostage by demanding you sign a Deed of Release that goes beyond what your mortgage allows. A Queensland Supreme Court decision delivered this week makes that clear. If you are trying to pay out a commercial loan and your lender is making it difficult, here is what you need to know.
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Case at a Glance Evolve Wealth Corp Pty Ltd v QB Finance Pty Ltd [2026] QSC 46
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The Case: Evolve Wealth Corp Pty Ltd v QB Finance Pty Ltd [2026] QSC 46
In April 2022, a Gold Coast business borrowed $450,000 against a residential investment property at Burleigh Heads. The loan fell into default, but the parties agreed on a settlement date of 23 May 2025. On that day, the borrower’s solicitors had the full redemption amount of over $517,000 loaded into the PEXA electronic conveyancing workspace, ready to pay.
The lender, QB Finance, refused to settle.
Instead, on the morning of settlement, QB Finance’s solicitors produced a deed of settlement and release and said they would not proceed without it. The proposed deed was extensive. It required the borrower to release all claims: not just against QB Finance, but against a broad class of related companies and individuals, some of whom had no current interest in the mortgage. It included a confidentiality clause that would have prevented the borrower from making complaints to regulatory authorities. And it required an indemnity significantly broader than what the mortgage itself already provided.
The borrower’s solicitors rejected the demand. Settlement did not proceed. Both parties commenced proceedings in the Supreme Court of Queensland.
When Can a Lender Refuse to Release Your Mortgage?
The mortgage memorandum did contain a clause (clause 19.5) that permitted QB Finance to require a release of claims as a condition of settlement. QB Finance argued this gave it a broad discretion to set the terms of any deed it saw fit.
McCafferty J disagreed. On its proper construction, clause 19.5 permitted QB Finance to require a release of claims that QB Finance itself apprehended: claims arising out of the mortgage transaction, against QB Finance as credit provider. It did not authorise a release of claims against third parties who were not credit providers under the mortgage. It did not authorise an indemnity broader than the mortgage already provided. And it could not be read as permitting QB Finance to prevent the borrower from making legitimate regulatory complaints.
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“The proposed deed exceeded what was authorised by clause 19.5” McCafferty J, Evolve Wealth Corp Pty Ltd v QB Finance Pty Ltd [2026] QSC 46 at [36] |
The test applied was the orthodox one: what would a reasonable businessperson have understood the clause to mean, having regard to the text, context, and commercial purpose of the contract? That standard, drawn from Mount Bruce Mining Pty Ltd v Wright Prospecting (2015) 256 CLR 104, does not support reading a mortgage discharge clause as a blank cheque for the mortgagee to extract whatever terms it likes at the point of settlement.
The Tender Was Valid
The Court also found that the borrower’s tender on 23 May 2025 was valid. The funds were available, loaded into the PEXA workspace, in an amount that matched the payout figure QB Finance itself had provided. The fact that the borrower did not request an updated payout figure in the days before settlement did not matter. Any movement in the figure would have reflected minimal additional legal costs, and QB Finance had already provided a figure expressed to run beyond the scheduled settlement date.
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“In my view, the reason why settlement did not occur on 23 May 2025 was not because of insufficient funds or an inability on the part of Evolve Wealth to tender those funds.Settlement did not proceed because Elliott May did not sign the financial settlement schedule within PEXA that would have allowed it to proceed. Elliott May refused to do so because its client, QB Finance, required that the proposed deed be executed before settlement occurred.” McCafferty J, Evolve Wealth Corp Pty Ltd v QB Finance Pty Ltd [2026] QSC 46 at [46] |
QB Finance’s argument that the tender was insufficient was rejected. The reason settlement did not proceed was not a shortfall in funds. It was QB Finance’s refusal to sign off in the PEXA workspace until the proposed deed was executed. That was a demand the mortgage did not authorise.
The Lender Lost Its Right to Interest
Because QB Finance wrongfully refused a valid tender, it was disentitled to interest from the date of refusal. This follows the general rule confirmed in Saafin Constructions Pty Ltd (in liq) v MAG Financial and Investment Ventures Pty Ltd [2021] VSC 489: where a creditor refuses a valid tender, it cannot continue to accrue interest unless the debtor saved interest through its refinancing arrangements or earned interest on the retained funds. Neither applied here.
The practical consequence is significant. Penalty interest in commercial loans can run quickly. A wrongful refusal does not just delay settlement. It may extinguish the lender’s right to that ongoing interest entirely.
QB Finance’s application for a declaration that the borrower was in default and orders for possession of the property was also dismissed.
What This Means for You
Your right of redemption is real
When you pay out your mortgage, you are exercising an equitable right of redemption, one of the most fundamental protections a borrower has, and one courts take seriously. A lender cannot use the settlement process as leverage to extract conditions that go beyond what your mortgage documents authorise.
Scrutinise any proposed deed carefully
Evolve Wealth Corp Pty Ltd v QB Finance Pty Ltd illustrates what overreach looks like: a release extending to third parties beyond the lender, an indemnity broader than the mortgage already provides, and a confidentiality clause that would suppress legitimate complaints. If the deed your lender is demanding contains any of these features, it may exceed what your mortgage permits, and you may be entitled to refuse it.
Don’t wait until settlement day
In this case, QB Finance’s solicitors flagged the possibility of requiring a deed weeks before settlement but did not provide the actual draft until settlement day itself. If your lender signals that discharge will be subject to additional conditions, push for the draft document immediately. Assessing whether the demand is supported by the mortgage terms is far easier, and far less costly, when done in advance rather than on the day.
A wrongful refusal has consequences for the lender
If your lender has already refused a valid tender, that refusal may affect its right to ongoing interest. Document the tender carefully: the amount, the date, and the mechanism. Then get advice promptly.
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Need advice? If you are dealing with a lender who is imposing conditions on mortgage discharge, demanding a deed of release before settlement, or refusing to proceed on settlement day, speak with our property and commercial law team. We act for borrowers and business owners in exactly these situations. |
This article is general information only and not legal advice. Contact Fraser Lawyers for advice specific to your circumstances.
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