"At that time, we accepted because we felt under pressure from the NAB. But we wouldn't have accepted if we knew we weren’t going to get a penny. No way."

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Shortly after the sale, NAB bankers also met with Mr Dillon and his two other co-owners of a musical instrument and supplies distributor, National Music, to refuse their application to increase the business' trade and overdraft facilities by $100,000 each.

"I think all three of us were in a state of absolute shock," Mr Dillon said. "Up to that point, it had only been that we were going to lose the home, but it was made clear at that meeting that they were going to also reduce our facilities. Not only to the level that the payout would allow, but even lower. That was just disastrous for all three of us."

NAB reduced the company's trade facility from $1.5 million to just $650,000 meaning the business could not hold as much inventory and sales declined.

Only when Mr Dillon told the bank he would be talking to the royal commission did it grant an increased facility.

After questioning by counsel assisting, Eloise Dias, Mr Dillon was then questioned at length by NAB's chief counsel, Wendy Harris, QC.

Ms Harris took Mr Dillon to internal NAB reports about National Music written in 2010 which stated the business had "significant cash flow issues" which "if not corrected will result in business failure".

In April 2010, National Music's then relationship manager at NAB, Kevin Matthews, wrote a submission to extend additional finance, noting that Mr Dillon intended to sell Goanna Downs and keep betwen $800,000 to $1 million to buy a new home in Melbourne.

Mr Matthews wrote a later report in October 2010, in which he noted that "guarantors have now committed all funds from the sale of our security "Goanna Downs" to debt reduction" with just $100,000 to be retained for personal purposes.

In response to Ms Harris' questioning, Mr Dillon said he did not recall the details. "I don't recall any of this. I haven’t seen any of this in recent years. It’s eight years old."

"I do not recall ever having said we would contribute all the funds of the sale," Mr Dillon told the Commission.

Ms Harris will continue her questioning on Thursday morning.