Bendigo and Adelaide Bank v Stamatis - [2014] NSWSC 1233

Supreme Court

New South Wales

Medium Neutral Citation: Bendigo and Adelaide Bank v Stamatis [2014] NSWSC 1233
Hearing dates: 24/03/14, 25/03/2014, 26/03/2014, 27/03/2014 and 28/03/2014
Decision date: 16 September 2014
Jurisdiction: Common Law
Before: RS Hulme AJ
Decision:
Loan contract and mortgage to be set aside.

Catchwords: EQUITY - mortgage - "Lo Doc" loan - forgery - unconscionability - Contracts Review Act.
Legislation Cited: Australian Securities and Investment Commission Act 2001 (Cth)
Civil Liability Act 2002 (NSW)
Consumer Credit (NSW) Code 1995
Contracts Review Act 1980 (NSW)
Criminal Assets Recovery Act 1990 (NSW)
Financial Sector (Business Transfer and Group Restructure) Act 1999 (Cth)
National Credit Code
Real Property Act 1900 (NSW)
Trade Practices Act 1974 (Cth)
Cases Cited: Burke v State Bank of NSW (1994) 37 NSWLR 53
Learn & Play (Rhodes No 1) Pty Ltd v Lombe [2011] NSWSC 1506
Leybourne v Permanent Custodians Ltd [2010] NSWCA 78
National Australia Bank Ltd v Hall (unreported, Dunford J, 17 September 2003)
Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 148
Perpetual Trustees Vic Ltd v Bodiroza [2009] NSWSC 861
Petersen v Moloney (1951) 84 CLR 91
Texts Cited: Bowstead and Reynolds on Agency, (18th ed)
Ge dal Pont, Law of Agency (2nd Ed)
Category: Principal judgment
Parties: Bendigo and Adelaide Bank Limited (Plaintiff/Cross Defendant)
Aristides Stamatis (First Defendant/First Cross Claimant)
Maria Stamatis (Second Defendant/Second Cross Claimant)
Representation: Counsel:
N Kidd SC; RI Bellamy (Plaintiff/Cross Defendant)
JK Taylor; Z Hillman (Defendants/Cross Claimants)
Solicitors:
Solicitors:
Gadens Lawyers (Plaintiff/Cross Defendant)
Hughes & Taylor (Defendants/Cross Claimants)

File Number(s): 2011/156419

Judgment

Since about 1982 the Defendants in these proceedings have been the registered proprietors of the land contained in folio identifier 7/14848 and known as 88 Bruce St, Brighton-le-Sands.

Registered against the title is a mortgage AA277559 in favour of Adelaide Bank Limited dated 11 December 2003. It is common ground that the Plaintiff in these proceedings is a successor in title to the Adelaide Bank Ltd pursuant to the Financial Sector (Business Transfer and Group Restructure) Act 1999 (Cth). The Plaintiff asserts that there has been default under that mortgage and an associated loan agreement or agreements and seeks to enforce the mortgage (and a registered Memorandum referred to in it) and/or obtain damages and/or compensation.

The Plaintiff's claims are opposed. The principal bases of opposition set out in a Defence and a Cross Claim are:

The Defendants never entered into any relevant loan agreement,
The Defendants did not receive the moneys advanced by the Plaintiff,
The documents on which the Plaintiff relies are the product of its conduct which is unconscionable under the general law or the Australian Securities and Investment Commission Act (Cth) 2001,
The documents on which the Plaintiff relies are the product of undue influence of which the Plaintiff should not be entitled to receive the benefit,
The Contracts Review Act 1980 (NSW),
The Consumer Credit (NSW) Code 1995, and
The Trade Practices Act 1974 (Cth)

The Defendants further contend that any liability they may have is an…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] NSWSC 1233
Decision Date: 16 September 2014

CaseChat Overview and Summary

The matter before the court involved the Bendigo and Adelaide Bank and Stamatis, where the dispute centred on a "Lo Doc" loan and issues of forgery and unconscionability. The case was heard in the Supreme Court of Victoria. The bank sought to enforce a mortgage against Stamatis, who claimed that the mortgage was obtained through forgery and was therefore unconscionable. The court was tasked with determining whether the bank could enforce the mortgage and whether the Contracts Review Act applied to provide relief to Stamatis.

The central legal issues revolved around the validity of the mortgage and whether the bank could enforce it given the allegations of forgery and unconscionability. Additionally, the court had to consider the applicability of the Contracts Review Act, which provides for the review of contracts on the grounds of unconscionable conduct. The bank argued that the mortgage was valid and enforceable, while Stamatis contended that the mortgage was obtained through fraudulent means and was thus unenforceable.

In its decision, the court examined the evidence regarding the execution of the mortgage and the allegations of forgery. The court found that the mortgage was indeed obtained through forgery and that Stamatis had been misled into signing the document under false pretences. The court held that the bank's conduct amounted to unconscionability, and as a result, the mortgage was unenforceable. The court also found that the Contracts Review Act applied, granting relief to Stamatis. Consequently, the court ruled in favour of Stamatis, declaring the mortgage invalid and unenforceable.

The court ordered that the mortgage be voided and that Stamatis be provided with appropriate relief under the Contracts Review Act. The bank was prohibited from enforcing the mortgage against Stamatis, and any associated interest and costs incurred by Stamatis as a result of the bank's actions were to be repaid by the bank. This decision underscores the importance of ensuring that loans are obtained through legitimate means and the court's commitment to protecting borrowers from unconscionable conduct.

Orders