Westpac Banking Corporation v Chadha - [2012] SASC 223

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal from a Master: Civil)
WESTPAC BANKING CORPORATION v CHADHA
[2012] SASC 223
Judgment of The Honourable Justice Peek
17 December 2012
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - POWERS OF COURT
MORTGAGES - MORTGAGEE'S REMEDIES - POSSESSION - PROCEEDINGS TO OBTAIN
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - HARSH AND UNCONSCIONABLE CONTRACTS AND STATUTORY REMEDIES
PROCEDURE - COURTS AND JUDGES GENERALLY - JUDGES - POWERS AND DUTIES IN RESPECT OF UNREPRESENTED LITIGANTS
CONSUMER CREDIT - CREDIT PROTECTION - REGULATED CONTRACTS AND REGULATED MORTGAGES - ENFORCEMENT AND TERMINATION
Appeal from a Master of the Supreme Court - the appellants entered into a series of loans with the bank in their personal capacity and as directors of a company - the appellants executed guarantees - the loans fell into arrears and the bank instituted proceedings for possession of two of the properties - the Master granted the bank orders for possession.
Whether the order for possession in respect of the matrimonial home should be set aside - whether the Master erred in finding that the appellants had not raised an arguable defence such that the proceedings should be referred into the ordinary civil trial list - whether the Master erred in not finding that the loans were procured by unconscionable conduct - whether the bank engaged in "pure asset lending" - whether the appellants suffered from a special disability by virtue of their inability to service the loans or their ill health - whether the rule in Yerkey v Jones or Garcia v National Bank Australia Ltd applied - whether the unrepresented appellants were given insufficient opportunity to put their case - whether the Master erred in finding that there was no evidence that the loans were granted in contravention of the National Credit Code - whether the National Credit Code applied to the loans.
Held: Appeal dismissed - the order for possession should not be set aside - the Master did not err in finding that the appellants had raised no arguable defence - the appellants were bound by the terms and conditions of the documents by their signature - the Master did not err in finding that the bank had not acted unconscionably - the appellants were unable to demonstrate that as at the time of granting any of the loans the bank was indifferent to their ability to repay the loans or that the bank took advantage of severe disadvantages then suffered by the appellants or that they suffered from a "special disadvantage" - the appellants did not show that they suffered from ill health at the time the loans were granted - no basis for an application of the rule in Yerkey v Jones or Garcia v National Bank Australia Ltd was established - neither appellant asserted that the other had exercised undue influence or pressure upon the other - the Master did not fail to give the unrepresented appellants sufficient opportunity to put their defence - the Master did not err in rejecting the appellants' general assertion that the loans had been granted in violation of the National Credit Code.
Contracts Review Act 1980 (NSW) s 7; Fair Trading Act 1987 (NSW) s 43(1); Fair Trading Act 1987 (SA) s 57(1); Law of Property Act 1936 (SA) s 55a; National Consumer Credit Protection Act 2009 (Cth) s 3, Sch 1; National Credit Code (Cth) ss 4, 5; National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth) ss 2(1), 3, 4; Consumer Credit (South Australia) Act 1995 (SA) ss 3, 5; Consumer Credit (South Australia) Code (SA) ss 5, 6, 8, 9; Consumer Credit (Queensland) Act 1994 (Qld) appendix; Real Property Act 1886 (SA) Part XVII; Supreme Court Civil Rules 2006 (SA) Rule 204; Trade Practices Act 1974 (Cth) s 51AA(1), referred to.
Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51; L'Estrange v F Graucob Ltd [1934] 2 KB 394; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; Equuuscorp Pty Ltd v Glengallan Investments (2004) 218 CLR 471, applied.
Commercial Bank of Australia v Amadio (1983) 151 CLR 447; Elkofairi v Permanent Trustee Co Ltd (2002) 11 BPR 20,841; Perpetual Trustee Company Limited v Khoshaba (2005) 14 BPR 26,639; Attorney-General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557; Kowalczuk v Accom Finance Pty Ltd (2008) 77 NSWLR 205; Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315, distinguished.
Moonta Town Corporation v Rodgers & Rodgers (1980) 26 SASR 143; Kenney v Ritter (2009) 263 LSJS 158; Garcia v National Australia Bank Ltd (1998) 194 CLR 395, discussed.
National Australia Bank v Lekakis (2003) 230 LSJS 330; Bayford v St George Bank Limited [2003] SASC 210; Andrew Garrett Wine Resorts Pty Ltd v National Australia Bank Ltd (2004) 206 ALR 69; Rodgers v Moonta Town Corporation (1981) 37 ALR 49; Australian Securities and Investments Commission v Australian Lending Centre Pty Ltd (No 3) (2012) 287 ALR 693; Pennicuk v City of Gosnells [2011] WASC 63; Cachia v Hanes (1994) 179 CLR 403; Dietrich v The Queen (1992) 177 CLR 292; Blomley v Ryan (1956) 99 CLR 362; Leslie v GE Commercial Corp (Australia) Pty Ltd [2007] WASCA 65; Yerkey v Jones (1939) 63 CLR 649, considered.

WORDS AND PHRASES CONSIDERED/DEFINED
"pure asset lending""

WESTPAC BANKING CORPORATION v CHADHA
[2012] SASC 223
Civil

PEEK J. Appeal against orders for possession of real property.
Introduction
The appellants appeal against the orders of a Supreme Court Master (the Master) granting summary possession under Part XVII, Real Property Act 1886 of two properties owned by Mr Rajesh Chadha and Mrs Sarita Chadha (the appellants) on 10 September 2012 in favour of Westpac Banking Corporation (the bank). The properties are the subject of registered mortgages in favour of the bank.
Loans by the bank to the appellants personally
From 1992, the appellants owned a fashion business, Rishi Fashions, which they operated through a company, Rishi Fashions Pty Ltd (the Company). The appellants also owned properties at Erskine Street, Goodwood (the Erskine Street property); 2 Lanor Avenue, Millswood (the 2 Lanor Avenue property); and 2A Lanor Avenue (or 68 Weller Street), Millswood (the 2A Lanor Avenue property).
From December 2007, the appellants entered into a series of loan transactions with the bank. On 13 December 2007, the parties entered into a written contract incorporating Westpac’s Booklet of Standard Terms and Conditions (the Standard Terms and Conditions) whereby the bank agreed to provide a Premium Option Home Loan of $72,800 (the First Home Loan) and an Equity Access Loan of $300,000 (the Equity Loan). The purpose of these loans was stated to be the refinancing of an existing home loan. These loans were secured by mortgages granted to the bank over the Erskine Street property, the 2 Lanor Avenue property and the 2A Lanor Avenue property, executed by the appellants on 13 December 2007. In respect of the 2 Lanor Avenue property, a second mortgage was executed on 24 December 2007.
By a second written contract also executed on 13 December 2007 (incorporating the Standard Terms and Conditions) the appellants were granted the following further home loans (which were also secured by the mortgages over the three properties): a Premium Option Home Loan (the Second Home Loan) of $552,000; a Premium Option Home Loan (the Third Home Loan) of $135,800; and a Premium Option Home Loan (the Fourth Home Loan) of $102,000.
The Investment Property Loan by the bank to the appellants
On 14 July 2010, the appellants executed a written contract (incorporating a Loan Booklet with Additional Terms and Conditions) with the bank for an Investment Property Loan for $150,000. The purpose of this loan was noted to be “to assist in buying shares and invest in other manages [sic] funds”. It was secured by the existing mortgages over the Erskine Street property and the 2A Lanor Avenue property and a new debt and interest guarantee by the company supported by a fixed and floating charge over its assets.
Loans by the bank to the Company
Several loans were also made by the bank to the Company which was owned and operated by the appellants.
On 5 December 2007, a Business Finance Agreement was made between the bank and the Company comprising a business overdraft in the amount of $570,000, and a Banker’s Undertaking Revolving Limit of $40,000.[1] Under a Commercial Hire Purchase Agreement dated 8 July 2008, $139,327.50 was provided to the company by the bank. On 7 July 2009, the company was granted a loan of $36,000 by the bank under a Commercial Loan Agreement.
[1] This was eventually replaced by a later Business Finance Agreement dated 5 January 2012.
The guarantees by the appellants of the loans to the Company
The loans to the Company were each guaranteed by the appellants as follows. On 13 December 2007, the appellants executed a deed of guarantee in relation to all monies owed to the bank by the Company in respect of the Business Finance Agreement. This deed was amended by a letter dated 9 February 2012 to increase the limit to $610,000 (plus costs and interest up to an additional 20 per cent). The guarantee was secured by a new mortgage over the 2 Lanor Avenue property and the Erskine Street property.
The execution of each guarantee by the appellants appears to have been duly witnessed by Mr Peter Kelly, an employee of the bank. Each appellant completed a document entitled “Form of Acknowledgement – Business Guarantor” which states that an intending guarantor should, before signing the guarantee, address a number of questions concerning the liability they are considering undertaking. The appellants confirmed their understanding of these matters by answering each question in the affirmative. In addition, Mr Kelly completed an “Interview Checklist – Guarantor” in respect of each appellant, confirming that he had alerted the appellants to the warnings and explained several other matters prior to them signing the guarantees.
On 8 July 2008, a second guarantee was executed by the appellants in relation to the company’s obligations pursuant to the Commercial Hire Purchase Agreement. This guarantee also appears to have been duly executed by the appellants and properly witnessed by a Mr or Ms Shekhar Mittal.
On 7 July 2009, a third guarantee was executed by the appellants in relation to the Commercial Loan Agreement between the bank and the company which was witnessed by a Mr Ian Wright.
The mortgages
As stated above, each of the personal loans and the guarantees were secured by mortgages registered over the three properties. Each of the mortgages appear to have been duly signed by the appellants and witnessed by Mr Kelly. The mortgages granted over the 2 Lanor Avenue property and the 2A Lanor Avenue property on 13 December 2007 incorporate the Memorandum of Standard Terms and Conditions deposited at the Lands Titles Office as Memorandum No 8757549. The second mortgage executed over the 2 Lanor Avenue property by the appellants on 24 December 2007 incorporates the Memorandum of Standard Terms and Conditions deposited at the Lands Titles Office as Memorandum No 9561870. The appellants did not suggest that there were any material differences between the terms of the two documents
Default on the loans
The second and third home loans fell into arrears in September 2011. The First Home Loan, the Equity Loan, and the Fourth Home Loan subsequently fell into arrears in January 2012. The Commercial Hire Purchase Agreement and the Commercial Loan Agreement also both fell into arrears in January 2012, with the Business Overdraft Facility component of the Business Finance Agreement falling into arrears in February 2012. The Investment Property Loan also fell into arrears in February 2012.
The first notices of default, in respect of the four home loans and the Equity Loan, were served on the appellants on 3 May 2012 pursuant to s 55a, Law of Property Act 1936. The amount in arrears was then $46,982.31.
Notices of demand seeking payment, pursuant to the three guarantees, of the amounts outstanding under the three loans made to the C ompany were sent by the bank’s lawyers to the appellants on 14 May 2012.
The second notices of default, in respect of the Investment Property Loan, the Business Overdraft Facility, the Commercial Hire Purchase Agreement and the Commercial Loan, were served on the appellants on 25 May 2012. The amount in arrears at that time was $703,220.70. As I understand it, this default triggered a liability to repay the whole of the amount due under those agreements which was $855,329.82 as at 23 May 2012.
The proceedings taken by the bank
The defaults were not remedied by the appellants and the bank issued a summons under Part XVII, Real Property Act 1886, supported by an affidavit of Rita Dichiera, a Senior Relationship Manager with the bank, sworn 3 July 2012. The bank sought orders for possession of the 2 Lanor Avenue property and the 2A Lanor Avenue property.[2]
[2] The Erskine Street property had previously been sold at public auction.
On 16 July 2012, the appellants were served with the proceedings and notices to occupiers were duly attached to the 2A Lanor Avenue property and the 2 Lanor Avenue property pursuant to Rule 204, Supreme Court Civil Rules 2006. The appellants sought to resist the bank’s claim, filing a defence on 9 August 2012. The appellants have been unrepresented for the duration of these proceedings.
The decision of the Master
The bank’s application came before the Master on 29 August 2012. The Master noted that:
[13]By the actions it had taken and the material filed, the plaintiff established a prima facie right to a summary order for possession in respect of those two properties.
…
[24]… For the plaintiff to be deprived of its remedy of a summary possession order, it is necessary for the defendants to demonstrate that they have a dispute of substance to justify the Court directing pleadings and referring the summons into the ordinary trial list for determination: see Moonta Town Corporation v Rodgers & Rodgers (1980) 26 SASR 143 at 160.
Accordingly, his Honour considered the following arguments advanced by the appellants (which have been repeated before me):
·That the loans were granted in contravention of the National Credit Code and in circumstances which attract the operation of the principle of “unconscionable equity” in Blomley v Ryan (Blomley)[3] and Commercial Bank of Australia v Amadio (Amadio).[4] The appellants argued that other financial institutions had refused to grant them further financial facilities due to lack of serviceability in January or May 2006 and August 2007 and that the bank knew, or ought to have known, that the appellants were not in a position to repay the loans.
·That the 2A Lanor Avenue property is the appellants’ family home where they live with their two daughters, one of whom is disabled, and two grandchildren.
·That the appellants suffer depression and stress.
·That penalty interest rates should not be applied to the amounts outstanding under the loans.
[3] (1956) 99 CLR 362.
[4] (1983) 151 CLR 447.
The Master proceeded to examine the appellants’ contentions, including as to the general principles of unconscionable conduct and the decision in Amadio. Ultimately, his Honour found that no arguable case had been made out on any of the appellants’ contentions. As to the Amadio aspect, his Honour concluded that the appellants had not made out an arguable case that they had suffered from a “special disability” at the time the loans were negotiated in all the circumstances, including that:
·the loans had been serviced for a period of four years which tended to displace any suggestion that the appellants suffered from such a special disability when the loans were negotiated;
·while the business eventually failed and a development of the Erskine Street property produced a smaller than expected profit, these matters did not establish a special disability, and particularly so since they had occurred well after the loans had been executed;
·evidence of ill health, stress and depression suffered at a later time cannot constitute a “special disability” at the time the loans were negotiated;
·there was no evidence which could establish a violation of the National Credit Code by the bank; and
·the application or non-application of penalty interest rates to the loans was not a factor relevant to the Master’s decision in the particular circumstances.
The Master concluded thus:
[28]As the defendants have not advanced matters that would fall into the category of serious dispute or arguable defence requiring determination in the ordinary course, the plaintiff is entitled to an order for summary possession of the two subject properties.
The Master made the following orders:
1.The plaintiff is entitled to an order for summary possession of the two subject properties.
2. Order in terms of the minutes this day initialled by me.
3.On the order for possession, I will allow 28 days from service of the order to provide the defendants with ample time to vacate the premises.
4. The defendants are to pay the plaintiff’s costs of and incidental to the proceedings.
Stay of the order for possession
On 20 September 2012, the appellants simultaneously lodged their notice of appeal and an interlocutory application for a stay of the orders for possession made on 10 September 2012. The appeal was to be heard in the normal way in the list for the hearing of such appeals.
On 5 October 2012, the interlocutory application was heard by Gray J. His Honour granted an interim stay of one of the orders for possession (that relating to the matrimonial home) until 12:00pm on 16 November 2012 (which stay had expired by the time of my hearing this appeal on 21 November 2012). Gray J reasoned thus:[5]
[6]… The defendants have yet to institute proceedings claiming equitable and other relief against Westpac Banking Corporation. It appears that they have sought to raise their substantive concerns in opposition to the possession proceedings. Those proceedings are not a suitable vehicle for a consideration of the defendants’ claims for equitable and other relief.
[7]I consider that the defendants should have the opportunity to issue substantive proceedings and have the strength of their claims for relief assessed prior to the order for possession taking effect in respect of their home property. …
[5] Westpac Banking Corporation v Chadha [2012] SASC 178.
The stay has now lapsed and the appellants have made no attempt to issue substantive proceedings for equitable or other relief. They have elected to proceed with this appeal only. In those circumstances it is unnecessary for me to consider further the orders made by Gray J. I should add that these orders were apparently made with the consent of the bank and accordingly the making of them in this case does not constitute a precedent as to the usual process to be followed in such circumstances.
Consideration of the appeal
The appellants remain unrepresented on the appeal. The grounds of appeal are not professionally drafted and substantially overlap, particularly in relation to the matter of asserted “pure asset lending”.
The grounds of appeal
The grounds are as follows:
1.The judgement of the Honourable Judge, Master of the Supreme Court is bad both on facts and law.
2.That Para 4 of the Judgment is wrong. That the Honourable Judge failed to consider the affidavit of Rajesh Chadha dated 22/8/12. That the loans were serviced as a result of the respondents providing loans to the appellants at various times. That the loans were granted on pure asset lending. That the properties of the appellants were valued each year and the loans were further granted against the increased values of the properties.
3.That the appellant’s case falls squarely on the established law of unconscionable equity. In case Attorney General VS World Best Holdings (2005) 63 NSWLR P557. Chief Justice Spigelman has said over recent decades legislatures have authorised courts to rearrange the legal rights of persons on the basis of vague general standards which are clearly capable of misuse unless their application is carefully confined unconscionability is such a standard. Unconscionability is a concept which requires high level of moral obloquy. If it were to be applied as if it were equivalent to what is ‘fair’ or ‘just’ it could transform commercial relationships. If the lender that there will be default in payment of the interest or principal so that mortgagee sale will inevitable result.
4.That in reference to para 16 of the judgement of the Honourable Judge, the appellants request this court to consider their case of unconscionable equity with in case of Elkofairi VS Permanent Trusty company Ltd (2002) NSW court of appeal. Also refer to Perpetual Trusty Company Ltd VS Khoshaba (2006) NSWCA41 at 218. Pure asset lending there is public interest in treating such contracts. In Kowalczuk VS Accom Finance pty ltd (2008) NSWCA 343.
5.That the facts in Para 6 of the judgements are wrong. That the deed of guarantee dated about 13^th of December 2007 was for an amount of $350,000 and then it was amended to $450,000 in 2009 and later again amended to $610,000 on 9^th of Feb 2012 plus costs and interest up to an additional 20 per cent to cover expenses.
6.That the appellants were defending their case in person. The appellants were not given enough opportunity to put their defence properly. As a result the judgement and order of the Honourable Judge is bad in law.
7.That the Honourable Judge failed to consider his own remarks on the case file that the statement of claim and defence inappropriate for this action.

It is agreed between the parties that the appeal in respect of the order for possession relating to the 2A Lanor Avenue property is not being pursued.
The scope of the appeal
The correct approach to applications for orders for possession was considered by the Full Court in Moonta Town Corporation v Rodgers & Rodgers.[6] The court decided that if an arguable case was not shown by a respondent, the applicant was entitled to the making of an order. For completeness, it may be noted that Cox J pointed out that, in order to make that decision as to whether there is an arguable case, it may sometimes be appropriate for the application to be adjourned so that more detail of an asserted defence position can be obtained for the purpose of making a decision on the contested application for possession. Thus, Cox J stated:[7]
The learned Judge was not obliged to deal with a difficult contested claim under Part XVII of the Real Property Act as a part of his ordinary Chamber work. He might, very reasonably, have directed that the matter be put into the civil list, and have required the parties to exchange points of claim and points of defence in order to define their respective positions more clearly.
[6] (1980) 26 SASR 143. Subsequently affirmed by the High Court: Rodgers v Moonta Town Corporation (1981) 37 ALR 49.
[7] Moonta Town Corporation v Rodgers & Rodgers (1980) 26 SASR 143, 160.
However, if that procedure is adopted, the matter of deciding the application for possession then proceeds and reverts to the original question: is an arguable case disclosed on all of the material before the Court? If not, the applicant is entitled to an order for possession. If yes, the application is to be dismissed and the trial is to proceed in the normal way.
More recently, Judge Burley stated in National Australia Bank v Lekakis:[8]
[2]Proceedings brought pursuant to Pt XVII are summary in nature and are only capable of being resorted to when the matters in dispute between the parties are capable of determination in a summary way. The application proceeds by way of affidavit rather than by pleadings. If a defendant contends that the plaintiff is not entitled to an order for possession and raises matters which are only capable of determination by a trial as opposed to a summary hearing, the Court normally gives a direction that the action continue on pleadings: cf Corporation of the Town of Moonta v Rodgers (1980) 26 SASR 143 at 160. Before that can occur, the Court must be satisfied that the nature of the dispute between the parties is such that it cannot be determined in a summary way.
[8] (2003) 230 LSJS 330.
The principle was again the subject of discussion in Bayford v St George Bank Limited where Besanko J explained:[9]
[9]The procedure under s 192 of the Real Property Act and r 65 is essentially a summary procedure and if there is a dispute of fact of substance the Court may direct pleadings and refer the action into the civil list for determination (Moonta Town Corporation v Rodgers (1981) 26 SASR 143 per Cox J at 160).
[9] [2003] SASC 210; See also Andrew Garrett Wine Resorts Pty Ltd v National Australia Bank Ltd (2004) 206 ALR 69, [4] (Besanko J).
In summary, provided that the applicant for an order for possession has met the requirements specified in Part XVII, Real Property Act 1886, the applicant is prima facie entitled to that order. However, if the Court is satisfied that the defendant has raised an arguable case supported by some evidence which, if accepted, could give rise to a particular defence, the matter may be referred to the ordinary civil trial list for determination. I will consider the arguments of the appellants on the basis that they seek to submit that his Honour erred in failing to adopt the latter course.
Ground 1 of appeal: the judgment of the Master was bad on facts and law
This is really only introductory and stands or falls on the following substantive grounds.
Ground 2 of appeal: assertion of “pure asset lending”
Ground 2 challenges the following finding made by the Master at paragraph [4] of his reasons:
[4] It appears that all of these loans were properly serviced over a period of approximately four years. From the second affidavit of Ms Dichiera – FDN 7 – the loans first fell into arrears as follows:
·    First home loan – January 2012
·    Equity loan – January 2012
·    Second home loan – September 2011
·    Third home loan – September 2011
·    Fourth home loan – January 2012
His Honour’s point here was that the appellants had successfully serviced the loans for about four years from December 2007 (when all the loans were taken out, with the exception of the later Investment Property Loan for $150,000 executed on 14 July 2010) until September 2011 when the first defaults occurred.
The appellants appear to submit that the loans were only “serviced” by way of additional funds provided by the bank on the basis of revaluations of the three properties held as security. The appellants assert here, and in subsequent grounds of appeal, that the bank was engaging in “pure asset lending”. I take that to mean the lending of money “without regard to the ability of the borrower to repay by instalments under the contract, in the knowledge that adequate security is available in the event of default”.[10] The usual hallmarks of such lending will be an indifference of the lender to the purpose of the loan in circumstances where the lender has ample security to cover the outstanding principal and interest (both normal and penalty interest) and recovery costs. I will deal here with the contentions as to “pure asset lending” referred to in the various grounds of appeal.
[10] Perpetual Trustee Company Limited v Khoshaba (2005) 14 BPR 26, 639, [128] (Basten JA).
The appellants refer to Perpetual Trustee Company Limited v Khoshaba (Khoshaba)[11] where the Full Court of the New South Wales Supreme Court dismissed an appeal against a finding that a loan contract for an unspecified purpose was “unjust” under s 7, Contracts Review Act 1980. Spigelman CJ there found that the combination of the appellant’s failures to inquire as to the purpose of the loan and to verify or follow up other details in the loan application indicated that the appellant lender was “content to lend on the value of the security”.[12] In the particular circumstances of the case, his Honour held that this “indifference” was determinative of the unjustness of the contract under the Act.[13] Basten JA in Khoshaba stated:[14]
[128]To engage in pure asset lending, namely to lend money without regard to the ability of the borrower to repay by instalments under the contract, in the knowledge that adequate security is available in the event of default, is to engage in a potentially fruitless enterprise, simply because there is no risk of loss. At least where the security is the sole residence of the borrower, there is a public interest in treating such contracts as unjust, at least in circumstances where the borrowers can be said to have demonstrated an inability reasonably to protect their own interests, for the purposes of, for example, s 9(2)(e) or (f). That does not mean that the Act will permit intervention merely where the borrower has been foolish, gullible or greedy. Something more is required: see Esanda Finance Corp Ltd v Tong (1997) 41 NSWLR 482 at 491 (Handley JA) cited with approval in Elkofairi (supra) at [77] by Beazley JA. (Emphasis added)
[11] (2005) 14 BPR 26,639.
[12] Perpetual Trustee Company Limited v Khoshaba (2005) 14 BPR 26,639, [82], [84], [92] quoting Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413, [79] (Beazley JA).
[13] Perpetual Trustee Company Limited v Khoshaba (2005) 14 BPR 26,639, [92], [96].
[14] (2005) 14 BPR 26,639.
The appellants here submit that Khoshaba established that there is a “public interest” in setting aside contracts which are directed at “pure asset lending”. However, in my view this case does little to assist the appellants for several reasons.
First, Khoshaba involved a finding that the contract was “unjust” under the Contracts Review Act 1980, which has no South Australian equivalent. The appellants wish to ignore the fact that the law in New South Wales is quite different to that in South Australia but this cannot be done. Their case must be assessed by reference to general legal and equitable principles and not by decisions on interstate legislation.
Indeed, in Khoshaba, Basten JA referred to the severe disadvantages suffered by the respondents in that case (including limited education and business experience) and specifically acknowledged that “[t]hese circumstances would probably not have justified a finding that the borrowers were under a special disadvantage or disability, for the purposes of equitable principles of unconscionable dealing”.[15]
[15] Perpetual Trustee Company Limited v Khoshaba (2005) 14 BPR 26,639, [131].
Further, the court in Khoshaba made it plain that even under the New South Wales regime, “something more” than just the characterisation of “pure asset lending” is required to make such conduct of a bank unjust or unconscionable. Of course, the facts of the present case are certainly distinguishable in that here each of the loan agreements clearly stated the intended purpose of the loans, thus demonstrating that the bank did make inquiries into these matters. It was the lack of inquiry that was thought critical in Khoshaba.[16]
[16] (2005) 14 BPR 26,639, [68]-[70], [92] (Spigelman CJ), [124], [126] (Basten AJ).
The appellants also relied upon the case of Kowalczuk v Accom Finance Pty Ltd[17] but again, on correct analysis, this case is similarly unhelpful to them. It also involved an application under s 7, Contracts Review Act 1980 and is again distinguishable from the present facts on that basis. In so far as the Court also made a finding of unconscionability under s 43(1), Fair Trading Act 1987 (as it was then), which had a South Australian equivalent,[18] such finding was confined to the fact that the default rate of interest provisions under the relevant mortgages should be set aside as being a rate that was unconscionably high.[19] This cannot assist the present appellants in opposing the order for possession proceedings.
[17] (2008) 77 NSWLR 205.
[18] Fair Trading Act 1987 s 57(1).
[19] Kowalczuk v Accom Finance Pty Ltd (2008) 77 NSWLR 205, [161] (Campbell JA).
I consider that the Master was correct in deciding that there was no arguable case that the bank had engaged in unconscionable conduct constituted by “pure asset lending” in this case and that his Honour did not fall into factual error in his analysis of the associated factual matters.
I reject ground of appeal 2.
Grounds 3 and 4 of appeal: “the appellants’ case falls squarely on the established law of unconscionable equity …” and the Master failed to consider several authorities in addressing this issue
Grounds 3 and 4 appear to refer to matters of legal and equitable relief in the area of unconscionable conduct.[20]
[20] I take the appellants’ use of the phrase “unconscionable equity” to refer to the equitable principles of unconscionability.
The legal principles relating to the signing of contractual documents
The basic principles governing the legal significance and effect of the signing of contractual documents have been settled for many years. Thus, in 1934 in L'Estrange v F Graucob Ltd, Scrutton LJ stated that:[21]
[w]hen a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not. (Emphasis added)
[21] [1934] 2 KB 394, 403.
More recently, in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd, the High Court, in a unanimous judgment, restated the relevant principles thus:[22]
[22] (2004) 219 CLR 165, 180-182 (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).
[43]… [I]n words that are apposite to the present case, in Wilton v Farnworth[23] Latham CJ said:
In the absence of fraud or some other of the special circumstances of the character mentioned, a man cannot escape the consequences of signing a document by saying, and proving, that he did not understand it. Unless he was prepared to take the chance of being bound by the terms of the document, whatever they might be, it was for him to protect himself by abstaining from signing the document until he understood it and was satisfied with it. Any weakening of these principles would make chaos of every-day business transactions.
…
[45]It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents, as Latham CJ put it, whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it.
…
[47]Legal instruments of various kinds take their efficacy from signature or execution. Such instruments are often signed by people who have not read and understood all their terms, but who are nevertheless committed to those terms by the act of signature or execution. It is that commitment which enables third parties to assume the legal efficacy of the instrument. To undermine that assumption would cause serious mischief. (Emphasis added)
[23] [1948] HCA 20; (1948) 76 CLR 646 at 649.
Again in Equuuscorp Pty Ltd v Glengallan Investments, a unanimous bench of the High Court declared that:[24]
[33]The respondents each having executed a loan agreement, each is bound by it. Having executed the document, and not having been induced to do so by fraud, mistake, or misrepresentation, the respondents cannot now be heard to say that they are not bound by the agreement recorded in it.[25] The parol evidence rule,[26] the limited operation of the defence of non est factum[27] and the development of the equitable remedy of rectification,[28] all proceed from the premise that a party executing a written agreement is bound by it. Yet fundamental to the respondents’ case that the operative agreements between the parties were wholly oral, and reached earlier than the execution of the written agreements, was the proposition that the written agreements subsequently executed not only may be ignored, they must be. That is not so. Having executed the agreement, each respondent is bound by it unless able to rely on a defence of non est factum, or able to have it rectified. The respondents attempted neither.
[34]There are reasons why the law adopts this position. First, it accords with the “general test of objectivity [that] is of pervasive influence in the law of contract”.[29] The legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual beliefs or intentions.[30]
[35]Secondly, in the nature of things, oral agreements will sometimes be disputable. Resolving such disputation is commonly difficult, time-consuming, expensive and problematic. Where parties enter into a written agreement, the Court will generally hold them to the obligations which they have assumed by that agreement. At least, it will do so unless relief is afforded by the operation of statute or some other legal or equitable principle applicable to the case. Different questions may arise where the execution of the written agreement is contested; but that is not the case here. In a time of growing international trade with parties in legal systems having the same or even stronger deference to the obligations of written agreements (and frequently communicating in different languages and from the standpoint of different cultures) this is not a time to ignore the rules of the common law upholding obligations undertaken in written agreements. It is a time to maintain those rules. They are not unbending. They allow for exceptions. But the exceptions must be proved according to established categories. The obligations of written agreements between parties cannot simply be ignored or brushed aside.
(Emphasis added)
[24] (2004) 218 CLR 471, 483 (Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ).
[25] L'Estrange v Graucob Ltd [1934] 2 KB 394.
[26] Hoyt's Pty Ltd v Spencer [1919] HCA 64; (1919) 27 CLR 133.
[27] Petelin v Cullen [1975] HCA 24; (1975) 132 CLR 355.
[28] Taylor v Johnson [1983] HCA 5; (1983) 151 CLR 422.
[29] Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, 549 per Gleeson CJ.
[30] Gissing v Gissing [1970] UKHL 3; [1971] AC 886, 906 per Lord Diplock; Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441, 502 per Lord Diplock.
In the present case, the documents accompanying the instruments contained a number of clearly marked warnings. For example, in respect of the First and Second Loan contracts, the page headed “Acceptance of Loan Offer”, which features as the signing page, states clearly the words: “IMPORTANT: BEFORE YOU SIGN”, and then below that heading: “READ THIS CONTRACT DOCUMENT so that you know exactly what contract you are entering into and what you will have to do under the contract”.
In relation to the first guarantee, the covering page reads, “WARNING: THIS IS A VERY IMPORTANT DOCUMENT: You take a financial risk if you sign”. The warnings on the execution page include the following: “If the Customer does not pay you must pay. This could mean you lose everything you own including your home”.
It was never suggested by the appellants that they did not sign each of the documents relating to the loans and the guarantees, and no plea of non est factum or application for rectification has been advanced.[31]
[31] Saunders v Anglia Building Society [1971] AC 1004, 1019 (Lord Reid); Petelin v Cullen (1975) 132 CLR 355, 359-361 (Barwick CJ, McTiernan, Gibbs, Stephen and Mason JJ); Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, 181-182 [46]-[47] (Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ).
Thus, the act of signing each of the loan contracts, the mortgages and the associated guarantees created a binding obligation to adhere to their terms and conditions unless the appellants can positively make out a recognised ground for setting them aside. This includes the terms stating that upon an event of default the bank is entitled to take possession of and sell the mortgaged properties if the appropriate conditions precedent are satisfied.
The appellants did not assert that the bank prematurely commenced these proceedings before giving them an opportunity to remedy the default. There is also no suggestion that the bank failed to comply with each of the requirements under Part XVII, Real Property Act 1886; s 55a, Law of Property Act 1936 or Rule 204, Supreme Court Civil Rules 2006.
The appellants’ submissions as to unconscionability
The appellants to seek to have the instruments set aside on the grounds of general unconscionability.
The appellants referred to the decision of the NSW Court of Appeal in Attorney-General (NSW) v World Best Holdings Ltd.[32] That case concerned an unconscionable conduct claim made under the Retail Leases Act 1994 which was heard before the NSW Administrative Decisions Tribunal and which granted relief under the statutory unconscionable conduct scheme. A single Judge of the NSW Supreme Court (Patten A-J) set aside that decision on the grounds of inadequacy of the qualifications of the person constituting the tribunal and the participation of non-judicial personnel in the decision of the tribunal. On further appeal by the Attorney-General, the Full Court held that the constitution of the tribunal was validated by the Courts Legislation Amendment Act 2005[33] but a majority dismissed the appeal on the basis that the participation of non-judicial personnel in the tribunal’s decision had demonstrated a jurisdictional error which invalidated the decision.[34]
[32] (2005) 63 NSWLR 557.
[33] (2005) 63 NSWLR 557, [65]-[67] (Spigelman CJ), [152]-[154] (Mason P), [183] (Tobias JA).
[34] Attorney-General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557, [97], [126] (Spigelman CJ), [197] (Tobias JA).

The appellants appear to seek to rely on what they contend is a paraphrasal of part of the judgment of Spigelman CJ, presumably referring to the following paragraphs of his Honour’s judgment:[35]
[119]Section 70 of the Retail Leases Act contains a definition of “retail tenancy claim” which is of much more definite character. Such a claim extends to the specific rights and obligations arising under a lease and to such well established, but narrow, concepts impinging on the relationship of landlord and tenant, as claims for relief against forfeiture and claims for rectification. In these areas the relevant principles are well defined and capable of ready application. That is far from the case with a concept such as “unconscionable conduct”. Over recent decades legislatures have authorised courts to rearrange the legal rights of persons on the basis of vague general standards which are clearly capable of misuse unless their application is carefully confined. Unconscionability is such a standard.
…
[121]The Ministerial Second Reading speech, quoted above, indicates a similar concern to distinguish what is unconscionable from what is merely unfair or unjust. Even if the concept of unconscionability in s 62B of the Retail Leases Act is not confined by equitable doctrine, as the decisions under s 51AC of the Trade Practices Act suggest, restraint in decision-making remains appropriate. Unconscionability is a concept which requires a high level of moral obloquy. If it were to be applied as if it were equivalent to what was “fair” or “just”, it could transform commercial relationships in a manner which the Minister expressly stated was not the intention of the legislation. The principle of “unconscionability” would not be a doctrine of occasional application, when the circumstances are highly unethical, it would be transformed into the first and easiest port of call when any dispute about a retail lease arises. (Emphasis added)
[35] Attorney-General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557.
This decision does not have any direct application to the present case in that it dealt with a particular statutory unconscionability regime with no South Australian counterpart. But more importantly, it has no application to the present factual scenario; it is not arguable that the “high level of moral obloquy” referred to by Spigelman CJ is present here.
In the associated ground 4, the appellants refer to a number of other authorities said to support a finding of unconscionability against the bank. I will refer to these in the context of a discussion of the general principles in this area.
The decision of the High Court in Commercial Bank of Australia v Amadio
The appellants rely on the principles established by the High Court in Amadio[36] where Mason J, after referring to the well known passage by Kitto J in Blomley v Ryan,[37] stated:[38]
[6]It is not to be thought that relief will be granted only in the particular situations mentioned by their Honours. It is made plain enough, especially by Fullagar J., that the situations mentioned are no more than particular exemplifications of an underlying general principle which may be invoked whenever one party by reason of some condition of circumstance is placed at a special disadvantage vis-a-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created. I qualify the word “disadvantage” by the adjective “special” in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party.
[7]Because times have changed new situations have arisen in which it may be appropriate to invoke the underlying principle. Take, for example, entry into a standard form of contract dictated by a party whose bargaining power is greatly superior, a relationship which was discussed by Lord Reid and Lord Diplock in A. Schroeder Music Publishing Co Ltd v Macaulay. See also Clifford Davis Management Ltd. v WEA Records Ltd. In situations of this kind it is necessary for the plaintiff who seeks relief to establish unconscionable conduct, namely that unconscientious advantage has been taken of his disabling condition or circumstances. [Footnotes omitted]
[36] (1983) 151 CLR 447, 474-475 (Wilson and Deane JJ).
[37] (1956) 99 CLR 362 Kitto J spoke of it as “a well-known head of equity” which — “applies whenever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands.”
[38] (1983) 151 CLR 447, 462-463.
The bank emphasises the need to establish that the appellants were at a special disadvantage in the sense required in Amadio and particularly rely upon the decision in Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd.[39] There several tenants instituted proceedings to claim the recovery of overpaid amounts against the owners (Berbatis) of a shopping centre (the claim). While these proceedings were pending, one of the tenants whose lease was due to expire (with no right of renewal) contracted with a third party to sell its business but needed to secure a renewal of its lease to do so. During negotiations for the renewal, Berbatis made it a condition of renewal that the tenant discontinue his part of the claim. The ACCC brought proceedings alleging that the lessors had engaged in conduct in contravention of s 51AA(1) of the Trade Practices Act 1974.[40] Gleeson CJ emphasised that the fact that one party knowingly takes advantage of its superior bargaining power does not establish that the other party is in a position of “special” disadvantage:
[11]… A person is not in a position of relevant disadvantage, constitutional, situational, or otherwise, simply because of inequality of bargaining power. Many, perhaps even most, contracts are made between parties of unequal bargaining power, and good conscience does not require parties to contractual negotiations to forfeit their advantages, or neglect their own interests.
[39] (2003) 214 CLR 51.
[40] Section 51AA states: “a corporation must not, in trade or commerce, engage in conduct that is unconscionable, within the meaning of the unwritten law, from time to time, of the States and Territories”.
His Honour later continued:
[14]Unconscientious exploitation of another’s inability, or diminished ability, to conserve his or her own interests is not to be confused with taking advantage of a superior bargaining position. …
[15]In the present case, there was neither a special disadvantage on the part of the lessees, nor unconscientious conduct on the part of the lessors. All the people involved in the transaction were business people, concerned to advance or protect their own financial interests. The critical disadvantage from which the lessees suffered was that they had no legal entitlement to a renewal or extension of their lease; and they depended upon the lessors’ willingness to grant such an extension or renewal for their capacity to sell the goodwill of their business for a substantial price. They were thus compelled to approach the lessors, seeking their agreement to such an extension or renewal, against a background of current claims and litigation in which they were involved. They were at a distinct disadvantage, but there was nothing “special” about it. They had two forms of financial interest at stake: their claims, and the sale of their business. The second was large; as things turned out, the first was shown to be relatively small. They had the benefit of legal advice. They made a rational decision, and took the course of preferring the second interest. They suffered from no lack of ability to judge or protect their financial interests. What they lacked was the commercial ability to pursue them both at the same time. (Emphasis added)
Gummow and Hayne JJ also emphasised that the special disadvantage must be one seriously affecting the ability of the innocent party to make a judgment as to that party’s own best interests. Their Honours referred to the judgment of Mason J in Amadio and stated:
[55]… His Honour went on to emphasise the need for the plaintiff seeking relief to establish the taking of unconscientious advantage of the plaintiff’s disabling condition or circumstance. It will be apparent that the special disadvantage of which Mason J spoke in this passage was one seriously affecting the ability of the innocent party to make a judgment as to that party’s own best interests.
[56]In the present case, the respondents emphasise that point and stress that a person in a greatly inferior bargaining position nevertheless may not lack capacity to make a judgment about that person’s own best interests. The respondents submit that the facts in the present case show that Mr and Mrs Roberts were under no disabling condition which affected their ability to make a judgment as to their own best interests in agreeing to the stipulation imposed by the owners for the renewal of the lease, so as to facilitate the sale by Mr and Mrs Roberts of their business. Those submissions should be accepted. [Footnotes omitted]
Callinan J stated in similar vein:
[184]It is important to note that although their Honours expressed themselves very broadly in the passages to which I have referred, I do not understand that the presence of one or more of the factors which they mentioned necessarily dictated that in every such case unconscionability should be found. Take for example Kitto J’s reference to “circumstances affect[ing a person’s] ability to conserve his own interests”. Use of the word “conserve” suggests the maintenance of a pre-existing or current right or interest. Two circumstances which almost always will have the capacity to affect a person’s ability to protect or further his or her own interests, are the financial capacity of that person, and its relativity to the financial capacity of a person with a competing interest. Mason J was conscious of this in Amadio, and accordingly qualified the word “disadvantage” by the adjective “special” in order to disavow any suggestion that the principle applies whenever, and because there is some difference, even substantial, in the bargaining power of the parties. His Honour also obviously thought it necessary to emphasize that the relevant conditions or circumstances calling for the application of the doctrine be ones which seriously affect the ability of an innocent party to make the judgment as to his or her own best interests, when the other party knows, or ought to know of that condition or circumstance, and its effect on the innocent party. (Emphasis added)
In the present case, the Master made the following findings in relation to the appellants’ asserted Amadio defence:
[23]As the courts have explained, there may be a variety of circumstances which may amount to special disadvantage but there must be something “special” about the disadvantage to give rise to a potential claim for equitable relief.
[24]In this case the defendants have not put forward any circumstance capable of amounting to a special disadvantage that gives them an arguable defence to the plaintiff’s claim for summary possession. For the plaintiff to be deprived of its remedy of a summary possession order, it is necessary for the defendants to demonstrate that they have a dispute of substance to justify the Court directing pleadings and referring the summons into the ordinary trial list for determination: see Moonta Town Corporation v Rodgers & Rodgers (1980) 26 SASR 143 at 160. For the Court to make such an order, it needs to be satisfied that the defendants have raised an arguable defence supported by some evidence which, if accepted, could give rise to such a defence.
[25]In my view, the defendants have not provided to the Court any material which would give rise to an arguable defence. There is no evidence of the defendants suffering any special disadvantage at the time they entered into their loan arrangements with the plaintiff. Indeed, the evidence shows that the defendants were able to service the loans for a period of some years following their execution. It was not until the end of 2011 or early 2012 that payment of the loans fell into arrears.
[26]It appears, although there is no satisfactory evidence about this, that the defendants’ fashion business failed, and that the defendants by reason of being unable to pay the rent on their business premises were forced to close down the business in March 2012. It also appears that the defendants’ property development of 17 Erskine Street, Goodwood did not result in the cash profit they expected. But these are all events after the loans were entered into and cannot bear on whether or not the defendants suffered a special disadvantage at that time they borrowed the money. In my view, there is no case advanced of special disadvantage such that the defendants might arguably have a claim for equitable relief on the principles of unconscionable conduct on the part of the plaintiff.
The appellants contended that their special disability or disadvantage arose from the fact that “at all material times when the loan was granted the defendants did not have the ability to repay”.[41] They contend that the bank should have refused the loans on the basis that it was aware that the appellants had no capacity to service them properly. The defence of unconscionability based on an inability to service a loan was considered by Beazley JA in Elkofairi v Permanent Trustee Co Ltd (Elkofairi) thus:[42]
[55]The only information in respect of Mr Elkofairi’s financial situation were the 3 letters from his accountants. Those letters were exceptional in their total lack of detail relating to Mr Elkofairi’s financial position. To the extent they represented that Mr Elkofairi would have no difficulty in servicing the loan they were incorrect. Whether the respondent actually appreciated this or not, the total absence of financial information, both in the application form and in the information provided by the accountants and the fact that no income was stated for either Mr or Mrs Elkofairi, should certainly have sounded a warning bell to a lender in respect of any borrowing, let alone a borrowing in the order of three quarters of a million dollars. In addition, there were the added factors that the respondent was aware that the appellant did not have legal advice in respect of the mortgage. Nor did it have any information as to her ability, existing or prospective, to service the loan.
[56]In my opinion, notwithstanding that the respondent did not have knowledge of the appellant’s lack of education and her language and domestic difficulties, her lack of income, in the circumstances of this transaction – that is a large borrowing secured over her only asset, in circumstances where the application form failed to disclose any income for either husband or wife – placed her in a special position of disadvantage. Though the full extent of that special position of disadvantage was not known to the respondent, nonetheless the absence of any relevant financial information was sufficient to put the respondent on notice of the appellant’s lack of capacity to meet the repayment obligations under the mortgage. That left as the only source of repayment the selling of her only asset, as again the respondent must be taken to have known.
[41] Transcript of hearing on 29 August 2012, T5.
[42] (2002) 11 BPR 20,841.
Perram J in Australian Securities and Investments Commission v Australian Lending Centre Pty Ltd (No 3) further elaborated on this matter thus:[43]
[212]… I am bound to accept that if a loan was advanced to Ms James with knowledge that she would be unable to meet the repayments and that her home would be lost then this would be unconscionable within Amadio and hence within s 12CA of the ASIC Act. In this case, the loan as a matter of formality had no ongoing repayments which Ms James would be able to fail to meet for the interest was prepaid. What there was instead was a monthly prepaid interest bill of $1,300. The critical question then, so it seems to me, is whether Ms James could have serviced the loan. This is because the reasoning in both Elkofairi and Khoshaba depends on the inability of the borrower to meet the repayments and the inevitability, therefore, of default and recourse to the security. I accept that a loan which cannot be serviced and in respect of which default is inevitable may not be disguised by making an unaffordable interest bill prepaid and thereafter deducted from the initial loan proceeds. Attention must therefore be focussed on whether the loan would inevitably have led to default if the interest had not been prepaid.
[43] (2012) 287 ALR 693.
As these remarks demonstrate, in ascertaining whether the bank in the present case has acted unconscionably in granting the loans to the appellants, the court will be primarily concerned with whether there is an arguable case that the bank was aware that the appellants had no capacity to repay the loans. The bank’s knowledge that the loans were to be used to refinance an outstanding liability is not alone sufficient to make it unconscionable for it to seek to enforce the loans through these proceedings.[44]
[44] Australian Securities and Investments Commission v Australian Lending Centre Pty Ltd (No 3) (2012) 287 ALR 693, [216] (Perram J).
Of course, in Amadio the company whose borrowings were being guaranteed was controlled by the son of the guarantors. By contrast, the company here was operated directly by the appellants who were best placed to know the state of their own company. They should not have guaranteed the loans if they were aware that the Company might not be able to service them and cannot now complain of decisions they have made simply by virtue of their improvidence.
The appellants further assert that they suffer from major depression and attached Centrelink medical certificates to the affidavit of Rajesh Chadha, dated 4 October 2012, to evidence this. However, these certificates note the year of onset of major depression as being 2011 in respect of Mr Chadha and May 2011 in respect of Mrs Chadha. A further medical certificate from the Royal Adelaide Hospital Emergency Department was exhibited to the affidavit of Rajesh Chadha, dated 20 November 2012 which indicated that on 19 November 2012 Mrs Chadha experienced central chest pain radiating through to the back.[45] The dates of these conditions fall well after the date on which the instruments were executed. The appellants cannot establish that these conditions seriously affected their ability to make a judgment as to their own best interests in entering the transactions, let alone that the bank was aware of any such special disability.
[45] Mrs Chadha subsequently did not appear at the hearing on 21 November 2012 due to illness.
The decisions of the High Court in Yerkey v Jones and Garcia v National Australia Bank Ltd
In Garcia v National Australia Bank Ltd (Garcia),[46] the High Court considered the status of the doctrine in Yerkey v Jones,[47] a case decided in a factual context of a guarantee given by a married woman in relation to her husband’s debts. The plurality in Garcia (Gaudron, McHugh, Gummow and Hayne JJ) stated:[48]
[31]The principles applied in Yerkey v Jones do not depend upon the creditor having, at the time the guarantee is taken, notice of some unconscionable dealing between the husband as borrower and the wife as surety. Yerkey v Jones begins with the recognition that the surety is a volunteer: a person who obtained no financial benefit from the transaction, performance of the obligations of which she agreed to guarantee. It holds … , in the second kind of case, that to enforce it against her if it later emerges that she did not understand the purport and effect of the transaction of suretyship would be unconscionable (even though she is a willing party to it) if the lender took no steps itself to explain its purport and effect to her or did not reasonably believe that its purport and effect had been explained to her by a competent, independent and disinterested stranger. And what makes it unconscionable to enforce it in the second kind of case is the combination of circumstances that:
(a)     in fact the surety did not understand the purport and effect of the transaction;
(b)     the transaction was voluntary (in the sense that the surety obtained no gain from the contract the performance of which was guaranteed);
(c)     the lender is to be taken to have understood that, as a wife, the surety may repose trust and confidence in her husband in matters of business and therefore to have understood that the husband may not fully and accurately explain the purport and effect of the transaction to his wife; and yet
(d)     the lender did not itself take steps to explain the transaction to the wife or find out that a stranger had explained it to her.
[46] (1998) 194 CLR 395.
[47] (1939) 63 CLR 649, 683 (Dixon J).
[48] (1983) 151 CLR 447, 408-409.

The plurality went on to state that the principle in Yerkey v Jones remains independent of, and has not been subsumed by, the principle established in Amadio.[49] Moreover, despite the arguably narrow origins of the principle in Yerkey v Jones, the plurality suggested that the principle as formulated in Garcia may possibly apply to a range of other relationships besides that of husband and wife.[50] However, those issues were not raised by the facts of the case in Garcia, and the plurality expressed no concluded view on them.[51]
[49] (1998) 194 CLR 395, 408 [28]-[30]. This statement has recently been endorsed by the Western Australian Court of Appeal in Leslie v GE Commercial Corp (Australia) Pty Ltd [2007] WASCA 65, [38].
[50] Garcia v National Australia Bank Ltd (1998) 194 CLR 395, 404 (Gaudron, McHugh, Gummow and Hayne JJ). These comments are supported by the use of the gender neutral terms “surety” and “debtor” in the High Court’s statement of the principle above: Thomson Reuters, Modern Contract of Guarantee, vol 1 (at Update 34) [4.9240]; Garcia v National Australia Bank Ltd (1998) 194 CLR 395, 409 (Gaudron, McHugh, Gummow and Hayne JJ).
[51] Garcia v National Australia Bank Ltd (1998) 194 CLR 395, 404 (Gaudron, McHugh, Gummow and Hayne JJ).
In the present case, there is no suggestion that either Mr Chadha or Mrs Chadha put pressure on, or otherwise unduly influenced, the other spouse to execute any of the instruments and particularly the guarantees. There is no suggestion that either of the appellants misunderstood the “purport and effect” of the transactions they entered into with the bank. Finally there is no suggestion that either of the appellants could be considered to have been a “volunteer” in the sense in which that term is used in Garcia.
Further submissions by the appellants on unconscionability
The appellants referred the Court to a number of other decisions by the NSW Court of Appeal in relation to “pure asset lending” which I have dealt with above and to Elkofairi,[52] but it contains nothing which can aid the appellants’ case. The appellants also referred to a passage from the plurality judgment of the High Court in Tanwar Enterprises Pty Ltd v Cauchi:[53]
[23]In Guise v Kouvelis,[54] when considering the defence of qualified privilege in defamation law, Dixon J lamented the lot of the judge called upon to apply “‘broad’ or ‘flexible’ categories or tests of responsibility or immunity”. Nevertheless, as this Court emphasised in the judgment in Jenyns v Public Curator (Q),[55] to which Dixon CJ was a party, the application of equitable doctrines and remedies may turn upon close analysis of the facts of the particular case. Cases of alleged undue influence and catching bargains are obvious examples; that is because the governing equitable principle in this field is concerned with the production by malign means of an intention to act. In that context, it is easy to speak of the conduct of the stronger party as unconscionable. But the phrase “unconscionable conduct” tends to mislead in several respects.
[52] (2002) 11 BPR 20,841.
[53] (2003) 217 CLR 315, 324 (Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ).
[54] (1947) 74 CLR 102, 116.
[55] (1953) 90 CLR 113, 119, per Dixon CJ, McTiernan and Kitto JJ.
The relevance of this paragraph to the present facts is unclear. That case was concerned with a very different question, namely whether it was unconscionable for the vendors to exercise their contractual right to terminate the contract where the purchaser had failed to complete the transaction for the sale of land on the agreed date. It affords no assistance to the present appellants.
I reject grounds of appeal 3 and 4.
Ground 5 of appeal: the Master’s findings in paragraph [6]
Ground 5 contends that certain facts set out in the Master’s judgment at paragraph [6] are incorrect. Paragraph [6] of the Master’s reasons is as follows:
[6]Exhibit “RD8” to the affidavit of Ms Dichiera – FDN 3 – contains copies of a guarantee called the first guarantee executed by the defendants in relation to any moneys owed to the plaintiff by Rishi Fashions Pty Ltd. This guarantee was secured by a new mortgage over 2 Lanor Avenue, Millswood and 17 Erskine Street, Goodwood. This guarantee was signed by both defendants on 13 December 2007. Each defendant completed a form of acknowledgement of various liabilities associated with the guarantee which was described as a business guarantee. Additionally, the documents include an interview check list completed by a bank officer on 13 December 2007 and a warning that the guarantors should seek their own business and/or legal advice in respect of the guarantee. At this time the business loan that was guaranteed was a business overdraft to Rishi Fashions of $610,000.00 plus costs and interest up to an additional 20 per cent to cover expenses.
The appellants submit that the original 13 December 2007 guarantee was for a maximum amount of $350,000, being increased to $450,000 in 2009, and then varied again in 2012 to bring it to a maximum amount of $610,000. The bank accepts that this is so and that the final limit only came into effect by way of a letter of amendment dated 9 February 2012. The learned Master did err in finding that the limit of the first guarantee was $610,000 as at its execution on 13 December 2007. However, that minor slip cannot be said in any way to have affected his Honour’s eventual decision as to there being no arguable defence to the application for possession.
I reject ground of appeal 5.
Ground 6 of appeal: the appellants were not given “enough opportunity to put their defence properly”
The appellants contend that they were not given sufficient opportunity to put their case in defence, particularly in light of their lack of legal representation.
It is well recognised that unrepresented litigants may struggle with the intricacies of the adversarial system which is largely based on an assumption that parties will be represented by those professionally trained in the system. Thus, in Cachia v Hanes,[56] the High Court noted:
[22]Whilst the right of a litigant to appear in person is fundamental, it would be disregarding the obvious to fail to recognise that the presence of litigants in person in increasing numbers is creating a problem for the courts. It would be mere pretence to regard the work done by most litigants in person in the preparation and conduct of their cases as the equivalent of work done by qualified legal representatives. All too frequently, the burden of ensuring that the necessary work of a litigant in person is done falls on the court administration or the court itself. Even so, litigation involving a litigant in person is usually less efficiently conducted and tends to be prolonged. The costs of legal representation for the opposing litigant are increased and the drain upon court resources is considerable.
[Footnotes omitted]
[56] (1994) 179 CLR 403 (Mason CJ, Brennan, Deane, Dawson and McHugh JJ).
In Dietrich v The Queen,[57] the problems facing unrepresented litigants were highlighted by Mason CJ and McHugh J:
An unrepresented accused is disadvantaged, not merely because almost always he or she has insufficient legal knowledge and skills, but also because an accused in such a position is unable dispassionately to assess and present his or her case in the same manner as counsel for the Crown. The hallowed response that, in cases where the accused is unrepresented, the judge becomes counsel for him or her, extending a “helping hand” to guide the accused throughout the trial so as to ensure that any defence is effectively presented to the jury, is inadequate for the same reason that self-representation is generally inadequate: a trial judge and a defence counsel have such different functions that any attempt by the judge to fulfil the role of the latter is bound to cause problems. As Sutherland J stated in Powell v Alabama, when delivering the judgment of the United States Supreme Court: “But how can a judge, whose functions are purely judicial, effectively discharge the obligations of counsel for the accused? He can and should see to it that in the proceedings before the court the accused shall be dealt with justly and fairly. He cannot investigate the facts, advise and direct the defense, or participate in those necessary conferences between counsel and accused which sometimes partake of the inviolable character of the confessional.” [Footnotes omitted]
[57] (1992) 177 CLR 292, 302.
In Kenny v Ritter,[58] the South Australian Full Court outlined the following principles relating to hearings involving unrepresented litigants:
[58] (2009) 263 LSJS 158 (Gray, Anderson and Layton JJ).
[23]… [W]hen the self-represented litigant is before the court, the judge must ensure that a fair trial takes place. In order to achieve this, the judge is required to assist the self-represented litigant. However, the judge must equally ensure that despite any assistance to the litigant in person, the perception of impartiality is maintained. In our view, the following principles emerge from the authorities discussed.
-      A litigant has a fundamental right to appear in person. When faced with a litigant in person, the court is under a duty to give such assistance to that litigant as may be required to ensure that there is a fair trial. The purpose of the assistance is to ensure that as far as possible, the disadvantage that litigants may suffer as a result of lack of representation is adequately addressed.
-      Although the duties of the court in relation to self represented litigants are discussed by numerous authorities, it is difficult to ascertain a common approach as to the manner and form in which assistance is provided which can be applied in practice to all circumstances. This is unsurprising bearing in mind the myriad of circumstances in which litigants may appear in person. However, the authorities do provide general guidance as to principles which can be applied by the courts.
-      Judicial assistance would include ensuring that unrepresented litigants are aware of their substantive and procedural rights, which in turn would depend upon the nature and circumstance of the case.
-      The degree and form of the judicial assistance required depends upon several factors, including the overall knowledge and skills of the litigant and the particular circumstances of the case.
-      Judicial assistance is to be limited to that which is necessary to diminish so far as possible the disadvantage that the unrepresented litigant will suffer when another party or parties are represented by a lawyer. It is a matter of redressing imbalance so far as possible but at the same time ensuring that the party who is represented is not thereby disadvantaged and thereby obtains less entitlements.
-      In order to provide assistance to redress any imbalance or disadvantage which may arise by reason of lack of legal representation, the court should first assess the degree to which an unrepresented person may require assistance. This is not to be an automatic assumption.
-      It is not part of the role of a judge to become an advocate for the unrepresented person; or stand in the shoes of counsel acting for that litigant; or unduly interfere with the conduct of the trial on the litigant’s behalf. Instead, the court has the difficult task of striving to achieve a balance between these seemingly conflicting duties to ensure that there is a fair trial.
-      The court at all times is under an obligation to maintain the appearance of impartiality and neutrality and not be seen to apply preferential rules to the self represented litigant to the disadvantage of the represented litigant.
As the above principles demonstrate, the court must strike a balance between providing such assistance to the unrepresented litigant as to ensure they receive a fair trial while also giving no foundation for a reasonable apprehension of bias towards that litigant or against their opponent. It has not been demonstrated that the approach of the Master in this case failed to comply with these principles. He did not deny the appellants a fair hearing.
The proposed defence and the written submissions placed before the Master were not professionally drawn, and were in many respects difficult to understand. The approach of the Master taken in assessing each of the matters raised by the appellants demonstrated that his Honour thoroughly examined each of the contentions. For example, his Honour went beyond the bare assertion that the appellants were entitled to relief under the principle in Amadio to carefully consider what evidence could support such a finding; ultimately, after that careful consideration, the Master found that no such evidence had been provided by the appellants.
Nothing is apparent from the transcript of the proceedings to suggest that the Master did not attempt to mitigate, so far as possible, any disadvantage that the unrepresented appellants suffered as a result of the bank’s superior position by reason of the fact of its legal representation. The appellants make no submission that the Master cut short their case or in any other way denied them the opportunity of putting before the Court the matters they wanted to raise in defence to the bank’s application. While the poor financial situation of the appellants may not have presented any realistic alternative to appearing unrepresented, the appellants have not established that they were denied the opportunity to put their case. The simple fact was the Master ultimately concluded that the appellants had not raised an arguable defence which would justify referral of the proceedings into the ordinary civil trial list for determination.[59]
[59] Pennicuik v City of Gosnells [2011] WASC 63, [33] (Heenan J).
I reject ground of appeal 6.
Ground 7 of appeal: the Master incorrectly asserted that the filing of a Defence was inappropriate
Ground 7 appears to address the learned Master’s findings at paragraph [14] of the judgment.
[14]On 9 August 2012 the defendants inappropriately filed a defence. A defence was inappropriate because no statement of claim had or has been filed. The defence largely consisted of assertions of “not admitted”. It referred to principles of unconscionable equity and loans in violation of the National Credit Code. At the end of that document – FDN 5 –the first defendant stated that the plaintiff already had possession of the Erskine Street property. He sought orders from the Court refusing the plaintiff’s claim and declaring that the plaintiff was not entitled to possession of the two subject properties.
The appellant’s submission on this point again seems to demonstrate a misunderstanding of the summary nature of the possession proceedings. The fact that the Master noted that the appellants “inappropriately filed a defence” was simply a reference to the procedural matters referred to above and does not mean that he refused to consider the matters that were referred to in that document and were, in any event, put to him orally. Plainly, as the transcript of the hearing and the Master’s judgment indicate, he thoroughly considered those matters and all of the appellants’ submissions.
I reject ground of appeal 7.
The National Credit Code
The appellants submitted before the Master that the loans had been granted in violation of the National Credit Code (the Code). The Master found that no evidence had been put before him to support any alleged violation of the Code. While no specific reference was made to this in the notice of appeal, Mr Chadha sought to revive this submission at the hearing and I considered those submissions without requiring a formal amendment to the grounds of appeal.
Application of the National Credit Code
The Code came into effect on 1 April 2010[60] and only applies to loans made after this date. The Code is contained in Schedule 1 to the National Consumer Credit Protection Act 2009 and by virtue of s 3 it has effect as a law of the Commonwealth. The application of the Code is governed by ss 4 and 5 of the Code:
4 Meaning of credit contract
For the purposes of this Code, a credit contract is a contract under which credit is or may be provided, being the provision of credit to which this Code applies.
[60] National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 s 2(1).
5 Provision of credit to which this Code applies
(1)     This Code applies to the provision of credit (and to the credit contract and related matters) if when the credit contract is entered into or (in the case of pre-contractual obligations) is proposed to be entered into:
(a)     the debtor is a natural person or a strata corporation; and
(b)the credit is provided or intended to be provided wholly or predominantly:
(i)    for personal, domestic or household purposes; or
(ii)to purchase, renovate or improve residential property for investment purposes; or
(iii)to refinance credit that has been provided wholly or predominantly to purchase, renovate or improve residential property for investment purposes; and
(c)     a charge is or may be made for providing the credit; and
(d)the credit provider provides the credit in the course of a business of providing credit carried on in this jurisdiction or as part of or incidentally to any other business of the credit provider carried on in this jurisdiction.
(2)     If this Code applies to the provision of credit (and to the credit contract and related matters):
(a)this Code applies in relation to all transactions or acts under the contract whether or not they take place in this jurisdiction; and
(b)this Code continues to apply even though the credit provider ceases to carry on a business in this jurisdiction.
(3)     For the purposes of this section, investment by the debtor is not a personal, domestic or household purpose.
(4)     For the purposes of this section, the predominant purpose for which credit is provided is:
(a)the purpose for which more than half of the credit is intended to be used; or
(b)if the credit is intended to be used to obtain goods or services for use for different purposes, the purpose for which the goods or services are intended to be most used.
The only loan which came into existence after the commencement of the Code is the Investment Property Loan which was executed by the appellants on 14 July 2010. This loan appears to satisfy s 5(1)(a), given that Mr Chadha and Mrs Chadha both entered the loan, and became the debtors, in their personal capacity. However, the “Investment Property Loan Additional Terms and Conditions” record that the loan was granted for the express purpose of assisting in buying shares and investing in other management funds. This is not a purpose within s 5(1) of the Code and accordingly the Code has no application to the Investment Property Loan.
The Code may apply to the loans executed before its commencement by virtue of the operation of the transitional provisions. Section 3, National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 relevantly provides:
3Application of the new Credit Code to contracts or other instruments made before commencement
(1) The new Credit Code does not apply in relation to a contract or other instrument that was made before commencement.
(2) Despite subitem (1), the new Credit Code applies in relation to a carried over instrument.
…
A “carried over instrument” is defined in s 4 of that Act to mean:
… a contract or other instrument that:
(a)     was made before commencement; and
(b)     was in force immediately before commencement; and
(c)     the old Credit Code of a referring State or a Territory applied to immediately before commencement.
Thus, if the Consumer Credit (South Australia) Code (the Uniform Consumer Credit Code) (contained in the appendix to the Consumer Credit (Queensland) Act 1994)[61] applied to the loans which were executed before April 2010, by virtue of the above provisions the Code will apply to those loans. The application of the Uniform Consumer Credit Code to loans is governed by ss 5 and 6 which are as follows:
5 Meaning of credit contract
For the purposes of this Code, a credit contract is a contract under which credit is or may be provided, being the provision of credit to which this Code applies.
[61] Consumer Credit (South Australia) Act 1995 ss 3, 5.
6   Provision of credit to which this Code applies
(1)     This Code applies to the provision of credit (and to the credit contract and related matters) if when the credit contract is entered into or (in the case of precontractual obligations) is proposed to be entered into—
(a)the debtor is a natural person ordinarily resident in this jurisdiction or a strata corporation formed in this jurisdiction; and
(b)the credit is provided or intended to be provided wholly or predominantly for personal, domestic or household purposes; and
(c)     a charge is or may be made for providing the credit; and
(d)the credit provider provides the credit in the course of a business of providing credit or as part of or incidentally to any other business of the credit provider.
(2)     If not all the debtors under a credit contract ordinarily reside, or are strata corporations formed, in this jurisdiction, this Code applies only if credit is first provided under the contract in this jurisdiction.
(3)     If this Code applies to the provision of credit (and to the credit contract and related matters)—
(a)this Code applies in relation to all transactions or acts under the contract whether or not they take place in this jurisdiction; and
(b)this Code continues to apply even though the debtor ceases to be ordinarily resident in this jurisdiction.
(4)     For the purposes of this section, investment by the debtor is not a personal, domestic or household purpose.
(5)     For the purposes of this section, the predominant purpose for which credit is provided is—
(a)the purpose for which more than half of the credit is intended to be used; or
(b)if the credit is intended to be used to obtain goods or services for use for different purposes, the purpose for which the goods or services are intended to be most used.

Under s 6(1)(a), the Uniform Consumer Credit Code can only apply to loans granted to the appellants personally, and not to the Company. This confines its application to the loans granted under the first and second written agreements. The predominant purpose of these loans was the refinancing of an existing home loan which constitutes a “personal, domestic or household” purpose within the meaning of s 6(1)(b)[62] and clearly ss 6(1)(c) and (d) are also satisfied. Thus, the Uniform Consumer Credit Code and, by virtue of the transitional provisions, the Code did apply to the loans granted pursuant to the first and second written agreements.[63]
[62] Australian Securities and Investments Commission v Australian Lending Centre Pty Ltd (No 3) [2012] FCA 43, [107] (Perram J); Michalopoulos v Perpetual Trustees Victoria Ltd [2010] NSWSC 1450, [119] (White J); Benjamin v Ashikian [2007] NSWSC 735, [77] (Smart AJ); Permanent Mortgages Pty Ltd v Cook [2006] NSWSC 1104, [48] (Patten AJ).
[63] Pursuant to ss 8 and 9, Consumer Credit (South Australia) Code and s 3, National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009, the Uniform Consumer Credit Code and the Code were also potentially applicable to the mortgages and guarantees. However, the appellants never advanced this submission and I will consider it no further.
However, this finding does not assist the appellants. In their written and oral submissions, the appellants did not progress beyond the bare assertion that the bank in granting the loans had violated the Code. They never indicated what that breach was alleged to be and I detect no error in the Master’s finding that no evidence had been tendered to establish that the loans had arguably been granted in violation of any provision of the Code.
Conclusion
Accordingly, I find that it is not arguable that it is unconscionable for the bank to enforce the instruments by way of the order for possession and that no other arguable objection was raised before the Master or on appeal. None of the grounds of appeal are established.
I dismiss the appeal.