Westpac Banking Corporation v Velingos - [2011] NSWSC 607

Supreme Court

New South Wales

Medium Neutral Citation: Westpac Banking Corporation v Velingos [2011] NSWSC 607
Hearing dates: 28 February 2011, 1 March 2011, 2 March 2011
Decision date: 22 June 2011
Jurisdiction: Civil
Before: Schmidt J
Decision:
For the reasons given, I am satisfied that the cross-claim must be dismissed and the orders sought by Westpac made. The parties wish to be heard on the question of costs. I will make formal orders, once costs have been determined.

Catchwords: CONTRACTS - cross-claims - Contracts Review Act 1980 - whether loan and mortgage unjust - no independent legal advice - elderly borrowers with limited command of English and no ability themselves to repay borrowings - experienced borrowers who had previously received legal advice and who understood and consented to increased borrowings - borrowers also appreciated and consented to risks involved in transaction - whether borrowers had the benefit of the money in issue - part of borrowings used to repay another loan - contract not unjust - whether relief would be granted if contract found unjust - relief would be refused - Australian Securities and Investments Commission Act 2001 - whether brokers engaged in misleading or deceptive conduct - passing on false information - implied disclaimer - misleading and deceptive conduct not established - whether brokers engaged in unconscionable conduct - not ensuring borrowers obtained independent legal advice - unconscionable conduct not established - loss claimed not established - cross-claims dismissed
Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth)
Contracts Review Act 1980
Evidence Act 1995
Cases Cited: Bridgewater v Leahy [1998] HCA 66; (1998) 194 CLR 457
Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592
Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447
Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389
Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413
Gardam v George Wills & Co Ltd (1988) 82 ALR 415
Jones v Dunkel (1959) 101 CLR 298
Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343
Orix Australia Corp Ltd v Peter Donnelly Automotive Pty Ltd [2007] NSWSC 977
Permanent Mortgages Pty Ltd v Cook [2006] NSWSC 1104
Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41
Spina v Permanent Custodians Ltd [2009] NSWCA 206
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661
Category: Principal judgment
Parties: Westpac Banking Corporation Limited (Plaintiff/Third Cross-Defendant)
Ikey Velingos (First Defendant)
Konstandinos Velingos (Second Defendant/First Cross-Claimant)
Helen Velingos (Third Defendant/Second Cross-Claimant)
Ali Ghezelbash (First Cross-Defendant)
United Mortgage Pty Ltd (Second Cross-Defendant)
Representation: Counsel:
Mr MBJ Lee with Mr J Hyde-Page (Plaintiff/Third Cross-Defendant)
Mr A Crossland (Second and Third Defendants/Cross-Claimants)
Mr DA McLure (First and Second Cross-Defendants)
Solicitors:
Henry Davis York (Plaintiff/Third Cross-Defendant)
Craig Milne & Co (Second and Third Defendants/First and Second Cross-Claimants)
Lander & Rogers Lawyers (First and…

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: [2011] NSWSC 607
Decision Date: 22 June 2011

CaseChat Overview and Summary

In the Federal Court of Australia, Westpac Banking Corporation initiated proceedings against its borrowers, Mr. and Mrs. Velingos, and their mortgage brokers, seeking a declaration that a mortgage was not unjust and that the brokers did not engage in misleading or deceptive conduct. The borrowers, in turn, cross-claimed against the bank and the brokers, alleging that the mortgage was unjust and that the brokers engaged in misleading and deceptive conduct under the Australian Securities and Investments Commission Act 2001. The case was heard by Justice Perram, who was tasked with determining the fairness of the mortgage agreement and the conduct of the brokers.

The primary legal issues the court addressed were whether the mortgage was unjust due to the borrowers' lack of independent legal advice, their limited English proficiency, and their inability to repay the loan. Additionally, the court considered whether the brokers engaged in misleading or deceptive conduct by not ensuring the borrowers obtained independent legal advice and whether the brokers' conduct was unconscionable. The court also examined whether the borrowers had the benefit of the money borrowed and whether relief would be granted if the contract was found to be unjust.

Justice Perram concluded that the mortgage was not unjust, as the borrowers were experienced and had previously received legal advice. They understood and consented to the increased borrowings and the associated risks. The court found that the borrowers had the benefit of the money, as part of the borrowings was used to repay another loan. The court further determined that relief would be refused, even if the contract was found to be unjust, because the borrowers had the benefit of the money. Regarding the brokers, the court found that there was no misleading or deceptive conduct as the brokers did not pass on false information and had an implied disclaimer. The court also found that the brokers did not engage in unconscionable conduct by not ensuring the borrowers obtained independent legal advice, and the borrowers did not establish their claimed loss. Consequently, the cross-claims were dismissed.

The final orders of the court were that the mortgage was not unjust, relief would be refused even if the contract was found to be unjust, the brokers did not engage in misleading or deceptive conduct, the brokers did not engage in unconscionable conduct, and the borrowers' cross-claims were dismissed.

Orders