Westpac Banking Corporation v Velingos

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.