ANZ Banking Group v Londish [2014] NSWSC 202

A wife applied the bulk of the $4m inheritance she received from her parents to buy the family home which she then mortgaged to invest in real estate. The investments were conducted by her husband.

Eventually the investments went bad and the bank sought possession of the family home. The wife raised a Contracts Review Act defence. In order to avoid having to give credit for an earlier mortgage, as is becoming commonplace, she argued the discharged mortgage had also been unjust and joined the previous lender.

On the question of unjustness the court found:

In relation to the discharged mortgage:

  1. No material inequality existed between the lender and the wife;
  2. The wife was intelligent and well educated and capable of understanding the documents she signed;
  3. The wife received legal advice about the effect of the mortgage but such advice would not have added to what she already knew about the legal effect of a mortgage;
  4. The wife did not receive independent financial advice but was in as good a position as having received it given the sound financial position of the family companies and the fact that the investments were proper and reasonable and intended to benefit the family; and
  5. No undue influence by the husband.

In relation to the current mortgage:

  1. No material inequality existed between the lender and the wife;
  2. The lender had no reason to believe that the refinance was not commercially beneficial to the wife given the funds discharged a previous mortgage and offered a lower interest rate;
  3. The wife got the benefit of the lower interest rate in return for the loan being characterised as a home loan;
  4. The wife did not receive independent legal or financial advice but she understood the legal effect of a mortgage and would not have acted differently had she received such advice; and
  5. No unfair tactics or pressure by the husband.

The court also found no unconscionability on the basis of the following:

  1. The wife understood the mortgages; and
  2. The wife was not a volunteer, because she directly benefited from both loans even though she did not exercise control over the company borrower because she owned the company which held real estate assets and provided her income.
  3. She was at no special disadvantage and both loans were fair, just and reasonable.

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