Azar v Citigroup [2011] NSWCA 380

This case concerns an appeal from a judgment of the Supreme Court (see Citigroup v Azar [2011] NSWSC 95) which granted the lender judgment for possession. The facts were that parents borrowed funds to refinance their existing mortgage and to give money to their son. The parents claimed that they were elderly, on a pension and did not know or understand what they were signing. They pleaded their case as non est factum (not my deed) and on the grounds that the loan and mortgage was unjust and unconscionable. They did not succeed at first instance and appealed on the following grounds:

1. The judge should have found that the conduct of the lender was unjust for the purposes of the Contracts Review Act;

2. The judge should have found that the Consumer Credit Code applied because the loan was predominantly for personal, household or domestic purposes;

3. The judge should not have found that the parents had a well-established practice of using their home as security to raise funds for family members and benefitted from the loan.

The law
Challenges to findings of fact that are credit based are only upheld if the findings are glaringly improbable. The Appeal Court did not find this to be the case and found that the undisputed evidence supported the primary judge’s findings that the parents knew and understood their son was raising money on the security of their home and that he might provide false information and tell the lender whatever was required for that purpose, that he had done so on several previous occasions, that they could not afford to service a loan and that if the loan payments were not met, the lender could enforce the mortgage. However the Appeal Court did not think it was correct for the judge to say that a lender is entitled to accept at face value statements made in a loan application. Nevertheless, the Appeal Court found that the primary judge was correct to find that the loan and mortgage were not unjust on the basis of the findings of fact made. It anyone was misled, it was the lender and not the parents.

The Appeal Court did not think the primary judge was correct to find that the loan was not governed by the Consumer Credit Code because its purpose was to pay out the parent’s existing mortgage and “to assist with future investments and personal use”. However even if it applied, no relief would have been granted because the loan and the mortgage were not unjust.

The appeal was dismissed with costs.

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