CBA v Serobian [2009] NSWSC 302

In this case a husband and wife sought to have a mortgage and guarantees totalling $8 million set aside as being:

  1. Void for being witnessed by a bank officer;
  2. Unjust under the Contracts Review Act
  3. tainted by misleading and deceptive conduct in breach of the Trade Practices Act. 
  4. Hammerschlag J rejected the argument that the mortgage was void because of the way it was witnessed. This was because although s 38(1) of the Conveyancing Act 1919  provides:

Every deed, whether or not affecting property, shall be signed as well as sealed, and shall be attested by at least one witness not being a party to the deed.

the bank officer who witnessed was not a party to the mortgage. His Honour characterised her attestation as a personal act and not an act on behalf of the Bank. Moreover, even if an attestation was in breach of s 38, the mortgage, being registered, would not be unenforceable or void for that reason.

The Serobians argued that their personal guarantees were unjust at the time they were entered into because:

  • Mr Serobian could not read, write, or understand English; 
  • Mrs Serobian was suffering ill health and was not able to make decision as a result of her medical impairment;
  • The Serobians did not have legal advice or other assistance; and
  • There was an inequality of bargaining position.

The Trade Practices Act claim was based on the accusation by the Serobians that they were mislead by the bank into believing that only their companies were giving security and not them personally.

The Serobians gave evidence of that they had very little education and were immigrants from Iran. However, the evidence showed that they owned (through their companies) three child care centres, a real estate agency, a development company, multiple properties, and were trying to put together a $100 million golf course development. In finding that the evidence did not support either the Contracts Review Act or Trade Practices Act claims His Honour made the following statements:

  • I consider that Mrs Serobian was not a truthful witness. She is intelligent, articulate, experienced in business, and quick witted and to my observation was prepared to say things under oath if she thought they suited her case, even though they were insupportable….
  • Mrs Serobian’s evidence was that she felt so sick she wanted to die. The Serobians led no medical evidence from which a conclusion could be drawn that Mrs Serobian was in fact sick at the time. Mrs Serobian’s behaviour at all times reflects an unimpaired capability of dealing with the facilities and the Bank…
  • The contents and tone of her letter to the Bank regarding the golf course development reflect an aggressively demanding posture, leaving no room for the conclusion that she was a disadvantaged negotiator….
  • My assessment of Mrs Serobian is that she was sufficiently confident and competent with respect to her dealings with the Bank so as to consider that legal assistance was not required. There was no evidence of her having utilised legal assistance with respect to the proposed $100 million golf course development…
  • My own observations of Mr Serobian in the Courtroom were that his professed near total inability to understand and speak English was not honest. He understood and reacted immediately when I invited him to step forward and enter the witness box. The manner in which he commenced his evidence gave the impression that he was not even able to state his full name and address which would be inconsistent with even the level of English conceded. After Mr Serobian was asked his name I ruled that his evidence should be given in English. His ability to understand then appeared to improve. He understood and intelligibly responded to a series of questions. When giving evidence through the interpreter he responded or commenced to respond to questions put in English before the interpreter had translated or completely translated the question…
  • Mr Serobian has lived in this country for 31 years. He is a director and secretary of companies. He had a significant interest in a commercial enterprise of what might be thought to be reasonably significant proportions and executed company documentation for the purposes of that enterprise. He applied to become a Justice of the Peace, although he did not follow through with the application…

His Honour then ordered that a writ for possession issue forthwith and entered judgment against the Serobians, jointly and severally, in the amount of $8,007,806.85

Click here to read the full judgment

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