CBA v Tarrant [2011] NSWSC 1087

The bank seeks possession of property owned by a husband and wife following the their default and summary judgment for the amount owing. Alternatively it seeks that the defence be struck out and default judgment entered.

The Law
Rule 13.1 provides that the court may give summary judgment if there is evidence of the facts on which the claim is based and the defendant has no defence to the claim. The case law indicates that the court must be satisfied that the defence cannot succeed.

The Defence
The wife raised a Contract Review Act type defence that the bank knew or ought to have known that the she was under the undue influence of her husband, who conducted all the arrangements for the loans and made all decisions in relation to business and legal matters because the bank only dealt with the husband and had no direct contact with the wife. Furthermore, the wife claimed she had no independent legal advice and did not directly benefit from the loan, as all funds advanced by the bank were controlled by her husband.

The court re-affirmed that it is unconscionable for a bank to enforce a mortgage against a mortgagor if:

  1. the mortgagor did not understand the effect of the transaction;
  2. the mortgagor obtained no gain from the contract;
  3. the lender is taken to have understood that a wife may repose trust in her husband in matters of business and that the husband may not fully and accurately explain the effect of the transaction to his wife; and yet
  4. the lender did not itself take steps to explain the transaction to the wife or find out that a stranger had explained it to her.

The court found the wife’s defence weak because there was no evidence to establish that the bank had knowledge of her arrangements but held that it was inappropriate to determine such a defence on an application for summary judgment and it was not hopeless. The court also refused to strike out the defence under Rule 14.28.

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