NAB v Paul Burness [2007] NSWSC 247

In this case the lender sought possession of the security for non-payment under the mortgage after having served s57(2)(b) notices. In her defense the borrower firstly alleged she was not party to the mortgage, secondly that the credit was predominantly provided for personal, domestic or household purposes and that therefore the Consumer Credit Code applied and the mortgage was unenforceable upon the grounds she had not received a copy of the loan documents (as required by s43 of the Code), thirdly that the mortgage was unjust in all the circumstances or unconscionable and ought to be set aside under the Code, the Contracts Review Act or general law.

The Court reviewed the purpose for which the funds were applied and determined as a finding of fact that they were used predominantly for investment purposes and so consequently the code had no application. The Court secondly determined that the argument that the loan had been discharged was untenable because under the mortgage liability was joint and several and continuing and the repayment of the original facility with drawdown’s from later facilities could not have the effect of releasing the property or the Defendant (from her personal covenants).

On the issue of unjustness/unconscionability Associate Justice Cooper held:

All of this evidence comfortably satisfies me that Mrs. Bradley clearly understood the nature of the transactions. She had been given independent legal and financial advice by Mr Knight and Mr Garrett less than two years beforehand in connection with the Cromwell/Cardinal mortgage and guarantee. She was well aware of the effects and consequences of signing the mortgage and guarantee in August 1999 of signing the mortgage in September 2000 and the application to restructure the loan in May 2001.

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