National Australia Bank v McCarthy [2015] NSWSC 1040

The lender obtained default judgment and the borrower sought to have it set aside and a stay of the writ of possession. The borrower argued that it was unconscionable for the lender to lend him money since he had insufficient income to repay the loan, placing him in a position of special disadvantage and raised a Contracts Review Act defence and alleged fraud by the bank in copying his signature verifying an inflated income.

The court rejected this because he was a builder who owned three properties, had a business with a substantial cash flow and the documents provided by the borrower to the bank supported the serviceability of the loan and the bank had no reason to doubt their veracity. The court noted that there was nothing to indicate that the loan was speculative or risky. The court also noted that the loan was a refinance, leaving the borrower in no worse position and the subsequent restructure of the bank’s loans to the borrower did not change the bank’s entitlement to subrogation.

The court said:

The term “asset lending” is an ambiguous one since it may cover a range of situations from one where the borrower has no income to service a loan and only one asset, which is his or her own, and a developer who requires capital for a development, which will be repaid when the development is completed and the developed properties are sold. The first may give rise to relief, whereas the latter is unlikely to.

The court also rejected the fraud allegation as unsubstantiated and found that the borrower signed the particulars of his income as accurate.

The court refused to set aside default judgment and refused a stay.

Click here to read the full judgment

Scroll to Top