The borrowers brought Contracts Review Act defence based on an allegation that the former lender, NAB (whom Westpac refinanced) knew or ought to have known that its loan was not to be used for the benefit of the borrowers, but rather for that of their son and his wife Nicky Velingos. It was claimed that the borrowers spoke English poorly; they had little understanding of financial matters; they were induced by their son to sign the NAB loan and mortgage documents; and that they did not have an adequate understanding of this transaction, without having received independent legal or other advice. The result was that they did not understand the risks involved in the NAB loan.
The Judge found that Mr and Mrs Velingos were Greek immigrants, now aged respectively 72 and 70 years. They are pensioners who had no personal capacity to repay the Westpac borrowings, when the loan was obtained.
They were certainly elderly, with limited command of English and no ability themselves to repay the loans. They had not received independent advice about the transaction and stood to gain nothing with the benefit going to their son to assist his business interests.
Nevertheless, their own evidence revealed that they were experienced borrowers who had in the past received independent legal advice counselling against giving their home as security for borrowings for their son; they had rejected his advice and took the risk they were counselled against; over the years, further moneys were repeatedly borrowed. They were well aware of the risks they were thereby taking.