Westpac v Kekatos [2014] NSWSC 1802

The bank lent money to a husband and wife on the security of their Vaucluse family home to finance the husband’s development project.

The bank applied for summary judgment against the husband and the wife. Against the husband, the bank got judgement for $19.3 million. However, the bank failed to get summary judgment against the wife or possession of the house.

The wife made a Contracts Review Act claim and a claim for unconscionable conduct on the grounds that prior to signing the documents she had been assured by her husband that the finance obtained would not put at risk the family home or make her liable. She signed the documents on this basis and did not ask questions as she feared rebuke. The wife also claimed that she received no benefit from the discharge of the previous mortgage because that mortgage was itself unenforceable because it was not signed by her.

The court noted that ordinarily a borrower needs to give credit for any sums paid to discharge a pre-existing loan. That would ordinarily have meant the wife was liable to summary judgement for the amount of the pre-existing loan and that the bank would have been entitled to possession of the house.

However, in this case, the fact that the earlier loan’s enforceability was called into question by the wife meant that summary judgement was refused. 

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