AF&L First Mortgages Ltd v Owens [2014] VCC 1190

1. The plaintiff is the responsible entity of the AF&L Direct Mortgage Fund which is a managed investment scheme registered under Chapter 5C of the Corporations Act 2001 (Cth). The plaintiff is part of the Austfin Group which comprises the plaintiff and Australian Finance & Leasing Ltd. The fund seeks funds from private investors and then loans them to borrowers approved by the plaintiff through loan contracts secured by mortgages over real property and other security.[4]
2. The defendant is a retired solicitor. She practised mainly as a family law solicitor from 1971 until 2006, which she says was when she last held a practising certificate.[5]
3. The defendant was the registered proprietor of the property known as 78 Wattle Road Hawthorn (the property) and had previously given mortgages including to the Commonwealth Bank and the ANZ.[6]
4. She was declared bankrupt in May 2005 which bankruptcy was annulled on 21 September 2010 by reason of "payment in full."[7]

1. In about November 2009, the defendant had arranged a loan and mortgage facility with Victoria Mortgage Investments (VMI) of $1,500,000 on 12 month terms with interest of 11% (and 16% in default) payable in advance. The purpose of this facility included the discharge of her bankruptcy.[8]
2. Consequent on the imminent expiry of the VMI loan, in about February 2011, the defendant made contact with Mr Robert Campbell, a finance broker of Armadale House, to obtain further finance. He thereafter appeared to make contact with Mr Cameron Perry of Perry Financial Strategies, who were brokers and aggregators.
3. By email of 17 March 2011, Mr Perry of Perry Financial Strategies submitted a loan application to the plaintiff executed by the defendant, but seeking that the loan be in the name of Landrove Pty Ltd (with the defendant as the director).[9]
4. The application proposed a 2 year loan with a first mortgage over the property valued at $3,600,000 - $3,800,000 (which was subject to the $1,500,000 mortgage to VMI) and sought a loan of $1,600,000 plus 2 years interest cover indicating that interest should be "capitalised".
5. The purpose of the loan was given as follows:

To refinance VMI mortgage for a period of 2 years to allow for litigation of barrister who represented the client in court for bankruptcy proceedings, as well as litigation against the trustees of the bankruptcy. In the event the litigation does not succeed, then the property will be sold and the client will downsize. VMI mortgage is $1,500,000 - Total anticipated debt post refinance + Interest and fees is $2,100,000.[10]

1. The defendant's occupation was given as "property consultant/legal mediator". The application also indicated that she was earning income of $20,833 per month.
2. The defendant's evidence was that the income figure was inaccurate (and that she had in fact signed the document in "blank"). However, she accepted that the purpose of the loan part was accurate, that is, that it was to refinance her outstanding loan and enable her to continue proceedings in the County Court for damages.
3. By correspondence from the defendant of 17 March 2011 the defendant indicated that if no substantial progress had been made in the litigation by month 18 of the proposed 24 month loan, then she would sell the property to repay the loan facility at month 24.[11]
4. The defendant subsequently lodged a mortgage loan application in which she described the nature of her employment as "consultant" with her employer being "self" and her position as a "director" with the purpose of the loan being for "refinance".[12]
5. By letter dated 17 March 2011 the plaintiff wrote to Perry Financial Strategies advising that a loan to Landrove for 24 months in an amount of $1,950,000 (or 65% of market value) had been approved subject to certain conditions.[13] One of these conditions was as follows:

(f) If the court action is not resolved in Ms Owens favour with 18 months of the drawdown of this proposed loan (assuming we are able to provide a 24 month term), the security property must be offered for sale by public auction within 20 months of drawdown with a reserve price not more than our valuer's estimate of forced sale value.[14]

1. The defendant executed this letter accepting and acknowledging the terms and conditions contained in it.
2. By email of 23 March the plaintiff advised that given, inter alia, the company was not registered and the property was registered in the defendant's name, the plaintiff would not proceed with the loan to Landrove. However, the plaintiff would be prepared to consider proceeding if the loan was in the name of the defendant subject to certain conditions including that the borrower was to provide a letter confirming the purpose of the loan and that she was fully aware of the ramifications including the house being sold as detailed in part (f) of the special conditions of 17 March 2011.[15]
3. Mr Laurence Best, a director of the plaintiff, subsequently received a phone call from Mr Perry who advised that the defendant wished to proceed with the loan in terms of the email of 23 March.[16] A revised mortgage loan application was subsequently prepared and returned in the defendant's (personal) name.[17]
4. By a "mortgage loan submission" dated 24 March 2011 Mr Best and Mr Paul Scerri (an alternate director) approved the loan on conditions, although only for a 12 month term. The purpose of the loan was given as to "refinance existing loan to VMI, cover interest for term of the loan and loan set up costs".
5. The evidence of both Mr Best and Mr Scerri was that the submission was effectively the culmination of the "suitability assessment" process undertaken for the purposes of the legislation which assessment process was undertaken by both Mr Best and Mr Scerri. In this case Mr Scerri undertook the first part of the process by collating relevant information, and then signing the mortgage loan submission document making the first recommendation before passing it to Mr Best. Mr Best then went through all the documents himself undertaking a second check before coming to his own decision.
6. By letter dated 24 March 2011, a revised indicative loan approval was forwarded to the defendant who executed it accepting the terms and conditions of the offer.[18] The approval contained a "sale condition" in the same form as in the letter of 17 March.
7. On 25 March 2011 the plaintiff and defendant entered into a loan agreement whereby the defendant agreed to borrow the amount of $1,850,000 for 12 months.[19] The loan terms included that interest was 10.95% annually but default interest was 15.95%
8. A solicitor's certificate was also provided by Mr Jeffrey Tait in which he certified that he explained the general nature and effect of the documents including the risk of the loss of the said security property.[20]
9. By notice of voluntary advance interest payments the defendant acknowledged that she had requested that all interest be paid in advance and that this request was made voluntarily by her for the reason that it was "financially beneficial" for her to do so.[21]
10. The defendant further executed an instrument of mortgage dated 5 April 2011 which was registered on the same date.[22]
11. The funds were advanced on 1 April 2011. A Disbursement Schedule showed that $1,850,000 was advanced which included settlement of the earlier mortgage to VMI of $1,500,990, interest for 12 months of $202,575, fees, and with funds to the defendant herself of $73,074.35.[23]

1. The defendant commenced proceedings for professional negligence in the County Court on 22 August 2011.[24]
2. The defendant thereafter submitted a further loan application which stated, inter alia, that she was self-employed as a mediator earning an after tax income of (only) $2000 per month.[25]
3. By further mortgage loan submission dated 5 March 2012 the loan extension was recommended.[26] Again, the evidence of both Mr Best and Mr Scerri was this document, in part, also constituted the "suitability assessment" for the purposes of the Act.
4. The purpose documented is "to cover interest for a further 10 months, payment of outstanding rates plus set up costs pending outcome of current litigation being undertaken".[27]
5. By correspondence of 8 March 2012 the plaintiff advised of an indicative and conditional approval of $2,050,000 for 10 months. The letter included the following:

5. Borrower is to confirm in a letter that she is aware that this is our final level of assistance and she is aware that if the current court action is not resolved in her favour within the terms of this loan (10 months), the security property at 78 Wattle Road Hawthorn must be offered for sale by public auction with a reserve price set at no more than our valuers estimate of forced sale value.[28]

1. The defendant signed that she accepted and acknowledged the terms and conditions of the loan offer on 19 March 2012.
2. The defendant later provided a letter dated 12 April 2012 which read as follows:

"Dear Mr. Scerri, Re Loan Wattle Road Hawthorn. I confirm my discussion with you that there will be no extension of the loan to me past the current extension and that the property will have to be sold unless I am able to refinance. My solicitor informs me there has been a trial date allocated for December of this year. Thank you for your help. This has been a very difficult time for me and had I not been able to refinance my house I may well have lost the battle".[29] (emphasis added)

1. The plaintiff and defendant entered the renewed loan agreement on 26 March 2012 for $2,050,000 for 10 months with ordinary interest of 10.45% and default interest of 15.45%.
2. Mr Broadbent also provided a legal practitioner's certificate certifying, inter alia, that he explained the general nature and effect of the documents, including the risk of the loss of the said security property.[30]
3. By correspondence of 16 April 2012 the plaintiff confirmed settlement and provided a disbursement schedule which included interest advanced for the further 10 months at $179,596.82.[31]
4. During December 2012 the parties exchanged correspondence as to the status of the litigation in a context where the facility was due to expire on 1 February 2013.
5. Thus in correspondence of 5 December 2012 the defendant advised Mr Best that she had settled her claims against her solicitor, Mr James, at $21,000 and against Mr Bornstein, for $22,000, but that her claim for $3,500,000 was continuing against Mr Galvin.[32]
6. By correspondence of 2 February 2013 the defendant advised the plaintiff that her claim had been dismissed (on 1 February) but that she intended to appeal. She stated that she would "appreciate your withholding any action" to enable refinancing or alternatively to organise an auction.[33]
7. By correspondence of 27 February 2013 the plaintiff enclosed a notice of default citing the failure to repay the principal due on 1 February 2013[34] and seeking payment by 29 March 2013.
8. An appeal of the defendant's action against Mr Galvin was heard on 5 March and dismissed on 11 March.[35]
9. This proceeding was then issued on 5 April 2013.

1. Given the parties had prepared affidavit material relating to the summary judgment application, orders were made to the effect that the affidavits filed to date were to stand as examination in chief subject to any contrary direction.[36]
2. In the result, the main witness for the plaintiff, Mr Best, filed a series of affidavits[37] and supplemented these with some brief oral evidence. He was also cross examined at some length. Mr Scerri was also called for the plaintiff.[38]
3. Mr Best appeared to be somewhat defensive and evinced some frustration with the court processes generally, and with the defendant in particular. He did however present as an honest witness.
4. Mr Scerri was a straightforward and measured witness.
5. The only witness called for the defendant was Ms Owens.
6. The defendant swore and filed 2 affidavits[39] and was given leave to supplement her affidavits by oral evidence.
7. Having had an opportunity to observe the defendant both in and outside the witness box, she generally presented, consistent with her extensive legal experience, as an intelligent, astute person with no apparent difficulty in looking after her own interests. By way of example, when it was suggested that she might have limitation problems with her claims for outstanding fees, she quickly responded that the claims "were already on foot". She also highlighted (without prompting) that the solicitor, who completed a certificate, did not advise on the viability of the transaction.
8. There were aspects of the defendant's evidence that were unsatisfactory. For example, she claimed that there were conversations with the plaintiff she had early in the piece about her financial situation, but also claimed that "I don't know whether I did or I didn't".[40] She also claimed in cross examination that she had tried to alter some of the conditions of approval (which she had forgotten) but that Mr Scerri made it clear that she had to sign documents "with no amendments" notwithstanding this was never put to him (and notwithstanding she had been reminded of the need to put specific conversations to witnesses). Her explanation was that she was not sure she had remembered it when Mr Scerri gave his evidence (on the previous Friday).
9. Her conduct in relation to the loan application (which she signed) was also, at the least, irresponsible. Thus, as indicated already, the loan application contained a statement of actual monthly income of $20,833. Although she admitted that she signed this document, she claimed to have signed it in blank with Mr Campbell later filling it in. Further that she did not tell him she was earning $200,000 - $250,000 a year because she was "unemployed and he knew that".
10. In fact, Ms Owens ultimately conceded that the information contained in the application form was incorrect since it was really "anticipated income" and not actual income that she was earning.[41] Even if this was so, it was unclear how such a figure was justified. Thus, the VMI loan application of 25 November 2009 had recorded $350,000 as the expected income figure for the year to June 2010[42] which the defendant said she was hoping to recover from former clients in outstanding fees. However, in the preliminary assessment of February 2011 a figure of only $250,000 was given as "anticipated income" though the defendant's evidence was that she had not in fact recovered any monies in the meantime.
11. In any event, the defendant conceded that it was "unwise" to give her broker a blank form, but suggested that "when you're depressed you often don't act as wisely as you should". However, even accepting her explanation that she was unwell at the time, her conduct was irresponsible, particularly given her experience and training as a lawyer for some 30 years. At the very least, she appears to have been prepared to "arm" her broker with the ability to mis-state her actual income.
12. Given such difficulties with the defendant's evidence as identified, I have relied on objective documentation insofar as that is available.
13. In terms of the reference to the plaintiff's health, the plaintiff's evidence was that she suffered depression from 2005, which she described as a "major depressive illness" during the loan period in 2011 and 2012.[43] Although it was not completely clear, she also appeared to be suggesting that this condition was ongoing.[44] She gave evidence that she was also diagnosed with grade 3 cancers in 2008 and underwent invasive treatment for cancer with drug treatment continuing until September 2013.[45]
14. Although there was no medical evidence in support of these statements[46] it was true (as the defendant highlighted) that the plaintiff did not challenge that she had suffered these illnesses under cross examination.
15. Nevertheless, although it might be accepted that the defendant was suffering from some depression at the time of taking the loans the subject of this proceeding, there is no objective medical evidence to suggest that this ill health affected her ability to make rational decisions. She also accepted that she understood the general nature and effect of the documents and signed them voluntarily and without pressure and knew what the documents were.

Whether the plaintiff breached any provision in Division 4 of Part 3.1 of the National Consumer Credit Protection Act 2009 (Cth) (including ss. 116 and 119)

1. Part 3.1 applies to licensees that provide "credit assistance" in relation to credit contracts. Pursuant to s112, Part 3.1 does not apply in relation to credit assistance provided by a licensee in relation to a credit contract if the licensee is or will be the credit provider under the contract.
2. Given the plaintiff was the credit provider in this case (being the person that provided credit pursuant to the definition in s204 of the Code) it follows that part 3.1 can have no application.
3. This also appeared to be ultimately accepted by the defendant who maintained reliance on Part 3.2 instead.[47]

Whether the plaintiff breached any provision in Division 3 and/or Division 4 of Part 3.2 of the National Consumer Credit Protection Act 2009 (Cth) (including s133)

1. Although the statement of issues is reasonably broad,[48] I have generally confined myself to the matters alleged in the pleading. Although the defendant was unrepresented, she was given ample opportunity to amend her pleadings, including on the first day of the trial.[49] It would be unfair to the plaintiff to permit consideration of matters beyond those pleaded.
2. Turning to this part of the case, then, no complaint was made that an assessment did not occur. Rather the complaint was that there was a failure to "properly assess" suitability with an emphasis on the failure to inquire into and/or verify information. Further, that the loan contracts should have been assessed as "unsuitable".

1. Pursuant to s128(d), a licensee must not enter a credit contract unless the licensee has made the inquiries and verifications in accordance with section 130.
2. Pursuant to the relevant parts of s130(1), the licensee must, before making the assessment:

(a) make reasonable inquiries about the consumer's requirements and objectives in relation to the credit contract; and

(b) make reasonable inquiries about the consumer's financial situation; and

(c) take reasonable steps to verify the consumer's financial situation.

1. The defendant's primary complaint was that the plaintiff failed to make reasonable inquiries as to whether she had the income to meet the payments (Amended Defence dated 4 June 2014, page 4, paragraph B, particular 6 and page 8, paragraph F, particulars 1 and 2), in particular, by failing to take reasonable steps to verify her financial situation by requesting proof of income and tax returns.
2. In oral submissions the defendant further emphasized that the plaintiff took the position that if the defendant had enough property to secure the loan there was no need for anything beyond "very simple" inquiries.[50] She also claimed that the failure to inquire as to serviceability also breached the policy,[51] and the ASIC guide 209.[52]

1. In examining this part of the case, it is important to first detail the actual checks made by the plaintiff as well as what the plaintiff was advised by the defendant herself. Critical to this checking process, it is important that the plaintiff obtained a number of statements from the defendant to the effect that she would adopt a particular "exit strategy", namely, that she would sell her home if the litigation was unsuccessful (in the absence of refinance).
2. More particularly, the plaintiff took various steps as indicated in the "checklist" documents (exhibit 3) and which included the following:

• obtaining information, from the defendant and her broker and credit assistance provider in the form of the initial application for finance setting out her income and asset position ($20,833 per month and $150,000 in the bank), and exit strategy;[53]
• obtaining a letter from her dated 17 March 2011 confirming her exit strategy;[54]
• inquiring about the debt she had previously with VMI and whether the interest was paid up to date, including a statement from VMI;[55]
• obtaining information, from the defendant's lawyers, Oakley Thompson, of 18 March 2011 advising that the chances of success against her barrister were better than 50/50 and that she may well also have a claim against her trustee in bankruptcy. Ms Owens also instructed that her total losses exceeded $4,000,000;[56]
• obtaining a credit report on 22 March about the defendant from VEDA which gave a credit score of 834 which Mr Best says was in the "higher area";[57]
• obtaining a bankruptcy search in respect of the defendant;[58]
• obtaining a title search of the property;[59]
• checking that the council rates and water rates were up to date;[60]
• obtaining a valuation of the property for the loan at $3,500,000.[61]

• obtaining updates from the defendant's lawyers, Oakley Thompson, by letter dated 15 March 2012,[62] and the defendant[63] as to the status of her County Court damages claim;
• obtaining an updated VEDA credit report which showed a ranking which, though lower, was still in the satisfactory range or "green band" according to Mr Best;[64] and
  • obtaining a valuation of the Property for the renewed loan (which was lower at $3,100,000).[65]

1. It was accepted, however, that the plaintiff generally did not make inquiries as to verifying income including by way of seeking tax returns.

What the defendant had told the plaintiff regarding income/ illness

1. Before considering the question of "reasonable inquiries" it is also important to determine what the defendant advised the plaintiff as to her income and state of health.
2. Although the defendant's affidavits contain some generalised references to the plaintiff being aware of her "financial circumstances", the defendant accepted that there was no advice in writing that she was in receipt of Centrelink and had (effectively) no income. The defendant also did not put any particular conversations to either Mr Best or Mr Scerri as to her income and ultimately accepted that she did not really know whether she did or did not have any particular conversation.[66]
3. The defendant did suggest to Mr Scerri that they had had a conversation about her cancer but he denied having any such conversation. Again, she also accepted that there was nothing in writing from her that she was ill.
4. In all the circumstances, it is preferable to rely on the objective evidence which suggests that the defendant did not advise the plaintiff as to the details of her income and illness. More particularly, that she only advised the plaintiff as to a relatively high income of approximately $20,000 a month at the time of the initial loan application. I also do not consider that the advancement of fees and interest generally imputed knowledge to the plaintiff that the defendant's income must have been lower. Thus it was only at the renewal stage in about March 2012 that the plaintiff was advised that the defendant was in fact only on an income of $2,000 per month.[67]

1. Pursuant to s130(1)(a), the plaintiff had made inquiries about the defendant's requirements and objectives and had properly identified the purpose of the loans, namely, to refinance/continue to refinance the VMI mortgage, and to prepay interest and charges so as to give her as much time as possible to litigate her claims.
2. In terms of the complaint of a failure to make inquiries as to income (pursuant to s130(1)(b) and (c)), it is true that the plaintiff did not take steps to verify income.
3. The evidence of the plaintiff's witnesses was that this was because investigations as to income were not relevant given the prepayment of interest (the defendant did not need to "service" the loan on a monthly basis). Further, although she disclosed that her income was only some $20,000 a year at the renewal stage, the evidence of Mr Scerri was that she was still halfway through the litigation so "pulling the pin" would have made it extremely difficult for her.
4. I accept that serviceability alone should not govern the extent of the inquiries pursuant to s130 which are designed to determine the suitability of a loan "for the consumer" (see s129(b)).
5. However, it is not true that the plaintiff was indifferent to the defendant's capacity to meet her obligations under the loans when those obligations are properly understood. Thus, given the exit strategy she explicitly agreed to, her obligations under the contracts were to be satisfied by the litigation or, alternatively, the sale of her home (absent refinancing) rather than out of any recurrent income. I am not satisfied that any further inquiries were therefore warranted given the circumstances of this particular case, which circumstances included the fact that the defendant presented as a well-educated professional able to access independent advice and protect her own interests. Further inquiries are not always appropriate where a financier is satisfied that a borrower is able to make the decision for herself or has received appropriate advice.[68]
6. In terms of the complaints as to breaches of the policy, the checks indicated at page 5 are guidelines only, and were to be undertaken only where "appropriate". I consider that the checks identified earlier were appropriate in this case. Much of the information mentioned at pages 6-7 is again concerned with "serviceability" of the relevant commitment premised on the need for monthly payments.
7. Further, insofar as the defendant referred to a large number of extracts from the ASIC guide during the hearing, the document appears to contain ASIC's views only as to responsible lending conduct.[69] In any event, the guide indicates that the obligation to make reasonable inquiries and to verify information is "scalable" - that is, what you need to do to meet these obligations will vary depending on the circumstances.[70]
8. The guide also acknowledges that although "generally" consumers should be able to make their payment obligations from income rather than equity, there may be "circumstances" where this is not reasonable, including with bridging loans.[71]
9. Finally, the defendant complained that some inquiry should have been made as to why she would be seeking lending from the plaintiff when, at an income of $250,000 she could afford bank lending.[72] However, there was no evidence as to whether this would be the case, particularly given the short term sought. In any event the evidence of Mr Scerri was that the income was not noteworthy given the loan sought was the type of loan they were accustomed to seeing in the organisation.
10. I am of the view that it was not necessary or reasonable for the plaintiff to make any further inquiries about the defendant's financial situation, nor to take any further steps to verify that situation in the circumstances of this particular case.
11. I am therefore satisfied that the alleged breach of s130 is not made out.

1. Pursuant to the relevant parts of s131(2) a credit contract will be unsuitable for the consumer if, at the time of the assessment, it is likely that:

(a) the consumer will be unable to comply with the consumer's financial obligations under the contract, or could only comply with substantial hardship, if the contract is entered or the credit limit is increased in the period covered by the assessment; or

(b) the contract will not meet the consumer's requirements or objectives if the contract is entered or the credit limit is increased in the period covered by the assessment.

1. Pursuant to s131(3):

(3) For the purposes of paragraph (2)(a), it is presumed that, if the consumer could only comply with the consumer's financial obligations under the contract by selling the consumer's principal place of residence, the consumer could only comply with those obligations with substantial hardship, unless the contrary is proved.

1. For the purposes of determining whether the contract will be unsuitable the information to be taken into account is the information about the consumer's financial situation, requirements or objectives which, at the time of assessment the licensee had reason to believe was true, or would have had reason to believe the information was true if the licensee had made the requisite inquiries/verification under s130 (s131(4)).

1. Although it was not completely clear (the pleading made reference to provisions apparently mis-numbered and also to inapplicable provisions in Part 3-1), the defendant appeared to allege that the plaintiff breached the obligations as to assessing unsuitability because:
   • the plaintiff knew she was without sufficient income to meet the obligations under the loan which the plaintiff knew from "discussions with the plaintiff" and from the defendant's inability to pay periodic interest and fees which were advanced to her including valuation fees and insurance. (Amended Defence, page 2, paragraph A, particulars 1,2,4 and 5);
   • she was consuming her capital in her residence ("asset stripping") which was her only asset and she was ill and unable to obtain employment (Amended Defence, page 3, paragraph A, particular 3 and paragraph B, particulars 1 and 3);
   • the contract would cause substantial hardship because the interest rates were high (Amended Defence, page 4, paragraph B, particular 2); and
   • the plaintiff failed to consider the possibility that the claim for damages would remain undetermined when making further advances (Amended Defence, page 4, paragraph B, particular 4).
2. The defendant further appeared to rely on the presumption in s131(3) (Amended Defence, page 3, paragraph A, particular 6 and page 4, paragraph C, and page 6, paragraph F). In particular she alleged:
   • that the plaintiff was aware the only means of discharging the debt was if the defendant succeeded in her County Court action but had no assurance that litigation would succeed and knew it may well not do so in which case the defendant would have no option but to sell the property and suffer the loss of interest payments, costs, and depreciation of value (Amended Defence, page 4, paragraph C); and
   • if the defendant's litigation did not succeed she would be required to sell her property given she had no means of funding payments (Amended Defence, page 6, paragraph F).
3. She also claimed that the loan was highly detrimental to her since the best outcome at the time (given, in particular, the higher value of the property and her age and health) was for her to sell the house.[73]
4. She further emphasized that Mr Best gave evidence that had he known of the income and health of the defendant there would never have been a loan provided.[74]
5. She further stated that the loan had not met her objectives since she had to take out a mortgage to fund her lawyers.

Requirements and objectives s131(2)(b)

1. In order to assess s131(2)(b) it is important to identify the consumer's requirements or objectives as at the time of assessment of both the initial loan and the renewal.
2. As indicated already they were to refinance/continue to refinance the VMI mortgage, and to prepay interest and charges so as to give her as much time as possible to litigate her claims. Her objectives were also tied up with her "exit strategy" wherein she had continually acknowledged that the home would be sold if the litigation was unsuccessful (absent refinancing) so as to meet her repayment obligations. She must have understood the significance and meaning of this given her professional background and also given she had in fact given a similar undertaking to VMI before.[75]
3. In my view, considered as at the time of the assessment, it was likely that the contracts would meet these requirements or objectives. Although a 2 year period was initially contemplated, the evidence of Mr Best was that they decided to only offer 12 months "to start with". In any event, the plaintiff then provided the renewal loan to provide a total refinance period of 22 months.
4. The fact that the defendant ultimately took out another mortgage to pay for some solicitor's fees (as the defendant complained) does not undermine the above conclusion. In fact the documentation does not necessarily suggest that the refinance sought would cover all legal costs. In any event, the defendant received some $73,000 for herself which could have been put towards lawyer's fees.
5. The contracts were not unsuitable by reason of s131(2)(b).

Substantial hardship s131(2)(a)

1. Firstly, I do not consider that the presumption as to "substantial hardship" under s131(3) applies. The provision has operation if the consumer could only comply with the consumer's financial obligations under the contract by selling the consumer's principal place of residence. However, this is not the case here where the purpose of the loans contemplated the mounting of a claim from which the defendant expected to obtain some $4 million and in relation to which her solicitors said she had good prospects. The defendant also acknowledged that further refinancing was a possibility in her correspondence of 12 April 2012.[76]
2. In these circumstances there were other ways the consumer "could comply" with her obligations to pay out the loans.
3. In the alternative, if the presumption does apply, I am satisfied that "the contrary is proved" here. Thus it was always contemplated in this particular case that if the legal action was unsuccessful the defendant would sell her home (absent refinancing). This was acknowledged on many occasions including in the original application form and letter of 12 April 2012 as well as the other documents cited in the background above.
4. I am therefore not satisfied that the presumption contained in s131(3) applies.
5. Turning to the defendant's other allegations.
6. Firstly, for reasons already given the plaintiff was not aware the defendant was "without sufficient income" to meet her obligations under the loan until the time of the renewed loan by which time the defendant was understandably reluctant to "pull out". In any event, the submission misconceives the nature of the defendant's obligations. Thus the defendant essentially agreed to sell her asset to meet her obligations if the litigation proved unsuccessful such that the income position was of marginal significance.
7. In terms of the suggestion that this was "asset stripping" it is unclear if the label is applicable. Thus, In Perpetual Trustee Co v Khoshaba Basten JA observed that asset lending was equivalent to "lending money without regard to the ability of the borrower to repay by instalments".[77] However, as already explained, there was no ongoing obligation to pay by instalments in the present case given the prepayment of interest.
8. In any event, even if such a label is appropriate, it should not be determinative of legal reasoning,[78] but should be considered along with all other circumstances. In Provident Capital Ltd v Papa[79] Macfarlan JA states:

It is apparent from these authorities that it can be relevant in the determination of whether a contract is unjust, and whether relief should be granted against a financier, under the Contracts Review Act that the financier has shown no interest in the borrower's ability to service the loan. However the significance of that fact must be assessed in the context of all the circumstances surrounding the loan. In my opinion, of particular significance will be the financier's knowledge of the borrower's circumstances, the purpose of the loan and whether the borrower has obtained independent legal advice. Public interest does not necessarily require so-called asset lending to be proscribed, or even deterred. It may advance the interests of the parties to many transactions, and facilitate commerce generally, for financiers to be able to lend on a "low doc" basis without requiring the expenditure of time and effort in ascertaining and verifying the ability of borrowers to service loans. In any event, that exercise will often be difficult...If, instead, a financier is satisfied that a borrower is able to make the decision for him or herself or has received appropriate advice, the public interest reflected in the Contracts Review Act will ordinarily have been satisfied. (emphasis added)

1. In the present case, then, the borrower's specific purpose was to be met, while the borrower had independent advice and was an experienced professional lawyer. Insofar as "serviceability" was concerned the information relayed by the borrower, at least initially, was that she had a relatively high income. In any event, the matter was of less significance given the exit strategy.
2. In terms of the suggestion that the high interest rate would cause substantial hardship, it may be true that the interest rate appears high (which is discussed further below). However, I do not consider that this would amount to "substantial hardship" here where the defendant explicitly sought a relatively short term for a particular purpose.
3. I also reject the suggestion that the plaintiff failed to consider the possibility that the claim for damages would be undetermined or unsuccessful. To the contrary, the plaintiff took extensive steps to ensure that the defendant identified an exit strategy in such an event and also obtained solicitor's advice.
4. The fact that one can say that the loans were "highly detrimental" in the result, and that Mr Best might not have made it given the further facts he knows now, are also not relevant matters. Rather, the provision requires the financier to take a future view of reasonable foreseeability of compliance as at the time of the assessment.[80] I am not satisfied that "at the time of the assessment" the defendant would be only able to comply with her obligations with "substantial hardship" which is more than mere hardship.[81] Instead, she could comply by being successful in the litigation (which had good prospects); alternatively by refinancing or selling her home after obtaining an opportunity she herself wished to take.
5. None of the matters raised suggest a breach of s131(2)(a).

Prohibition on entering unsuitable credit contracts

1. Pursuant to s133, a licensee must not enter a credit contract which is unsuitable under sub-section (2).
2. Pursuant to s133(2) the contract is judged to be unsuitable if, at the time it is entered:

(a) it is likely that the consumer will be unable to comply with the consumer's financial obligations under the contract, or could only comply with substantial hardship;

(b) the contract does not meet the consumer's requirements or objectives.

1. The provisions therefore essentially mirror the provisions contained in Division 3 save that they are concerned with the time of actual entry into the credit contract, rather than the time of assessment. Section 133(3) also contains a presumption in the same terms as contained in s131(3).
2. The defendant appeared to allege (without further elaboration) that these provisions were breached for similar reasons as already advanced (Amended Defence paragraph E). However, for reasons given already neither the loan contract nor the renewed loan contract was unsuitable, when also considered as at the time of entry.
3. The defendant however appeared to additionally allege that these provisions were breached by the renewal of the loan in circumstances where the valuation indicated a reduction in value such that the plaintiff thereby "ignored the impact of advancing further interest funds and incurring fees" (Amended Defence paragraph D).
4. However, for reasons already identified, I consider that it was still likely that the defendant would be able to comply with her financial obligations under the contract given the high amount of equity she retained (notwithstanding some drop in value). The renewed loan contract also met her objectives in ensuring she had the opportunity to finalise the litigation she had wanted to undertake.
5. No breach of s133 as alleged is sustained.

1. Two other complaints appear to remain in terms of Part 3.2; a complaint that there was a breach of the policy in terms of the approval being by only 2 directors, and an allegation that the assessments were not provided.

1. Although not pleaded, in oral submissions, the defendant highlighted that the policy provided that for approval of lending over one million dollars there should be approval by all directors which had not occurred in this case.
2. However, given:
   • the evidence of Mr Best was that the third director, Mr Norman, had in fact approved the loan, given he signed the indicative offer;
   • it was unclear what provision, if any, might be breached if the policy was not followed in the way suggested; and
   • the breach of a guideline does not necessarily result in a claim under the Code;[82]

1. The defendant alleged that the plaintiff refused or failed to produce a copy of the assessment (Amended Defence, page 8, paragraph F, particular 3).
2. The defendant also alleged that the plaintiff never provided the defendant with the preliminary assessment (Amended Defence, page 4, paragraph B, particular 5).
3. However, there is no obligation on the plaintiff to provide the defendant with a copy of the preliminary assessment under Part 3.1, which does not govern its conduct.
4. Moreover, there is only an obligation to give the consumer the assessments if the consumer requests the same before entering the credit contract or increasing the credit limit (s132). There is no evidence of any such request in the present case until 16 January 2014. The 2 assessments were then provided on 23 January 2014.[83]

1. I am satisfied that the plaintiff met its obligations under s130(1)(a)-(c). In particular, I am satisfied that reasonable inquiries and steps were taken in the circumstances of this particular case notwithstanding the non-verification of income.
2. I am further satisfied that the credit contracts did not need to be assessed as unsuitable under s131, in particular, given that the defendant expressly agreed on numerous occasions that the sale of her home would be necessary if the litigation was unsuccessful.
3. I am further satisfied that the plaintiff has not breached any of the other obligations under part 3.2 as alleged, in particular, it has not entered any unsuitable credit contract under s133 by reason of entry into the initial loan contract or the renewal loan contract.

Whether any term of the loan or mortgage or renewal was unjust pursuant to s. 76 of the National Credit Code

1. A number of the defendant's allegations overlapped with her complaints about the unsuitability of the loans.
2. More particularly, the defendant alleged that interest charged by the plaintiff was unjust, excessive, unconscionable and oppressive (Amended Defence, page 6, paragraph G and particulars) making specific complaints relating to:
   • the interest rate of 10.95% and in default of 15.95% (page 6, particulars G);
   • the fact that interest paid "up front" effectively gave the plaintiff in excess of the 10.95% charged (page 6, paragraph G and particulars); and
   • the duplication of establishment fees in 2011 and 2012 with a further payment of $8000 establishment fee (page 6, paragraph G and particulars).
3. In submissions she also emphasized that the interest was substantially higher than other lending rates of fewer than 5%.[84]
4. It was said that these terms were unjust having regard to the following circumstances:
   • that she was seriously ill, unable to work and relied on Centrelink which the plaintiff was aware of and knew particularly given it agreed that all costs would be deducted from the advance given her inability to pay, and also paid insurance (page 7, paragraph G and particulars 1, 1A and B);
   • there was an enormous discrepancy between income and interest payments (page 7, paragraph G and particular 2);
   • the plaintiff was aware the interest and fees were eating into her capital (page 7, paragraph G and particular 3);
   • the defendant was under the strain of seeking assistance from lawyers (page 8, paragraph G and particular 4);
   • it is not in the interest of the public to permit companies to "asset strip" when the consumer has no income (page 8, paragraph G and particulars 5 & 6);
   • the defendant was unable to alter the terms or negotiate with the plaintiff although she tried (page 8, paragraph G and particulars 7 and 8); and
   • the plaintiff failed to verify the defendant's income (page 8, paragraph G and particular 9).
5. The defendant also emphasized the decisions in Permanent Mortgagees v Cook & Anor[85] and Kent v Rebfin[86] where unjustness was found.

1. Pursuant to s76(1) the court may, if satisfied on the application of the debtor, that in the circumstances relating to the relevant credit contract or mortgage at the time it was entered into that the contract or mortgage was unjust, reopen the transaction that gave rise to the contract or mortgage. Sub-section 76(2) then set out matters to which the court is to have regard in determining whether a term of a contract or mortgage is unjust.
2. The legislation has been described as "beneficial legislation" to be interpreted liberally.[87]
3. In considering whether to reopen the transactions, the court is to have regard to the public interest and to all the circumstances of the case. It may also have regard to the various matters contained in s76(2).
4. An often quoted passage is that of McHugh JA in West v AGC (Advances) Ltd[88] as follows:

Under s 7(1) [a similar provision] a contract may be unjust in the circumstances existing when it was made because of the way it operates in relation to the claimant or because of the way in which it was made or both. Thus a contractual provision may be unjust simply because it imposes an unreasonable burden on the claimant when it was not reasonably necessary for the protection of the legitimate interest of the party seeking to enforce the provision: cf s (9)(2)(d). In other cases the contract may not be unjust per se but may be unjust because in the circumstances the claimant did not have the capacity or opportunity to make an informed or real choice as to whether he should enter into the contract: cf s 9(2)(a), 9(2)(e), 9(2)(f), 9(2)(g), 9(2)(i), 9(2)(j). More often, it will be a combination of the operation of the contract and the manner in which it was made that renders the contract or one of its provisions unjust in the circumstances. Thus a contract may be unjust under the Act because its terms, consequences, or effects are unjust. This is substantive injustice. Or a contract may be unjust because of the unfairness of the methods used to make it. This is procedural injustice. Most unjust contracts will be the product of both procedural and substantive injustice.

1. Allsop P also emphasizes in Provident Capital Ltd v Papa:[89]

Central to the normative evaluation is the recognition that there is a need for the protection of some people in some circumstances, who are not able fully to protect their own interests against factors that may cause injustice. That vulnerability may come from one or more of many circumstances, such as lack of education or of intelligence, from gullibility, from the predation of fraud and greed, and also sometimes from loyalty and love. The characterisation of a contract as unjust and the sheeting home to the other contracting party of the consequences of its unjustness may be a difficult evaluative exercise_. At its heart, however, is the recognition of the inadequacy of one party to protect her or his interests in the circumstances_. (emphasis added)

1. Dealing with each of the other matters raised by the defendant.
2. Firstly, for reasons already given I do not consider the plaintiff was aware of the defendant's state of health or true income, and certainly not at the time of the first loan.
3. Secondly, although it appears that there was a disparity between income and interest, this disparity was not revealed to the plaintiff until the initial loan had already been advanced. Further, the fact that interest and fees were eating into the capital was a matter of the defendant's own choosing and ignores the specific request from the defendant to have interest and fees taken out of the loan against the background of the particular purposes of the loans.
4. Next, the fact that there was "strain" in seeking assistance from lawyers was unfortunate but does not make the transactions unjust.
5. In terms of the suggestion that this was "asset stripping" or "asset lending" I refer to the matters stated earlier. The key feature of this case however is that the defendant, who was able to take care of her own interests, undertook to sell her home to meet her obligations if the litigation was unsuccessful.
6. As indicated already, the defendant was unable to identify which conditions she alleged she had tried to alter. There was also no objective evidence that the defendant attempted to alter the terms of the arrangements.
7. I have also already considered that further inquiries as to income were not appropriate in the circumstances of this particular case.
8. In terms of interest the fact that it was paid "up front" was a matter of the defendant's own choosing on the express basis that it was "financially beneficial" for her to do so.[90]
9. Insofar as the rate of interest was concerned, the defendant agreed that the plaintiff made full disclosure of all the interest and costs regarding the loan. The evidence of Mr Best was also that, depending on the purpose, bank bridging finance would be between 9-12% and that this loan was akin to bridging finance; bridging meaning "to get from point A to point B". He agreed that for a principal and interest home loan it would only be around 5%, but he emphasized that the plaintiff was not dealing with a comparable product and disagreed that the interest charged by his company was very high.
10. There was no evidence adduced that the defendant would have been entitled to access a normal bank loan. In fact, the preliminary assessment undertaken by the broker indicated that the only mortgage products available to the defendant were a Schwarz Capital loan at 11.25% or a loan from Union Fidelity of 13%.[91] The VMI loan had also been 11% and 16% on default.
11. Given the state of the evidence, and the particular purpose for which the funds were sought, I am unable to be satisfied that the loans were unjust by reason of the interest rates.[92]
12. Establishment fees are not properly the subject of an inquiry under s76 (see s76(6)).
13. Finally, in terms of the 2 decisions, they are readily distinguishable from the present case.
14. Thus, in Permanent Mortgages v Cook & Anor[93] the defendants were unsophisticated with little education and with no clear exit strategy.
15. Kent v Rebfin[94] was concerned with a loan structured at 120% interest per year and again related to defendants with limited education and experience. The creditor also engaged in predatory type conduct, engaging in attempts to circumvent the Code.

1. Firstly in terms of public interest I have considered the underlying consumer protection purpose of the legislation which is beneficial legislation. However, there is also the public interest in keeping parties to their bargains.[95] I consider the latter to have particular significance in the present case where the defendant sought funds on a particular basis clearly undertaking to sell her property if events did not turn out as she hoped.
2. In terms of "all the circumstances" I will return to these below.
3. Turning to the specific matters in s76(2), I make the following observations.

(a) the consequences of compliance, or noncompliance with all or any of the provisions of the contract, mortgage or guarantee;

1. The defendant was aware that upon the expiry of the loans she would be required to repay the principal loan sum. Further, the defendant acknowledged on several occasions that, if she could not refinance, she would be required to sell the property absent success on her litigation.

(b) the relative bargaining power of the parties;

1. The defendant is legally trained and practised as a solicitor for some 35 years. She also engaged Perry Financial Strategies and Armadale House Pty Ltd, who were licensed credit assistance providers, to act on her behalf for the purposes of the initial loan application and had previously refinanced her home, including, most recently, with VMI.
2. There is no obvious inequality of bargaining power.

(c) whether or not, at the time the contract, mortgage or guarantee was entered into or changed, its provisions were the subject of negotiation;

1. The terms of the arrangements were subject to limited negotiation as to parties. However, as indicated already, the defendant did not specify any other terms she sought to alter.

(d) whether or not it was reasonably practicable for the applicant to negotiate for the alteration of, or to reject, any of the provisions of the contract, mortgage or guarantee or the change;

(e) whether or not any of the provisions of the contract, mortgage or guarantee impose conditions that are unreasonably difficult to comply with, or not reasonably necessary for the protection of the legitimate interests of a party to the contract, mortgage or guarantee;

1. The defendant did not identify any such provisions. Moreover, given the size and risk of the undertaking of the plaintiff (the loan principal under the renewed loan was a substantial sum of $2,050,000), the taking of a registered first mortgage was justified.

(f) whether or not the debtor, mortgagor or guarantor, or a person who represented the debtor, mortgagor or guarantor, was reasonably able to protect the interests of the debtor, mortgagor or guarantor because of his or her age or physical or mental condition;

1. There was no reason to believe that Perry Financial Strategies and Armadale House Pty Ltd, (who were licensed credit assistance providers) were unable to protect the defendant's interests.
2. As highlighted by the plaintiff, no-one was called from Perry Financial Strategies to suggest otherwise.
3. Further, although it appears that the defendant did suffer some ill health at the time of entering the transactions, there was no evidence that the defendant's health conditions affected her ability to protect her interests and make rational decisions.
4. Finally, although the defendant was 64 at the time of the first loan I do not consider this to be significant given the exit strategy. In Perpetual Trustees Victoria Ltd v Knezevic, the loan was not held to be unjust though the defendant was 62.[96]

(g) the form of the contract, mortgage or guarantee and the intelligibility of the language in which it is expressed;

1. There were no difficulties identified. As the defendant properly conceded, she understood the documentation.

(h) whether or not, and if so when, independent legal or other expert advice was obtained by the debtor, mortgagor or guarantor;

1. The Defendant obtained independent legal advice in relation to both the Loan Agreement, the mortgage and the Loan Renewal Agreement.
2. She also retained Perry Financial Strategies and Armadale House Pty Ltd at the initial loan stage.

(i) the extent to which the provisions of the contract, mortgage or guarantee or change and their legal and practical effect were accurately explained to the debtor, mortgagor or guarantor and whether or not the debtor, mortgagor or guarantor understood those provisions and their effect;

(j) whether the credit provider or any other person exerted or used unfair pressure, undue influence or unfair tactics on the debtor, mortgagor or guarantor and, if so, the nature and extent of that unfair pressure, undue influence or unfair tactics;

(k) whether the credit provider took measures to ensure that the debtor, mortgagor or guarantor understood the nature and implications of the transaction and, if so, the adequacy of those measures;

(l) whether at the time the contract, mortgage or guarantee was entered into or changed, the credit provider knew, or could have ascertained by reasonable inquiry at the time, that the debtor could not pay in accordance with its terms or not without substantial hardship;

1. This has already been dealt with above.
2. In any event, in the absence of refinancing, the obligations under the contracts were actually to be met by the proceeds of the litigation, or alternatively by the sale of the house and the defendant downsizing with sufficient equity for her to purchase a smaller property. In neither case was there substantial hardship.
3. The defendant also did not inform the plaintiff of any deficiencies in income until the renewed loan stage by which time it was appropriate to give the opportunity to the defendant to complete the litigation (which occurred).

(m) whether the terms of the transaction or the conduct of the credit provider is justified in the light of the risks undertaken by the credit provider;

(n) for a mortgage - any relevant purported provision of the mortgage that is void under section 50;

(o) the terms of other comparable transactions involving other credit providers and, if the injustice is alleged to result from excessive interest charges, the annual percentage rate or rates payable in comparable cases;

1. The structure of the plaintiff's loan and renewed loan were almost identical to the prior loan the defendant took out with VMI, save that the plaintiff documented its loans as being regulated under the National Credit Code (as was the case). As indicated already, the range of finance options available to the defendant was also apparently limited.
2. In considering the issue of unjustness, I have also had regard to the other "circumstances" already cited, particularly: that the defendant was a capable and intelligent former solicitor able to protect her own interests notwithstanding some ill health; that there was no predatory behaviour on the part of the plaintiff who ensured that the defendant obtained independent legal advice; that the transactions met the specific purpose sought by the defendant and provided her with the opportunity to pursue the litigation she herself wished to pursue; that her proposed course appeared sound on the basis of correspondence from an independent solicitor; finally, that the exit strategy she herself acknowledged on numerous occasions meant she was well apprised of the need to sell her asset in the event the proposed litigation failed.
3. I do not consider the loans or the mortgage to be unsuitable, nor were they unjust.

1. In the light of the above, it is unnecessary to consider the question of remedy.

1. I consider that the following orders are appropriate:
   • The plaintiff recover possession of the land described in indorsement of claim on the writ as 78 Wattle Road Hawthorn in the State of Victoria and being the land more particularly described in Certificate of Title Volume 11195 Folio 823.
   • The defendant pay the plaintiff the sum of $2,472,870.07 as at 4 June 2014 plus interest at $867.74 per day pursuant to the Certificate of Laurence Best dated 3 June 2014.
   • The defendant's counterclaim is dismissed.
   • The amended summons dated 31 January 2014 seeking summary judgment is struck out without an adjudication on the merits.
   • The defendant pay the plaintiff's costs of the proceeding, including reserved costs and the costs of the plaintiff's application by amended summons dated 31 January 2014, on a party - party basis in default of agreement.
2. However, I will hear from the parties as to the precise form of final orders.

[1] See paragraph 1 of the Amended Defence and Amended Counter Claim, dated 4 June 2014 which admits paragraph 1-10 of the Statement of Claim, dated 4 April 2013; the defendant further admitted receipt of the notice dated 27 February 2013 under cross examination- see transcript dated 6 June 2014, page 204.

[2] Reply and Defence to Counterclaim dated 7 May 2014, paragraph 3(b).

[3] Amended Statement of Issues pursuant to s50 Civil Procedure Act 2010, dated 4 June 2014.

[4] Exhibit A, affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41, paragraphs 2(b) and 4.

[5] Exhibit 4, Second Affidavit of Suzann Owens sworn 18 March 2014, appearing at court book 383 - 387, paragraph 2.

[6] Exibit H, Historical title search for 78 Wattle Road, Hawthorn (Volume 09239 Folio 723).

[7] Exhibit F, ITSA extract in relation to the defendant.

[8] Exhibit LJB.45 "VMI Loan Application" appearing at court book 357 - 364 and Exhibit LJB.47 "VMI Loan Agreement", appearing at court book 367 - 373, contained in Second Further Affidavit of Laurence John Best sworn 18 February 2014, appearing at court book 353 - 356.

[9] Exhibit LJB.4 "Email from Cameron Perry and Loan Application" appearing at court book 57 - 66, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[10] Exhibit LJB.4 "Email from Cameron Perry and Loan Application" appearing at court book 57 - 66, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[11] Exhibit LJB.5 "Defendant's letter to Landrove Pty Ltd" appearing at court book 67 - 68, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[12] Exhibit LJB.6 "Loan Mortgage Application" appearing at court book 69 - 71, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[13] Exhibit LJB.7 "Indicative Loan Approval letter" appearing at court book 72 - 75, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[14] Exhibit LJB.7 "Indicative Loan Approval letter" appearing at court book 74, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[15] Exhibit LJB.10 "Email from Paul Scerri to Cameron Perry" appearing at court book 82 - 84, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[16]Exhibit A, affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41, paragraph 17.

[17] Exhibit LJB.11 "Revised Loan Application", appearing at court book 85 - 88, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[18] Exhibit LJB.13 "Revised Approval Letter" appearing at court book 92 - 95, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[19] Exhibit LJB.14 "Loan Agreement" appearing at court book 96 - 125, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[20] Exhibit LJB.15 "Australian Legal Practitioner's Certificate" appearing at court book 126 - 128, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[21] Exhibit LJB.19 "Notice of Voluntary Advance Interest Payments" appearing at court book 194 - 195, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[22] Exhibit LJB.16 "Mortgage of Land" appearing at court book 129 - 131, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[23] Exhibit LJB.20 "Letter and Loan Disbursement Schedule" appearing at court book 196 - 198, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[24] Owens v Galvin [2013] VCC 22.

[25] Exhibit LJB.55 "Renewal Loan Application" appearing at court book 439 - 441, contained in Third Further Affidavit of Laurence John Best sworn 2 April 2014 appearing at court book 388 - 404.

[26] Exhibit LJB.25 "Loan Renewal Submission" appearing at court book 208 - 210, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[27] Exhibit LJB.25 "Loan Renewal Submission" appearing at court book 208 - 210, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[28] Exhibit LJB.26 "Renewal Approval Letter" appearing at court book 211 - 215, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[29] Exhibit LJB.29 "Defendant's Letter Dated 12 April 2012" appearing at court book 250 - 251, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[30] Exhibit LJB.28 "Solicitor's Advice Certificate" appearing at court book 247-249, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[31] Exhibit LJB.30 "Plaintiff's Letter and Loan Disbursement Schedule" appearing at court book 252 - 254, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[32] Exhibit LJB.59 "Defendant's Email dated 5 December 2012" appearing at court book 451 - 452, contained in Third Further Affidavit of Laurence John Best sworn 2 April 2014 appearing at court book 388 - 404.

[33] Exhibit LJB.34 "Defendant's Letter dated 2 February 2013" appearing at court book 262 - 263, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[34] Exhibit LJB.35 "Default Notice" appearing at court book 264 - 269, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[35] Owens v Galvin [2014] VSCA 33.

[36] Order made by Her Honour Judge Kennedy in the matter of AF&L First Mortgages - v - Owens, Dated 4 April 2014, Order 4.

[37] Exhibit A, Five affidavits including exhibits of Laurence John Best as follows: Affidavit of 27 November 2013 appearing at CB 25 - 41, Further Affidavit 31 January 2014 appearing at CB 302 - 312, Second Further Affidavit of 18 February 2014 appearing at CB 353 - 356, Third Further Affidavit of 2 April 2014 appearing at CB 388 - 404, Fourth Further Affidavit 30 April 2014 appearing at CB 470 - 482.

[38] Ruling made by Her Honour Judge Kennedy in the matter of AF&L First Mortgages - v - Owens, Dated 5 June 2014.

[39] Exhibit 4, affidavit of Suzann Owens sworn 12 December 2013, appearing at court book 285 - 289 and Second Affidavit of Suzann Owens sworn 18 March 2014, appearing at court book 383 - 387

[40] Transcript dated 6 June 2014, page 204.

[41] A certificate under s128 of the Evidence Act 2008 was granted in relation to this part of the defendant's evidence

[42] Exhibit LJB.45 "VMI Loan Application" appearing at court book 357 - 364, contained in Second Further Affidavit of Laurence John Best sworn 18 February 2014, appearing at court book 353 - 356.

[43]Exhibit 4, second Affidavit of Suzann Owens sworn 18 March 2014, appearing at court book 383 - 387, paragraph 4.

[44] Exhibit 4, affidavit of Suzann Owens sworn 12 December 2013, appearing at court book 285 - 289, paragraph 8 and Second Affidavit of Suzann Owens sworn 18 March 2014, appearing at court book 383 - 387, paragraph 4.

[45] Exhibit 4, affidavit of Suzann Owens sworn 12 December 2013, appearing at court book 285 - 289, paragraph 7

[46] This notwithstanding an order made by Her Honour Judge Kennedy in the matter of AF&L First Mortgages - v - Owens on 26 May 2014. Order 5 states: "On or before 4.00pm on Wednesday 28 May 2014 the Defendant is to provide the Plaintiff with any affidavit from her GP annexing a short report. If the Plaintiff has any objection to such evidence it should advise the Defendant forthwith with such objection to be determined at trial."

[47] Transcript dated 6 June 2014, page 204.

[48] Which does not displace the function of the pleadings- see s50A(3) Civil Procedure Act 2010 (Vic)

[49] Orders made by Her Honour Judge Kennedy in the matter of AF&L First Mortgages - v - Owens: order 4 of 16.12.2013; order 8 of 4.4.2014; order of 4 June 2014

[50] Transcript, dated 11 June 2014, page 277.

[51] Exhibit 2, Austfin Group Credit Policy, page 5 and Procedures and Defendant's Additional Submissions, filed in court on 11 June 2014

[52] Defendant's Additional Submissions, filed in court on 11 June 2014

[53] Exhibit LJB.4 "Email from Cameron Perry and Loan Application" appearing at court book 57 - 66, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[54] Exhibit LJB.5 "Defendant's letter to Landrove Pty Ltd" appearing at court book 67 - 68, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[55] Transcript dated 4 June 2014, pages 69 and 78.

[56] Exhibit LJB.8 "Oakley Thompson & Co letter" appearing at court book 76 - 78, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[57] Exhibit LJB.62 "VEDA Credit Report" appearing at court book 483 - 485, contained in Fourth Further Affidavit of Laurence John Best sworn 30 April 2014 appearing at court book 470 - 482.

[58] Transcript dated 4 June 2014, page 43.

[59] Exhibit LJB.3 "Copy of Register Title Search of the Defendant's Land" appearing at court book 54 - 56 contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[61] Exhibit LJB.9 "Valuation Report Dated 22 March 2011" appearing at court book 79 - 81 contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[62] Exhibit C, Correspondence from Oakley Thompson & Co to the defendant dated 15 March 2012.

[63] Exhibit LJB.32 "Defendant Email dated 5 December 2012" appearing at court book 257 - 258 and Exhibit LJB.33 "Defendant Letter dated 19 December 2012" appearing at court book 259 -261, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[64] Exhibit LJB.64 "Updated VEDA Credit Report" appearing at court book 488 - 491, contained in Fourth Further Affidavit of Laurence John Best sworn 30 April 2014 appearing at court book 470 - 482

[65] Exhibit LJB.24 "Valuation dated 27 February 2012" appearing at court book 205 - 207, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41,

[66] Transcript dated 6 June 2014, page 204.

[67] Exhibit LJB.55 "Renewal Loan Application" appearing at court book 439 - 441, contained in Third Further Affidavit of Laurence John Best sworn 2 April 2014 appearing at court book 388 - 404.

[68] Provident Capital Ltd v Papa [2013] NSWCA 36, paragraph 113.

[69] Silberman v Citigroup Pty Ltd [2011] VSC 514, paragraph 17.

[70] ASIC Regulatory Guide 209 "Credit Licensing: Responsible Lending Conduct", September 2013, page 11.

[71] ASIC Regulatory Guide 209 "Credit Licensing: Responsible Lending Conduct", September 2013, page 35.

[72] Defendant's Additional Submissions, filed in court on 11 June 2014, page 2.

[73] Defendant's Additional Submissions, filed in court on 11 June 2014, page 4.

[74] Defendant's Additional Submissions, filed in court on 11 June 2014, page 5.

[75] LJB.41 "VMI Letter" dated 11.3.2010 appearing at court book 334 - 336 contained in Further Affidavit of Laurence John Best, sworn 31 January 2014 appearing at court book 302 - 312.

[76] Exhibit LJB.29 "Defendant's Letter Dated 12 April 2012" appearing at court book 250 - 251, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[77] Perpetual Trustee Co v Khoshaba [2006] NSWCA 41, paragraph 128.

[78] Tonto Home Loans Australia Pty Ltd v Tavares & Ors [2011] NSWCA 389, paragraph 3.

[79] [2013] NSWCA 36, paragraph 113

[80] Naional Consumer Credit Protection Bill 2009, Explanatory Memorandum, Chapter 3 "Responsible Lending Conduct", page 112, paragraph 3.167.

[81] Silberman v Citigroup Pty Ltd [2011] VSC 514, paragraph 16.

[82] Kowalczuk v Accom Finance [2008] NSWCA 343; (2008) 77 NSWLR 205, paragraph 117.

[83] Exhibit LJB.61 "MJHI Letter dated 23 January 2014" appearing at court book 455 - 460, contained in Third Further Affidavit of Laurence John Best sworn 2 April 2014 appearing at court book 388 - 404.

[84] Outline of Argument of the Defendant, dated 3 June 2014, page 3

[85] [2006] NSWSC 1104.

[86] [2008] NSWCTTT 1168.

[87] West v AGC (Advances) Ltd (1986) 5 NSWLR 610, 611 and 631.

[88] (1986) 5 NSWLR 610, 620 (Hope JA agreeing at 618)

[89] [2013] NSWCA 36, paragraph 7.

[90] Exhibit LJB.19 "Notice of Voluntary Advance Interest Payments" appearing at court book 194 - 195, contained in Affidavit of Laurence John Best sworn 27 November 2013, appearing at court book 25 - 41.

[91] Exhibit LJB.44 "Preliminary Credit Assessment" appearing at court book 341 - 352, contained in Further Affidavit of Laurence John Best sworn 31 January 2014 appearing at court book 302 - 312.

[92] See also decision in Garas v Majaraj [2004] NSWSC 1157 wherein a rate of 20% was not viewed as unjust.

[93] [2006] NSWSC 1104.

[94] [2008] NSWCTTT 1168.

[95] Knowles v Victorian Mortgage Investments Ltd & Anor [2011] VSC 611, paragraph 68

[96] [2012] NSWSC 956, paragraph 65 per Adamson J. Appeal dismissed in Knezevic v Perpetual Trustees Victoria & Anor [2013] NSWCA 199