Australia and New Zealand Banking Group Limited v Fink

Judgment Introduction 1The plaintiff (ANZ) was the mortgagee of real estate of which the defendant borrowers are registered proprietors. The mortgages were entered into pursuant to loans made by ANZ to the borrowers in October 2007 and September 2008. Following the filing of a defence and cross-claim ANZ moved for summary judgment in respect of part of the relief claimed, namely for possession of each of the mortgaged properties and an order granting leave to issue a writ of possession in respect of those properties. The borrowers opposed this application upon the basis, essentially, that the terms of each loan agreement and mortgage are (in whole or in part) void for uncertainty and, accordingly, no binding agreement was entered into; and, secondly, that relief to which the borrowers are entitled under the Contracts Review Act 1980 would include orders in effect preventing ANZ from enforcing either of the loan agreements or relying on the mortgages, in short that they could keep the principal sum they borrowed. ANZ contended that the best case capable of being made by the borrowers in respect of uncertainty was confined to the calculation of interest and, therefore, as the borrowers were (admittedly) in default, at least in respect of the payments of principal, ANZ was entitled to judgment and the writs, since such a default triggered its entitlement under the mortgages. Furthermore, the cross-claim, as pleaded, could not, at its highest for the borrowers, result in ANZ not being entitled to, at least, repayment of the principal. 2During the hearing, to ensure that the matter did not go off on a pleading point, (there being no prejudice) I granted leave to ANZ to amend its statement of claim to seek orders by way of restitution of the principal, in the alternative to the amounts claimed under the loan agreements of principal and interest. The borrowers then amended their defence and cross-claim to allege, in substance that ANZ should not be entitled to repayment either of principal or interest. In the result, the question of restitution does not arise. Summary judgment 3The relevant principles have been frequently stated. A recent iteration was stated succinctly in Commonwealth of Australia v Griffiths & Anor [2007] NSWCA 370, by Beazley JA (as her Honour then was) - [11] The general principles relating to the summary disposal of proceedings are well-known: see General Steel Industries Inc v Commissioner for Railways (NSW) & Ors [1964] HCA 69; (1964) 112 CLR 125 at 129. If it is demonstrated that there is a real question to be tried, the matter is inappropriate for the entry of summary judgment: Dey v Victorian Railway Commissioners [1949] HCA 1; (1949) 78 CLR 62. The tests stated in the authorities as to whether it is appropriate that a case be disposed of by the entry of summary judgment include statements such as that the matter is "so obviously untenable that it cannot possibly succeed"; "manifestly groundless" or "would involve useless expense": see General Steel Industries at 129. [12] The summary disposal of proceedings or part thereof deprives a party of the right to a contested hearing. For that reason it is said that the requirement for establishing that there is no triable issue is demanding: Air Services Australia v Zarb (Court of Appeal, 26 August 1998, unreported). In Webster & Anor v Lampard [1993] HCA 57; (1993) 177 CLR 598, Mason CJ, Deane and Dawson JJ said at 602: '... the issue before the learned Master on the application for summary judgment was not whether [the plaintiffs] would probably succeed in their action against [the defendant]. It was whether the material before the Master demonstrated that that action should not be permitted to go to trial in the ordinary way because it was apparent that it must fail. The power to order summary judgment must be exercised with 'exceptional caution' and 'should never be exercised unless it is clear that there is no real question to be tried.' (Citations omitted)". 4Where summary dismissal of a defence under the Contracts Review Act is sought, it is necessary particularly to bear in mind the breadth of the relevant factors that need to be considered, not only as to whether there is any relevant unjustness but as to the nature of the relief. The notion of unjustness is very much a question of fact and degree requiring judgment as to the interaction of circumstances and, in the end, an evaluative decision not susceptible to precise analysis. The question of relief is obviously discretionary. The level of certainty required before summary dismissal of such a defence will be appropriate is therefore difficult to achieve. Here, it is crucial that the orders sought do not relate to the claim for debt but (if driven so far) only to the repayment of the principal sums. The 2007 loan agreement 5This agreement (described as a "home loan") was dated 29 October 2007. It was not subject to the Consumer Credit Code. The purpose of the loan was to refinance a loan from the National Australia Bank and, obviously, to discharge that bank's mortgage over the security property. 6The following was specified as to interest - "Currently 7.89% per annum, being the ANZ 3 year Fixed Rate Home Loan for the period of 3 years from the date of advance (the 'fixed interest rate period'). After the fixed interest rate period is completed, your interest rate will convert to the ANZ Home Loan Index (which is currently 8.32% per annum) less an interest margin of 0.7% per annum." 7The repayments clause provided for 36 monthly repayments of interest only followed by 323 monthly repayments of principal and interest of $10,936.29 each, followed by one final repayment of $10,701.21. The total period of repayments is 30 years. It was also provided - "The above repayments are only correct if interest rates do not change". In addition to the various administration fees, a loan approval fee of $500 was payable on the date of advance or, if the advance is accepted and the loan is declined on the date that ANZ was advised of this decision. An early repayment administration fee of $300 was payable if and when the loan was repaid in full during the fixed interest rate period. If the loan was repaid early during the fixed interest rate period a payment was due calculated according to a formula specified in the Consumer Lending Terms and Conditions ("General Conditions"), essentially focussing on the so called "cost of interest foregone", the details of which do not presently matter. The loan agreement also contained the following clause - "The following may be varied by ANZ without your consent: The ANZ Home Loan Index and the name of the ANZ Home Loan Index. The ANZ 3 year Fixed Rate Home Loan at any time prior to the date of advance and the name of the ANZ 3 year Fixed Rate Home Loan. The amount, method of calculation, frequency and payment dates of fees and charges (other than the Loan Approval Fee). New fees and charges may be introduced except no change to the Early Repayment Cost will be made and no new Early Repayment Cost will be imposed during the fixed interest rate period. The number and amount of repayments, their method of calculation and repayment dates. ANZ can also vary any other term or condition of your loan." 8The agreement also provided - "Variation to Repayments "A change in the annual percentage rate for your loan may mean that your repayments will need to change if you are to repay your loan within its term. ANZ will calculate your repayment amount for the fixed interest rate period on the date of advance, in accordance with the ANZ 3 year Fixed Rate Home Loan that applies on that date. If this rate is different from that stated in the table at the commencement of this loan offer, ANZ will automatically adjust your repayments as stated in the table at the commencement of this loan offer so that they meet interest charges. Once your fixed interest rate period has ended, after any change in the annual percentage rate of your loan, ANZ can increase your repayments so that they are sufficient to pay out your loan within its agreed term. Similarly, after any decrease in the annual percentage rate of your loan, ANZ can decrease your repayments so that you need pay no more than is required to pay out your loan within its agreed term. ANZ will give you written notice of any change to your repayments no later than the day on which the change takes effect. If you wish to change the amount of your repayments, please contact your ANZ manager." The General Conditions provided - "8. Will I be told in advance if ANZ is going to make a change in the contract? That depends on the type of change. For example: · you get at least same day notice for a change to an annual percentage rate. That notice may be a written notice to you or a notice published in a newspaper. · you get 20 days advance written notice for: > a change in the way in which interest is calculated; or > a change in credit fees and charges; or > any other changes by ANZ; except where the change reduces what you have to pay or the change happens automatically under the contract." 9The security was a first mortgage over a property at Wallis Island, New South Wales, of which the borrowers were the registered proprietors, being the land in Folio Identifiers 1/858763 and 2/858763. The 2008 loan agreement 10This agreement, dated 29 September 2008, is described as a "Supplementary Loan" and stated to be regulated by the Consumer Credit Code. The purpose of the loan was described as "Int/ext Decoration of Home". 11The interest rate was - "Currently 8.67% per annum, being the ANZ Home Loan Index, currently 9.37% per annum, less an interest margin of 0.7%". 359 monthly repayments were stipulated of principal and interest of $6,256.60 each, followed by one final repayment of $6,245.58, with the total period of repayments being 30 years and the total amount being $2,252,364.98. These repayments were said to be "only correct if interest rates do not change". The repayment amount on the date of advance depended upon the ANZ Home Loan Index that applied on that date, the ANZ giving at least 30 days written notice before the new repayment amount commences. Following the advance, the agreement provided that, in the event either of an increase or decrease of the interest rate, the repayments would be recalculated so they would be sufficient to pay out the loan within the agreed term. The conditions specified as able to be varied by ANZ without consent were identical to those in the earlier agreement. 12The General Conditions provided that the variable interest rate could be changed at anytime, which would be "notified no later than the date on which the change takes effect, by notice in writing or advertisement published in a newspaper" and details of the change would also appear on the borrower's next statement. 13The loan agreement provided the security was that already held by ANZ over the property at Wallis Island. Standard mortgage provisions 14Filed in the Land Titles Office as a Memorandum of Common Provisions No. 243390 is a copy of the plaintiff's standard mortgage provisions ("standard terms") which, it is not disputed, applied to the mortgages in this case. Amongst other conditions, it provided that the mortgage secured payment to ANZ of "the secured money" which is defined as "the principal money and all interest accrued on the principal money", principal money being defined as, inter alia, "at any time all money... [owed] to ANZ at that time for any reason". Clause 5.2 provided, inter alia, that "interest accrues at the rate or rates that ANZ and [the borrowers] agree or, if there is no particular agreement, at the rate or rates that ANZ determines from time to time". The clause also provided - "In determining a rate ANZ may have regard to the matters that it considers appropriate. These matters may include the nature, purpose, amount and risk grading of the facility and the interest rate or rates charged by it to its other customers for similar facilities." Clause 7.1 provides that a borrower will be in default if "any part of the secured money is not paid when it is due". Superseded loan 15On 29 October 2007 a second loan agreement was entered into between the plaintiff and the defendants, also called a home loan and also not regulated by the Consumer Credit Code. This was for the sum of $500,000 at a variable interest rate. The terms of this agreement were substantially the same as the 2007 loan agreement, and was secured by the mortgage already given over the property. It was, however, superseded by the 2008 loan agreement and it is not necessary to refer to it again. Defaults 16On 8 April 2011 the defendants defaulted under the 2007 loan agreement by failing to repay the money due upon that date or any subsequent date. On 11 June 2011 the defendants defaulted under the 2008 loan agreement by failing to repay the instalment due on that date or any later instalments. Uncertainty as to interest 17It was undisputed that the loan agreements, the terms and conditions and the relevant mortgage together with the standard mortgage provisions should be read and construed together. If there be a conflict between the particular terms of the loan agreement and the general standard terms of the mortgage documents, the former should prevail: Kabwand Pty Ltd & Ors v National Australia Bank Limited [1989] FCA 131; (1989) ATPR 40-950 (at [50380], citing longstanding English authority. In Kabwand the clause in the loan agreement as to interest provided - "... 'Interest shall initially be calculated at the rate set out in Item 3 in the Schedule but the Bank may at any time hereafter at its sole discretion vary either by way of increase or decrease the said rate of interest conforming with general movements in the Bank's interest rates without any obligation on the Bank to notify you of such variation.' The Schedule to each agreement provided for a rate of 15.25% and referred to specific securities by way of mortgage that were given at the same time as the agreements were entered into. Each mortgage contained a clause (cl. 35(a)) which was in the following form: 'The Mortgagor shall pay interest on the respective moneys and amounts referred to in the definition of the moneys hereby secured during the period that they are owing or remain unpaid to the Bank, calculated at the rate from time to time charged by the Bank and computed from the day or respective days of their being advanced or paid or becoming owing (whichever first occurs).'" 18The Court concluded that (at [50381]) there was no conflict between these two clauses, adding - "... Construed together they entitled the respondent to increase or reduce interest provided that the amount actually charged to the appellants was in accordance with the rate charged in similar circumstances to other customers of the bank so that, if the bank's rate or facilities to other customers increased by a percentage, then the rate charged to the appellants could similarly be increased." 19It had been submitted by the appellants in Kabwand that the clauses were void for uncertainty since the interest could be varied without reference to an external standard or, alternatively, so obscure that a definite or precise meaning could not be ascribed to them. In dealing with this submission the notion of uncertainty and its effects "involved three quite distinct principles" (ibid). The first principle was that a failure by parties to a contract to agree upon a fundamental term means that there is no contract at all, an effect that also arises if the terms they do agree on "are so vague that no precise meaning can be attributed to them". The second principle is that a contract will be unenforceable if one of the parties is left to choose whether or not to perform it. As the Court observed this may not be so much a matter of uncertainty but rather of illusory consideration. This second principle was expressed in Godecke v Kirwan [1973] HCA 38; (1973) 129 CLR 629 at 646-647 by Gibbs J (as his Honour then was) in language drawn from Thorby v Goldberg (1964) 112 CLR 597 per Kitto J at 605 - "... [Where] words which by themselves constitute a promise are accompanied by words which show that the promisor is to have a discretion or option as to whether he will carry out that which purports to be the promise, the result is that there is no contract on which an action can be brought." The Court in Kabwand went on to say - "A third but related principle is that there can be no concluded bargain if a vital matter has been left to the determination of one of the parties: Godecke v. Kirwan (1973) 129 C.L.R. per Gibbs J. at p. 647. Whether 'interest' is, in the context of a loan, a vital matter, was not debated before us; but it was not suggested that an agreement for a loan at such rate of interest as the lender required did not involve a concluded bargain vis-a-vis the principal of the loan; rather it was said that interest alone was not recoverable in such a case." Accordingly, the Court concluded that the case raised neither the first or second principle but only the question whether the right to interest was unenforceable because it infringed the third principle. The Court went on to exclude the possible adoption of a construction that, the amount not being determined by the agreement, it must be a reasonable sum, since the contract provided otherwise. In the result, it was held that the requirement for the interest rate to conform to the general rates of interest charged to customers of the bank was "an objective market standard to be applied at all times", so that the interest rate clause was not void for uncertainty (ibid [50382]). 20The question whether provisions in a loan agreement and mortgage as to interest were void for uncertainty was also considered in this Court by Brereton J in Perpetual Nominees Ltd v Parist Holdings Pty Ltd [2005] NSWSC 1345. The loan agreement provided for the payment of interest at two rates of which the higher was defined as the lower rate plus 4%. The lower rate was the aggregate of the "Benchmark Rate" and a margin of 3% per annum. The Benchmark Rate was - "the rate as determined by the lender on 1 December 2004 [the date of the advance] and then as redetermined by the lender quarterly ... each year. The lender will (but without having any obligation to do so) when determining and redetermining the Bench Mark Rate refer to the level at which 90 day bank bill products have been trading by the major Australian trading banks rounded up to the nearest five basis points." 21The borrower in Parist contended that this definition left the fixing of a substantial obligation under the contract entirely to the discretion of one of the parties and, accordingly, gave rise to no contractual obligation to pay interest. Brereton J rejected the lender's submission, even if the effect of the clause was to make no valid provision for the determination of the Benchmark Rate, the applicable rate was to be assessed as "fair and reasonable", since the contract expressly specified the criteria for determining the rate, citing South Sydney Council v Royal Botanic Gardens Trust [1999] NSWCA 478, especially Spigelman CJ at [16]. The issue is summed up by his Honour as follows - [31] In Cross v National Australia Bank Limited (FCA, 29 April 1994, unreported) Drummond J held a provision in a lease, which empowered the lessor (which was a bank) to recover interest from the lessee on any arrears of rental and on the accelerated future rentals from the due dates until payment 'at such rate as is determined by the bank from time to time' - it not being suggested that this could be read as a reference even to the bank's own benchmark rate - was void and illusory, but severable. [32] ... [The] cases establish that, while determination of a price or payment under a contract may be left to the party entitled to receive the price or payment, that will be so only where there are criteria - either express, or such implied criteria as 'fair and reasonable' - by which that party's decision can be tested and that, where an express formula is provided, there is no room to imply criteria such as 'fair and reasonable'. In Royal Botanic Gardens and in Kabwand, there were such criteria; in Cross there were not. [33] If the provision relating to interest be void in the present case, it must be because the mechanism for its calculation infringes the third principle, since this is not a case in which the parties have not agreed on a fundamental term, nor is it a case in which one party has been left to choose whether it will perform the contract. The question is whether a vital matter, namely the rate of interest - or more precisely, one component of it, being the benchmark rate - has been left to the determination of one of the parties, namely Perpetual, without a criteria against which Perpetual's determination can be tested." In the result, Brereton J found the specific qualification that the bank had no obligation to refer to the 90 day bank bill rate had the result that the loan agreement left the rate "to be determined by the lender without any constraint or reference criteria" which distinguished the case from Kabwand and brought it within Cross. Accordingly, the clause was void. Furthermore, it was not open to substitute a "fair and reasonable rate". Following Cross, his Honour determined that the void provision was severable, leaving the other components of the equation intact, so that there remained the obligation to pay interest at the margin rate. 22In Victorian Producers Co-operative Co Ltd v Edwards (1993) 62 SASR 415, a term to the effect that the borrowers were liable to pay interest at reasonable rates having regard to the rates charged generally by stock and station agents in like circumstances as might be fixed by the lender from time to time was held not to be uncertain; see also Morehuman (Australia) Pty Ltd v Talimor Pty Ltd [2006] NSWSC 1027 at [18]. The interest rate clauses are valid 23In respect of the 2007 loan agreement, it was submitted by Mr Klooster of counsel for the borrowers that the clause permitting the ANZ 3 year Fixed Rate Home Loan to be varied without the borrowers' consent without reference to any criteria was void for uncertainty. Whatever may have been the position as to the provision for interest once the fixed interest rate period was completed, the contention that the fixed rate interest provision was void for uncertainty must be rejected. Aside from the possibility that, given the absence of any criteria (on Mr Klooster's argument) for determining the interest rate, it would be implied as requiring the rate to be "fair and reasonable", the clause itself specifies that the variation can only be made "at any time prior to the date of the advance". It follows that the rate as at the date of the advance was fixed and was not subject to variation at the instance of ANZ. So far as the variable rate is concerned, this was expressed as converting to the "ANZ Home Loan Index ... less an interest margin of 0.7% per annum". Since the Index obviously does not apply solely to the loan in question but to all customers of ANZ taking a loan of the same kind, to adopt to the language of Kabwand at [50382] this clause requires the interest rate to "conform to the general rates of interest charged to customers of the bank, that is to say there is an objective market standard to be applied at all times". ANZ was not able to exercise an unfettered discretion to charge whatever rate it wished and, as the trial judge said in Kabwand (ibid at [50382]), the borrowers, "may challenge any increase on the basis that it has been fixed otherwise than in conformity with the general movements referred to". It follows that the provisions of the loan agreement as to interest were not void for uncertainty. 24 So far as the 2008 loan agreement is concerned, the rate was set in accordance with the ANZ Home Loan Index less a margin of 0.7%. ANZ could only vary this index and its name. It follows that this ability to vary the rate as a consequence of varying the index (by whatever name) is not void for uncertainty. 25The remaining ability to vary the terms or conditions of the loan applied only to its other terms or conditions. Thus, it could not vary the mode of determining the interest rate, the amount, method of calculation, frequency and payment of fees and charges or the number and amount of repayments, their method of calculation and repayment dates. It is difficult to see how this power of variation could affect any significant term of the agreement, with the possible exception of requiring new or additional security. However, that possible problem is not presently material. At all events, the power to vary other terms is severable. 26It follows that the submission made by Mr Klooster that ANZ had the power to rewrite any and all obligations under each loan agreement is misconceived and that the provisions as to interest are not void for uncertainty. Even if they were, they are plainly severable, which would leave the loan agreements enforceable as to the payment of principal and interest and the effects of default. It is not, therefore, necessary to consider the issues raised by the claim for restitution. Contracts Review Act 27It is submitted on behalf of the borrowers that relief can be given under the Act on the basis that the defendants did not understand the documents, that the terms of the loans were not negotiated and that there was a significant inequality of bargaining power between the borrowers and ANZ. The General Conditions provide - "Your Letter of Offer describes the Annual Percentage Rate, Repayments and Credit Fees and Charges that apply to your loan or facility. When you accept the offer of credit from ANZ in your Letter of Offer, you agree to pay the Annual Percentage Rate (interest) on the amount of credit provided by ANZ and to pay the Credit Fees and Charges and to make the Repayments described in the Letter of Offer (but subject to change as described in this booklet and in the Letter of Offer). If you accept the offer of credit made to you, the contract will be made up of: · the terms in the Letter of Offer [ie, the loan agreement]; · the General Conditions in this booklet; and · depending on the type of loan or facility involved, either Specific Conditions (A) or Specific Conditions (B) in this booklet (see the table on page 2)." Clause 19, however, permits ANZ to vary any of the following - "· the dates on and frequency with which interest will be charged or debited, and the method of calculating interest. However, no such change will be made during any fixed interest rate period; · the manner in which interest is to be paid or charged; · the name of any reference rate; · the amount, method of calculation, frequency, manner of payment and number of the repayments, together with the dates on which they are to be paid; · the default rate of interest which applies to the loan or facility if the credit limit is exceeded; and · the minimum amount that can be withdrawn from a continuing credit facility." It is important to note that this clause does not affect the mode of determining the interest rate contained in the loan agreement. In any event, if there were an inconsistency between the General Conditions and the loan agreement the former, being a generic document, would give way to the latter. As to the variation of charges or the imposition of new fees and charges, given that no criteria are specified as to the amounts, they must be such as would be "fair and reasonable". At all events, it would be surprising if variations of fees and charges or the imposition of new fees and charges would leave uncertain such a substantial condition of the contract as to render it void for uncertainty; moreover, they are plainly severable. 28The defence, which contains the claim for relief under the Act, asserts that the borrowers had a poor command of the English language and the wife relied on her husband to advise her of the meaning and effect of the loan agreements and mortgages and to generate sufficient income to service the loans. It asserted that the borrowers did not have the capacity to service the loans. It was claimed that they never saw the Memorandum of Mortgage, although it is not suggested that they did not sign it. Nor, it is pleaded, were they provided with the Consumer Credit Code or the General Terms. It is pleaded that they did not read and did not know the terms of the loan documents or their full effect and that ANZ did not explain the true meaning and effect of the loan agreements. (It is also alleged that the terms of the mortgages, to the extent that they are not void, which allowed for the charging of variable interest, reserving to the plaintiff the right to charge whatever interest rate it deemed appropriate was manifestly unfair to the defendants, in that their liability under the loan agreements was at the "sole and unfit discretion of the plaintiff". As is obvious from what I have already said, this allegation proceeds upon a mistaken construction.) 29It is clear that neither of the borrowers is a volunteer. The 2007 loan agreement was used to repay their liability to NAB and the 2008 loan agreement was used to renovate their home and, of course, to improve its value. No facts, matters or things are pleaded which suggest that ANZ was or should have been on notice that the borrowers' position was such so as to give rise to an obligation to explain the true meaning and effect of the loan agreements or the mortgages. Nor is there any pleading that suggests that the omission of the borrowers to obtain and read the material documents arose from anything done or omitted to be done by ANZ as distinct from a decision by the borrowers not to bother to do so. So far as the income-generating capacity of the borrowers is concerned, no facts, matters or things are alleged which should have alerted ANZ to a risk, such as to give rise to an obligation to consider this question. Mr Fink does not suggest that, at the time the 2007 and 2008 loan agreements were entered into, he did not have the financial capacity to service them. The mere fact that borrowers have a poor command of the English language cannot be a ground for granting relief under the Act unless it can be shown that, in some way, that prevented them from obtaining or understanding the necessary information, an allegation which is not pleaded. It may be that the defence might be amended to deal with these issues but, in its present form, the pleading does not raise any matter which could qualify the right of ANZ to the relief it presently seeks. 30The borrowers relied on affidavits made by each of them. Mr Fink deposed that ANZ "gave us very little information and no one advised us of the seriousness of taking out such a loan". However, nowhere in his affidavit does he suggest that he or his wife was in fact unaware of the seriousness of taking out the loans, in particular he does not suggest and, indeed, its inconsistent with the thrust of the affidavit, that he was not aware that he would have to repay the loans, that they were subject to the requirement to pay interest and how it was calculated, the amounts of the payments, the term of the loans, that repayment was secured by first mortgage over their home which ANZ was entitled to sell in the event of default. In the result, no relevant matter is identified as being something which the borrowers did not understand. Nor was it suggested that, at the time the loan was transacted, the borrowers might not have been able to service it or that, in any way, repayment of NAB or expenditure on the borrowers' home was ill-advised. 31It is submitted that, since ANZ "insisted" (in 2010) that the borrowers sell their major source of income and, accordingly, lost the ability to repay the loans, the only way to repay the moneys was to improve the property and sell it. The negotiations as to the sale of the borrowers' business was undertaken, as Mr Fink says in his affidavit, "we needed more money to continue building" and (unsurprisingly) ANZ required an additional mortgage over the assets and undertaking of the business. Mr Fink said that he did not wish to do so but "felt under enormous pressure and needed the money desperately to continue". Of course, this reason might be true but it had nothing to do with ANZ. The assertion by Mr Fink in his affidavit that ANZ pressured him to sign the document giving the bank further security over his stock and assets, said to be demonstrated by an email from ANZ of 29 March 2010, entirely misstates its effect. That the documents should be signed was plainly a necessary prerequisite to advancing the funds. In no sense could it be regarded as inappropriate pressure for a lender to impose such a requirement. There is no suggestion that ANZ placed the borrowers under pressure, or under any relevant pressure, to obtain the loan. 32It may be, as appears from Mr Fink's affidavit, that he did not attempt to negotiate the terms of the mortgage. It is not suggested that there was anything done by ANZ that prevented his entering into a negotiation; it is clear that the reason was his own personal need for funds. Even if (which is not alleged) the borrowers were under financial pressure, that will not create any material inequality of bargaining power between the parties: May v Brahmbhatt [2013] NSWCA 309. Nor is there any unfairness or injustice inherent in a refusal - even if there were one - to negotiate. Lenders are no more obliged to bargain than any other participant in the marketplace. 33It also is alleged that there was a significant inequality of bargaining power between the borrowers and ANZ. There is no evidence for this except such inequality as is inherent in the circumstance in which a borrower is seeking to obtain funds from a lender. Such a transaction is essentially the same as that obtaining between a buyer and a seller. It may be, because of particular circumstances, a seller might be desperate to sell or a buyer desperate to buy but that does not create relevant inequality of bargaining power. Nor is it suggested that any of the terms of the loan (with the exception of those giving rise to the claimed uncertainty, which I have already disposed of) or might be not reasonably necessary for the protection of the legitimate interests of ANZ as distinct from being - as they plainly are - conventional conditions in transactions of this kind: see Australia and New Zealand Banking Group v Karam [2005] NSWCA 344; (2005) 64 NSWLR 149 at [66] ff. 34In West v AGC (Advances) Ltd (1986) 5 NSWLR 610 McHugh JA observed - "If a contract or one of its relevant provisions is neither unfair nor unreasonable so far as the applicant is concerned, it is difficult to see how the existence of inequality in bargaining power or lack of independent advice, for example, can render the contract or a provision of the contract unjust. ... If a defendant has not been engaged in conduct depriving the claimant of a real or informed choice to enter into a contract and the terms of the contract are reasonable as between the parties, I do not see how that contract can be considered unjust simply because it was not in the interest of the claimant to make the contract or because she had no independent advice. ... a contract will not be unjust as against a party unless the contract or one of its provisions is the product of unfair conduct on his part either in the terms which he has imposed or in the means which he has employed to make the contract." 35In Crowe v Commonwealth Bank of Australia [2005] NSWCA 41 Tobias JA (with whom Sheller and Bryson JJA agreed), applying the approach adumbrated by McHugh JA in West, said - "[80] It is obvious that in one sense there was inequality in bargaining power insofar as the Bank made an offer on certain terms which Mrs Crowe could either accept or reject. More relevantly for present purposes is the fact that that inequality in bargaining power was not taken advantage of by the Bank in any relevant sense. The issue raised by Mrs Crowe on the appeal was that there was no degree of equality between herself and the Bank in relation to their respective knowledge and appreciation of the risks associated with entering into the 1994 transaction in terms of [the] ability to service the loan (at least in the short term)." Although, as Spigelman CJ (with whom on this point, as I understand it, Handley and Basten JJA agreed) in Perpetual Trustee Company Limited v Koshaba [2006] NSWCA 41 observed (at [65]), standards may have changed from those applied in West, the reasoning of McHugh JA was nevertheless "instructive" [73]. 36The borrowers, as I understand it, allege that ANZ's conduct in respect of the making of the third business loan in August 2010 and enforcing its obligations prevented the borrowers from performing their obligations under the 2007 and 2008 loan agreements. I do not accept there is any basis for concluding that ANZ, having advanced an additional sum of $750,000 as requested by the borrowers and then seeking to enforce its rights under that agreement, prevented the borrowers from complying with their obligations under the 2007 and 2008 loan agreements. It was a matter for the borrowers whether, to fulfil their obligations in relation to the 2010 advance, they should dispose of the business or any other assets or otherwise seek to refinance. Since the business assets were security for repayment, they envisaged from the very beginning, plainly enough, that they were at risk if the advance was not repaid in accordance with the arrangements. At all events, the allegations in the cross-claim, even if made out, cannot effect ANZ's right to possession based on the 2007 and 2008 loan agreements because all amounts payable under the mortgages are payable without set off or counterclaim pursuant to clause 8.5 of the General Conditions, a term which is not at issue in respect of those agreements, quite apart from the point that, if ANZ is not able to enforce those agreements, this could affect the amount owing under the earlier agreements. Nor can the character of the subsequent agreements make the earlier agreements relevantly unjust. If, for some reason, ANZ is not entitled to enforce the subsequent loan agreements, that cannot affect its right to enforce the earlier loan agreements. 37It was lastly contended for the borrowers that the loan agreements were unjust in that no notice was required to be given prior to taking possession in circumstances where the mortgaged property is the borrowers' primary place of residence, it is a "somewhat isolated location being on an island" and they would need some time to relocate their personal effects. Merely hypothetical problems will, unless most exceptional, not amount to unjustness for the purposes of the Contracts Review Act. The fact is that the procedures which must be undertaken before ANZ can enter into possession would necessarily give the borrowers sufficient time to relocate. At all events, the variation which might be obtained would be to provide for the giving of notice. In fact ANZ gave notice, though whether that notice was appropriate is in controversy (which I discuss below). 38I have mentioned that, against the possibility that the loan agreements and mortgages might be held to be unenforceable for uncertainty as a whole (as distinct from the interest rate clauses), ANZ was granted leave to amend its statement of claim to seek restitution of the principal sums. By its amended defence, the borrowers claim that, in light of alleged breaches by ANZ of the Banking Code of Conduct, the overriding policy imperatives behind the Code would defeat a claim in restitution. The argument under the Code, however, it appears to be confined to the 2010 transaction with ANZ, which is not the subject of the present claim, which is entirely dependent upon defaults under the 2007 and 2008 loan agreements and the claimed set-off does not change this position. Because I have taken the view that the contracts are not unenforceable for uncertainty and, even if the interest rate clauses were unenforceable, they are severable, it is unnecessary for ANZ to rely on a claim in restitution to recover the principal sums. However, it is argued for the borrowers that summary judgment based on default in payment of the principal should nevertheless be refused since the borrowers' case (assuming it to be made out) under the Contracts Review Act, could be such as to justify denying ANZ's right to repayment of the principal sums, although it is conceded that it would be "most unusual" for a defence under the Contracts Review Act to result in a borrower not being liable to repay principal of which he or she has had the benefit. No basis that might justify such an outcome in the present case was proffered. However, in respect of the argument concerning restitution, it was submitted that it might be refused because the lender had breached an "overriding policy imperative" or the borrowers had changed their position. Since these arguments might be made in respect of the case brought under the Contracts Review Act, given the wide character of any relevant unjustness and the breadth of the relief that might be obtained, I should deal with the borrowers' contentions in respect of that case. 39The submissions under the first head rely on alleged breaches of the Banking Code of Conduct, but only in respect of the 2010 transaction. The question is, in substance, whether vindication of the restitutionary claim would, in effect, "make nonsense of the refusal to enforce the contract": Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 519; see also Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221. Whatever might be the position as to the 2010 transaction (and, even there, the matters relied on strike me as falling well short of establishing unenforceability, let alone illegality), this would not provide any basis for refusing ANZ's entitlement to enforce the mortgage in respect of the 2007 and 2008 loan agreements. So far as changing position is concerned, it is submitted that the advances were used (as envisaged) to discharge the borrowers' debt to NAB and to renovate their home. It is submitted that, as ANZ required them to charge the business assets with the 2010 loan, they had no choice but to improve the property and sell it. I do not understand how this was, in any sense a relevant change of position. Spending the advances in this way was a matter entirely for the borrowers and was not brought about by ANZ lending them the funds which they sought: in no relevant sense could the advancing of the borrowed funds have been a detriment to the borrowers. Neither of these matters are capable, to my mind, of justifying relief under the Contracts Review Act which, on the assumption that the borrowers succeeded, would prevent ANZ from enforcing the loan agreements in respect of recovery of the principal sums. The validity of the default notices 40It was not disputed that the borrowers received default notices on or about 20 June 2012 which demanded, in respect of the 2007 loan agreement the sum of $144,853.22 and, in respect of the 2008 loan agreement the sum of $66,308.10. It is also not disputed that each of these demands included the non-payment of principal. It was also agreed that these amounts had not been paid. A question arose during argument whether, if the loan conditions as to interest were void for uncertainty and, therefore the notices demanded interest which, upon this basis, the borrowers were not obliged to pay, whether the notices were valid. This argument does not presently matter because of my conclusion that the conditions as to interest rates were not void. During argument, however, it was submitted by Mr Docker for ANZ that, at all events, there was no obligation to serve a notice of demand, relying on clauses 7.3 and 7.4 of the Mortgage Memorandum which specifically so provides. The Consumer Credit Code did not apply to the 2007 loan agreement and accordingly the requirements as to notice prescribed by it did not apply to that loan. However, the 2008 loan agreement provided that it was regulated by the Code. The provisions in the Mortgage Memorandum excluding the requirement for notice therefore did not apply. It might be worth noting that s 57(2)(b) of the Real Property Act 1900 applies only to the exercise of the power of sale and not to claims for possession: Long Leys Co Pty Ltd v Silkdale Pty Ltd (1991) 5 BPR 11,512 (NSWCA). 41Whether a notice is valid depends on whether it reasonably conveys to the recipient the information which is required to be given and the recipient is not misled: Monas v Perpetual Trustees Victoria Ltd [2011] NSWCA 417; (2011) 80 NSWLR 739 at [39]. It is not essential to the validity of a notice calling up a debt that it correctly states the amount of the debt, a principle that applies to a notice by a mortgagor to the mortgagee which is a condition precedent to the exercise of the sale: Bunbury Foods Pty Ltd v National Bank of Australasia Ltd [1984] HCA 10; (1984) 153 CLR 491 at 503-4. It was pointed out in Clare Morris Pty Ltd v Hunter BNZ Finance Ltd (1988) 4 BPR 9,609; BC8802005 by Waddell CJ in Eq, citing Campbell v Commercial Banking Co of Sydney (1879) 2 LR (NSW) 375 at 385, that a notice of default under a mortgage given pursuant to the Real Property Act was not invalid because more than was due was demanded and the mortgagee was still obliged to tender what was actually due "unless there (was) at the same time refusal to receive less" and that such refusal might "be implied from the circumstances, and that an excessive and wrongful demand may be one of the circumstances". Given that ANZ does not accept that the conditions of the loan agreements concerning interest were void, I think it should be inferred that it would not have accepted any tender of less than the demanded sums. In that event the notices were invalid if, contrary to my conclusion on the point, the interest rate conditions were void. Of course, as the terms of the contract make clear, it is the fact of default and not the failure to comply with a demand which renders the whole of the outstanding principal and unpaid interest due. Conclusion 42No matter pleaded by the borrowers or referred to in their affidavits could disentitle ANZ from enforcing the loan agreements in respect of the obligation to repay the principal sums lent under the 2007 and 2008 loan agreements. The borrowers' resistance to ANZ exercising its rights under the mortgages in this respect is therefore futile and doomed to fail. Accordingly, I make the following orders - (i)judgment for the plaintiff for possession of the land in Certificates of Title Folio Identifiers 1/858763 and 2/858763; (ii)the plaintiff has leave to issue a Writ of Possession forthwith in respect of the land referred to in Order (i); (iii)in respect of costs, the parties are to provide written submissions by 14 February 2014; (iv)the action and cross-action are to be listed in the next list before the Registrar for directions; (v)liberty to apply on three days' notice.