King Mortgages v Satchithanantham; Cash King v Satchithanantham

Supreme Court of NSW|2006-12-08|Before: Bell J

CITATION : King Mortgages v Satchithanantham; Cash King v Satchithanantham [2006] NSWSC 1303

HEARING DATE(S) : 1/8/06, 2/8/06, 3/8/06, 7/8/06, 8/8/06, 9/8/06, 10/8/06, 11/8/06

CATCHWORDS : Mortgages over family home - application of principles in Yerkey v Jones to a case outside that of a guarantee - Contracts Review Act 1980 - whether loan agreement and mortgage unjust - asset lending - unfair pressure by lender

Collins v Parker (unreported) 11 May 1984 Commercial Bank of Australia Limited v Amadio (1982-1983) 151 CLR 447 Elkofairi v Permanent Trustee Co [2002] NSWCA 413 Ellison v Vukicevic (1986) 7 NSWLR 104 Esanda Finance Corporation Ltd v Tong (1996-1997) 41 NSWLLR 482 Garcia v National Australia Bank [1998] HCA 48; 194 CLR 395 CASES CITED : Guardian Mortgages v Miller [2004] NSWSC 1236 Johnson v Buttress (1936) 56 CLR 113 Perpetual Trustee Company Limited v Albert and Rose Khoshaba [2006] NSWCA 41 Takemura v National Australia Bank Ltd [2003] NSWSC 339 Toscano v Holland Securities Pty Ltd (1985) 1 NSWLR 145 Yerkey v Jones (1939) 63 CLR 649 Zanzoul v Westpac Banking Corporation (1995) NSW Conv R 55-749.

King Mortgages Pty Limited (ACN 62 105 890 971) (Plaintiff) PARTIES : Hemalathasothy Ranjini Satchithanantham (Defendant) Cash King Pty Limited (ACN 191 086 718 407) (Plaintiff) Hemalathasothy Ranjini Satchithanantham (Defendant)

COUNSEL : M W Young (Plaintiff) A D Crossland (Defendant)

SOLICITORS : WKA Legal Pty Ltd Jackson Smith Lawyers (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

King Mortgages Pty Limited (ACN 62 105 890 971) v Hemalathasothy Ranjini Satchithanantham Cash King Pty Limited (ACN 191 086 718 407) v Hemalathasothy Ranjini Satchithanantham

JUDGMENT 1 BELL J: In each of these proceedings the plaintiff claims an order for possession of land pursuant to a mortgage, the security in each case being the property described in Certificate of Title Folio Identifier 2/181628, known as 76 Houison Street, Westmead (the Westmead property). The defendant, Hemalathasothy Ranjini Satchithanantham (Mrs Satchithanantham), cross-claims against the plaintiff in each of the proceedings, seeking orders setting aside the mortgage and loan contract on equitable grounds and under the Contracts Review Act 1980 (the CRA). 2 King Mortgages Pty Limited (King Mortgages) and Cash King Pty Limited (Cash King) have common directors, Daniel Swart and his wife, Janette Swart. The facts giving rise to the issues raised by the cross-claims arise out of a common set of circumstances and the two proceedings were heard together with the evidence in one being received as evidence in the other. 3 Mrs Satchithanantham's husband, Thambiappah Satchithanantham, was joined to each of the proceedings as the second defendant on his application. At the commencement of the hearing Mr Krishna appeared for him in the King Mortgages proceeding and Mr Patel announced his appearance on his behalf in the Cash King proceeding. Mr Patel explained that Mr Satchithanantham had sought to be joined to each proceeding at a time when his wife was unrepresented. No relief was claimed in either proceeding against him and, since his wife was now legally represented, it was his desire to have the proceedings against him discontinued. The plaintiff in each proceeding consented to this course, subject to costs being reserved. Orders were made in these terms and the hearing proceeded with Mrs Satchithanantham as the sole defendant and the sole cross-claimant.

4 The negotiations that led to Mrs Satchithanantham mortgaging her home to King Mortgages and Cash King were conducted between Mr Satchithanantham and Louis Swart. Louis Swart, who is the brother of Daniel Swart, was employed by Cash King and he also did work on behalf of King Mortgages. Daniel and Louis Swart dealt with the public using business names that included Quality Brokers. Applications for finance were directed by Quality Brokers to King Mortgages and/or Cash King. The offices of all three entities were located in North Parramatta. 5 Prior to entering into the subject transactions Mrs Satchithanantham received advice from Mel Ciampa, a licensed conveyancer and from Janet Stuart-Watt, a chartered accountant. 6 King Mortgages and Cash King had a business relationship with Mel Ciampa. Mr Ciampa was licensed as a conveyancer under the Conveyancers Licensing Act 2003. As such he was able to carry out legal work, including giving advice generally in relation to mortgages, provided the amount secured by the mortgage did not exceed $7,000,000. It was common for King Mortgages and Cash King to refer prospective borrowers to Mr Ciampa for him to provide them with legal advice relating to the proposed loan and security transaction. He received two or three such referrals per week. Mr Ciampa submitted monthly invoices to King Mortgages/Cash King claiming a standard fee in respect of these referrals. The fee was deducted by King Mortgages/Cash King from the funds advanced on settlement.

7 Janet Stuart-Watt rented office space in the North Rocks premises owned by Mel Ciampa. It was common for her to be asked to provide financial advice to clients of King Mortgages and/or Cash King. She submitted an invoice to King Mortgages/Cash King, as the case may be, to cover her fees for the provision of the advice in these cases. This, too, was deducted from the balance on settlement.

Credit issues 8 Daniel Swart, Louis Swart, Mel Ciampa and Janet Stuart-Watt gave evidence in the plaintiffs' case. Mrs and Mr Satchithanantham gave evidence in her case. For the reasons that I explain below, I considered that there were unsatisfactory features about the evidence of each of the witnesses save for Janet Stuart-Watt. I approached the evidence of the other witnesses with caution and I have endeavoured to resolve factual issues by reference to the contemporaneous documents and to the inherent logic of events. 9 Both Mrs and Mr Satchithanantham gave evidence in a fashion that was at times histrionic. I was satisfied that each of them exaggerated the extent to which Mrs Satchithanantham is unfamiliar with English. I was also satisfied that each of them exaggerated their accounts of the extent to which Mrs Satchithanantham was and remains in fear of Mr Satchithanantham. Mrs Satchithanantham's evidence on this topic was in certain respects incredible. Mr Satchithanantham was anxious to advance his wife's case; he was quick to volunteer that she had known nothing of the subject transactions. He was cross-examined about rent receipts for three properties that were paid into a National Australia Bank account that is operated in their joint names. I deal with this evidence in some detail later in these reasons. For present purposes I record that I considered that Mr Satchithanantham was less than frank in his account of these matters.

10 Daniel Swart did not impress as a witness whose evidence could be relied upon. He was inclined to adopt the role of advocate. He volunteered that he had considered a second valuation on the Westmead property to be more reliable than the first because the second valuer had noted that there were two houses on the property. The first valuer had not failed to note that fact. Mr Swart was careful to check the accuracy of valuation reports for his own purposes. His glib account of his reason for preferring the second valuation was disingenuous. Daniel Swart and Louis Swart each gave evidence of representations that were said to have been made by Mr Satchithanantham concerning the sum that was required to discharge a debt that had led to the lodgement of a caveat on the title of the Westmead property (the Maybrene caveat). The matter is not without significance to the cross-claims in each proceeding and I deal with it in detail below. For the present I record that I considered neither Daniel Swart nor Louis Swart gave a frank account of his knowledge of this topic. 11 I approach the evidence of Mel Ciampa with some circumspection. It seemed to me that he was reluctant to acknowledge the extent of his professional relationship with King Mortgages/Cash King. He was careless in completing documents that, wrongly, described him as a solicitor. 12 Janet Stuart-Watt was a witness who presented as considered and reliable. To the extent that her evidence differed from that of Mr or Mrs Satchithanantham I preferred her account.

13 Mrs Satchithanantham was born in Sri Lanka on 14 December 1954. After completing her high schooling she attended university in Colombo, where she obtained a Bachelor of Arts degree with honours in philosophy. After graduating she taught subjects, including the theory of knowledge, contemporary philosophy and contemporary religion at university in Colombo. Her first language is Tamil and she taught in that language. While at university she met her husband, who was then studying electrical engineering. 14 Following their marriage the Satchithananthams moved to Singapore and Mr Satchithanantham obtained employment as an electrical engineer. Mrs Satchithanantham did not work. In 1984 the couple moved to Brunei. They remained there for three years. During this time Mrs Satchithanantham taught English to young children at a privately owned school. This was the only time during her marriage that Mrs Satchithanantham has been employed. 15 In 1987 Mr and Mrs Satchithanantham immigrated to Australia. On 14 August 1989 their son, Bramooth, was born. Bramooth is autistic. His disability is severe and he is not able to speak. He requires fulltime care. 16 Prior to the birth of Bramooth, Mrs Satchithanantham completed a clerical course with an organisation named Itech. This was a three-month skills course for migrants and included training in vocational and computer skills, basic English, typing and the skills needed to prepare a resume. Mr Satchithanantham obtained employment in Australia as an electrical engineer. 17 In 1992 Mr Satchithanantham left Australia looking for business opportunities. He went to Singapore and then to Brunei. Over a two-year period he supported his wife and child, sending regular payments to them. He returned to Australia every six months to see them.

18 Between 1994 and 1997 the pattern of the Satchithanantham's married life changed. In these years Mr Satchithanantham resided in Australia but travelled regularly to Brunei on business. Mrs Satchithanantham had no knowledge of his business. She had been raised in a traditional Sri Lankan family, in which emphasis had been placed on respect for her parents and, later, her husband. She says that in her culture the husband plays the dominant role and the wife is expected to follow his commands and that women who show disrespect to their husbands are ostracised. She would be ashamed if her marriage was dissolved. Mrs Satchithanantham was not cross-examined about these matters of cultural background. 19 Around 1997 Mr Satchithanantham told Mrs Satchithanantham that he was having business problems and that he could no longer support her and their son. Mrs Satchithanantham applied for assistance from Centrelink. Since that time she has been receiving benefits from Centrelink, which include a carer's allowance. Her present monthly benefit is $1,700.00. 20 Mr and Mrs Satchithanantham both reside in the Westmead property. The nature of their relationship and their financial arrangements in February and March 2004 is a matter to which it will be necessary to return.

21 The Westmead property was acquired in 1992. It was registered in Mr and Mrs Satchithanantham's joint names. Mr Satchithanantham was declared bankrupt in February 2002. He was discharged from bankruptcy in June or July 2005. Around the time of his bankruptcy his interest in the Westmead property was transferred to Mrs Satchithanantham. The circumstances in which this occurred were not explained in the evidence. Mrs Satchithanantham said that she did not recall signing any documents in connection with the transfer of her husband's interest in the property. She did not pay any money by way of consideration for obtaining this interest.

The King Mortgages transaction 22 On 2 February 2004 Mr Satchithanantham approached Quality Brokers because he needed finance to set up a retail business in Wentworthville. He had arranged to import a quantity of stock from Singapore. He needed funds to pay the rent on the shop premises and to secure the release of the stock. 23 Mr Satchithanantham met Daniel Swart on his initial visit to the Parramatta offices of Quality Brokers/King Mortgages/Cash King. He was introduced by Daniel Swart to his brother Louis and his subsequent dealings, in relation to the King Mortgages loan and the Cash King loan, were with Louis Swart. Mr Satchithanantham explained to Louis Swart that he urgently needed funds to pay for the release of stock for his business. He offered his wife's property (the Westmead property) to secure any loan. 24 King Mortgages conducted an online title search of the Westmead property on 2 February. This revealed that the property was subject to a registered first mortgage in favour of the National Australia Bank (the NAB) and that a caveat had been lodged by Maybrene Properties Pty Limited (Maybrene). Mr Satchithanantham said that there was an amount of approximately $705,000 owing on the loan secured by the first mortgage to the NAB. There is an issue concerning what he said about the debt that was the subject of the Maybrene caveat.

25 Louis Swart told Mr Satchithanantham that any loan would have to be made to Mrs Satchithanantham because she was the registered proprietor of the proposed security and he explained that she would need to obtain independent legal advice before proceeding with the loan. Mr Satchithanantham nominated Christine Karthikeyan as a solicitor whom they would consult in this respect. 26 Louis Swart discussed various proposals for a loan with Mr Satchithanantham. He explained that loans secured by first mortgage carried a low interest rate but that it would take some weeks before the funds were advanced. Loans secured by second or third mortgage were likely to carry interest at a higher rate, say, 14.5 to 17 percent per annum. These, too, would take several weeks to settle. Louis Swart explained that in cases of urgency where a borrower needed funds released within 24 or 48 hours, a "caveat loan" could be obtained. He explained that caveat loans had high establishment fees and high interest. He discussed with Mr Satchithanantham the possibility of re-financing a caveat loan after a short period. 27 Mel Ciampa was running his wife's mortgage broking business along with his conveyancing business at the time of these events. Shortly before Mr Satchithanantham approached Quality Brokers Mr Ciampa had a telephone discussion with Louis Swart in which he said that he had a contact at Macquarie Bank and that he may be in a position to arrange long term re-finance for clients of King Mortgages/Cash King. 28 I am satisfied that during his initial discussion with Mr Satchithanantham Louis Swart said that he was able to refer him to brokers who could assist with re-financing the Westmead property and he nominated Mel Ciampa as such a person. Louis Swart also gave Mr Satchithanantham a list of solicitors/conveyancers who would be able to give his wife independent legal advice. Mr Ciampa's name was the first on this list. It is likely that he told Mr Satchithanantham that Mel Ciampa was able to see clients of King Mortgages/Cash King on short notice. 29 Mr Satchithanantham told Louis Swart that he would take a caveat loan. Louis Swart said that the loan would be subject to interest at eight percent per month. Mr Satchithanantham said this was too high and there was discussion about a loan for three months at a rate of seven or seven and a half percent per month.

30 At the end of his initial meeting with Louis Swart Mr Satchithanantham left the offices of Quality Brokers with four differently structured loan offers for an advance of not more than $75,000. 31 Mr Satchithanantham decided that the offer that his wife would accept was for an advance of $75,000, which after a number of deductions would yield the sum of $64,615 on settlement. It was a loan for three months with interest at the rate of seven and a half percent per month (the higher interest rate) reducing to four percent per month on payment within seven days of the due date. The fees payable to King Mortgages included an establishment fee of $2,625; a "fast release of funds" risk premium of $2,625; a fee of $880 for Quality Brokers' costs of preparing the loan documentation; a fee of $440 for valuation of the Westmead property and fees for the provision of independent legal and accounting advice. The first month's interest, (a sum of $3,000) was payable in advance. Acceptance of the offer gave King Mortgages a caveatable interest in the Westmead property for the recovery of its costs in the event that the loan did not proceed. 32 Mrs Satchithanantham signed the letter of offer and it was sent by facsimile to Quality Brokers' office at 9:16 am on 6 February. At 9:43 am that morning Mr Satchithanantham sent a further document to Quality Brokers. It was a pro forma for use by Quality Brokers/King Mortgages/Cash King described as an application form for corporate borrowers, which contained handwritten particulars of Mrs Satchithanantham's financial position. This document contained the assertion that Mrs Satchithanantham was employed as the Manager of Brightstar Properties & Holdings and that she had been thus employed since 13 August 2003. No figure was given for her annual gross income. The purpose of the loan was described in the corporate borrowers application as: "To set up & commence business at Wentworthville. Stock paid insured value for $500,000." Mrs Satchithanantham's assets were listed as comprising a home valued at $1,300,000; a 1987 Mercedes and a 1987 Jaguar valued together at $25,000; furniture valued at $50,000 and stock at emporium valued at $500,000. Her liabilities were recorded as $680,000 owing on a first mortgage and $42,000 owing on a caveat. In summary, the assets & liabilities statement showed a total of $1,875,000 of assets against total liabilities of $722,000. 33 Mrs Satchithanantham did not complete the corporate borrowers application. Mr Satchithanantham filled out the application and sent it to Quality Brokers. All negotiations for the loan had been conducted with Mr Satchithanantham who had made it clear that he was seeking funds for his business and that he was in a position to offer mortgage security over property that was owned by his wife. 34 Daniel and Louis Swart each gave evidence of having been introduced to Mrs Satchithanantham on an occasion when she called to their office with her husband. Both Mrs and Mr Satchithanantham denied that she had been present on any occasion when he visited the Quality Brokers office. 35 Daniel Swart said that he had been introduced to Mrs Satchithanantham when she and Mr Satchithanantham came to pick up the mortgage documents. He did not recall any conversation with Mrs Satchithanantham concerning the proposed transaction. He said that he had spoken with her about jackfruit curry, a dish he recalled from his childhood in South Africa. In the course of cross-examination concerning the meeting with Mrs Satchithanantham counsel put to him that "none of what you described happened" (T.143.57-58). Counsel did not, in terms, put to Mr Swart that he had not met Mrs Satchithanantham at his offices on any occasion. Subsequently counsel sought to have Daniel Swart recalled in order to cross-examine on topics that included that he had not met Mrs Satchithanantham on any occasion (T 262). Leave was granted. In the event, through oversight, counsel did not put to the witness that he had not met Mrs Satchithanantham at his office. 36 Louis Swart said he had met Mrs Satchithanantham on 6 February and on that occasion he had taken her through the epitome of mortgage noting the terms of the proposed loan. 37 The evidence of Daniel and Louis Swart on the topic of the circumstances in which Mrs Satchithanantham attended the Quality Brokers' offices was inconsistent. He said he had met the two of them at the reception desk and that he had introduced Mrs Satchithanantham to Louis Swart. They had gone into one of the offices and he had been present for a short time before leaving the Satchithananthams with Louis. Louis Swart said that he was introduced by Mr Satchithanantham to Mrs Satchithanantham and that no other person was present. He put the meeting with Mrs Satchithanantham as taking place on 6 February. On Daniel Swart's account, the meeting would appear to have taken place on 9 February, since he said they had called to collect the mortgage documents. Louis Swart said that they, Quality Brokers, had sent the mortgage documents to Ciampa and Associates.

38 Louis Swart said that he had not sought to give any detailed explanation of the loan to Mrs Satchithanantham: he preferred her to receive independent legal advice so there could be no later suggestion that any feature of the transaction had been misrepresented by King Mortgages. There was no reason for Mrs Satchithanantham to accompany her husband on the occasions when he attended the Quality Brokers offices to arrange the loan. The likelihood is that she did not meet any representative of King Mortgages or Cash King in connection with either transaction. In the event that she was introduced to Daniel Swart on the morning that Mr Satchithanantham took her to Ciampa and Associates, I am satisfied that there was no discussion touching on the transaction or on her capacity to service the obligations that she was to undertake under the loan.

39 Around midday on 9 February Mr and Mrs Satchithanantham attended Mel Ciampa's office and spoke with him concerning the proposed advance from King Mortgages of $75,000. Mrs Satchithanantham's evidence is that she accompanied her husband to see Mr Ciampa because he told her, "We are going to refinance the house by taking out another loan and securing the loan with our house". She said that she asked why this was necessary and that he replied saying, "you mind your own business. You must do this, I need the money". She says that she was in fear of her husband. I will return to this evidence.

40 Mrs Satchithanantham said in her affidavit that was sworn on 27 July 2006 (the July affidavit), that Mr Ciampa (whom she described as the male officer) informed her that her husband had applied for a loan and asked whether she agreed to signing for the loan and putting her house as security for it. She said that she did not fully understand his question and that she had looked at her husband to get an indication from him as to what her reply should be and that he had said to her, "you sign this, it is for the loan, say yes and sign". She said that she signed a document and that after this Mr Ciampa asked her for her driver's licence and that she had produced it. After this, Mr Ciampa again told her that her husband had applied for a loan and asked whether she consented and that after confirming with her husband she had again said "yes". Mr Ciampa had put a number of documents before her that she had signed. Mr Ciampa and her husband were talking in English and she said that she had not followed what they were saying. 41 Mr Ciampa took no steps to speak with Mrs Satchithanantham in the absence of her husband. Mr Ciampa said that he had read through the mortgage and the loan documents and that he had explained the contents of each document, pausing from time to time to ask Mrs Satchithanantham, "did you understand that?" and that on these occasions she had responded, "yes I do" or words to that effect (T 178.53-56). Mr Ciampa had no recall of any discussion beyond that he had taken Mrs Satchithanantham through the documents in the way he described. He said that after explaining the documents to her he had witnessed her signing them. In cross-examination Mr Ciampa acknowledged that during the interview the discussion had been principally between himself and Mr Satchithanantham and that "in truth she didn't speak a great deal, no" (T 189.54).

42 Mr Ciampa signed a conveyancer's certificate dated 9 February 2004, stating, inter alia, that he attended on Mrs Satchithanantham from 12:30 pm to 1:15 pm on 9 February and that he had done the following things: · I advised the borrower before any of the documents were signed. · I am not acting for the lender in relation to the documents. · I witnessed execution of the documents by the borrower. CONVEYANCERS CERTIFICATE I, Mel Ciampa, being a principal of the above firm, certify that the information contained in this certificate is true and correct. I have examined the documents listed above and I am satisfied that the borrower(s) is/are the borrower(s) identified in (2) above. All document numbers, issue, if shown, and expiry dates have been recorded. 43 Mr Ciampa said that Mr and Mrs Satchithanantham signed a number of ancillary documents the following day. A number of documents, which Mrs Satchithanantham signed, are dated 10 February. The question of why Mr Ciampa would obtain the execution of the mortgage and consent to the lodgement of caveat and issue his certificate and then arrange for the borrowers to return on a second occasion in order to witness their signatures to the related documents was not explored. Neither Mr nor Mrs Satchithanantham gave any account of returning the day after signing the mortgage to sign the ancillary documents. 44 Mrs Satchithanantham signed a document described as a declaration by borrower. This document is dated 10 February and records that she had received independent legal advice regarding the loan and security documents in favour of King Mortgages and that after receiving that advice she freely and voluntarily signed the following documents: · Mortgage · Memorandum Q860000 · Declaration by borrower (schedule 1 to the Solicitors' Rules) · Acknowledgment of legal advice by proposed borrower (schedule 4 Part 1 to the Solicitors' Rules) · Direction, authority to complete & undertaking · Consumer Credit Code declaration · Declaration regarding security properties. 45 Mr Ciampa was careless in the completion of the ancillary documents. These contained more than one reference to him as a solicitor. I am satisfied that any explanation Mel Ciampa gave of the documents was cursory. On his account it did not extend beyond reading through the documents, paraphrasing in some cases, and saying, "do you understand that?" and moving on when Mrs Satchithanantham nodded her assent. Mr Ciampa took no steps to explain to Mrs Satchithanantham that she stood at risk of losing her home in the event repayments were not made in accordance with the agreement.

46 English is not Mrs Satchithanantham's first language. However, I am satisfied that she understood the discussion that took place between her husband and Mel Ciampa. I am also satisfied that Mrs Satchithanantham is able to read English. On more than one occasion in the course of her evidence she appeared to read parts of her first affidavit. One of the documents that Mrs Satchithanantham signed was an ability to repay loan declaration. This document contained the assertion that she was earning $104,000 per annum. The likelihood is that Mr Satchithanantham supplied the figure of $104,000 as his wife's salary.

47 After signing the mortgage and loan documents for the proposed advance of $75,000 Mr and Mrs Satchithanantham went to see Ms Stuart-Watt. 48 Ms Stuart-Watt did not recall the terms of her initial interview with Mr and Mrs Satchithanantham. She said that she would have taken them through the schedule, which recorded the principal, the interest rate, and the term of the loan and checked that they understood this was the case. She said that she would have then inquired about the income and expenses, explaining that she needed to understand their current financial position. I accept that Ms Stuart-Watt approached the interview with the Satchithananthams in this way. She remembered that Mr Satchithanantham had been the one to answer most of her questions. She recalled that he had told her that they received rent from some properties and that she had asked the amount of the rent and that she had asked about other sources of income. 49 Mrs Satchithanantham did not agree that her husband told Ms Stuart-Watt that they received rental income. Annexed to Mrs Satchithanantham's affidavit, sworn 27 July 2006, are statements of a Commonwealth Bank Streamline account operated in the name of Thambiappah and Hemalathasothy Satchithanantham at the Westmead branch. These record payments, including: 16 January 2004 netbank deposit "rent Toongabbie" $1,040 29 January 2004 netbank deposit "rent Toongabbie" $780 12 March 2004 netbank deposit "rent 181a Cornelia" $1,040 21 April 2004 netbank deposit "rent Toongabbie" $1,000

Mrs Satchithanantham said she had no knowledge of these deposits. 50 Mr Satchithanantham could not remember telling Ms Stuart-Watt that he and his wife received rental income from properties. He thought that he would not have said such a thing because they were not receiving rent at the time. He said that the funds deposited to the joint bank account and described as "rent" belonged to his sister, Sivamani Thambiappah, and to a man named Satish Menon. Mr Satchithanantham said that he was managing three properties, which were owned by his sister and Mr Menon. Mr Satchithanantham received rent on their behalf and applied it in payment of the mortgages on each of the properties. He said that Mr Menon is a person to whom he owed money and who trusted him to look after his property interests in New South Wales. At one point Mr Satchithanantham gave an account that the rent receipts from Mr Menon's properties were insufficient to meet the mortgage repayments and that he had made up the deficiency from his own pocket. He claimed to have borrowed money from friends in order to meet Mr Menon's obligations in this respect. Mr Satchithanantham's evidence concerning the rent receipts struck me as being less than frank. 51 I am satisfied that Mr Satchithanantham told Ms Stuart-Watt that he and his wife received rental income from properties and that this was a source from which the loan repayments could be made.

52 Mr Satchithanantham said that he had told Ms Stuart-Watt that his wife was receiving Centrelink benefits and that he had no income. Ms Stuart-Watt did not say that she had been informed that Mrs Satchithanantham was a recipient of social security benefits. It is likely that neither Mrs nor Mr Satchithanantham said anything on this topic during their interview with Ms Stuart-Watt. Mr Satchithanantham was responsible for the representation that his wife was earning $104,000 in the Ability to Repay Loan declaration. It is true that this document was not shown to Ms Stuart-Watt, but to my mind it is clear that Mr Satchithanantham's intention was to promote his wife as a woman in command of a sizeable income. Mr Satchithanantham said that he had represented to Ms Stuart-Watt that he expected the business would have returns of the order of $10,000 or $15,000 per month. Mrs Satchithanantham was present and I am satisfied she understood the representations that were being made to Ms Stuart-Watt in this respect. 53 Ms Stuart-Watt was not shown any documents relating to the Satchithananthams' financial circumstances. She relied on the things that Mr Satchithanantham told her about their position. Mrs Satchithanantham was applying for a loan of $75,000 for a term of six months at interest of 90 per cent per annum on the security of the family home. The provisions of the mortgage were weighted in favour of the lender in a number of respects. One might expect persons in the market for a loan on terms such as these to be in parlous financial circumstances. Ms Stuart-Watt accepted the figures given by Mr Satchithanantham as to income and expenditure without further exploration. She did not recall whether Mrs Satchithanantham had said she was comfortable with her ability to repay the loan or merely that she had not signified her dissent. Ms Stuart-Watt certified that, on the information supplied by Mrs Satchithanantham, in her opinion Mrs Satchithanantham had the ability to meet her obligations under the loan without substantial hardship. 54 Ms Stuart-Watt was accustomed to receiving two or three referrals per week from King Mortgages/Cash King for the provision of a certificate as to a prospective borrower's ability to repay a loan. The certificate that she issued on this occasion was a pro forma that had been supplied to her by King Mortgages/Cash King, albeit she would on occasions vary the terms of the certificate. 55 King Mortgages made an online inquiry through Baycorp Advantage Business Information Services Ltd to ascertain the commercial risks associated with lending to Mrs Satchithanantham. The search revealed that Mrs Satchithanantham was a director of three companies; Global Investment & Securities (Australia) P/L; Jayaputra Properties & Holdings (Australia) P/L and Bylander International Consortium (Australia) P/L. She was recorded as being the proprietor of three registered business names; Hema's Music & Movie World; Satchi & Satchi Australia and Brightstar Properties & Holdings. The search showed that Mrs Satchithanantham had no record of defaulting on credit contracts. Nonetheless it assessed Mrs Satchithanantham as being a risk of -66.17 worse than the Baycorp average. Daniel Swart said that Mrs Satchithanantham's relatively poor rating did not trouble him because Baycorp's report is based on the number of inquiries generated by an individual. Daniel Swart said that the report confirmed that Mrs Satchithanantham appeared to be a businesswoman with an interest in a number of companies/businesses. 56 At 11:21 am on 9 February King Mortgages received a valuation report from United Valuers, which valued the Westmead property at $750,000. It was King Mortgages lending policy that the total value of any loans secured against real estate not exceed 80 percent of the value of the property (the loan to value ratio or LVR). The proposed loan of $75,000 to Mrs Satchithanantham exceeded King Mortgages' LVR. Be that as it may, sometime before 3:30pm on 9 February the mortgage documents, which had earlier been signed by Mrs Satchithanantham, were sent to the city by courier with instructions that the mortgage was to be stamped at the Office of State Revenue and the caveat lodged at the Land Titles Office.

57 At 3:52 pm on 9 February King Mortgages prepared a letter addressed to Mrs Satchithanantham explaining that the loan offer that she had accepted could not proceed because the LVR was over 100 per cent. 58 King Mortgages obtained a further valuation of the Westmead property. This was carried out by RPG Property Services who valued the property at $1,000,000. This valuation was received on 11 February. 59 On 12 February Mrs Satchithanantham signed a further acceptance of loan offer from King Mortgages. This was for a loan of $100,000, which after payment of an amount owing to Maybrene and a number of other deductions, would leave an amount of $51,714.70 on settlement. The wheels were already in motion in relation to this loan offer before King Mortgages received the second valuation. Daniel Swart explained King Mortgages willingness to make a further, higher, offer to Mrs Satchithanantham on the basis that in his experience borrowers have a realistic estimate of the value of their property. He was prepared to accept that the Westmead property was worth more than the $750,000 valuation given by United Valuers. 60 The offer that Mrs Satchithanantham accepted on 6 February was of an advance of $75,000, which after deductions would yield $64,615 on settlement. No provision was made for the discharge of the debt owing to Maybrene. It is clear that King Mortgages would not lend money behind a caveat. How did King Mortgages come to make an offer which made no provision for the discharge of the debt due to Maybrene? Daniel and Louis Swart each gave an account that Ms Satchithanantham had represented that there was a negligible amount owing to Maybrene. Daniel Swart said that he had tried to contact Ian Grey, the principal of Maybrene, but that he had been unable to locate him. It was in these circumstances that, on 2 February, one of the offers made to Mr Satchithanantham was for an advance that did not include a sum to be paid to Maybrene on settlement. 61 Daniel Swart was recalled at the request of Mrs Satchithanantham's counsel and cross-examined on the topic of his knowledge of the amount of the debt owing to Maybrene at the date of the first round of offers. He was shown a letter of offer and the accompanying cheque directions issued on 2 February which made provision for payment to Maybrene of $35,000 on settlement (exhibit 4). His response when confronted with this document was unsatisfactory. He speculated that the document may not have emanated from his office, although he acknowledged that it had the appearance of being a document produced by his office (T. 269.5-12). He changed his evidence, saying that Mr Satchithanantham may have nominated $35,000 as the figure to be paid out to Maybrene. 62 Louis Swart said that, at the time the initial round of offers was made to Mr Satchithanantham, the amount owed to Maybrene was not known and that Mr Satchithanantham had represented the sum to be negligible. This explained why an offer had been made that did not include a payout figure to Maybrene. He was cross-examined on the contents of exhibit 4. His response to being shown the document was unconvincing. He, too, queried its provenance although without conviction (T 279.7). 63 I am satisfied that on 2 February Daniel Swart and Louis Swart knew that the caveat lodged by Maybrene related to a substantial debt. I am also satisfied that neither Daniel or Louis Swart had any intention of advancing funds to Mrs Satchithanantham without the debt to Maybrene being discharged. Notwithstanding this, Quality Brokers, on King Mortgages, behalf made an offer on 6 February to advance $75,000 to Mrs Satchithanantham on the strength of taking a second mortgage security over the Westmead property without making provision for payment of the debt owed to Maybrene. 64 On 9 February Louis Swart told Mr Satchithanantham that the loan which his wife had accepted could not proceed because King Mortgages required that the debt to Maybrene be discharged. In the course of this conversation Louis Swart said that a caveat had been lodged on the title of the Westmead property in order to protect King Mortgages' interest in payment of the expenses it had incurred to date. He put an alternative proposal to Mr Satchithanantham: the principal sum be increased to $100,000 and the debt owed to Maybrene be paid out of the settlement monies. Mr Satchithanantham, who was in desperate need of funds, considered that he had no alternative but to procure his wife's acceptance of the new offer, since there was now a further caveat on the title of the property, which effectively prevented him seeking recourse from any other lender. 65 Mr and Mrs Satchithanantham attended a further interview with Mel Ciampa on 12 February. In the course of this interview Mrs Satchithanantham signed a further acknowledgment of legal advice by proposed borrower stating that she had instructed Mel Ciampa to give her legal advice concerning the loan and security documents. 66 In the acknowledgement Mrs Satchithanantham confirmed that she had received legal advice and understood the consequences of not making her mortgage repayments. She authorised King Mortgages to sell the security property in the event that she was unable to meet her mortgage payments. Mr Ciampa issued a conveyancer's certificate, dated 12 February, certifying that he had advised Mrs Satchithanantham at the conference on that date and that he had witnessed the execution of the mortgage and caveat. 67 The second interview between Mel Ciampa and Mr and Mrs Satchithanantham followed the same pattern as the first. Any explanation of the transaction was cursory. Mr Satchithanantham did most of the talking and Mrs Satchithanantham took no active part in the discussion. The ability to repay loan declaration signed by Mrs Satchithanantham again, wrongly, stated that she was earning a gross income per annum of $104,000. 68 After Mrs Satchithanantham executed the mortgage and loan documents associated with the $100,000 loan she and her husband again went to see Ms Stuart-Watt. This interview followed the pattern of the first interview. Mr Satchithanantham supplied the information about their financial circumstances. Mrs Satchithanantham contributed no information. At this meeting there was discussion of the acquisition of a shelf company, Satchi & Satchi Australia Pty Limited. The discussion concerning the pros and cons of adopting a company structure was between Ms Stuart-Watt and Mr Satchithanantham. The company was incorporated on 13 February and Mrs Satchithanantham was made the sole director and shareholder of it. 69 Mrs Satchithanantham understood the things that her husband told Ms Stuart-Watt at this, second, interview. Ms Stuart-Watt furnished a certificate to King Mortgages, dated 12 February, in these terms: Ms H R Satchithanantham - Loan Application/Interest Repayment Ability I certify that: 1. I am a practising accountant and a member of the Institute of Chartered Accountants in Australia. 2. I am the accountant providing advice to Hemalathasothy Satchithanantham ("the Mortgagor") for a revised loan amount. 3. I understand that the Mortgagor has applied for a loan of $100,000.00 interest payable by monthly instalments of $4,000.00 over six months, at an interest rate of 48% per annum interest only (with a higher default interest rate of 90% per annum). 4. I know the mortgagor's income and expenditure and based on that knowledge and my understanding of the Mortgagor's financial position I am of the opinion that the Mortgagor is able to repay the loan in accordance with its term and can do so without substantial hardship. 5. I am not aware of any factors which may affect the Mortgagor's ability to make repayments or which may cause substantial hardship to the mortgagor to make repayments.

70 The loan of $100,000 was settled on 12 February. The balance of $51,714.70 was paid into a Commonwealth Bank account in the joint names of T & H Satchithanantham. The payment directions acknowledging receipt of the sum were signed by Mr Satchithanantham. 71 The mortgage signed by Mrs Satchithanantham on 12 February (the second mortgage) was subject to identical terms to the mortgage signed on 9 February (the first mortgage), save that the principal sum agreed to be advanced by the mortgagee to the mortgagor and secured by the mortgage was $100,000 and the mortgagor covenanted to pay the mortgagee interest by equal monthly payments on the 12th day of each month (whereas the first mortgage provided for interest payments to be made on the tenth day of each month). 72 King Mortgages lodged a caveat on the title of the Westmead property on 13 February to protect their interest arising out of the $100,000 advance. On receipt of consent from the NAB, King Mortgages arranged for the registration of their mortgage. A junior member of staff attended to this. As a result of inadvertent error the first mortgage was registered instead of the second mortgage, which secured the advance of $100,000..

The Cash King Mortgage 73 On 19 March 2004 Mr Satchithanantham again visited the King Mortgages/Cash King offices. On this occasion he told Louis Swart that he was seeking finance to be secured by mortgage either over a property that belonged to his sister or by way of further mortgage over the Westmead property. As the result of his enquiry an offer was sent by facsimile to Mrs Satchithanantham. She did not accept the initial offer and on 22 March a new offer was sent to her. This offer was accepted. The early repayment penalty clause had been deleted by consent and Mrs Satchithanantham initialled the alterations. This offer was for an advance of $25,000. After deductions, an amount of $19,760 was to be paid on settlement. 74 On 23 March Mr and Mrs Satchithanantham attended a further interview with Mel Ciampa during which Mrs Satchithanantham signed a mortgage securing an advance of $25,000. The principal was repayable in three months. Interest was payable at the rate of 90 per cent per annum, reduced to 48 per cent per annum for payment within seven days of the due date. The first month's interest was payable in advance. Mrs Satchithanantham signed a caveat in favour of Cash King, together with a number of ancillary documents, including an acknowledgement of legal advice by proposed borrower. Again, Mr Ciampa's explanation of the transaction was cursory and the discussion was principally between him and Mr Satchithanantham. 75 By her acknowledgment of legal advice Mrs Satchithanantham recorded that she had received legal advice and understood the consequences of not making her mortgage repayments and that she authorised Cash King to sell the security property in the event she could not meet her repayments. 76 The purpose of the loan was expressed to be: To set up business (fashion shop) at 2/53 Station Street, Wentworthville, Satchi's Singapore Style Emporium (Consumer Credit Code declaration).

The loan repayment ability declaration signed by Mrs Satchithanantham recorded her current gross income as $120,000 per annum. 77 After seeing Mel Ciampa, Mr and Mrs Satchithanantham again attended an interview with Janet Stuart-Watt. Ms Stuart-Watt recalled having some concern about Mrs Satchithanantham's ability to meet the repayments on this further loan. The income and expense figures she had been given on the earlier occasions were merely estimates that were dependent upon the success of the new retail shop. When the Satchithananthams returned on this third occasion Ms Stuart-Watt asked them to bring documents with them relating to their financial position. Mr Satchithanantham produced bank statements and some insurance documents.

78 A new letter of offer and final cheque directions dated 24 March were sent to Mrs Satchithanantham by facsimile on 25 March. These included an additional deduction of $3,697.47 being arrears payable to the NAB, leaving a balance on settlement of $15,809.53. The mortgage was duly registered as a third mortgage on the title of the Westmead property.

The King Mortgages claim 79 The statement of claim by which the proceedings were commenced was filed on 25 August 2004 and recited the second mortgage securing the sum of $100,000. King Mortgages pleaded that the mortgage is subsisting and that Mrs Satchithanantham was in default of payments of instalments and the principal sum and interest. 80 In opening the claim brought by King Mortgages counsel put its case this way (T 13.5-29): There was another mortgage prepared on 12 February for $100,000. For some reason that one wasn't registered and the $75,000 mortgage was registered. But there was under whatever mortgage there was a default and the plaintiff says it is the registered mortgage, albeit the wrong mortgage was registered. The most the defendant can claim is the defendant has got some equitable entitlement to have the right mortgage registered rather than the $75,000. The two mortgages are equally identical except for the mortgage registered refers to $75,000 and the unregistered refers to $100,000. The plaintiff is more than happy to register the $100,000 one instead. The plaintiff says because it is a registered mortgagee it has got the right to possess it (sic). The mere fact that a mortgage for a slightly [lower] sum has been registered in lieu doesn't alleviate that right. Of course your Honour can only grant possession of the property to one of the plaintiffs. Normally that would be King Mortgages, being the second registered mortgagee, but if it was found for some reason perhaps related to the mistake that King Mortgages wasn't entitled to possession then your Honour would award possession to Cash King. 81 Consistently with the way the claim was pleaded in the statement of claim, King Mortgages relied on an affidavit sworn by Daniel Swart on 11 February 2005 which recited that Mrs Satchithanantham was in default under the terms of the second mortgage by her failure to make the payments as set out in paragraph 6. Annexed to Mr Swart's affidavit was a copy of the second mortgage, which was expressed to secure the principal amount of $100,000. 82 Provision is made for the registered mortgagee of land under the Real Property Act 1900 (the RPA) upon default in payment of the principal sum or any part thereof, to bring proceedings in this Court for possession of the land under s 60(c) of the RPA. 83 The only order claimed by King Mortgages is for possession. 84 The initial pleading depended upon proof of default under the terms of the second mortgage. During the course of the hearing King Mortgages was given leave to file an amended statement of claim. By its amended claim it pleaded its case in this way: 2. By Mortgage dated 12 February 2004 ("the Mortgage") the Defendant mortgaged to the Plaintiff the property situated at and known as 76 Houison Street, Westmead NSW 2145 , being the whole of the land described in Certificate of Title Folio Identifier 2/181628 , and all improvements thereon (" the land "). 2A. Subsequently the Plaintiff registered a mortgage over the Land ("the Registered Mortgage"). Particulars The Registered Mortgage was a document in the same terms as the Mortgage save that: (a) It secured a sum of $75,000.00 instead of $100,000.00; and It provided for repayment on 10 August 2004 instead of 12 August 2004. 2B. The Mortgage remains unregistered. 3. The Mortgage secured an advance by the Plaintiff to the Defendants in the sum of $100,000.00 ("the Principal Sum") and interest thereon made pursuant to the Mortgage. 3A. The Registered Mortgage secured $75,000.00 of the Principal Sum and interest thereon. 4. The Mortgage and the Registered Mortgage is still subsisting and the Plaintiff relies upon the terms and conditions of the Mortgage and the Registered Mortgage as if the same were set out here and in full. 5. The Defendant is under an obligation to make repayments to the Plaintiff and to carry out other requirements pursuant to the terms of the Mortgage and the Registered Mortgage . 6. The Mortgage and the Registered Mortgage each contain terms and conditions to the effect that upon default being made in payment as provided: - (a) The Principal Sum shall immediately become due and payable and recoverable at any time after such default together with interest, fees and charges thereon at the rate provided therein; and (b) the Mortgages (sic) may exercise its power of sale and all other powers conferred on the Mortgagee by the Real Property Act 1900 and the Conveyancing Act 1919; and (c) the Mortgagee may lawfully enter upon and take possession of all and any of the Land without notice to the Mortgagor. 7. The Defendants have defaulted in payment of instalments due under the Mortgage and under the Registered Mortgage since 12 June 2004 and such default continues. 8. The balance of the Principal Sum, interest, fees and charges due and outstanding as at 12 August 2004 amount to $115,000.00 that amount has not been paid and continues to carry interest, fees and charges under the terms of the Mortgage and the Registered Mortgage . 9. In the circumstances, the Defendant is in default of both the Mortgage and the Registered Mortgage. 85 In Ex Parte Jackson; Re Australasian Catholic Assurance Co Ltd (1941) 41 SR(NSW) 285 Jordan CJ observed: Where the land is under the provisions of the Real Property Act, 1900, a mortgage has the effect of a security but does not operate as a transfer of the land for the mortgagee: s 57. It does not therefore confer upon the mortgagee a right to possession as an incident of a transfer. Section 60, however, provides that, upon default in payment of principal or interest, the mortgagee may … (c) bring an action of ejectment to recover the land, in the same manner in which he might have made such an entry or distress or brought such action if the principal sum or annuity were secured by a conveyance of the legal estate … [I]t would appear that the purpose of the legislature is to put the mortgagee, but only upon default by the mortgagor, in the same position as regards the three matters mentioned as he would be under an old system mortgage. 86 A second mortgagee may bring proceedings for possession under s 60(c) of the RPA: Zanzoul v Westpac Banking Corporation (1995) NSW Conv R 55-749. 87 Counsel for Mrs Satchithanantham contended that no monies had been advanced by King Mortgages pursuant to the first mortgage and, hence, no entitlement arose to an order for possession under s 60 of the RPA there being no default under that mortgage. He referred to the judgment of Young J in Grosvenor Mortgage Management Pty Limited v Younan (unreported), 23 August 1990. In that case his Honour observed at 20: Again, if there is a registered mortgage, but in fact no monies have been lent by the mortgagee, there will be a charge on the title, but this will be a mere illusion because the mortgagor can have the charge set aside. 88 Counsel for King Mortgages submitted that it was misconceived to say that no monies had been advanced pursuant to the first mortgage. The reality was that in the period between 6 February and 12 February negotiations had taken place between King Mortgages and Mrs Satchithanantham culminating in the advance of $100,000. In the course of the negotiations the first mortgage had been executed at a time when the parties contemplated a lesser advance by King Mortgages. The first mortgage had been registered inadvertently in circumstances in which King Mortgages was entitled to have the second mortgage registered. The advance made by King Mortgages was subject to the same terms and conditions, including the rate of interest, as those in the first mortgage. The principal sum described in the first mortgage was less than the sum in fact advanced. King Mortgages accepted that its security was limited to the principal sum secured by the first mortgage and not to the greater sum that had in fact been advanced. There could be no issue that Mrs Satchithanantham was in default by reference to the first and second mortgages. 89 Section 60 of the RPA provides as follows: 60 In case of default, entry and possession, ejectment The mortgagee, chargee or covenant chargee upon default in payment of the principal sum or any part thereof, or of any interest, annuity or rent/charge secured by any mortgage, charge or covenant may: (a) Enter into possession of the mortgaged or charged land by receiving the rents and profits therefor, or (b) (Repealed) (c) Bring proceedings in the Supreme Court or the District Court for possession of the said land, either before or after entering into the receipt of the rents and profits thereof, and either before or after any sale of such land effected under the power of sale given or implied in the mortgage, charge or covenant charge, In the same manner in which the mortgagee, chargee or covenant chargee might have made such entry or brought such proceedings if the principal sum, interest, annuity, or rent-charge were secured to the mortgagee, chargee or covenant chargee by a conveyance of the legal estate in the land so mortgaged or charged. 90 Relief under s 60 of the RPA requires proof of default in payment of the principal sum or interest due under the mortgage. The first mortgage secured an advance of $75,000 repayable on 10 August 2004 and subject to monthly interest payments due on the tenth day of each month. No such advance was made. The subsequent advance of $100,000 was subject to the second mortgage. The second mortgage is not registered and takes effect as an equitable mortgage. The default that is relied upon is default under the second mortgage. I do not consider that King Mortgages has established that it is entitled to an order for possession under s 60(c) of the RPA based on default under the registered first mortgage. Its endeavour to plead the case in the amended statement of claim to my mind makes the difficulty clear. King Mortgages has remedies available to it pursuant to its equitable security (subject to a consideration of the issues raised by Mrs Satchithanantham's cross-claim), which include that the Court may make an order for judicial sale: Guardian Mortgages v Miller at [121]. No such relief is claimed in these proceedings. The Cash King Claim 91 Cash King holds a registered third mortgage over the Westmead property, which secures the principal sum of $25,000 which was advanced to Mrs Satchithanantham on 23 March 2004. It is not in issue that Mrs Satchithanantham failed to repay the principal sum on 25 June when it became due and that she has failed to pay interest payments under the mortgage from that date to the date of the hearing. 92 Cash King has established that it is entitled to an order for possession of the Westmead property subject to a consideration of the issues raised by Mrs Satchithanantham's cross-claim. The cross-claims 93 In each of the proceedings Mrs Satchithanantham cross-claims against the plaintiff, contending that the mortgage and the loan which it secured, be set aside pursuant to the Contracts Review Act 1980 (the CRA) and/or by reason of equity. Each of the cross-claims is pleaded in the same terms and raise issues that are largely common to each proceeding. 94 Mrs Satchithanantham contends that the mortgage and the loan secured by the mortgage were unconscionable transactions. She relies on the principles in Yerkey v Jones (1939) 63 CLR 649 and Garcia v National Australia Bank [1998] HCA 48; 194 CLR 395 in support of her claim for equitable relief. She does not plead that she was a person subject to a special disability of which King Mortgages/Cash King was on notice for the purpose of invoking the principles of unconscionability enunciated by the High Court in Commercial Bank of Australia Limited v Amadio (1982-1983) 151 CLR 447. 95 In Garcia, in their joint judgment Gaudron, McHugh, Gummow and Hayne JJ observed at 404 [23]: In his reasons for decision in Yerkey v Jones , Dixon J dealt with at least two kinds of circumstances: the first in which there is actual undue influence by a husband over a wife and the second, that dealt with in Mueller ( Bank of Victoria Ltd v Mueller [1925] VLR 642), in which there is no undue influence but there is a failure to explain adequately and accurately the suretyship transaction which the husband seeks to have the wife enter for the immediate economic benefit not of the wife but of the husband, or the circumstances in which her liability may arise. The former kind of case is one concerning what today is seen as an imbalance of power. In point of legal principle, however, it is actual undue influence in that the wife, lacking economic or other power, is overborne by her husband and goes surety for her husband's debts when she does not bring a free mind and will to that decision. The latter case is not so much concerned with imbalances of power as with lack of proper information about the purport and effect of the transaction.

… [25] Thus, Dixon J was dealing with two kinds of case. In the former, the case of actual undue influence, as Dixon J says, explaining the effect of the document to the surety will not protect the creditor and "[n]othing but independent advice or relief from the ascendency of her husband over her judgment and will would suffice". In the latter, "[I]f the creditor takes adequate steps to inform [the wife] and reasonably supposes that she has an adequate comprehension of the obligations she is undertaking and an understanding of the effect of the transaction, the fact that she has failed to grasp some material part of the document, or, indeed, the significance of what she is doing" cannot give her an equity to set the document aside. 96 Mrs Satchithanantham's claim is pleaded under both the first and second limbs stated in Yerkey. Her counsel submitted that the principles in Yerkey, as restated in Garcia, are available, notwithstanding that Mrs Satchithanantham is not a volunteer in the strict sense. 97 It was not in issue that there had been incidents in which Mr Satchithanantham had assaulted his wife during the course of the marriage. Counsel for Mrs Satchithanantham relied on that evidence as relevant to an understanding of the nature of their relationship, which in his submission, was one that was a "fearful controlling relationship" (T 465.42). 98 Counsel for the plaintiff submitted that the episodes of violence had occurred a long time prior to the date of these events and that Mrs Satchithanantham had failed to establish that she was subject to the actual undue influence of her husband at the date she entered either of these transactions. In his submission, the principles in Yerkey were, in any event, of no application since Mrs Satchithanantham was the borrower in each case and that she obtained a benefit from each transaction.

99 Mr and Mrs Satchithanantham's marriage has been subject to strain. They continue to reside together in the Westmead property, but they occupy separate rooms. In her first affidavit Mrs Satchithanantham said that she and her husband are separated from "bed and table", but that she still regards herself as married to her husband. She continues to attend to domestic duties, including making her husband's bed, preparing his meals cleaning the home and washing his clothing. 100 Mrs Satchithanantham said that her husband had assaulted her on more than one occasion in the past and that she was in continuing fear of him. She said that she signed the mortgages and ancillary documents because he had instructed her to do so and she was frightened of him. It was her evidence that over the years her husband had made her sign documents on a number of occasions and that she had done so through fear and without knowing to what they related. 101 In the course of oral evidence Mrs Satchithanantham described an occasion when her husband had struck her, injuring her eye and another occasion when he had struck her, injuring her hand. Each of these assaults occurred when they were living in Singapore. The first, involving the injury to the eye, occurred in 1982. The second, involving injury to the hand, took place in 1995 when they were staying in Singapore on their way back to Australia from a holiday in Sri Lanka. This was an occasion whey they had argued over the question of whether she would go with him to live in Brunei. She had refused to do so because Bramooth was attending school in Australia. Mr Satchithanantham had become very angry with her and torn up six expensive saris and struck her. 102 Mrs Satchithanantham said she had not referred to the physical assaults in her affidavit because she was in terror of her husband and if he found out she had disclosed them she would have to pay hell at home (T 317.55-57). She gave an account of an episode when she had been roused in the night and dragged by her husband around the room by her hair until she signed some documents. She characterised her marriage as being like the film Cape Fear. 103 In her July affidavit Mrs Satchithanantham said this (at [79]): Even if I had known the terms of the loan and if it was explained to me, I would have signed because I am scared of my husband. He has shouted and pushed me before and I am scared that he would do it again if I don't obey him. He usually breaks goods (such as our television and VCR) in the house when he is angry and he once pulled me by the hair after I refused to follow his orders. 104 Mrs Satchithanantham said that prior to retaining her present solicitors (about three weeks before the hearing) she had not been aware of the contents of documents that she had signed in connection with these proceedings. Any documents that she had signed had been signed under the threat of physical assault (T 308.45-46). She said that on occasions, in the dead of night, her husband had got her up and forced her to sign documents. In cross-examination she was shown a number of affidavits that she had sworn in each of these proceedings. She agreed she had signed them. She said that she had signed the affidavits in the presence of a Justice of the Peace in circumstances in which she did not know the contents of them. She claimed not to know the contents of these affidavits at the date of giving evidence. She said that she had not understood that affidavits constituted the maker's sworn evidence. 105 Mrs Satchithanantham said that the first time she had had the opportunity to consult with solicitors independently of her husband was when she retained the services of her present solicitors in these proceedings. 106 In an affidavit sworn by Mrs Satchithanantham on 29 April 2005 and filed in the King Mortgages proceeding prior to Mrs Satchithanantham obtaining the services of her present solicitors, there is the following assertion (at [7]): My husband always get my signature forcefully whatever he ask me to sign. He angry with me and we have arguments but I don't sign any papers (T 300.56-301.1). 107 Mr Satchithanantham gave evidence that was generally supportive of his wife's account of his past violent conduct towards her. He volunteered that he had "hammered" her on an occasion when they were in Singapore, after she had refused to accompany him to Brunei. This physical assault had led to her spending one or two days in hospital. He said that they had had their differences from the time that he had stated his wish not to return to live in Australia. He was asked whether the occasion in Singapore was the only time that he had caused injury to his wife. He said that he thought there may have been an incident in 1999 or 1998 over her signing a guarantee in connection with proceedings brought by Multilink against them: she had been asleep and he had woken her, asking her to sign the guarantee and she had refused. He said that he had pulled her hair saying, "please do it, because I cannot survive" (T 402.49-50). From this time on, according to Mr Satchithanantham, his wife was "very fear with me, very scared. When I bring documents, she scared" (T 402.50-51). 108 Mr Satchithanantham's evidence on the topic of the physical violence to which he had subjected his wife was somewhat confused. He was asked again by his wife's counsel whether there was any other occasion when his wife had suffered physical injury at his hands (apart from the instance in Singapore). He said that he had pushed her and she had fallen down and hurt her eye and hand. He thought this probably occurred in 1999, maybe 2000 (T 403.10-17). This was an incident involving the signing of a guarantee. When asked what had happened in connection with the guarantee Mr Satchithanantham volunteered, "she doesn't know anything. She just sign on" (T 403.44). When asked whether his wife had received medical treatment for the injury to her eye and hand he said that he was not sure. He thought probably the hand injury had occurred in Singapore, on the occasion when she had been treated in hospital. 109 Mr Satchithanantham's account of the circumstances in which Mrs Satchithanantham signed the loan offer relating to the proposed advance of $100,000 was as follows: Soon after that I form - because King Mortgages call me that there is a fax send to house, so I ring the house and told her to sign this second set of cheque directions and she refused to sign. And I told her, because I spoke, people in King Mortgage told me that I wanted to go ahead for this loan, and she was very reluctant. She doesn't want to sign, but I told her, "if you cannot sign, I can't help you. I can't help anything, because I am down, there is no money because the shop will be gone, the goods will be gone. I told her, " you must sign no matter how". Q. You have given evidence - how did you obtain her signature on the third set of cheque directions, that relating to many (sic) the $25,000 loan? A. I think the same situation applied. 110 Mrs Satchithanantham was challenged that she had relied on defences and sworn affidavits in proceedings brought against her by Multilink and in these proceedings asserting that she was in fear of her husband as a stratagem to preserve family assets that had been put in her name. She rejected this suggestion, asserting that she had carried out her husband's instructions automatically through fear of him. 111 Mr Satchithanantham was also challenged along the lines that his evidence of terrorising his wife was a device to protect the family assets. 112 There was evidence concerning earlier proceedings brought by Multilink Investments against Bylander International Consortium (Bylander). It will be recalled that Mrs Satchithanantham is a Director of Bylander. She agreed that she had signed a guarantee indemnifying Multilink Investments Pty Limited in respect of a loan to Bylander in September 1997. She said that she had no knowledge of why her husband had created Bylander and that she had understood it to be an inoperative entity. She had signed the guarantee because of her fear of verbal abuse by her husband. She had not understood the contents of the guarantee. 113 Mr Satchithanantham gave evidence concerning the Multilink proceedings. His wife had been named as a third defendant in those proceedings. She had been separately legally represented. He had attended some interviews with her and her solicitor, Mr Bollinger. She had subsequently retained another solicitor. As I understand it, in the Multilink proceedings issues of unconscionability were raised on Mrs Satchithanantham's behalf. 114 The circumstances that Mrs Satchithanantham may have previously successfully resisted a claim against her on the ground that she had signed a guarantee because her husband had directed her to do so and she was in fear of him, is not a reason to reject her account that she signed papers in connection with the present proceedings because she was directed to do so by her husband and was in fear of him. However, Mrs Satchithanantham's claim that she was unaware of the contents of her defence in the Bylander proceedings and of affidavits filed on her behalf in those proceedings, and her assertion that she was unaware of the contents of affidavits filed in the present proceedings was, to my mind, not credible. Her evidence that she had only felt able to disclose the history of violence and threatening conduct after retaining her present solicitors was equally lacking in credulity. 115 Mrs Satchithanantham was emphatic that she had not approved of her husband's involvement in the shop at Wentworthville. Generally, she was critical of his business ability. She said that she had been completely opposed to her husband starting the business because of his history of borrowing money and wasting it and that despite her opposition he had proceeded with it. Mr Satchithanantham gave evidence that his wife had been very angry with him starting the ladies' fashion business. He said he had asked her to come and help him in the shop, but that she had refused to do so. She had said to him, "why you buy these bloody ladies clothes?" (T 441.40). To my mind Mrs Satchithanantham's firmly stated views about her husband's lack of business acumen did not sit well with acceptance of her account that she was in terror of him at the time of her evidence. 116 In her July affidavit Mrs Satchithanantham said that she had worked a total of ten days at the Wentworthville shop in the past two years. On these occasions she had worked two to three hours. She did not receive any payment for her work. Counsel for the plaintiffs submitted that Mrs Satchithanantham was actively involved in the shop at Wentworthville. Such was the inference to be drawn from the evidence of Daniel Swart and Mel Ciampa, who had seen her at the shop. It was also said to be the inference to be drawn from the circumstance that the music business was conducted under the name Hema's Music World. Finally, counsel relied on the fact that Indian-style women's clothing was sold at the shop. In counsel's submission, these three considerations in combination pointed to Mrs Satchithanantham as having an active involvement in the business for which the loans had been obtained. 117 There was an issue about the number of occasions Mrs Satchithanantham had been seen at the shop. She acknowledged that she had seen Daniel Swart at the shop on one occasion; he was the only person connected with the loans whom she had seen at the shop. Ms Stuart-Watt called to the shop on 24 March, she did not assert that she had seen Mrs Satchithanantham there on that occasion. I draw no inference about Mrs Satchithanantham's involvement in the Wentworthville shop from the evidence of Daniel Swart or Mel Ciampa of having seen her there. 118 I considered it probable that Mrs Satchithanantham had little, if any, involvement in the shop. In coming to this conclusion I do not overlook her evidence that some of the clothes sold in the shop were priced below cost price and that she had raised this concern with her husband. Although this may have suggested a greater familiarly with the business than she admitted to, I did not think that was the inference to be drawn. To my mind it was significant that Mrs Satchithanantham took no part in the discussions with Janet Stuart-Watt about the business on any of the occasions when she accompanied her husband to the North Rocks office. I considered it probable that her prime focus was, as she claimed, on the care of Bramooth. 119 I am satisfied that Mr Satchithanantham conceived the idea of setting up a retail shop in Wentworthville and that he proceeded to implement this plan without consulting her and without her participation or approval. His attitude to the Westmead property was to treat it as though it was his to deal with. He represented that it was available as a security from the outset in his dealings with Louis Swart. Mr Satchithanantham importuned Mrs Satchithanantham to enter into each of the transactions and she reluctantly agreed to do so. However, to the extent that Mrs Satchithanantham seeks to make out a case under the first limb of Yerkey v Jones, that she was subject to the actual undue influence of her husband I am not persuaded that she should succeed. Mrs Satchithanantham is an intelligent and well-educated woman. I do not find that at the time of these events she was in fear of her husband or subject to his controlling influence such that her entry into the transactions was not the exercise of her independent and voluntary will: Garcia per Gaudron, McHugh, Gummow and Hayne JJ at 402. 120 Mrs Satchithanantham's claim was also advanced under the second limb in Yerkey. Her counsel submitted that there had been no adequate and accurate explanation of the transaction which Mr Satchithanantham sought to have her enter for his benefit and that King Mortgages/Cash King had not taken adequate steps to inform her of the effect of the transaction; nor was it open to King Mortgages/Cash King to reasonably suppose that she had such an understanding. In counsel's submission King Mortgages/Cash King knew that Mr Satchithanantham was raising the funds and purporting to offer his wife's property as security. It was not sufficient for either plaintiff to rely on the advice given to Mrs Satchithanantham by Mel Ciampa. This was because Mel Ciampa had an established business relationship with King Mortgages/Cash King and an interest in providing certificates of advice to them. Further, King Mortgages/Cash King knew that Mel Ciampa was himself active in mortgage broking and that he had an interest in Mrs Satchithanantham obtaining funds on a short-term basis from them as a prelude to re-financing in a deal that he might put together.

121 Mrs Satchithanantham was also advised by Ms Stuart-Watt. Her counsel did not submit that Ms Stuart-Watt was not an independent adviser. He contended that her advice was inadequate and that King Mortgages/Cash King were on notice of that fact in that Ms Stuart-Watt's certificates were lacking in any detail which would point to her having a basis for her stated satisfaction in Mrs Satchithanantham's ability to repay the loan without substantial hardship. The issue raised by the second limb of Yerkey v Jones concerns the wife's understanding of the purport and effect of the transaction. 122 In her first affidavit Mrs Satchithanantham stated (at [46]): I was fully aware of the fact that I had signed a loan and I understood that I had mortgaged my house as security for the repayment thereof. But this all my husband informed me of the entire transaction. I did not understand there was a risk of losing our house. 123 Mrs Satchithanantham said that she had not understood details of the transactions, including the rate of interest that was to be charged. As I have stated, I consider that any advice given by Mel Ciampa concerning the transaction was cursory. I accept that his advice may not be characterised as competent, independent or disinterested (Garcia at 409 [31]). Ms Stuart-Watt explained the sum borrowed, the interest rate and the amount of the monthly repayments in the course of her interviews with Mr and Mrs Satchithanantham. I am satisfied Mrs Satchithanantham understood the discussion that took place on these occasions. Furthermore, she signed a number of documents, including the cheque directions, which set out the amount of the advance, the amount due on settlement and referred to the interest rate. I do not accept that Mrs Satchithanantham was ignorant of the interest rate either of the King Mortgages loan or the Cash King loan. I considered that Mrs Satchithanantham had an adequate understanding that she was in each case executing a mortgage at high rates of interest as security for a loan. 124 In Garcia it is noted that Yerkey v Jones begins with the recognition that the surety is a volunteer: (at 408 [31]). In Elkofairi v Permanent Trustee Co [2002] NSWCA 413 the Court of Appeal left open that the principle in Yerkey may have application to a case outside that of a guarantee given by a wife as a volunteer in respect of her husband's obligations. It was noted that it would be necessary in such a case for the creditor to be on notice that the person seeking to impugn the transaction was a volunteer (at [47]). 125 Each of these transactions involved a loan advance to Mrs Satchithanantham. In each case the plaintiff was aware that Mr Satchithanantham was the person seeking to raise the funds and in neither case did the plaintiff have direct dealings with Mrs Satchithanantham. From the outset, Mr Satchithanantham represented that he had the capacity to put up his wife's property as security for the loan that he was seeking. Furthermore, the settlement sum from the $100,000 advance was paid to Mr Satchithanantham, who signed the authority on his wife's behalf. The funds were paid into an account in Mr and Mrs Satchithanantham's joint names. I am satisfied that the business was Mr Satchithanantham's venture and that Mrs Satchithanantham had no active involvement in it.

126 The evidence of the financial arrangements between Mr and Mrs Satchithanantham was not entirely clear. Although not stated in her July affidavit, Mr Satchithanantham was contributing financially to the family by making the mortgage repayments to the NAB. He also was making some modest contribution towards payment of household expenses. Mrs Satchithanantham acquired her husband's share of the Westmead property for no consideration in circumstances, which as I have noted, were not explained. A substantial portion of the King Mortgages' advance was paid to Maybrene. This was a benefit to Mrs Satchithanantham in that it led to the removal of the Maybrene caveat from the title to the Westmead property. 127 If Yerkey v Jones has application to a case outside that of a guarantee given by a wife as a volunteer, I was not satisfied that Mrs Satchithanantham was a volunteer with respect to either transaction. I am not persuaded that the mortgages and loan agreements should be set aside on the principles stated in Yerkey v Jones and Elkofairi. The Contracts Review Act claim 128 In each of the proceedings Mrs Satchithanantham seeks to have the mortgage and the loan which the mortgage secured set aside under the CRA. She pleads that having regard to the public interest, the loan was unjust within the meaning of s 9 of the CRA. 129 The particulars of her Contracts Review Act claim in each case are as follows: 3(a) The loan and the mortgage were against the public interest because: (i) the defendant had demonstrated an inability to reasonably protect her own interest; (ii) the security was the sole residence of the defendant; (iii) the plaintiff was content to lend on the strength of the security alone; (iv) in making the loan and taking the mortgage the plaintiff participated in a system which involved the lending of funds to borrowers (including the first defendant) with no capacity to repay other than through the forced sale of her residence or through equally unjust refinancing; (v) the plaintiff was willing to lend on the value of the security and was indifferent to the purpose of the loan; (b) There was material inequality in the bargaining power of the cross-claimant and the plaintiff. (c) The plaintiff did not reasonably believe that the cross-claimant had an adequate comprehension of the obligations she was undertaking. (d) The provisions of the agreement pursuant to which the loan was advanced were not the subject of negotiation between the parties at the time it was entered into. (e) It was not reasonably practicable for the cross-claimant to negotiate for the alteration of, or to reject, any provisions of the agreement pursuant to which the loan was advanced. (f) The consequence of non-compliance with all or any of the provisions of the mortgage was to entitle the plaintiff to possession of the cross-claimant's only substantial asset being her home. (g) The consequences of compliance with the provisions of the mortgage and the loan it secures was to require the cross-claimant at the end of the term of the loan to either: (i) obtain new finance and incur further application, establishment, broking, legal, valuation and other fees; or (ii) sell her home at the end of the term of the loan to repay the principle. (h) At the time of entering into the loan contract and mortgage the plaintiff knew or could have ascertained that the cross-claimant could not pay in accordance with its terms or not without substantial hardship. (i) The provisions of the loan contract and mortgage and their legal and practical effect were not properly explained to the cross-claimant. (j) By reason of speaking poor English the cross-claimant was unable to understand the various provisions of the contractual and mortgage material presented to her nor the effect of those provisions. (k) There was substantial disparity between the literacy of the parties. (l) The mortgage and loan documents were not adequately intelligible. 130 By their amended defences to the cross-claims in each of the proceedings the plaintiffs plead that Mrs Satchithanantham is excluded from relief under the CRA by operation of s 6(2). 131 Section 6(2) of the CRA provides that a person may not be granted relief under the Act in relation to a contract so far as the contract was entered into in the course of or for the purpose of a trade, business or profession carried on by the person or proposed to be carried on by the person, other than a farming undertaking. 132 Mrs Satchithanantham signed a Consumer Credit Code declaration in support of each loan. Mr Satchithanantham had completed in handwriting a statement of the purpose of the loan in each case. The declaration made with respect to the King Mortgages loan gave as the purpose of the loan: To set up retail clothing & mixed business at 53 Station Street, Wentworthville.

The Cash King loan declaration stated the purpose of the loan as: To set up business (fashion shop) at 2.53 Station Street, Wentworthville, Satchi's Singapore Style Emporium. 133 Section 6(2) of the CRA is directed to whether the contract was entered into in the course of or for the purpose of a trade, business or profession carried on or proposed to be carried on by the person. In Ellison v Vukicevic (1986) 7 NSWLR 104 Young J cited with approval the observations of Lee J in Collins v Parker (unreported) 11 May 1984: The expression "for the purpose of" has the meaning that the contract under consideration is entered into as an ordinary incident of the carrying on of a particular trade, business or profession then being carried on or proposed to be carried on. 134 Consideration was given to the scope of the exclusion provided in s 6(2) of the CRA in Toscano v Holland Securities Pty Ltd (1985) 1 NSWLR 145. It was held in that case that the plaintiffs, the proprietors of a company who had guaranteed the debts of the company, were not precluded by operation of s 6(2) from seeking relief under the Act, since it was the company, which was carrying on the business. 135 Counsel for the plaintiffs did not advance any submissions in support of the pleading in the defence to the cross-claims that Mrs Satchithanantham was disentitled from relief under the CRA by reason of s 6(2). I consider that Mrs Satchithanantham did not enter into either loan transaction or mortgage in the course of or for the purpose of a trade, business or profession carried on by her or proposed to be carried on by her. Mrs Satchithanantham was at material times a housewife responsible for the fulltime care (save when he was at school) of her autistic son. The business of operating the clothing and mixed business at 53 Station Street, Wentworthville was Mr Satchithanantham's business. I approach the cross-claim in each of the proceedings upon the basis that Mrs Satchithanantham is not precluded from relying on the provisions of the CRA. 136 The principal way in which counsel for Mrs Satchithanantham put her claim for relief under the CRA was the contention that the loan was unjust in that the plaintiff in each case was prepared to proceed with the loan, taking as security Mrs Satchithanantham's personal residence, in circumstances in which it was indifferent to her ability to repay the loan and was content to proceed on the basis of enforcing its security: Perpetual Trustee Company Limited v Albert and Rose Khoshaba [2006] NSWCA 41. 137 In Khoshaba, Spigelman CJ (with whose judgment Handley JA agreed) found the lender's willingness to proceed on the basis that it could enforce its security, the family home, to be the determinative consideration (at [92]). Basten JA said at [128]: To engage in pure asset lending, namely to lend money without regard to the ability of the borrower to repay by instalments under the contract, in the knowledge that adequate security is available in the event of default, is to engage in a potentially fruitless enterprise, simply because there is no risk of loss. At least where the security is the sole residence of the borrower, there is a public interest in treating such contracts as unjust, at least in circumstances where the borrowers can be said to have demonstrated an inability reasonably to protect their own interests, for the purposes of, for example, s 9(2)(e) or (f). That does not mean that the Act will permit intervention merely where the borrower has been foolish, gullible or greedy. Something more is required: see Esanda Finance Corp Ltd v Tong (1997) 41 NSWLR 482 at 491 (Handley JA) cited with approval in Elkofairi (supra) at [77] by Beazley JA. 138 In Khoshaba, Basten JA considered that the borrowers' background, which included that English was their second language and that they had limited formal education and no business experience to be disadvantages that, while not constituting a special disadvantage or disability for the purposes of equitable principles of unconscionable dealing, were sufficient in the circumstances of that case to satisfy the requirement of the public interest in concluding that the asset lending in that case was unjust. 139 King Mortgages and Cash King contend that neither loan was "asset lending": Mrs Satchithanantham signed a document in support of the King Mortgages loan stating she earned income of $104,000 per annum and in the case of the Cash King loan, she declared she was earning $120,000 per annum. In the plaintiff's submission they were entitled to act on her declarations and assume that she could meet the repayments under the loan. Furthermore, in each case the application was supported by a certificate signed by Ms Stuart-Watt, a chartered accountant, certifying to her belief based upon an interview with Mrs Satchithanantham that she could meet the mortgage repayments without substantial hardship. 140 Ms Stuart-Watt's certificates were in each instance a pro forma adapted from a form of certificate supplied to her by King Mortgages and/or Cash King. Neither certificate contained any information to suggest that Mrs Satchithanantham, as a matter of fact, had the ability to service these loans. 141 Louis Swart had not met Mrs Satchithanantham. Any contact that Daniel Swart had with her was brief and did not involve any discussion of the proposed loan. Daniel Swart maintained that Mrs Satchithanantham was "quite the little businesswoman", taking into account her directorship of three companies and her proprietorship of three business names. The suggestion that, because a woman is a director of proprietary companies about which nothing else is known, she is to be a taken to be an able businesswoman and a good risk from a lender's point of view, seemed to me, to lack any commercial reality. Mr Satchithanantham had made plain to Louis Swart that he was in desperate need of funds and he represented that he was in a position to offer his wife's property to secure a loan. Save for the Baycorp search, the inquiries that King Mortgages and/or Cash King made were directed to the adequacy of the security. 142 When Mr Satchithanantham offered his wife's property as security Louis Swart did not ask what, if anything, Mrs Satchithanantham did. He ensured that Mr Satchithanantham took his wife to a person for the purposes of the provision of independent advice, but he did not suggest that she produce any evidence to King Mortgages or to any independent adviser to establish that she had the capacity to service the loan. 143 In my view, the reality of each of the loan advances made to Mrs Satchithanantham is that the lender was lending money without regard to the ability of Mrs Satchithanantham to repay the instalments under the contract. Furthermore, the security was her sole residence. 144 I turn now to a consideration of whether the contract in each case is unjust in the circumstances relating to it at the time it was made, having regard to the public interest and the circumstances of the case, including those matters to which s 9(2) of the CRA directs attention. Mrs Satchithanantham pleads that she had demonstrated an inability to reasonably protect her own interests. In support of this submission, her counsel pointed to the circumstance that in each case Mrs Satchithanantham offered her residence as security for loans which were most improvident and in respect of which she had taken no part in the negotiations. 145 A number of matters were relied upon by counsel for Mrs Satchithanantham in support of her claim for relief under the CRA. These included that English was not her first language and that a number of clauses of the standard form memorandum incorporated into each of the mortgages were expressed in language that is not readily understood. To the extent these submissions were directed to the considerations to which subs (2)(f) and (g) of the CRA are directed, I do not consider them to be matters of significant weight in determining her claim for relief. As I have stated, she is an intelligent and well-educated woman who had a sufficient understanding of the nature of each transaction. 146 No submission was made that the exceedingly high rate of interest charged in each case was, of itself, unjust: Takemura v National Australia Bank Ltd [2003] NSWSC 339 per Young CJ in Eq at [18] - [29]; Guardian Mortgages v Miller [2004] NSWSC 1236 per Wood CJ at CL at [104]. 147 Counsel did not submit that any provisions of the contract imposed conditions not reasonably necessary for the protection of the legitimate interests of the plaintiff, a consideration to which subs (2)(d) is directed. However he did take up certain of the provisions of the loan agreements in the cross-examination of Daniel Swart. Mr Swart was challenged about the fees charged by Quality Brokers, the lender's establishment fee and the fast release of funds fee. The point being made was that Quality Brokers were in reality one and the same as King Mortgages and/or Cash King and that given the exorbitant rate of interest it was hard to justify additional unexplained fees by way of establishment or risk premium fees. Mr Swart explained that the sum of $880 charged by Quality Brokers was for the preparation of the loan agreement and mortgage documents. The sum of $2,625 described as the fast release of funds risk premium was precisely that. It was an admittedly high fee charged, which represented the risk associated with making the loan funds available on short notice in circumstances in which the lender's protection is limited to the lodgement of caveat on title. 148 Counsel for the plaintiffs submitted that Mr Satchithanantham, who had negotiated on his wife's behalf, had demonstrated a capacity to bargain with King Mortgages over the provisions of the loan. Louis Swart had originally offered a loan at a rate of eight per cent per month and Mr Satchithanantham had protested that rate was too high. In the event, the offer that his wife accepted was at a lesser rate of seven and a half per cent per month. 149 Counsel for Mrs Satchithanantham placed emphasis on the conduct of King Mortgages in making an offer of a loan of $75,000 on terms that it did not intend to honour. By her acceptance of this offer Mrs Satchithanantham conferred a caveatable interest on King Mortgages in respect of their fees. This tactic involved considerable pressure being placed upon Mr Satchithanantham: he urgently needed funds and he had procured his wife's acceptance of an offer of a loan of $75,000 that was to yield a sum of $61,000 on settlement. When Louis Swart told him that King Mortgages would not proceed with the loan and that they had lodged a caveat on the title of the Westmead property to cover their fees, he had no recourse but to procure his wife's acceptance of the new offer of a loan of $100,000. 150 In Koshaba Spigelman CJ said: [63] In many respects this case, in its basic structure, is similar to that considered by this Court in West v AGC (Advances) Ltd (1986) 5 NSWLR 610 where the Court held, by majority, that the contract was not "unjust". The Appellant in this case relies on a number of steps in the reasoning in West in support of its contention that the contract in the present case should not be found to be "unjust". [64] Of course each case must depend upon its own facts. Furthermore, West is now 20 years old. When the Parliament adopts so general, and inherently variable, a standard as that of "justness", Parliament intends for courts to apply contemporary community standards about what is just. Such standards may vary over time, particularly over a period of two decades. [65] There have been observations in this Court that the standards may have changed from those applied in 1986 in West . (See Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413; (2003) 11 BPR 20,841 at [79]). [66] The Appellant relied on the distinction drawn by McHugh JA in West at 621 between the contract and the overall transaction, relevantly the loan and the investment of the funds. On the basis of that distinction the Appellant submitted (T p 22 cf T 31) that the investment agreement was not part of the "circumstances relating to the contract" within s 7(1). In my opinion this submission should be rejected. 151 I have concluded that the loan agreement and the mortgage entered into by Mrs Satchithanantham with King Mortgages was unjust in the circumstances relating to it at the time it was made because unfair pressure or unfair tactics were applied by it in connection with the making of the initial offer and because it was prepared to lend on the strength of the security without regard to Mrs Satchithanantham's ability to meet her obligations under the loan.

152 In my view the same considerations affect the Cash King loan agreement and mortgage, which was also unjust in the circumstances relating to it at the time it was made. I am satisfied that the funds advanced by Cash King were loaned without regard to Mrs Satchithanantham's capacity to meet the payments under the agreement. Although it is the case that there was some negotiation of the terms of the Cash King loan, in that Mrs Satchithanantham, through her husband, negotiated for the deletion of the early repayment penalty, I consider that there was material inequality in the bargaining power between the parties. Mr Satchithanantham was in desperate need of funds and Cash King knew it. The unfair pressure or unfair tactics associated with the King Mortgages loan was known to Cash King. On or about 19 March Mr Satchithanantham perceived that he had no real option but to return to Quality Brokers when he needed further funds since King Mortgages had a security over the title to the Westmead property. 153 It is necessary to consider whether it is just, for the purpose of avoiding as far as practicable an unjust consequence or result, to grant Mrs Satchithanantham the relief that she claims. In each case she seeks to have the mortgage and the loan which the mortgage secured set aside, in the alternative, she claims a declaration that the mortgage and the loan which it secures are void and, in the further alternative, she claims orders varying the mortgage in such manner as the Court thinks fit. 154 Section 7 of the CRA permits the court in a case in which it finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, if it considers it just to do so, for the purpose of avoiding as far as practicable an unjust consequence or result to do any one or more of the things set out in subs (1)(a) - (d). The court may decide to refuse to enforce any or all of the provisions of the contract, it may make an order declaring the contract void in whole or in part and it may make an order varying, in whole or in part, any provision of the contract. With respect to a land instrument (being an instrument that relevantly creates an interest in land or is a dealing within the meaning of the Real Property Act 1900) it may make an order for, or with respect to, the execution of an instrument that has the effect of varying the provisions of the land instrument or terminating or otherwise affecting the operation or effect of the land instrument. Where the court makes an order varying in whole or in part any provision of the contract the variation shall have effect from the time when the contract was made or from some other time as specified in the order: subs (2). The operation of s 7 is subject to s 19 with respect to orders affecting land. 155 Counsel for Mrs Satchithanantham's submissions were focussed wholly on the contention that the mortgage and the loan which the mortgage secured be set aside.

156 In Esanda Finance Corporation Ltd v Tong (1996-1997) 41 NSWLLR 482 Handley JA observed at 489: Section 7 gives the Court powers to grant civil remedies to remove unjust. These powers are neither penal nor disciplinary, and should not be exercised for such purposes. Once injustice to the weaker party has been remedied, the Court should not further interfere with the rights of the parties. Interference beyond that point will cause injustice to the other party, and is not authorised by the section. This question was considered in SH Lock (Australia) Ltd v Kennedy (1988) 12 NSWLR 482 at 487, where Samuels JA said: If the Court were now to vary the contract of guarantee by reducing the amount of the respondent's liability it would not be relieving the respondent from the consequences of injustice, but punishing the appellant for having brought about an injustice … I do not consider that this would be an authorised use of the powers which the Act provides: see the opening words of s 7(1). Similarly, Priestley JA said (at 492, 493-494): … Once the Court finds a contract unjust … it is faced with the next and quite separate task, for which the Act provides less guidance: the relief the court is empowered to give is, if it considers it just to do so, to make appropriate orders "for the purpose of avoiding as far as practicable an unjust consequence or result". As I understand s 7(1), wide though the court's powers are to find a contract unjust, the remedies it may grant in respect of such injustice are strictly limited to avoiding an unjust consequence or result of the unjust contract … 157 Mrs Satchithanantham, by her amended cross-claim in each proceeding seeks that the mortgage and the loan which it secured, be set aside pursuant to the powers conferred under s 7 of the CRA. I am not of the opinion that it would be just to so order. Monies have been advanced under each agreement and those monies have not been repaid. I am persuaded that it is appropriate to grant relief to Mrs Satchithanantham pursuant to s 7(1)(c) and (d) varying provisions of the loan agreements and the mortgages with respect to the interest component and the total of the fees and charges. The structure of any variation to the contracts which is claimed in paragraph 3 of her cross-claim in each proceeding was not the subject of any submissions by the parties.

158 The proceedings may be listed before me on a date and at a time that is suitable to the parties in the week commencing 11 December 2006 by arrangement with my Associate. In default of agreement the proceedings will be listed at 9.30AM on Thursday 14 December 2006. On such occasion I will hear from the parties concerning the structure of orders in each proceeding varying the loan agreements and mortgages under s 7(1)(c) and (d) of the CRA and on the form of any final order in proceedings 13736 of 2004 brought by Cash King. **********

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