St George Bank - A Division of Westpac Banking Corporation v Diakakis

9Upon completion of the sale of the property, the mortgage to ANZ was discharged and the mortgage to St George was registered. At or about the same time, Mr Diakakis sold the Kingsford Property for $808,000. John S Zouroudis & Co's trust account ledger indicated that the firm acted for Mr Diakakis on the sale of the Kingsford Property. 10The source of the balance of the purchase monies is not revealed by the evidence but it can reasonably be inferred that Mr Diakakis and Phillip had access to other funds, possibly from the sale of the Kingsford property, to make up the purchase price of $513,000, of which $486,474.74 was paid on settlement day. 11From the time of the advance in October 2003 until about June 2010, repayments under the loan agreement and mortgage were met. As at 12 November 2010, defaults in the payment of interest amounted to $14,134.00. On 15 November 2010, Kemp Strang sent a default notice to each defendant specifying the defaults and requiring the arrears be paid within the grace period of 31 days. No payment of the arrears claimed in the notices was made within the grace period specified. 12The loan agreement and the mortgage provided that, in the event of default that was not rectified, St George would be entitled to possession of the property. 13Mr Diakakis filed a defence on 29 June 2011 in which he admitted signing the loan agreement and mortgage and admitted the defaults. He alleged that he was induced into signing the loan agreement and the mortgage under the influence of his son and alleged that those agreements were accordingly void and of no effect. In a cross-claim filed on the same day Mr Diakakis sought declarations that the loan agreement and mortgage were unjust within the meaning of s 4 of the Contracts Review Act 1980 (NSW) and orders that they be set aside and discharged pursuant to s 7 of the Contracts Review Act so far as they relate to him. The allegations made in the cross-claim are addressed further below.

St George's entitlement to relief 14Mr Diakakis did not appear when the matter was called on for hearing on 11 July 2014. St George sought to proceed in his absence in accordance with r 29.7 of the Uniform Civil Procedure Rules 2005 (NSW). 15Mr Diakakis has neither filed nor adduced any evidence of his defence or his cross-claim. St George has adduced evidence that establishes that he was legally represented at the time he entered into the loan agreement and mortgage and received benefits from the loan: the acquisition of the property in which he proposed to live (and did in fact live) and the discharge of his liability for legal costs in other proceedings. The evidence does not reveal any basis for the suggestion that the loan was improvident or that Mr Diakakis was under the influence of his son, or indeed subject to any relevant disability or disadvantage. 16If there was any unfairness (and none is revealed by the evidence) there is nothing to show that St George was aware of it, much less responsible for it. It had no direct contact with either of the borrowers. The loan agreement appears to be a standard home loan at a market interest rate. There is no evidence to suggest that it was beyond the means of the defendants to repay it. Indeed that they were able to comply with the loan agreement for the first seven years of its operation is powerful evidence that it was within their means and that they had freely and voluntarily signed the loan documents presented to them and received an incontrovertible benefit from the loan. In Baltic Shipping Co v Dillon (1991) 22 NSWLR 1 Gleeson CJ said at 9: "[t]he general policy of the law is that people should honour their contracts. That policy forms part of our idea of what is just." 17In the cross-claim Mr Diakakis relied on his age (he was born on 14 September 1940), the fact he was born in Greece (it is alleged he moved to Australia in 1964) and his alleged status as a recipient of a Disability Support Pension. There is also an allegation that he relied on Phillip to meet the mortgage repayments. In my view, these matters (even if that had been proved) have not been shown to have created any unjustness, having regard to the benefit obtained by Mr Diakakis by reason of the loan. A contract is not unjust merely because a person is unable to pay the debt when called upon do to so, or because its enforcement will lead to the loss of a home: West v AGC (Advances) Ltd (1986) 5 NSWLR 610; Esanda Finance Corporation Ltd v Tong (1997) 41 NSWLR 482 at 491E per Handley JA. 18On the basis of the facts that I have found that are set out above, St George is entitled to possession of the property and to its costs of the proceedings.

Orders 19I make the following orders: (1)An order for possession of the land comprised in Certificate of Title Folio Identifier 2/SP70623 being the land situated at and known as Unit 2, 259-261 Maroubra Road, Maroubra. (2)Order the second defendant to pay the plaintiff's costs of the proceedings.

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