Westpac Banking Corporation v Kekatos

The evidence

1. Westpac tendered extracts from the defendant's affidavits; business records (the defendant's tax returns for the financial years 2005-2008; ABN registration; and a valuation of the Property it obtained in 2012); admissions made in the defendant's pleadings; and correspondence with its solicitors regarding the defendant's application to have the default judgment set aside in April 2014. Westpac also read affidavits sworn by Malcolm Grace, a Senior Manager, who was not cross-examined.
2. The defendant read the affidavit affirmed by Brooke Payne (an employed solicitor) on 1 April 2014, which had been filed in support of the defendant's application to set aside default judgment and which annexed the then proposed draft defence and cross-claim. The defendant also tendered a few additional documents obtained from Westpac in answer to a notice to produce which relate to its attitude to her application to set aside default judgment in April 2014. The defendant did not give evidence herself and, accordingly, could not be cross-examined.
3. The following narrative is derived from the evidence tendered at the hearing of the motion.

The purchase of the Property

1. On 5 July 1992 the defendant purchased the Property for $781,000. It was registered in her name. She borrowed a total of $800,000 from Westpac to cover the purchase price and the cost of renovations to the Property. This loan was secured by a mortgage over the Property in favour of Westpac granted on 5 July 1992 (the First Westpac Mortgage).

The additional funds for the purchase of the Burwood Property

1. In November 1998 the defendant agreed to a further mortgage being registered on the title to the Property to secure monies advanced by St George Bank Ltd (St George) for the purchase of a commercial property at 35AA Burwood Road, Burwood (the Burwood Property) for $1.6m (the 1998 St George Bank Mortgage). The Burwood Property, which was purchased for $1.6m, was to be used as the premises for the accountancy practice which the defendant and her husband, Jerry, operated. In her affidavit of 26 March 2014, the defendant admitted, in respect of this mortgage: "I agreed to this mortgage and I was fully aware of the amount being borrowed and the reason for the borrowing. In 1998 Jerry [Kekatos] decided to move the accounting practice from Parramatta. I found a commercial property in Burwood and Jerry and I agreed that this property was suitable for the practice and that it should be purchased. The purchase price was $1.6m. A mortgage on 41A New South Head Road was given to secure the purchase money."

The defendant's income, occupation and experience

1. The evidence showed that, at the relevant time, the defendant was, prima facie, an experienced accountant and business woman who earned a substantial income (which exceeded her husband's) and was familiar with property transactions and mortgage financing.
2. She was a director of several companies, including the following. On 13 November 1998 the defendant became a director of First Equity Home Loans Pty Ltd and remained a director until 12 February 2015. On 1 November 1999 the defendant registered an ABN which she has held continuously since that date until at least 13 September 2015, being the date of the search. On 17 January 2001 the defendant was appointed as a director of Euro Fund Pty Ltd (Euro Fund). Euro Fund was a business which arranged loans and was conducted under the auspices of Kekatos & Partners Pty Ltd. She was also appointed as the secretary of Euro Fund on 9 May 2003. She ceased to hold both of those positions on 6 February 2008. She was appointed a director of Eurofund (Australia) Pty Ltd on 27 February 2003 and ceased to be a director on 5 July 2005. On 2 April 2007 the defendant was appointed as a director of The Office of Financial Planning Pty Ltd, a position which she held until 10 July 2007.
3. On 15 February 2008 the defendant signed an "Acknowledgement by guarantor(s)" form on behalf of Kekatos & Partners Pty Ltd, which was said to be a guarantor of the Kekatos Facilities. Her signature appears above the description "signature of director/company secretary".
4. The defendant's tax returns showed the following. For the year ended 30 June 2005, the defendant's total gross income was $494,592, of which $59,640 comprised her income as an employed accountant at Kekatos & Partners Pty Ltd and, of the remaining $434,952, $338,000 came from distributions from trusts and $96,952 derived from (net) the rental of the Burwood Property. For that year her spouse's income was $225,590. Her main salary or wage occupation was described as "accountant". The defendant's main business or professional activity was described as "accounting service". The business address of her main business was said to be the Property.
5. For the year ended 30 June 2006, the defendant's taxable income was $724,421, of which $320,000 amounted to distributions from trusts; $314,285 represented dividends (franked amounts and franking credits); and $90,136 represented net rent obtained from the rental of the Burwood Property. Her husband's taxable income for that year was $198,053.
6. For the year ended 30 June 2007, the defendant's taxable income was $739,029 of which $320,000 comprised distributions from trusts; $47,601 represented net rent (from the Burwood Property) and dividends (franked amounts and franking credits) amounted to $371,428. Her husband's taxable income for that year was $195,998. The defendant's main business activity was described as "accountant"; the ABN was the one she had registered in 1999 and the business address of the defendant's main business was the Burwood Property.
7. For the year ended 30 June 2008, the defendant's taxable income was $783,833 of which $320,000 comprised distributions from trusts (the only trust being "The V Kekatos Family Trust"); $63,833 represented net rent and dividends (franked amounts and franking credits) amounted to $400,000. Her husband's taxable income for that year was $195,998. The defendant's main business activity was described as "accountant"; the ABN was the one she had registered in 1999 and the business address of the defendant's main business was the Burwood Property.

The AMP refinance in 2003

1. The defendant executed a further mortgage over the Property on about 13 August 2003 (the AMP Mortgage) which secured a loan of $1.7m advanced by AMP Bank Ltd (AMP). I infer that this loan constituted a refinance of the Burwood Property loan and that the mortgage that was discharged when the AMP Mortgage was registered was the 1998 St George Bank Mortgage.

The Perpetual refinance in 2006

1. On 17 November 2006 the defendant granted a mortgage to Perpetual Ltd to secure a loan advanced by Macquarie Bank Ltd (Macquarie) of $2.5m (the Perpetual Mortgage). At the time of registration of the Perpetual Mortgage, the prior registered mortgages (including the AMP Mortgage) were discharged. I infer that the loan from Macquarie discharged the liabilities secured by these mortgages and, thus, the Perpetual Mortgage secured a refinance of the original loans for the purchase of the Property and the Burwood Property. This inference is supported by the following admission made by the defendant in her affidavit of 26 March 2014 (which was tendered by Westpac): "As at 2006 I believed that 41A New South Head Road was encumbered for the original amount borrowed and also for an amount to secure the borrowing on the Burwood Property."

The Kekatos Facilities in 2008

1. On 17 January 2008 St George (now Westpac) offered to advance funds to the defendant (the Kekatos Facilities). The stated purpose of these facilities, which comprised three business loans, was "to assist with the refinance of an existing facility with Macquarie Bank Ltd". The defendant accepted Westpac's offer on 15 February 2008. The Kekatos Facilities provided for the advance of funds to the defendant as follows: Facility Amount Purpose First $1.7m Refinance of Burwood Property Second $800,000 Refinance of the Property Third $500,000 Other purpose TOTAL $3m

The Bronte Facility in 2008

1. On 27 February 2008 St George (now Westpac) agreed to provide to Bronte Properties Pty Ltd (Bronte Properties) a commercial bill acceptance/ discount facility with a limit of $9.9m (Bronte Facility). The defendant was the sole director and secretary of Bronte Properties from 3 September 2007 to 21 January 2012. Bronte Properties was, at all material times, a trustee for the Bronte Unit Trust.

Settlement of the Kekatos Facilities in March 2008

1. On 3 March 2008 the settlement of the Kekatos Facilities took place. Of the $3m advanced, St George (now Westpac) paid $2,988,049 to Perpetual for the discharge of the Perpetual Mortgage (the total pay-out figure was $3,023,424.09 which comprised two amounts: $805,623.80 and $2,217,800.29). The balance of $11,951 was paid to the Officer of State Revenue. A mortgage in favour of St George was granted to secure the Kekatos Facilities (the Westpac Mortgage).

Expiry of the Kekatos Facilities and consequential default

1. The Kekatos Facilities expired on 3 March 2013. The defendant did not repay the monies outstanding under those facilities on that day. On 15 May 2013 St George demanded repayment. On 30 August 2013 St George issued a default notice and notice pursuant to s 57(2)(b) of the Real Property Act 1900 (NSW), which were served on the defendant. She failed to comply with the default notice and the statutory notice.
2. The defendant has not made any payments to Westpac since prior to her default on 3 March 2013. She continues to reside in the Property. As at 23 January 2012 Westpac obtained a valuation of the Property which was said to have a market value, as at that date, of $4.75m.

The commencement of these proceedings and the application for default judgment

1. Westpac (the successor to St George) commenced these proceedings on 9 December 2013 to enforce the Westpac Mortgage. As against the defendant it sought: possession of the Property; leave to issue a writ of possession and judgment for $15,776,144.23, being the amount outstanding under the Kekatos Facilities and the guarantee given by the defendant in respect of the indebtedness of Bronte Properties under the Bronte Facilities.
2. On 31 January 2014 Westpac obtained default judgment against the defendant, including an order for possession of the Property and leave to issue a writ of possession. The default judgment was obtained as the defendant had not filed a defence.
3. On 26 March 2014 the defendant swore an affidavit which included the following paragraphs: "8 I am the registered proprietor of the property subject to these proceedings being the land comprised in Folio Identifier 5/16538 and known as 41 A New South Head Road Vaucluse, which I will refer to as '41A New South Head Road'. 9 I alone purchased 41A New South Head Road in April 1992. The purchase price was $781,000.00. I paid the deposit. I obtained a mortgage from Westpac. I borrowed more than the purchase price as I borrowed money to undertake renovations. I was able to do this as I used my apartment in Darling Point as security. … 11 I refer to Mortgage No 5442183 to St George Bank Ltd [the 1998 St George Bank Mortgage]. I agreed to this mortgage and I was fully aware of the amount being borrowed and the reason for the borrowing. In 1998 Jerry decided to move the accountancy practice from Parramatta. I found a commercial property in Burwood ("the Burwood Property") and Jerry and I agreed that this property was suitable for the practice and that it should be purchased. The purchase price was $1.6 million. A mortgage on 41A New South Head Road was given to secure the purchase money. 12 The signature on Mortgage No. 9928568 [the AMP Mortgage] is my signature. … 14 …As at 2006 I believed that 41A New South Head Road was encumbered for the original amount borrowed and also for an amount to secure the borrowing on the Burwood Property. . . . 32 One day in January 2008 my husband said to me: 'You have to come and sign some documents.' I said, 'What for.' He said, 'I'll tell you when I see you, just come and sign them, it will take a few minutes. There is nothing to them.' 33 I was given an address in Alexandria. 34 I went to the address and went into an office and into a meeting with Jerry and one other person. I do not recall the person's name. I now assume it was someone from Westpac. 35 I was shown some documents. The person said to me: 'Have these documents been explained to you.' I said, 'No.' Jerry said, 'just sign.' I just looked at my husband and thought: 'What am I going to do, I have to go home and face him in front of my three children if I don't sign.' …. 37 I refer to mortgage No. 818655 [the Westpac Mortgage]. The signature, which purports to be mine, is not my signature. I do not know who the purported witness, Peter Joseph Duggan is. I do recognise the address, 111 Elizabeth Street Sydney, as where my cousin Paul Satouris worked. He worked for McLachlan Chilton. Paul was not our solicitor. 38 If I was told at the time that 41A New South Head Road was encumbered for $3 million I would not have signed any documents. I would have been angry. I would have walked out. I would have said to Jerry when I saw him, 'I want the debt paid before you go ahead with any development.' I would have withdrawn from him until this was done. 39 I did not know what I signed. I did not know the effect of what I signed. I [sic] did not occur to me that what I was signing put my home at risk. The prospect did not cross my mind."
4. On 27 March 2014 the defendant applied for, and this Court ordered, a stay of the writ of possession in respect of the Property. The Court directed the defendant to serve a copy of the order for the stay and a copy of her affidavit on the plaintiff's solicitor. The matter was stood over to the Registrar's list on 3 April 2014.
5. By email dated 27 March 2014 sent at 1.04pm the defendant's solicitor sent the following documents to Fintan O'Connor, a solicitor employed by Gadens, Westpac's solicitors: a letter; the orders made by the Court; the defendant's motion; an affidavit in support of the motion; and a notice of appearance.
6. On 2 April 2014 the defendant filed: a notice of motion seeking an order that the default judgment be set aside; her affidavit of 26 March 2014 referred to above; and an affidavit from Brooke Payne, an employee of the defendant's solicitors, which annexed the defendant's proposed defence and cross-claim. Notwithstanding [37] of the defendant's affidavit of 26 March 2014 (set out above), she made no allegation in either her proposed defence or cross-claim that she had not executed the Westpac Mortgage. She alleged in [5] of her draft defence: "The First Defendant relies on the matters set out in her Cross Claim but concedes if the matters set out in her Cross Claim are unsuccessful the Plaintiff is entitled to the relief sought in prayers 1(a) and 1(b) of the Statement of Claim and concedes that the Plaintiff is entitled to a monetary judgment though she does not admit the amount."
7. By email of 2 April 2014, sent at 11.42am, Ms Payne served on Mr O'Connor the notice of motion; the affidavit of Ms Payne sworn 1 April 2014 and the defendant's affidavit of 26 March 2014. At 5.41pm on 2 April 2014 Mr O'Connor sent an email to Michael Grace, a Senior Manager at Westpac, forwarding the documents he had received from Ms Payne that day. The email contained the following passage: "Proposed defence and cross-claim Ms Kekatos' defence and cross-claim are based on unconscionable conduct. She alleges: She was forced by Jerry Kekatos to sign the mortgage, guarantee and loan agreements. She did not have the documents explained to her; and She did not understand what she was signing; and She did not sign the mortgage on her property at 41A New South Head Road. Based on the above, she seeks to set aside the facilities, the guarantee and mortgage under the Contracts Review Act. On its face, it appears that Ms Kekatos has raised an arguable defence however given these are fresh allegations, the Bank may wish to investigate the merits of these allegations and be provided with an opportunity to respond. Way forward We recommend that these motions be stood over for two weeks to investigate Ms Kekatos' allegations and consider whether to oppose the motions or allow the defence and cross-claim to be filed. . . ."
8. On 3 April 2014 the stay was extended until 9am on 17 April 2014 and the defendant's notice of motion was stood over to 16 April 2014. At 3.26pm Mr O'Connor reported what had occurred in Court that morning to Mr Grace by email.
9. On 4 April 2014, at 8.44am, Mr O'Connor sent an email to Mr Grace seeking his instructions to send a letter to Peter Duggan, who had apparently witnessed the defendant's signature on the Westpac Mortgage (and another person who had apparently witnessed her signature on the caveat). The draft letter was attached to the email.
10. Mr Grace responded on 4 April 2014 at 9.02am. His email read in part as follows: "It's exactly the information we require of these parties. Please issue the letters. . . . Are we to believe that Jerry [Kekatos] forced her to sign these too or that Jerry forged her signature on all these documents?"
11. Mr O'Connor sent another email to Mr Grace at 11.11am in which he wrote, in part: "Agree with your comments. I will review the files we have here and start to extract all documents with Vicki Kekatos's signature on it. It is unlikely to be enough to successfully oppose the notice of motion to set aside the default judgment, but it will certainly be information required for any substantive proceedings and would go to Mrs Kekatos's credibility. To successfully oppose the motion the Bank needs to show: There was significant delay in taking steps to have the judgment set aside and there will be prejudice to the Bank arising from the delay; and The prospects of success in the proceedings. Although Vicki has delayed, the delay would not be significant enough to prevent the setting aside of the judgment. Further no clear prejudice to the Bank has accrued given it has not actually taken possession yet. This leaves the Bank with the no prospects of success limb. Typically the court will look for manifest errors in the legal arguments proposed that would mean there is no hope for the defence succeeding. Generally for the purposes of determining the motion, the court takes the facts asserted by the defendant at their highest. Unfortunately Mrs Kekatos's defence from [a] legal perspective is not so hopeless that it would fit that category (if her version of events is believed). In rare circumstances the court may consider refusing an application to set aside a default judgment, if there is clear and incontrovertible evidence that shows the facts asserted by the defendant are incorrect. If Mr Duggan has clear evidence he witnessed her sign the mortgage and has a contemporaneous file note, and say a photo copy of Mrs Kekatos' licence, this may be sufficient for the court to allow the Bank to succeed in opposing the application. As discussed, once facts come into dispute the court is more inclined to require the case to proceed as it will want to have the evidence tested in a proper hearing. Please do not hesitate to call me if you wish to discuss."
12. By letter dated 7 April 2014 Gadens wrote to Mr Duggan asking for his confirmation, by 11 April 2014, that he knew the defendant; that he witnessed her signing the Westpac Mortgage; and that he was prepared to provide an affidavit to that effect.
13. On Friday 11 April 2014 Mr O'Connor sent an email to Mr Grace which recorded that he had met with Mr Duggan who had told him that it appeared to be his signature on the Westpac Mortgage but he could not specifically recall meeting the defendant and did not have access to his files. Mr O'Connor's email to Mr Grace concluded as follows: "Default judgment Unfortunately without a clear recollection of events, and file note of the meeting, it is unlikely the Bank will succeed in opposing the application to set aside the default judgment. We recommend consenting to the default judgment being set aside. Any orders will include an order for costs for the Bank in setting aside the default judgment. Let us know if you agree with this course of action. Feel free to call me if you have any queries."
14. On 16 April 2014 Westpac consented to the setting aside of the default judgment and orders were made by the Court accordingly. The consent orders handed up read as follows: "By consent, the Court orders that: 1. The default judgment entered in favour of the plaintiff on 31 January 2014 be set aside. 2. The first defendant to pay the plaintiff's costs thrown away as a result of setting aside the default judgment, as agreed or as assessed. 3. The first defendant be granted leave to file and serve a defence by 23 April 2014 in the form annexed as "A" to the affidavit of Brooke Payne dated 1 April 2014. 4. The first defendant be granted leave to file and serve by 23 April 2014 a statement of cross-claim in the form annexed as "B" to the affidavit of Brooke Payne dated 1 April 2014. 5. The plaintiff to file and serve defence to the first defendant's cross-claim by 21 May 2014. 6. The matter be listed for further directions on 23 May 2014. 7. The first defendant's notice of motion filed on 2 April 2014 is otherwise dismissed. 8. Liberty to restore on 3 days' notice."
15. As at 26 August 2014 the amount outstanding under the Kekatos Facilities was $3,596,723.95 made up as follows: Facility Amount First $1,707,256.46 Second $803,422.21 Third $502,144.13 Interest $585,901.15

Westpac's application for summary judgment in September 2014

1. On 5 September 2014 Westpac filed a notice of motion for summary judgment against the defendant and Jerry Kekatos, her husband, who was the third defendant. Westpac filed an affidavit of Mr Grace sworn 2 September 2014 in support of its motion in which Mr Grace set out the basis of its claim, exhibited relevant documents and deposed, in [20]: "Kekatos Facilities - Summary Judgment 20 I believe that Mrs Kekatos does not have a defence to St George's claim for judgment for possession of the Property or for the debt owing under the Kekatos Facilities, so far as the debt relates to the refinance of Mrs Kekatos' earlier mortgage to Perpetual Limited…"
2. The defendant swore an affidavit on 22 September 2014 in which she described her occupation as "sports coach". She swore in part as follows: "1 I am the first defendant. I have previously sworn an affidavit in these proceedings on 26 March 2014 ("my First Affidavit"). 2 I refer to Exhibit MG-1 to the affidavit of Michael Grace sworn on 2 September 2014. … 6 At pages 8 [her acceptance of Westpac's offer of the Kekatos Facilities] and 9 [her signature as a director of Kekatos & Partners Pty Ltd to execute a guarantee of the Kekatos Facilities by Kekatos & Partners Pty Ltd] of Exhibit MG-1 there are [sic] what appears to be my signature with the date 15 February 2008. I have no recollection of signing such a document and no recollection of ever signing any document where Nick Delaveris was the witness to my signature. 7 I was not aware in 2008 or at any time until these proceedings had commenced that I had agreed to borrow or borrowed $3,000,000 from St George Bank."
3. Westpac's motion for summary judgment was heard by Hamill J on 22 September 2014. Judgment was delivered on 19 December 2014: Westpac Banking Corporation v Kekatos [2014] NSWSC 1802. Westpac succeeded in obtaining summary judgment against Mr Kekatos (the third defendant) but not against the defendant. It was not contended by the defendant that Hamill J's refusal of Westpac's application for summary judgment foreclosed Westpac's present application.
4. The evidence before Hamill J was materially different from the evidence before me on the present application. Before Hamill J, the defendant disputed that she had signed the Perpetual Mortgage. The significance of this matter appears from the following passage from his Honour's reasons: "[11] …However, she appears to dispute the signature on the mortgage to Perpetual Limited. [19] …She also contends in the cross-claim that she should be relieved of liability altogether. This appears to be on the basis that, while the money was applied to pay out the Perpetual mortgage, that mortgage itself was not actually executed or signed by her. Accordingly, it will be contended that she received no benefit in discharging the Perpetual mortgage because that mortgage was itself unenforceable: cf Bank of Western Australia v Tannous [2010] NSWSC 1319 at [33]-[34]. [21] It is unnecessary to detail all of the evidence in the first defendant's affidavit dated 26 March 2014 other than to note the contents of para 14: 14. The signature, which purports to be mine, on Mortgage AD 767949 is not mine. I do not know how and did not know until the commencement of these proceedings that 41A New South Head Road had been mortgaged to Perpetual Limited, or for the amount of $2.5 million. As at 2006 I believed that 41A New South Head Road was encumbered for the original amount borrowed and also for an amount to secure the borrowing on the Burwood Property. I believed that the amount secured to repay the amount borrowed to secure the loan used to buy the Burwood Property did not put me at risk of losing my home as the sale of the Burwood Property would cover the amount owing."
5. Justice Hamill, at [37], cited Sackville AJA (with whom Beazley P and Gleeson JA agreed) in First Mortgage Managed Investments Pty Ltd v Pittman [2014] NSWCA 110 and continued: "[38] His Honour at [182]-[183] accepted a submission that Trimarchi [St George Bank Ltd v Trimarchi [2004] NSWCA 120] had been misapplied in that case and that it stood "for the proposition that an unjust loan or mortgage can be declared wholly unenforceable under the Act even if the borrower uses the funds advanced to discharge a pre-existing liability, but only if the borrower establishes that the pre-existing liability arose under a transaction that could have been avoided at the suit of the borrower. [39] The first defendant's case on these issues may be weak in view of the history of the matter and the flow of money as established by the plaintiff's evidence. But I am unable to conclude that it is hopeless or so obviously untenable that it is destined to fail. If it was accepted at trial that the first defendant did not sign the documents associated with the Perpetual mortgage, it is conceivable that the trial Judge may find that it could have been avoided at the suit of the first defendant. It may be held that the principles applied and discussed in Trimarchi and Tannous would lead to some relief, including in relation to the principal sum."
6. It can thus be seen that his Honour's refusal of Westpac's application rested on the proposition that there was an issue to be tried because the defendant denied executing the Perpetual Mortgage, which was discharged by the Westpac Mortgage. In these circumstances his Honour appears to have considered it to be arguable that she did not obtain a benefit from the monies advanced by the Westpac Mortgage, although they were used to pay out the Perpetual Mortgage.
7. On 28 January 2015 the defendant filed a further amended defence in which she added to [4] of her amended defence, the following with respect to the alleged benefit (or lack thereof) that she had obtained from the Kekatos Facilities: "The First Defendant admits paragraphs 2(d), 5, 6, 7, 14, 15, 17, 18, 19, 22 and 25, but relies on the matters pleaded in her cross claim but in doing so says that, in so far as the plaintiff advanced credit to the first defendant in accordance with the Kekatos Facilities, such moneys as were purportedly advanced to the First Defendant were advanced in circumstances where the first defendant: a. was unaware that such moneys were, or were purportedly, to be advanced to her; b. was unaware that moneys had been so advanced; c. did not at any time have the use or benfit [sic] of such moneys; In circumstances of which the First Defendant is not liable to the Plaintiff in respect of the said moneys."
8. On 9 February 2015 directions were made requiring the defendant to file and serve all her expert and lay evidence. She swore an affidavit on 26 March 2015, which was filed on 27 March 2015, in which she deposed in part as follows: "2. I have had access to Exhibit MG-1 to the Affidavit of Michael Grace of 2 September 2014. Mortgage to Perpetual Limited of 17 November 2006; page 145 of Exhibit MG-1 … 5 In November 2006 I believed my financial position to be as follows: a. My home, being the property of 41A New South Head Road, Vaucluse NSW 2030, was mortgaged to St George Bank Limited; b. 41A New South Head Road, Vaucluse NSW 2030 was worth about $3 million; c. The mortgage over 41A New South Head Road, Vaucluse NSW 2030 was about $800,000.00; … St George Bank Limited Mortgage of 3 March 2008; page 127 of Exhibit MG-1 of 3 March 2008 8 At paragraph 37 of my first affidavit dated 26 March 2014, I deny signing the St George Bank Limited Mortgage of 3 March 2008 [the Westpac Mortgage]. … 20 …I read the witnesses name as Steven Spyridinidis. He was an employee of Euro Fund Pty Ltd which was a branch of Kekatos & Partners Pty Ltd which gave out loans."
9. On 14 August 2015 the defendant filed a notice of motion to amend her cross-claim, which was made returnable before Davies J, the Possession List Judge, on 28 August 2015. On that occasion Westpac raised the apparent discrepancy between the defendant's sworn evidence (she had denied signing the Westpac Mortgage in her affidavits of 26 March 2014 and 26 March 2015) and her further draft amended cross-claim in which she claimed relief on the basis that she had signed documents, including the Westpac Mortgage, as a result of emotional pressure applied by her husband, without really appreciating the purpose of the documents she signed. Mr Moujalli, who appeared for Westpac on that day, made the following submission: ". . . the difficulty for the plaintiff is: this matter has now been on foot for some 18 months, and the plaintiff still does not know whether the cross‑claimant is asserting that she signed these documents but is entitled to a refund for the Contracts Review Act; or whether she's asserting she did not sign these documents, in which case they're fraudulent and if that is the case then she cannot possibly plead as to the circumstances in which they were signed. And your Honour, as a matter of procedural fairness and if the objectives of s 56 are to be achieved, surely it's reached the stage where the plaintiff is entitled to know exactly what the cross‑claimant's position is in relation to the signing of these documents."
10. Justice Davies, after hearing from Mr Allen, who appeared for the defendant, said: "HIS HONOUR: Then I think we need another affidavit from her to tell us that, and to explain why she denied signing them before. Because in the face of her affidavit, I'm not going to permit you to rely on this cross‑claim. And in fact, it isn't only paras 19(a) to 19(c), but it might be a lot more of it because if she denies signing them, she can't get relief under those Acts [Contracts Review Act and Trade Practices Act 1974 (Cth) and Australian Consumer Law]."
11. At the conclusion of the directions hearing, Davies J directed the defendant to serve, on or before 1 pm on 4 September 2015, a further affidavit which addressed such matters, in order that her application to file a further amended cross-claim could be heard at a later date in light of the further affidavit.
12. The defendant swore an affidavit on 3 September 2015. The following paragraphs from that affidavit were tendered by Westpac in the hearing before me: "1 I am the first defendant. 2 I refer to my affidavits of 26 March 2014 and 26 March 2015. In those affidavits I give evidence that I do not recognise or that I deny signatures on various documents relied upon by the plaintiff. 3 I now accept that the signatures on the documents, between me and the plaintiff, the subject of these proceedings, are my signatures. 4 I had always accepted that I signed in early 2008 some documents for the plaintiff and that I signed further documents for the plaintiff in June 2011. This acceptance is in my Defence and in my affidavit of 26 March 2014. 5 In late 2014 I saw all of the documents relied upon by the plaintiff for the first time. This was after I filed my Defence and Cross Claim. The documents were in Exhibit MG-1 to the affidavit of Michael Grace of 2 September 2014. When I looked at these documents I thought that I did not sign all of them. I had previously denied in an affidavit, but not in my Defence, that I had signed Mortgage 818655 [the Westpac Mortgage]. The affidavit was sworn before I filed my Defence. 6 I accept now that the signatures are mine. 7 When I swore my affidavit of 26 March 2015 I believed what I was saying was the truth. I do not wish to rely on this affidavit anymore beyond paragraph 5. I acknowledge that the evidence in paragraphs 6 to 23 is not the truth…"

The parties' submissions

1. Westpac contended that it had given its consent to the setting aside of the default judgment on the basis of the defendant's false evidence that she had not signed the Westpac Mortgage. It submitted that the defendant ought not be permitted to profit from her own wrong; that Westpac ought not be held to a consent which it had given on a false basis engendered by the defendant; and that the Court ought not allow orders obtained on a false basis to stand.
2. Westpac submitted that the default judgment ought be reinstated because the basis on which it was set aside was a false affidavit sworn by the defendant. It submitted that, in these circumstances, the Court ought return the parties, and the proceedings, to the status quo ante, which meant that the defendant was obliged to persuade the Court that the (notionally restored) default judgment ought be set aside.
3. Westpac further contended that Hamill J's refusal of its application for summary judgment did not amount to an impediment to my making the orders it sought since the refusal turned on Hamill J's understanding that there was an issue whether the defendant had executed the Perpetual mortgage (and therefore an issue whether she obtained the benefit of the refinance effected by the Westpac mortgage). As there was no issue before me about the defendant's execution of the Perpetual Mortgage, this constituted a material change in circumstances which entitled this Court to revisit the question. Westpac contended that it was not obliged to discharge the onus of satisfying me that it was entitled to summary judgment based on the Kekatos Facilities since the relevant question was whether the default judgment ought be reinstated. In the alternative, Westpac contended that it had discharged the onus for summary judgment in respect of its claim for possession and for judgment for a monetary sum for amounts referable to the refinancing of the Property and the Burwood Property.
4. Westpac contended that, in so far as the relief to be granted was a matter of discretion, I should take into account the prejudice it has suffered as a result of the delay between the entry of default judgment on 31 January 2014 and the present application. It relied on the value of the Property (which was, as at 23 January 2012, $4.75m) as compared with the amount of the debt. As at 18 September 2015 the amounts owing totalled $21,696,456.47 which comprised: a sum in the order of $2.5m under the two parts of the Kekatos Facilities which were refinanced; the third part of the Kekatos Facilities ($501,332.05); interest on the three loans that comprised the Kekatos Facilities ($868,659.57); and the amounts owing under the Bronte Facility ($17,819,804.59).
5. The defendant submitted that, since she relied on the Contracts Review Act 1980 (NSW) in respect of both the Kekatos Facilities and the Bronte Facilities, she ought not be subjected to an application for summary judgment and that, since she had filed a defence, there was no longer any basis for a default judgment. She referred to Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41 in support of the proposition that the relief to be granted under the Contracts Review Act involves a two-stage process which requires the Court to determine whether the contract is unjust before considering whether relief ought be granted.
6. The defendant also relied on First Mortgage Managed Investments Pty Ltd v Pittman (and in particular [187] per Sackville AJA) in support of her contention that whether a borrower obtains a benefit under a contract is not dispositive of the questions: whether the contract will be set aside as unjust; and whether any relief will be granted under the Contracts Review Act. The defendant submitted, further, that she bore no onus, since Westpac was the party which sought the orders in the notice of motion and, accordingly, it bore the burden of persuading the Court that the default judgment ought be reinstated. Mr Allen, who appeared on behalf of the defendant, submitted that there could be no expectation that she would get into the witness box to defend a notice of motion of this nature.
7. The defendant did not contend that she was entitled to relief on the basis of Yerkey v Jones (1939) 63 CLR 649 or Garcia v National Australia Bank (1998) 194 CLR 395. I apprehend, although it was not articulated, that it was accepted that she would not be entitled to such relief as she was not, relevantly, a volunteer: Garcia v National Australia Bank at [33]. Mr Allen accepted that the defendant had received a benefit as a result of the Westpac Mortgage. Although Mr Allen was not prepared to quantify the benefit the defendant had obtained, I note that the defendant herself admitted, in her affidavit of 26 March 2014 that she was aware as at 2006 that the Property was encumbered by the debt for its purchase and also the amount borrowed to purchase the Burwood Property. These amounts totaled approximately $2.5m.
8. The defendant submitted, further, that the consent orders amounted to a contract between the parties and that it was, accordingly, necessary for separate proceedings to be brought by Westpac to set them aside as they were enforceable per se. Mr Allen submitted that her client made an innocent misrepresentation (that she had not executed the Westpac Mortgage) and that Westpac had to prove, in order to set the contract aside, that it had relied on the innocent misrepresentation. Mr Allen contended that as no employee of Westpac with the requisite authority had given sworn evidence that he or she had relied on her representation, Westpac could not establish that the contract evidenced by the consent orders ought be set aside.

The relevant legislative provisions and rules

1. Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 14.3(1) requires a defendant to file a defence within 28 days of service of a statement of claim. Failure to file a defence within that time amounts to a "default": UCPR 16.2(1)(a). Where the defendant is in default, the plaintiff may apply for default judgment: UCPR 16.3(1)(a). Default judgment may be given for a monetary sum and for possession: UCPR 16.8. A default judgment may be set aside after it has been entered, unless it has been given in open court: UCPR 36.16(2)(a).
2. UCPR 36.15 provides: "36.15 General power to set aside judgment or order (1) A judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith. (2) A judgment or order of the court in any proceedings may be set aside by order of the court if the parties to the proceedings consent."
3. UCPR 13.1 provides in part: "13.1 Summary judgment (1) If, on application by the plaintiff in relation to the plaintiff's claim for relief or any part of the plaintiff's claim for relief: (a) there is evidence of the facts on which the claim or part of the claim is based, and (b) there is evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed, the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires."
4. Section 56 of the Civil Procedure Act 2005 (NSW) provides that the overriding purpose of the Act and of the rules of court is "to facilitate the just, quick and cheap resolution of the real issues in the proceedings". Proceedings in the court are to be managed having regard to matters including the just and timely determination of the proceedings. In deciding whether to make orders of a procedural nature and the terms in which such orders are to be made, the court is obliged to seek to act in accordance with the "dictates of justice". This requires the court to have regard to ss 56 and 57 and also certain enumerated matters in s 58(1)(b), including s 58(1)(b)(iv): the degree to which the respective parties have fulfilled their duties under s 56(3) (a party's duty to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court). Section 59 provides that the practice and procedure of the court should be implemented with the object of eliminating delay.

The relevant principles

1. A default judgment which has been regularly obtained will generally not be set aside unless the defendant files an affidavit which demonstrates a prima facie defence on the merits and an explanation of why a defence was not filed to the statement of claim within the requisite time. The reason for this requirement is that the defendant needs to show that there is utility in setting aside the default judgment (because there is a bona fide defence on the merits) and to explain why the default judgment was entered in order to have the Court's discretion exercised favourably: see the authorities referred to in Dai v Zhu [2013] NSWCA 412 at [89]-[91] per Sackville AJA (Barrett and Leeming JJA agreeing); and in Dunwoodie v Teachers Mutual Bank Ltd [2014] NSWCA 24 at [43]-[46] per McColl JA.
2. The demonstration of a bona fide defence on the merits requires the defendant "to show that the defence is asserted bona fide and that there is an arguable or triable issue": Dai v Zhu at [92] per Sackville AJA. Justice Hodgson said in Magnate Projects Pty Ltd v Youma Constructions (No 2) Pty Ltd [2005] NSWCA 331 at [52]: "In my opinion, an applicant seeking to set aside a judgment obtained after an undefended hearing does not have to show that a different result is likely should the judgment be set aside and a new trial ordered. However, the circumstances may be such, as Jordan CJ says, as to require "a reasonably clear case of merits to be shown"; that is, that it appear reasonably clearly that there is a defence capable of producing a different result. If that defence depends on facts, then there should be some evidence of those facts; and the circumstances may be relevant to the quality of the evidence that is required to show a defence on the merits in particular cases. Among such circumstances could be the degree of the applicant's default, and hardship to the respondent."
3. In the present case this requirement was apparently fulfilled by the defendant's swearing, on 26 March 2014, that she had not signed the Westpac mortgage. Westpac's consent to the setting aside of the default judgment was given, as the communications with its solicitors established, at least in part on the basis that there was a triable issue whether the defendant had executed the Westpac mortgage. I reject Mr Allen's submission that Westpac's reliance could only be established by sworn evidence of a duly authorised officer. Reliance can be proved, or inferred, from circumstances as well as by direct evidence: Gould v Vaggelas (1985) 157 CLR 215 at 236 per Wilson J. In my view, the communications between Mr Grace and Mr O'Connor in April 2014 which are set out above are sufficient to prove the connection between the defendant's evidence that she had not signed the Westpac Mortgage and Westpac's consent to the setting aside of the default judgment.
4. Subsequent events proved that the basis for the consent orders was incorrect since the defendant had, in fact, executed the Westpac mortgage and admitted that she had done so in an affidavit sworn on 3 September 2015.
5. In Permanent Trustee Co (Canberra) Ltd (Executor estate of Andrews) v Stocks & Holdings (Canberra) Pty Ltd (1976) 15 ACTR 45 (Stocks & Holdings), Brennan J, at 47-48, listed the three categories of exceptional circumstances in which a court would set aside a perfected judgment which was entered by consent: 1. Those "founded upon the inherent jurisdiction of the court to ensure that its procedures do not effect injustice"; 2. Those "which are authorised by statute"; and 3. Those "which override the general rule in order to give relief where the judgment is obtained by fraud or by an agreement which is void or voidable".
6. In my view the position is a fortiori when the order sought to be set aside is an interlocutory consent order, particularly one to set aside a default judgment, rather than, as in Stocks & Holdings, a judgment to give effect to an agreement, which was intended to finally dispose of the proceedings.

The jurisdiction to reinstate the default judgment and whether the discretion ought be exercised

1. The court's power to reinstate the default judgment (or, to put it another way, to set aside the consent order setting aside the default judgment) derives from its inherent jurisdiction and, if the consent order can properly be characterised as having been made "irregularly, illegally or against good faith", under UCPR 36.15(1). The circumstances in which Westpac was induced to consent to the order might be regarded as "against good faith" on the part of the defendant (she having sworn an affidavit, on which Westpac relied, which she later admitted to be false): see Roach v B & W Steel Pty Ltd (1991) 23 NSWLR 110 at 113-114. However, it is not necessary to determine this question as this Court has inherent jurisdiction to set aside an order, notwithstanding that it was made by consent, and notwithstanding that it has been entered.
2. In the present case I consider that categories (1) and (3) in Stock & Holdings apply. I am persuaded that it would tend to "effect injustice" (to borrow Brennan J's words) to allow the default judgment to stand in circumstances where the defendant has admitted that the basis on which I have found Westpac consented to orders setting it aside was false. In these circumstances, the defendant bears the onus of persuading this Court that the default judgment ought, on the new, and admitted facts, be set aside.
3. I reject the defendant's submission that it was necessary for Westpac to commence separate proceedings to have the consent orders set aside and the default judgment reinstated. Whatever may be the position where a judgment has either been entered as a result of fraud (not alleged in the present case) or constitutes a final judgment, it is, in my view, appropriate for a motion such as the present to be brought within the proceedings in which the order was made: see Romeo v Papalia [2012] NSWCA 221 at [79]-[81] per Sackville AJA. Any other course in respect of interlocutory orders would lead to an undesirable multiplicity of proceedings.
4. In order to decide whether Westpac is entitled to the relief sought, it is necessary to analyse, by reference to the narrative set out above, the circumstances in which default judgment was obtained and set aside, as well as the circumstances in which the application for summary judgment was refused.

Circumstances in which default judgment was obtained and set aside

1. Default judgment was obtained on 31 January 2014 because the defendant had not filed a defence to the statement of claim which had been filed on 9 December 2013. The first notice the defendant gave of a defence was the proposed draft attached to the affidavit of Ms Payne dated 1 April 2014. In her affidavit of 26 March 2014 the defendant swore that she had not executed the Westpac mortgage. The default judgment was set aside by consent because, as I have found above, Westpac had accepted Gadens' advice that, in circumstances where the defendant denied signing the Westpac mortgage, the Court would be likely to set aside the default judgment, thereby exposing Westpac to an adverse costs order on the defendant's motion for such an order. As the parties consented, the order was set aside under UCPR 36.15(2). I regard the defendant's sworn denial that she executed the Westpac mortgage as the principal reason why Westpac agreed to an order setting aside the default judgment.
2. The basis for Westpac's consent was, accordingly, removed by the defendant's affidavit sworn 3 September 2015 in which she accepted that she had signed the Westpac mortgage. I reject the defendant's submission that Westpac was entitled to rely, and ought to have relied, exclusively on the draft defence annexed to Ms Payne's affidavit and ought to have disregarded the defendant's sworn affidavit of 26 March 2014. I also reject the defendant's submission that Westpac had to prove that the affidavit was the sole reason it consented to the orders.
3. The proposed consent orders in the present case are to be distinguished from Paino v Hofbrauer (1988) 13 NSWLR 193 where the consent order was "based on a contract". Paino v Hofbrauer concerned a consent order which gave effect to a settlement agreement, in which the appellant had agreed to accept payment by installments of a lesser sum than the full amount of the agreed judgment. Justice McHugh considered that a party could not, except in exceptional circumstances, avoid the operation of an essential time clause in a settlement agreement by relying on the court's power to vary time stipulations in a consent order, where there was no entitlement to relief with respect to the underlying agreement. In the present case, where there is no enforceable underlying agreement, there is no impediment (such as in Paino v Hofbrauer) to this Court's setting aside or varying the order to set aside the default judgment.
4. In the present case, the proposed consent orders, which were handed to the Court and made on 16 April 2014, were neither an enforceable contract per se, nor based on an enforceable contract. They reflected no more than an acceptance by Westpac of the orders that were likely to be made by the Court if the motion were contested; and its consent to their being made without the need for the Court to hear and determine the defendant's notice of motion.
5. In my view, in order to retain the benefit of the setting aside of the default judgment, the defendant was, in effect, obliged to explain why she swore two affidavits a year apart (26 March 2014 and 26 March 2015) denying that she executed the Westpac mortgage, and then swore an inconsistent affidavit (3 September 2015) admitting that she had executed the Westpac mortgage. Further, the defendant was also, in my view, required to provide sworn evidence of a bona fide defence on the merits, that being the usual requirement for setting aside default judgment.

Circumstances in which the application for summary judgment was refused

1. Some time after the default judgment was set aside, Westpac applied for summary judgment against the defendant in respect of the Kekatos Facilities. As set out above, its application was refused on the basis that the defendant disputed that she had executed the Perpetual Mortgage (thereby leaving open the argument that she had not in fact benefited from the Westpac mortgage which had discharged the Perpetual Mortgage as she had not executed the Perpetual Mortgage). The defendant did not take any such issue in the hearing before me, nor was there any evidence that the defendant denied execution of the Perpetual Mortgage.
2. Moreover, the defendant's affidavit of 22 September 2014, which was read in opposition to the motion for summary judgment in the hearing before Hamill J, contains two paragraphs, [6] and [7] (set out above), which I take to be false in light of the following admissions: 1. that she was aware in 2006 that the Property was encumbered for its purchase price ($800,000) as well as for the amount to secure the loan for the Burwood Property ($1.6m) (in her affidavit of 26 March 2014); and 2. that she signed the Westpac Mortgage and associated documents (in her affidavit of 3 September 2015).
3. Accordingly I do not regard Hamill J's decision refusing summary judgment on the Kekatos Facilities as providing any basis for refusing the orders Westpac seeks before me. I reject the defendant's submission that there has been no relevant change in material circumstances in the period since Hamill J dismissed Westpac's application for summary judgment.

Summary of findings and the defendant's failure to give evidence

1. The defendant did not adduce any evidence before me, apart from documents that related to the advice Gadens had received from Westpac (relating to whether it should consent to the setting aside of the default judgment) and Ms Payne's affidavit annexing the draft pleadings. It is of particular relevance that the defendant did not give any explanation before me of how she had come to swear inconsistent affidavits. As she did not give evidence, she did not expose herself to cross-examination. Furthermore she exposed herself to a Jones v Dunkel inference that her evidence would not have assisted her to resist Westpac's application.
2. I am satisfied, on the basis of the evidence referred to above, of the following: 1. The defendant obtained the benefit of at least $2.5m of the Kekatos Facilities. The monies were used to discharge the Perpetual Mortgage and could be traced to the purchases of two properties of which she was the sole registered proprietor: the Property (in which she lived) and the Burwood Property (from which she conducted her accountancy business and received rent). 2. The defendant executed the Perpetual Mortgage and the Westpac Mortgage. 3. At all material times, including prior to executing the Perpetual Mortgage and the Westpac Mortgage, the defendant was an experienced accountant and business woman who had entered into various loan transactions and mortgages. She was a woman of substantial means, both in terms of assets and income. 4. The defendant's affidavit of 26 March 2014 (in which she relevantly denied executing the Westpac Mortgage) was inconsistent with her proposed defence annexed to Ms Payne's affidavit of 1 April 2014, which was based on the Contracts Review Act. In her affidavit of 26 March 2014 she gave evidence which, taken separately, could have supported each of the three possible defences to an action on a mortgage: first, she did not sign it; secondly, if she did sign it, she did not know what she was signing; and, thirdly, if she did sign it, she signed it knowing what it was, but because she was forced to sign it by her husband who applied emotional pressure to her. The defendant, until she swore her affidavit of 3 September 2015, can be taken to have maintained all three defences notwithstanding that they were inconsistent and irreconcilable and notwithstanding that her pleading did not include the allegation that she had not signed the Westpac Mortgage. 5. The defendant was prepared to swear two affidavits, a year apart, in which she denied executing the Westpac mortgage, although she subsequently admitted that this denial was not true. How she came to swear two affidavits which are relevantly inconsistent with the truth remains unexplained.
3. The defendant has not made any attempt to discharge the onus she bore of resisting Westpac's application to reinstate the default judgment. She has, I infer deliberately, refrained from giving sworn evidence on this motion. She has not deposed to any circumstances that would show that she has an arguable defence on the merits. Nor has she given evidence to explain why she swore false affidavits; why it took her so long to rectify the false impression she had created; and why she took no step of her own initiative to correct her false evidence but only swore the affidavit of 3 September 2015 when she was directed to do so by Davies J.
4. Although one can glean that the first affidavit which contained the false denial, sworn on 26 March 2014, was sworn before she examined the Westpac mortgage, the same cannot be said of the one sworn on the anniversary of the first, since, by that time, she already had a copy of the Westpac mortgage and could see for herself the page where she had apparently signed it. Moreover, her reiteration of her sworn evidence a year later means that the earlier affidavit cannot fairly be regarded as a momentary aberration. Although the defendant did not refer to Commercial Banking Co of Sydney Limited v Pollard [1983] 1 NSWLR 74, her opposition to Westpac's present motion appeared to be largely based on Rogers J's observation at 80, that it is generally inappropriate for a defence under the Contracts Review Act to be dealt with on an application for summary judgment.
5. I note further that Westpac's evidence (derived from statutory records and her own tax returns) as to her financial experience and acumen went entirely unchallenged. In these circumstances, I would not infer that she was ignorant of the forensic advantage that she would be likely to gain by swearing that she had not signed a mortgage when applying to set aside a default judgment or alleging a Contracts Review Act defence in the face of an application for summary judgment.
6. The present application is not principally an application for summary judgment: it is an application for a default judgment which was set aside by mistake, or on a false basis, to be reinstated. It was incumbent on the defendant to show that she is entitled to resist its reinstatement by demonstrating a bona fide defence on the merits and explaining her affidavits. Her defence under the Contracts Review Act is inconsistent with her evidence that she did not sign the document (and that therefore the signature, although apparently hers, was forged). The affidavit she filed in purported compliance with the directions of Davies J did not explain how this had happened. I am not satisfied that the defence has been raised bona fide.
7. Moreover, a Contracts Review Act defence will not usually give rise to relief where the defendant has obtained an incontrovertible benefit from a loan, since such enrichment is generally unjust. In the present case, Westpac has established that, at least in respect of the refinancing of the loans for the Property and for the Burwood Property, the defendant obtained a benefit in that the Perpetual Mortgage was refinanced by the funds secured by the Westpac Mortgage. The defendant did not challenge this evidence. Nor did her counsel cross-examine Mr Grace as to his belief that she had no defence to the claim based on the Kekatos Facilities in so far as it related to the monies advanced to discharge the Perpetual Mortgage.
8. I accept Westpac's submission that it did not have to discharge the onus that lay on an applicant for summary judgment. However, I consider that whether summary judgment would be ordered is a matter that I should take into account in determining whether, in the interests of justice, the orders Westpac seeks ought be made.
9. Westpac has established that the defendant obtained a benefit from these loans, being the discharge of the Perpetual Mortgage. The defendant accepts that she executed the Westpac Mortgage. There is no evidence that indicates that there is a triable issue about the justness of the Perpetual Mortgage or any of the anterior loans or mortgages referred to in the narrative. As is evident from Sackville AJA's judgment in First Mortgage Managed Investments Pty Ltd v Pittman, particularly at [182]-[188], the jurisdiction conferred by the Contracts Review Act does not lend itself to the making of hard and fast rules. However, there is considerable support in the authorities for the proposition that a contract will not generally be found to be unjust in so far as it confers a benefit on the borrower by way of the discharge of an antecedent debt which was not in itself unjust: Collier v Morlend Finance Corp (1989) NSW ConvR 55-473. This proposition, too, admits of exceptions. For example, at [187] in First Mortgage Managed Investments Pty Ltd v Pittman Sackville JA left open the possibility of an order declaring an unjust contract wholly unenforceable, notwithstanding that the borrower used part of the loan to discharge a valid and enforceable antecedent loan or mortgage. His Honour postulated that such an order may be appropriate in the following instance: "For example, the lender's actions may have deprived a vulnerable borrower of the opportunity to take an available course, other than refinancing through the lender, that would have permitted the borrower to pay out the earlier loan. A lender who is aware of a borrower's financial position might induce the borrower to take on commitments that are so burdensome and commercially unrealistic that the borrower defaults in all his or her obligations."
10. In the present case, the defendant has identified no basis on which earlier mortgages or loans would, or could, be set aside. She has admitted that she executed the Westpac Mortgage. She has admitted the incontrovertible fact that she obtained the benefit of the discharge of the Perpetual Mortgage. Although the defendant's counsel expressly relied on what Sackville AJA said at [187], the defendant adduced no evidence to show that the passage had any bearing on her situation. She has adduced no evidence that indicates that she is vulnerable or unaware of the commitments she was undertaking. To the contrary, Westpac has tendered evidence which establishes, at least prima facie, the defendant's economic experience, sophistication and comparative financial power vis-à-vis her husband as evidenced by her greater income. The defendant has not provided any basis for a conclusion that the detriment to Westpac as a result of the delay between the entry of default judgment and her correction of the record by the withdrawal of the evidence on which it was set aside can be undone otherwise than by either the reinstatement of at least part of the default judgment or an order for summary judgment.
11. I consider that Westpac has discharged the onus of showing that the defendant has no arguable defence with respect to the two loans incorporated within the Kekatos Facilities that refinanced loans with respect to the Property and the Burwood Property; and that it is entitled to summary judgment.
12. A further question arises as to the form of the appropriate orders. Westpac's primary submission is that it is entitled to have the default judgment reinstated. Its alternative submission is that it is entitled to an order for summary judgment for possession of the Property and for the sum of $2.5m plus interest. On balance I consider the former course to be the more appropriate since it more closely reflects what has occurred and why. In the exceptional circumstances of the present case, the defendant has failed to adduce evidence to dissuade me from reinstating the default judgment obtained by Westpac on 31 January 2014 and which was set aside by consent on 16 April 2014 on the false basis that she had engendered.
13. The interests of justice would not, however, be advanced by the wholesale reinstatement of the default judgment in circumstances where Westpac did not contend that there were no triable issues relating to that part of the Kekatos Facilities that related to the third aspect of the facilities (unrelated to the refinance of the Property or the Burwood Property) or the Bronte Facilities. The defendant is entitled, on the present state of the evidence, to have a final hearing on the merits in respect of these matters.

Other procedural matters

1. Westpac's notice of motion sought orders which included reinstatement of the default judgment, which in turn ordered possession of the Property and judgment for the whole amount outstanding. As the default judgment, if reinstated, would be "given in open court" within the meaning of UCPR 36.16(2)(a), the defendant's rights to set aside the judgment would be very limited and may be confined to an appeal. However, the defendant appeared not to appreciate, at one point in the hearing, that, if Westpac were successful, these orders would be made on a final basis. In order to make it even clearer on the face of the motion what orders were being sought I granted leave to Westpac to file an amended notice of motion setting out the orders sought in terms. Mr Castle, who appeared for Westpac, articulated the orders sought orally at the hearing of the motion on 26 October 2015 and the motion was filed in Court on 3 November 2015.
2. Mr Allen did not confirm that the defendant would not be giving evidence until after Westpac had closed its evidence in support of the notice of motion. Even in final submissions in reply Mr Castle reiterated his expectation that she would give evidence in the following terms: ". If my learned friend says he is surprised and he wants to bring an application that he can put Ms Kekatos in the box and read evidence from her so that she can be cross‑examined on, she should be here to be cross‑examined. That's why we were expecting to see Ms Kekatos. We served a notice on our learned friend. If they wanted to place reliance on her affidavits she should be here for cross‑examination. One can't constantly, as it were, delay the inevitable in relation to that bit which is beyond our argument."
3. Notwithstanding this submission, Mr Allen made no application for leave to re-open to call the defendant to give evidence. I am satisfied that the defendant's choice not to give evidence was a deliberate forensic one.

The defendant's notice of motion to file an amended cross-claim

1. The defendant's motion for leave to amend her cross-claim has been subsumed in Westpac's motion. It was not separately addressed by the parties. Having regard to the orders I propose to make, it is not necessary to make orders dealing with that motion other than to make provision for leave to be granted to the defendant to file a further defence and cross-claim limited to the Bronte Facilities and the third aspect of the Kekatos Facilities.

Orders

1. I make the following orders: 1. Set aside the order made on 16 April 2014 that default judgment be set aside in so far as it is necessary to give effect to orders (2), (3), (4) and (5) below. 2. Order that the default judgment entered on 31 January 2014 be reinstated in part as set out in orders (3) and (5) below. 3. Judgment for the plaintiff against the first defendant for possession of the land comprised in folio identifier 5/16538 being the land situated at and known as 41A New South Head Road, Vaucluse, New South Wales, 2030. 4. Grant leave to issue a writ of possession with respect to (3). 5. Judgment for the plaintiff against the first defendant in the sum of $2,500,000, being the amount owing in respect of the First Facility and the Second Facility referred to in paragraphs 5(a) and (b) in the statement of claim, plus interest payable in respect of each of those Facilities. 6. Direct the parties to provide a minute of order setting out the amount of the judgment sum (including interest to date) to my Associate within seven days so that an order for judgment can be made and entered in chambers for that sum. 7. Strike out the first defendant's further amended defence and amended cross claim. 8. Grant leave to the first defendant to file a further defence and cross-claim limited to the Third Facility referred to in paragraph 5(c) of the statement of claim and the Bronte Facility referred to in paragraph 8 of the statement of claim. 9. Unless any party makes an application in writing to my Associate within seven days hereof for a different order, order the first defendant to pay the plaintiff's costs of the plaintiff's motion filed on 4 September 2015.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 November 2015