Westpac v Bagshaw & Anor

Westpac Banking Corporation (Plaintiff)

v PARTIES : Leith Gordon Bagshaw (First Defendant)

Judith Hampton Bagshaw (Second Defendant) JUDGMENT OF : Davies AJ

P: Mr S A Gregory COUNSEL : 1D: No Appearance 2D: Mr G Stevens P: Henry Davis York SOLICITORS : 1D: In person 2D: Richard A Licardy & Co CATCHWORDS : Mortgage - whether executed on misrepresentation - whether executed in presence of bank officers - whether mortgage security for moneys owing - whether moneys lent to others without authority - whether partnership - whether misleading and deceptive conduct - whether unjust contract - whether enforcement of mortgage unconscionable Supreme Court Rules, Pt7r8 LEGISLATION CITED : Trade Practices Act 1974 (Cth), ss 52, 87 Contracts Review Act 1980, s 6 NZI Capital Corporation Ltd v Fulton (Federal Court, Black CJ, Davies and Lehane JJ, unrep, 10/6/98) CASES CITED : Yerkey v Jones (1939) 63 CLR 649 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 Garcia v National Australia Bank Ltd (1998) 194 CLR 395 DECISION : See paragraphs 50-52

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

7 JULY 2000 11751/94 - WESTPAC BANKING CORPORATION v Leith Gordon BAGSHAW & ANOR JUDGMENT 1 HIS HONOUR: The plaintiff is Westpac Banking Corporation ("Westpac") which, in 1982, by the Bank of New South Wales (Change of Name) Act, 1982, changed its name from Bank of New South Wales. Westpac sues under a mortgage over 16 Woodridge Place, Baulkham Hills, the matrimonial home of the defendants, Leith Gordon Bagshaw and his wife, Judith Hampton Bagshaw. Prior to the institution of proceedings, Mr Bagshaw was declared bankrupt. Mr Bagshaw has played little part in the proceedings, not only because his interest in the land and his monetary obligations to Westpac have become the responsibility of the trustee in bankruptcy, but also because Mr Bagshaw has failed to purge his contempt by complying with orders made by Justice Dowd. On 11 April 2000, Justice Dowd ordered that, if Mr Bagshaw failed to comply by 19 April 2000, which he did, he was not permitted to rely upon his defence or cross-claim at the hearing of these proceedings. The trustee in bankruptcy was given notice of the proceedings but did not wish to be involved. 2 The matter has thus proceeded on Westpac's claim for possession of the property and for monetary orders against Mrs Bagshaw. Mr Bagshaw submitted, in substance, that Westpac could not proceed with its claim for possession against him as it could not establish that he owed money to Westpac. Mr Bagshaw submitted that that issue would only be established when and if Westpac lodged a claim and the trustee in bankruptcy admitted the claim. In my opinion, however, Westpac is not precluded from pursuing its claim for possession. Westpac must show that there has been a default; but its claim is not a monetary claim. 3 At the hearing, Mr S A Gregory of counsel appeared for Westpac and Mr G Stevens of counsel appeared for Mrs Bagshaw. Mr Bagshaw was called to give some short evidence and, being an occupier of the land, he was invited to make any submission he wished to make in his capacity as an occupier who had been given notice in accordance with Pt 7 r 8 of the Supreme Court Rules. Mr Bagshaw chose to address only on the issue of the impact of the bankruptcy. 4 Most of the hearing was taken up with the points raised in Mrs Bagshaw's amended defence and cross-claim. In her defence, Mrs Bagshaw, inter alia, alleged that she executed the subject mortgage only after Mr Bagshaw had represented to her that the purpose of the mortgage was to secure a borrowing of $30,000 and that that borrowing would be repaid to Westpac within three months. The defence also alleged that the mortgage was signed by Mrs Bagshaw in the presence of Mr Bagshaw alone and not in the presence of an officer of Westpac; that Mrs Bagshaw had not been shown a copy of Memorandum No. R404835 filed in the office of the Registrar General to which the mortgage referred; that Westpac procured Mr Bagshaw to act as its agent in obtaining Mrs Bagshaw's signature; that Westpac did not disclose to Mrs Bagshaw that Westpac would use the mortgage as security for moneys due by Mr Bagshaw or that it would hold Mrs Bagshaw liable to repay moneys lent to Mr Bagshaw; that prior to signing the mortgage Mrs Bagshaw obtained no independent legal advice and was not advised to do so; that Mrs Bagshaw had been given no opportunity to negotiate the terms of the mortgage; that the language of the mortgage was incomprehensible to her; and that the provisions of the mortgage were not adequately explained. A further defence taken was that Westpac failed to notify Mrs Bagshaw that Westpac was lending moneys to Mr Bagshaw that would be repayable pursuant to the mortgage. On these facts, Mrs Bagshaw sought an order that the mortgage be set aside and/or varied under s 87 of the Trade Practices Act, 1974 (Cth) or under the Contracts Review Act, 1980 or under the equitable principle of unconscionability. The cross-claim substantially repeated the same points. The cross-claim also sought a declaration that Mrs Bagshaw had a 62.5% interest in the subject property and that Mr Bagshaw's interest was only 37.5%. However, this claim was not pursued at the trial. Indeed, it could not have been pursued without the joinder of the trustee in bankruptcy. 5 The substance of Mrs Bagshaw's case was put in her affidavit of 18 May 1995 in these terms:

"3. The facts and circumstances surrounding my signature to that mortgage were that in 1981 the home at 16 Woodridge Road, Baulkham Hills was unencumbered and had been owned by me and my husband, the First Defendant in these proceedings for about 10 years.

Some time in December 1981 I had a conversation with the First Defendant to the following effect:

First Defendant: 'I have a mortgage for you to sign as I am doing a subdivision at Astoria Park and need to buy a loader for the job. It is cheaper to buy a machine than to hire one and have to wait for it. I have found a machine that is suitable which is about $30,000.00.'

Me: 'I would rather borrow the money and not mortgage the house.'

First Defendant : 'This is a form of borrowing and is only short term. When I receive the money for the job I will pay back the Bank.

After dinner the First Defendant produced the mortgage form and said words to the following effect: 'Don't worry, the $30,000.00 will be paid back in three months. I have already organised with the bank to get the money and to pay them back when the job is finished.'

I then signed the mortgage in the presence of the First Defendant. I did not sign in the presence of S. Bartolillo and do not recall ever meeting that person.

I was not shown the document which is annexure 'B' to the Affidavit of Mark William Hilton sworn 5th April 1995 at the time that I signed the mortgage.

I did not receive any of the money, if any, which was lent by the Plaintiff and if any further moneys were lent over and above the mortgage to any person, I have not received any of those moneys, nor have I been notified about them." 6 The facts of the matter were, however, entirely different. I shall discuss the facts under several headings.

Partnership 7 Despite the implied allegation in Mrs Bagshaw's pleading that she was not in partnership with her husband and despite Mr Stevens' submission that that was so, it is clear that Mrs Bagshaw was a partner with her husband in the business of Bagshaw Development Hire and in associated business activities from 1975 onwards. No written partnership agreement has been produced although partnership tax returns referred to "terms allowed under the partnership agreement". However, the application for registration of the business name, Bagshaw Development Hire, was signed by both Mr and Mrs Bagshaw, each of whom was described as a person to be registered as carrying on business under that name. From the commencement of the business in 1975, annual tax returns showed Mr and Mrs Bagshaw as partners in the business. The principal bank account kept with Westpac, account No. 13-0146, was maintained in the name of "Bagshaw Development Hire" of which the particulars were "Mr & Mrs L G Bagshaw 16 Woodbridge Pl Baulkham Hills". The earliest statements of account are not in evidence but there are statements from the end of 1979, when the account had a modest credit of $373.62, to 31 July 1989, when the account had a debit of $887,819.59 and for some years thereafter. As Mrs Bagshaw attended to much of the secretarial work that was involved in the business, I have no doubt that she was well aware that the main account of the business was in the joint names of herself and Mr Bagshaw. Indeed, Mrs Bagshaw, herself, regularly drew cheques on the account. She did not give evidence that she was not aware of the existence of or the significance of the account. 8 Mrs Bagshaw did not deny in evidence that she subsequently claimed and received one-half of the proceeds of a sale of plant and the business which took place after Mr Bagshaw's bankruptcy. 9 The letters which were sent to Westpac were usually signed by Mr Bagshaw but most were typed by Mrs Bagshaw. Mrs Bagshaw must have been aware generally of the activities of the business. Letters from Westpac, confirming the approval of loans or setting out the terms upon which loans were to be granted and so on, were always addressed to Mr and Mrs L G Bagshaw and were sent to their home. 10 Over the years, the business developed from earthmoving and property development to include a cold store, transport and farming. A letter of 22 September 1988, which was typed by Mrs Bagshaw on the letterhead of Bagshaw Development Hire, listed the assets of the business. Mentioned were earth moving and other machinery and plant worth $723,000, a warehouse in Mildura, a warehouse in Wyong, land in Wyong, land in Western Australia, a villa at Terrigal, flats at 33 Railway Street Baulkham Hills, the matrimonial home and a Gold Coast unit, the total value of which was put at $1,117,000. Listed also was the Glen Lee Cold Store valued at $63,500 and C.R.M. Transport valued at $214,300. Farm No.1 at Kersbrook, South Australia, was valued at $811,000 and farm No.2 at "One Tree" Tea Tree Gully, South Australia, was valued at $1,434,144. The total value of the assets was said to be $4,255,644. 11 So far as Westpac was concerned, all the activities which led to the growth of these assets were activities of Mr and Mrs Bagshaw. That was how the matter was represented to Westpac and how Westpac dealt with them. 12 As not all relevant documentation is before the Court, it is difficult to be certain as to the name or names in which all the assets were acquired. However, there are in evidence, in addition to the mortgage of the subject property, a mortgage dated 13 May 1981, over a property at Warnervale and a mortgage of 5 August 1988 over a property at Castle Hill, both of which were executed by Mr and Mrs Bagshaw as mortgagors and debtors. Some other mortgages were in the name of Mr Bagshaw alone as mortgagor but were signed by Mrs Bagshaw as debtor. Flats in Railway Street Baulkham Hills were purchased in the names of Mr and Mrs Bagshaw. The unit at Terrigal was transferred to Mr and Mrs Bagshaw. A property at Mount Hutton, Lake Macquarie was put in the name of Mrs Bagshaw alone. A property in Mildura, Victoria was acquired in the names of both Mr and Mrs Bagshaw. 13 Mrs Bagshaw put the case that she had nothing to do with the business. In her affidavit of 20 November 1996, Mrs Bagshaw deposed:

"2. I am aware that my name was used in connection with the name 'Bagshaw Development Hire'. I do not know how or why it was used. I had nothing to do with the business. I made no decisions in relation to the business. I sometimes answered the telephone and gave messages. Sometimes I helped with the books to the extent that I wrote up cash books from the cheque butts and the Bank statements. The Husband's accountant headed up the books and I filled them in. I signed cheques on the Bagshaw Development Hire Bank account. This was mainly for things for the home, such as telephone electricity and water board and took out a weekly amount for housekeeping. The First Defendant held the business cheque book. This was the First Defendant's contribution to the home expenses. I did not ever work in the business itself although I sometimes delivered things to the Husband at work sites and answered the home telephone as a normal wife would do. 3. I have heard from the First Defendant, the names of the businesses 'Cobby Refrigeration and General Transport' and Glenlee Cold Stores. I little knowledge of the nature of these businesses, nor did I have make any decisions in relation to these businesses. I was aware that the cold store business carried oranges. As far as I am aware I did not receive any income from these businesses. I did not have any cheque books which related to these businesses." 14 However, the documents in evidence show constant involvement by Mrs Bagshaw in the business of Bagshaw Development Hire and the associated businesses of the cold stores, the transport company, the farms and land development. For example, the following letter, typed by Mrs Bagshaw and signed by both Mr and Mrs Bagshaw as directors of Bagshaw Development Hire, was sent to Westpac on 5 June 1989:

"1. Colyton has given us between $500,000/$600,000 profit and we thank you for releasing the $40,000 on IDB that L.G. and J.H. Bagshaw could put up as a bond to Penrith Council. 2. Mr McInnes, we have taken your advice and taken out $1m worth of Keyman Insurance. 3. We have taken heed of pulling back and cleared Carlingford from Mr Max Shean and I.E.L. We have traded off our $525,000 for a 90 block sub-division in Maryland? in the Newcastle district which it cost $1.1m to purchase with $1.2m development costs including interest and has a $1.4m profit. Furthermore there were 33 blocks sold without advertising and we would also point out the D A is at Newcastle Council ready for stamping. Therefore we have sold $1,350,000 in land before turning the first sod, and this will be finalised in construction by September/October 1989 weather permitting. This will conclude the Scott family Trust Fund and pay them out in full, and this is now being tied up with Hardings, Solicitors, and the gentleman to contact is Mr Colin Skelton. 4. Since last speaking to Mr McInnes, Lamb Street and Glendenning Road, Plumpton property has been advertised on two weekends only and had seven enquiries with five having contracts prepared for signatures on the 65 villas. In this heavy interest market it is totally incredible to say the least. After paying back the financiers there is approximately $300,000 in profits to be paid into our account at your Branch. 5. We have since sold C.R.M. Transport, the profit from that bought 10 acres at Irimple, an outer suburb of Mildura. I have since put in a D A for approval of approximately 30/35 blocks of industrial land and the projected profit would be $L,050,000 with a development cost of $250,000/$300,000. This land is free and unencumbered and we would like Westpac to release the Adelaide Gully Farm property and 16 Woodridge Place, Baulkham Hills and take a short term mortgage over this property as it has a bigger equity to give the bank more confidence. 6. We also have made moves to purchase more land including property at Rutherford in the Maitland area comprising about 55 blocks, with adjoining blocks selling for average of $30,000/$35,000 each. This sub-division has D. A. approval and we will be sitting on it until such time as the Merewether project is completed, therefore at an average price as above there is $1.6m after deduction of all costs, so gentlemen I feel that we, L.G. and J.H. and Devebo Pty Ltd, our new registered company in the Hunter Valley, has more than proven under the direction of L.G. Bagshaw we have gotten over our growing pains and Westpac should listen before condemning a 25 year established customer." 15 The substance of the matter is that Mrs Bagshaw carried on business in partnership with her husband and it was represented to Westpac by both Mr and Mrs Bagshaw that she was a partner in the business. No doubt, Mr Bagshaw was the person who was most active in the business, but Mrs Bagshaw nevertheless played her own part doing secretarial work, looking after the records, answering the telephone and so on. Under cross-examination, Mrs Bagshaw agreed that she and her husband were "the principals of a business in the eighties" and that she was "entitled to a share of the profits from the business".

The Context of the Mortgage 16 Contrary to Mrs Bagshaw's evidence, the loan for which the subject mortgage of 4 December 1981 was security was not a short-term loan of $30,000. The records of Westpac show that $30,000 had been advanced to Mr and Mrs Bagshaw in May 1981 to enable them to purchase 15 acres of vacant land at Warnervale. Westpac's records show that the purchase price was anticipated to be $45,000 and that there would be legal and stamp duty of $1,500 making a total of $46,500. The records noted that Mr and Mrs Bagshaw had $16,500 available to them leaving a balance of $30,000 to be funded. The application for that advance was granted. Two mortgages were taken. One was a mortgage over a block of land which Mr Bagshaw owned at Safety Bay, Western Australia and the other was over the Warnervale land. Mr and Mrs Bagshaw signed a letter acknowledging the terms of the advance which included the term that the loan was to be repaid by instalments of $690 per month, the first such instalment to be payable on 27 June 1981. The mortgage over the Warnervale land was signed by both Mr and Mrs Bagshaw as mortgagors and debtors. 17 The subject mortgage was required by Westpac when finance of $95,000 was sought for the purchase of a 1977 caterpillar/scraper 6/138. Westpac agreed to make the advance on the security of the two existing mortgages and a mortgage over the matrimonial home at 16 Woodridge Place, Baulkham Hills. A letter dated 1 December 1981, setting out the terms of the offer, was sent by Westpac to Mr and Mrs Bagshaw at their home. That letter noted that the security would be that held over the land in Western Australia, the land at Warnervale and the matrimonial home at Baulkham Hills. The repayments required were $25,000 on 31 January 1982, $50,000 on 30 September 1982 and $20,000 on 31 May 1983. A copy of that letter, signed by Mr Bagshaw, is in evidence. It is Westpac's copy of the letter. Presumably, Mr Bagshaw signed it in the offices of Westpac. There is no copy of that letter in evidence with Mrs Bagshaw's signature, but there is no reason to think that she did not receive it. Both Mr and Mrs Bagshaw signed an authorisation for Westpac to inspect the property. 18 A more formal letter setting out the terms of the arrangement was signed by both Mr and Mrs Bagshaw. I need not again set out the terms of the loan, save to mention that the amount to be advanced was altered in handwriting from $95,000 to $93,000, as the amount required had reduced. The mortgage of 4 December 1981 was signed by both Mr and Mrs Bagshaw as mortgagors. They also signed as covenantors and debtors. 19 Clearly, the mortgage was not a mortgage securing a loan of $30,000 to be repaid within three months. I reject Mrs Bagshaw's evidence that she was told by Mr Bagshaw that that was the case and I reject the inference from her evidence that she considered the mortgage was of that nature. The mortgage was given in relation to an advance of $93,000 to be repaid over a period of about eighteen months.

All Moneys 20 By incorporating the Memorandum No. R404835 filed in the Registrar General's Office, the mortgage secured, not only the $93,000 expressly advanced, but also, inter alia:

"All moneys already advanced or paid or now or hereafter advanced or paid by the Bank to for or for the accommodation of or on behalf of the Debtor and the Mortgagor or either of them either alone or jointly with any other person or otherwise owing or payable now or hereafter by the Debtor and the Mortgagor or either of them either alone or jointly with any other person to the Bank on any account whatsoever and without limiting in any way whatsoever the generality of the foregoing;"

That same Memorandum had also been referred to in the Warnervale mortgage of 13 May 1981. 21 It may be that no person expressly explained to Mrs Bagshaw that the mortgage was an all moneys mortgage, for no evidence has been given that that was said. It may be that Mrs Bagshaw did not spend time reading and understanding the provisions of Memorandum No. R404835. However, I do not accept, if it is to be inferred from Mrs Bagshaw's evidence, that she executed the mortgage in the positive belief that the mortgage was expressed to be a mortgage for a specific loan and that she would not have entered into the mortgage had she been aware that it was an all moneys mortgage. There is no letter of complaint from Mrs Bagshaw to Westpac stating that she was misled as to the nature of the mortgage. Moreover, she was aware of the pattern that was being followed by Westpac. In the letter of 1 December 1981 and in the acknowledgment signed 4 December 1981, the prior mortgages were specified as securities for the $93,000 loan. That pattern was followed by Westpac when later advances were made. The expression "securities if any already held by the Bank for other accommodation" was commonly used. In October 1982, Mr and Mrs Bagshaw sought a loan of $65,000 to enable them to purchase a property, 33 Railway Street, Baulkham Hills. A letter setting out the terms of the loan, which was signed by Mr and Mrs Bagshaw, said that approval had been given on the condition, inter alia, that "Security to be that already held by the Bank". It does not appear that any mortgage was taken over the Railway Street property itself, Westpac being content to rely upon its existing securities. 22 Westpac's records show that, on 7 August 1985, Mr Bagshaw sought funds of $366,000 for the purchase of a back hoe, property at Mildura, the cold store, the property at Canyon Street and a villa at Terrigal. It was noted that the security offered would be the Mildura property, the Canyon Street property, the Terrigal property, the Warnervale land, the Railway Street property, the land held in Western Australia and the matrimonial home at Woodbridge Place. A proposal to this effect, dated 30 July 1985, was typed out on the letterhead of Bagshaw Development Hire by Mrs Bagshaw. I assume that that matter went ahead because the Mildura property, the Canyon Street property, the villa at Terrigal and the cold store in Mildura were acquired. 23 I need not deal with all the transactions that occurred. Indeed, the material before the Court appears to be only an incomplete selection of the material that ought to be available. However, the practice was for Westpac, when it gave approval for a loan, to nominate what was to be the security for the loan that had been approved. 24 In August 1988, Mr Bagshaw asked Westpac to release the home at 16 Woodbridge Place as security and to substitute a second mortgage over a farm in South Australia. This was rejected as the equity was not sufficient. On 4 August 1988, this note was recorded:

"Security now offered is - (A) 16 Woodridge Place, Baulkham Hills (held) $175 (B) 33 Railway Street, Baulkham Hills (held) 140 (C) Lot 613 Singleton W.A. (held) 10 (D) Lot 9 Pavitt Crescent, North Wyong (held) 120 (E) 1100/1200 Bendtook Street, Mildura Vic. ¾ acres Erected thereon : 3 Iron warehouses with concrete floors. One complete with cold room and chiller. Capacity 100 palletts each M/V $320 S/V $220 (F) Warnervale V/L 15/17 acres (suitable for subdivision with Govt. approval) 60 (G) I.B.D. (held) 41 (H) Terrigal H/U No.1 Beaufort Road, Terrigal Erected thereon : One duplex - B/V and tile with 2 B/R - usual Offices lock up garage 90 Total $856 Leith intends to incorporate as all over securities held will need to be changed. When asked about Kershaw S.A. property, Leith said he had made a promise to his Uncle and Aunt that he would not mortgage that property. Leith signed security documents and Mrs. Bagshaw will call Friday 5/8/88. Says he expects Carlingford Shopping Centre to sell in September and residual loan on farm will be say $200. Asked we consider releasing family home and taking 2nd Mortgage on farm, Told him we would consider." 25 On the following day, Mrs Bagshaw went into the branch to execute a mortgage. One of the witnesses to that mortgage, Sandra Whitney, gave this evidence:

"18. I then saw Mrs Bagshaw with Judy Hermanson, who attended on the execution of the mortgage with me. I can remember the sign-up because Mrs Bagshaw said directly during our meeting: 'I am not that concerned about other properties that are being given as security, but I am worried about the mortgage we have given over the family home and about whether we might lose the house.'

I replied: 'If you're concerned about losing the house, you are going to have to speak to Alan (McInnes) and Leith about it. The mortgage that you are here to execute today is a mortgage over the property at Railway Street, Baulkham Hills. You do not have to sign it if you do not want to but, as you have said, the mortgage over your house is already held by the Bank as security.' 19. I can remember that when Mrs Bagshaw left the branch she said loudly to Judy Hermanson: 'If I lose my house, Jude, I'm going to kill him!' " 26 Judith Hermanson gave evidence to the same general effect, although it was briefer. 27 Subsequently, a letter of 5 June 1989 on the letterhead of Bagshaw Development Hire was sent to Westpac. This was typed by Mrs Bagshaw and signed by both Mr and Mrs Bagshaw. I have set out the letter in paragraph 14. The letter mentioned land in an outer suburb of Mildura and said, inter alia:

"This land is free and unencumbered and we would like Westpac to release the Adelaide Gully Farm property and 16 Woodridge Place, Baulkham Hills and take a short term mortgage over this property as it has a bigger equity to give the bank more confidence." 28 The whole of the evidence satisfies me that Mrs Bagshaw was aware, at the time when subsequent advances were made, that the mortgage over her home was an all moneys mortgage and that it was security for the various advances which were made. It was not until the middle of 1988 that Mrs Bagshaw expressed concern about her home. The complaint then was not that she had been misled as to the nature of the mortgage but simply that she did not wish her home to be at risk.

Repayment of the Loan 29 Mr Stevens has relied upon the fact that the particular loan of $93,000, which had been debited as a Fully Drawn Advance No. 13-0787, was repaid in the middle of 1985. Mr Stevens has submitted that Westpac had been under an obligation to then discharge the mortgage. However, by then, the business affairs of Mr and Mrs Bagshaw had become much more complex. Account No. 13-0146 had been in overdraft from about October 1980 onwards. By August 1985, finance of $366,000 was being sought for the purchase of properties at Mildura, Canyon Street and Terrigal and other assets. One of the securities offered was the matrimonial home at 16 Woodridge Place, Baulkham Hills. A schedule, dated 30 July 1985, typed by Mrs Bagshaw, listed the assets to be purchased and included, amongst the securities offered, the matrimonial home at Baulkham Hills valued at $125,000. The full details of what occurred thereafter are not before the Court, but, as the assets were acquired by Mr and Mrs Bagshaw, it appears that they were acquired with finance provided by Westpac and on the footing that the matrimonial home was one of the securities. The matrimonial home, valued at $225,000, was also listed amongst assets in a schedule dated 22 September 1988, typed by Mrs Bagshaw, which was provided to Westpac for the purpose of discussions about finance. It is irrelevant that the original debt was repaid. The home was used as security for other advances.

The Execution of the Mortgage 30 Mrs Bagshaw gave evidence that she signed the subject mortgage at her home on the kitchen table and in the presence only of her husband. She said that she received no advice from Westpac as to the nature of the document she was signing. I have already mentioned the letter from Westpac of 1 December 1981, confirming its approval to a fully drawn advance of $95,000 to assist in the purchase of a 1977 caterpillar/scraper and of the fact that that letter specified the terms of the advance. I have also mentioned the more formal letter setting out the conditions of the advance which was signed by Mrs Bagshaw on 4 December 1981 and the letter of authorisation to inspect which was signed by her. 31 The mortgage purports to have been signed by Mr and Mrs Bagshaw in the presence of Mr S Bartolillo, an officer of Westpac. Mr Bartolillo has given evidence that, although he cannot recall the specific instance, he has never signed a mortgage or other document as a witness when that document was not signed in front of him. I accept Mr Bartolillo's evidence on this matter. He gave credible evidence which accorded with the documents. I also accept his evidence that, although other documents could be signed otherwise than in the presence of an officer of Westpac, for example, when a solicitor for the mortgagor or mortgagors was involved, mortgages were always executed in the presence of one of the officers of Westpac. Mr Bartolillo gave evidence that it was his practice to explain the nature of the mortgage by saying that the mortgage was to secure the money which Westpac was lending and that, if the money was not repaid as agreed, Westpac would take proceedings and would sell the house. Mr Bartolillo said, in addition, that it was his practice to provide to the parties signing a mortgage a copy of the Memorandum that was incorporated into that mortgage. 32 I accept Mr Bartolillo's evidence on these issues and I reject Mrs Bagshaw's evidence that she signed the mortgage otherwise than in the presence of Mr Bartolillo. Indeed, Mrs Bagshaw, in her re-examination, considerably weakened her evidence. In re-examination, she simply said that she could not recall any occasion on which Mr Bartolillo was present when she signed a mortgage and that she could not recall where she signed either the mortgage executed in May 1981 or the mortgage executed in December 1981. 33 I am satisfied that Mrs Bagshaw understood the general nature of the document she was signing on 4 December 1981 and that she understood the general nature of a mortgage. I am also satisfied, on the balance of probabilities, that Mr Bartolillo provided her with a copy of Memorandum No. R404835, for that was his customary practice. 34 It was put to Mr Bartolillo that Mrs Bagshaw had not been personally known to him. Mr Bartolillo gave evidence that he could not recall Mrs Bagshaw, notwithstanding that his signature as witness appeared on both mortgages of May 1981 and December 1981. I do not see any legal significance in this issue. It is not in dispute that Mrs Bagshaw executed the mortgage.

Independent Legal Advice 35 Mrs Bagshaw was not advised to obtain independent legal advice. However, there was nothing in the transaction which called for independent legal advice. The advance was granted by Westpac to Mr and Mrs Bagshaw for the purposes of their partnership business, Bagshaw Development Hire. The loan was not unusual and the mortgage was in standard form. It is common practice for banks to require partners to put up security including security over private assets when loans are made to the partnership. In the present case, the loan was of a size and for a term which justified the request for security. 36 There is no evidence before the Court that Mrs Bagshaw expressed to Westpac's officers at the time any concern such as would have brought to their minds a need for independent advice.

Loans 37 It was put on behalf of Mrs Bagshaw that moneys claimed by Westpac were lent to Mr Bagshaw without the knowledge or approval of Mrs Bagshaw. This point was put by counsel in general terms. No specific loan meeting this description was identified by Mr Stevens. 38 So far as I can ascertain, all the relevant loans were loans to both Mr and Mrs Bagshaw. The complete materials are, of course, not before the Court. However, insofar as specific advances were made, these appear to have been made after letters setting out the terms of the advance had been sent to both Mr and Mrs Bagshaw and they had acknowledged the terms by signing and returning the letters. So far as the drawings on the partnership account No. 13-0146 are concerned, they were made, so far as the evidence discloses, either by Mr Bagshaw or Mrs Bagshaw. They were made by way of cheques drawn either by Mr Bagshaw or Mrs Bagshaw. The evidence is that Mrs Bagshaw's cheques were drawn mainly for household purposes and that the business cheques were drawn by Mr Bagshaw. However, Mr Bagshaw was a partner and was authorised to draw cheques on the partnership account. When he did so, he acted with the authority of Mrs Bagshaw. It has not been raised by way of an issue that Mr Bagshaw drew cheques on the partnership account that he was not authorised to draw. There is nothing in the facts which suggests that that was so. 39 It follows that the moneys which Westpac now claims are moneys in respect of which Mrs Bagshaw undertook liability to pay or repay to Westpac.

Mr Bagshaw's Evidence 40 Mr Bagshaw, in his affidavit of 2 May 1995, said that he phoned the manager of the Baulkham Hills branch of Westpac and said that he needed a short term loan. The manager replied, "Heres the money and we will fix the loan up after". Mr Bagshaw deposed that, a month later, the manager gave him an uncompleted document which was marked with pencil crosses where he and Mrs Bagshaw were to sign. He deposed that he did not ask the bank manager what the form was about and did not realise that Westpac was going to register a mortgage. In his oral evidence, Mr Bagshaw said that the relevant loan was a loan for a sum of about $31,000 required for the purchase of a back hoe and a little mini escavator. He said that the mortgage was signed in his home and that the mortgage and other documents, the letter setting out the terms of the loan of 1 December 1981 which was signed by Mr Bagshaw, and the formal letters specifying the terms of the loan, were "manufactured" or "dollied up" to make the position seem different from that agreed upon. Mr Bagshaw said in his evidence that the documents did not correlate with the true facts. I have not used Mr Bagshaw's precise words but that was, I think, the substance of his evidence. 41 Mr Bagshaw's evidence was, I believe, a figment of his imagination. Westpac records record the request for a loan of $95,000 to purchase a 1977 caterpillar/scraper 6/138. The documents thereafter, including the mortgage which was executed on 4 December 1981, are all inconsistent with Mr Bagshaw's evidence.

Witnesses 42 I do not accept the evidence of either Mr Bagshaw or Mrs Bagshaw. The evidence of both was fanciful and so biased in their favour that the true facts did not emerge from it. I need not refer to specific aspects of their evidence, save for the fact that both were so concerned with protecting their interests that they were inclined to query whether signatures appearing on documents were their own. I do not accept that any signature or initial which appeared to be that of Mr or Mrs Bagshaw was otherwise than what it seemed to be. It was not suggested that any officer of Westpac forged their writing other than in Mr Bagshaw's evidence that documents were "dollied up". No such claim was made in the proceedings or put by Mr Stevens. 43 The evidence of the witnesses called by Westpac was probable. I did not perceive anything in the demeanour of the witnesses or the content of their evidence which led me to doubt the credibility or substance of their evidence. 44 I accept, of course, that evidence of "invariable practice" should be taken to encompass the possibility of occasional lapses. However, I have not identified from the cross-examination any error on Westpac's part or any unfair or unjust action on the part of Westpac or its officers that should be taken into account.

Trade Practices Act 45 I am not satisfied that there was conduct on behalf of Westpac or its officers which amounted to misleading or deceptive conduct in breach of s 52 of the Trade Practices Act, 1974, or that Mrs Bagshaw was deceived or misled in any relevant way. Mrs Bagshaw's defence and cross-claim relies upon the allegation that Mr Bagshaw, as Westpac's agent, represented that the subject mortgage was security for a short term borrowing of $30,000. I reject Mrs Bagshaw's evidence on that point. Secondly, the pleadings allege that Westpac intended to use the mortgage for future advances made by Westpac to Mr Bagshaw and would hold Mrs Bagshaw liable to repay any moneys lent by it to Mr Bagshaw. There is no factual basis for that contention. The mortgage is relied upon as security for transactions entered into by Mrs Bagshaw or authorised by her.

Contracts Review Act 46 The Contracts Review Act, 1980 is relied upon by Mrs Bagshaw. However, s 6(2) provides that a person is not entitled to 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 him". The subject mortgage was entered into for the purpose of obtaining an advance for the purposes of the partnership business, Bagshaw Development Hire, and was used later as security for further advances and loans made by Westpac to Mr and Mrs Bagshaw for the purposes of Bagshaw Development Hire and other associated businesses in which Mr and Mrs Bagshaw were involved. 47 Accordingly, the Contracts Review Act does not apply in the present circumstances. I should add that I have not identified any relevant contract or provision of a contract between Mrs Bagshaw and Westpac which I consider to have been unjust in the circumstances relating to the contract at the time it was made. In my opinion, this was not the type of case which ss 7 and 9 of the Contracts Review Act have in mind.

Unconscionability 48 I need not discuss the equitable principles of unconscionability. I have expressed views of the principle in other cases including, NZI Capital Corporation Ltd v Fulton (Federal Court of Australia, Black CJ, Davies and Lehane JJ, unreported, 10 June 1998). I see nothing in the present case which discloses any fact which would make it unconscionable for Westpac to enforce its mortgage. The present is not a case such as Yerkey v Jones (1939) 63 CLR 649, Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 or Garcia v National Australia Bank Ltd (1998) 194 CLR 395. Mrs Bagshaw was not in a position of disadvantage and Westpac has not taken unconscientious advantage of an opportunity created by a position of disadvantage. Mr and Mrs Bagshaw were partners in a business. They sought finance for their own purposes and provided the mortgage over their home to secure such finance. They understood what they were doing and, at one stage, by using Westpac's finance, they became wealthy. There is no basis for equitable intervention to prevent the enforcement of Mrs Bagshaw's obligations to Westpac.

The Outstanding Debt 49 The outstanding debt has been proved by Westpac by use of a certificate given in accordance with Memorandum No. R404835 to be $1,099,533.92.

Conclusion 50 Accordingly, Westpac succeeds in its claim for possession. Westpac should obtain judgment for the amount outstanding by Mrs Bagshaw. Mrs Bagshaw's cross-claim should be dismissed on its merits. Mr Bagshaw's cross-claim, not having been pursued, should be dismissed. Mrs Bagshaw should pay the costs of the claim and of her cross-claim. 51 Counsel should bring in short minutes by 4.00pm on Tuesday, 11 July 2000. 52 Exhibits may be returned. **********

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