Tonto Home Loans Australia Pty Ltd v Tavares; FirstMac Ltd v Di Benedetto; FirstMac Ltd v O'Donnell [2011] NSWCA 389

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Tonto Home Loans Australia Pty Ltd v Tavares; FirstMac Ltd v Di Benedetto; FirstMac Ltd v O'Donnell [2011] NSWCA 389 Hearing dates: 1- 4 August 2011 Decision date: 21 December 2011 Before: Bathurst CJ at 1 Allsop P at 2 Campbell JA at 303 Decision: (1) As to appeal number 2009/00298570 (formerly 40454 of 2009) being the Tavares and Rowe appeal: (a) Allow the appeal in part. (b) Set aside order 2(b) made by the Supreme Court on 26 February 2010 (as set out in [448] of the primary judge's reasons) and in lieu thereof order that the mortgagee Tonto Home Loans Australia Pty Ltd deliver up to Jose De Carvalho E Rego Tavares and Kim Lee-Anne Rowe a registrable discharge of mortgage, but only on condition that Mr Tavares and Ms Rowe pay or have paid to the mortgagee or at its direction the sums referred to in order 4 made by the Supreme Court on 26 February 2010. (c) The appellant pay the respondents' costs of the appeal. (2) As to appeal number 2009/00298571 (previously 40455 of 2009) being the Di Benedetto appeal: (a) Allow the appeal in part. (b) Set aside order 2(b) made by the Supreme Court on 26 February 2010 (as set out in [447] of the primary judge's reasons) and in lieu thereof order that the mortgagee, Permanent Trustee Company Limited ("Permanent"), or to the extent that it has acceded to that company's rights, FirstMac Limited, deliver up to Lawrence Di Benedetto and Maria Di Benedetto a registrable discharge of mortgage. (c) The appellant pay the respondents' costs of the appeal. (3) As to appeal number 2009/00298572 (previously 40456 of 2009) being the O'Donnell appeal: (a) Allow the appeal in part. (b) Set aside orders 2 and 5 made by the Supreme Court on 26 February 2010 (as set out in [446] of the primary judge's reasons) and in lieu thereof order: (i) The loan agreement dated 10 January 2003 and made between Permanent as lender, or to the extent that it has acceded to that company's rights, FirstMac Limited, and Gillian O'Donnell and John Robert O'Donnell as borrowers be varied to reduce the principal loan from $500,000 to $125,000 such variation to take effect from 1 August 2005, with the effect that thereafter the responsibility for payment of interest and principal be referable to a principal sum of $125,000. (ii) The security provided by registered mortgage numbered 9386484P between Mr and Mrs O'Donnell and Permanent, or to the extent that it has acceded to Permanent's rights, FirstMac Limited, be limited in effect accordingly such that upon payment of the sum or sums sufficient to repay said loan as varied the O'Donnells be entitled to receipt of a registrable discharge of mortgage. (iii) The plaintiff pay 75 per cent of the defendants'/cross-claimants' costs of the proceedings. (c) The appellant pay 75 per cent of the respondents' costs of the appeal. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: CONTRACT - unjust - Contracts Review Act 1980 (NSW) - operation of Act where lender uses mortgage originators which in turn use sub-introducers to bring forward potential borrowers - sub-introducers engaged in fraud by falsifying relevant information concerning assets and earnings of borrowers in relation to low documentation lending secured by mortgage over borrowers' homes - lenders had no knowledge of fraud - relevant enquiry for the purposes of the Act, ss 7 and 9 is whether contract is unjust in all the circumstances of the case and whether it is just to grant relief - low documentation lending not unjust of itself but carries inherent systemic risk - principal safeguard against risk in present cases was vigorous application by lender of lending guidelines - lending guidelines not followed - just in all circumstances to grant relief notwithstanding carelessness of borrowers.