McLean v Westpac Banking Corporation [2012] WASCA 152
The Western Australian Court of Appeal recently upheld earlier decisions of the NSW Supreme Court in Westpac Banking Corporation v Mason,[1] and the Victorian Supreme Court in National Australia Bank v Norman, [2] in rejecting a ‘defence of securitisation’ from the defaulting mortgagor.
Background
Westpac commenced two actions for possession against the mortgagor in relation to two loan agreements, each supported by mortgages.
The mortgagor raised identical ‘securitisation’ defences to both actions. The mortgagor argued that as Westpac engaged in securitisation, if the loans and mortgages had been securitised then Westpac could not enforce the mortgages and keep the benefit of such enforcement because Westpac:
-
had already received a benefit for assigning its interest in the loans and mortgages;
-
would suffer no loss or damage from the defaults, with any loss being suffered by a third party; and
-
would be ‘doubly compensated’ if it was allowed to enforce the loans and mortgages.
The mortgagor argued that Westpac could not satisfy an essential element of an action for debt - i.e. that the mortgagor owed it money.
Findings at first instance
The mortgagor called an expert witness on securitisation, who was unable to say whether or not the loans had been ‘securitised’. An officer of Westpac gave evidence that the respondent’s records showed that the mortgagor’s loans had not been securitised.
The primary judge concluded that ‘securitisation’ was not a precise term. His Honour considered that it was “a generic term referring to a transaction involving the marketing of a parcel of debts as a means of raising funds”. The use of the term by the mortgagor was, “at best obscure”.
In any event, the primary judge found that the mortgagor’s claim that the loan agreements and the mortgages had been securitised was not made out, and went on to find that, in any case, there was no substance in the ‘securitisation’ defence.
Appeal
The appellant put forward several grounds of appeal, including that the primary judge had pre-judged the issue and erred in law and practice in relation to the acceptance of sworn evidence.
On appeal the Court found that “the appellant’s so-called defence of securitisation was in law no defence at all. So far as it was given any specific meaning, the 'securitisation' alleged involved an equitable assignment of the respondent's interest in the loan agreements and the mortgages to a third party. That, contrary to the appellant's case, did not have the effect that the respondent was no longer able to enforce its securities”.
Accordingly, the appeals were dismissed.
For more information, please contact:
T +61 2 8233 9650
F +61 2 8233 9555
Footnotes:
1. [2011] NSWSC 1241
2. [2012] VSC 14
The information in this document is provided for general guidance only. It is not legal advice, and should not be used as a substitute for consultation with professional legal or other advisors. No warranty is given to the correctness of the information contained in this document, or its suitability for use by you. To the fullest extent permitted by law, no liability is accepted by DibbsBarker for any statement or opinion, or for an error or omission or for any loss or damage suffered as a result of reliance on or use by any person of any material in the document.
This publication is copyright. Apart from any use as permitted under the Copyright Act 1968, it may only be reproduced for internal business purposes, and may not otherwise be copied, adapted, amended, published, communicated or otherwise made available to third parties, in whole or in part, in any form or by any means, without the prior written consent of DibbsBarker.
