Borrower with financial nous fails to establish claims against ANZ

Australia and New Zealand Banking Group Limited v Ngo [2022] VSC 713


In 2015, the ANZ bank provided the defendant, Ms Ngo, with a business loan facility in the sum of $220,000, and a residential loan facility in the amount of $591,431.94.  The business loan was used by Ms Ngo to purchase a commercial office suite in Coburg (which was provided as security for the business loan).  The residential loan was used by Ms Ngo to purchase a residential property in Preston (which was provided as security for the residential loan).  ANZ had earlier provided Ms Ngo’s company, Jessica Public Pty Ltd, with an overdraft facility with an initial limit of $24,500.

In 2018, Ms Ngo defaulted on her business loan, her residential loan and her related mortgages.  Ms Ngo did not remedy the defaults.  ANZ commenced proceedings against Ms Ngo to recover the amount owing under the business loan and residential loan respectively, plus various bank fees, charges and legal costs.  It also sought possession of the mortgaged properties.

Ms Ngo disputed the claim made by the ANZ bank on a number of different bases.  While she admitted receiving the advances under the facilities and that she had defaulted under the facilities, she alleged ANZ had behaved improperly in relation to the overdraft facility, the business loan and residential loan and contravened the Customer Owned Banking Code of Practice, the unconscionable conduct provisions contained in ss 20 and 21 of the Australian Consumer Law (ACL), the misleading or deceptive conduct provisions in s 18 of the ACL and the statutory consumer guarantees under ss 60 and 61 of the ACL.  She also alleged the ANZ breached the National Consumer Credit Protection Act, including sch 1, the National Credit Code (NCC) in relation to the residential loan.  Ms Ngo sought damages under the ACL and compensation under the NCC of just under $2M.


The Court was satisfied the ANZ had made out its claim in relation to the amounts owing under the residential loan, the business loan and its claim for possession of the mortgaged properties.

The Court dismissed each of the claims made by Ms Ngo in the proceeding. 

With respect to the overdraft facility, the Court was not satisfied the ANZ’s conduct fell short of the requisite care of skill and diligence of a prudent banker under the Banking Code. The Court found the increases to the overdraft facility did not occur without Ms Ngo’s consent. The Court noted Ms Ngo was a tertiary qualified accounting and tax adviser, and her company received the benefit of the funds from the overdraft facility. Furthermore, the Court placed significant weight on the fact the ANZ had waived the entirety of the amount owing under the overdraft facility ($202,737.63), which it considered was more than sufficient to compensate the company in the event its findings were incorrect.  The Court noted that the alleged inappropriate increases of the overdraft facility provided Ms Ngo’s company with $124,500 which it otherwise would not have obtained.

With respect to the business loan, the Court held the business loan was used by Ms Ngo for the purposes of acquiring the Coburg Property.  The Court held Ms Ngo’s assertion the ANZ incorrectly provided her with the business loan (rather than a ‘personal investment property loan’) had not been made out, and that Ms Ngo signed the agreement for the business loan herself without objection.  The Court also found the ANZ did not act unconscionably in failing to extend an interest free period in the absence of a contractual obligation to do so.  To the contrary, the Court found that the ANZ’s conduct in respect of its dealings with Ms Ngo in relation to the business loan ‘is the antithesis of unconscionable conduct’. 

With respect to the residential loan, the Court held the ANZ’s failure to agree to Ms Ngo’s request for a discount on her interest rate did not constitute unconscionable or misleading conduct.  The Court noted the ANZ was not under any obligation to accede to the request.  The Court also held that if the ANZ was in some way obliged to implement the discount, Ms Ngo had not suffered any loss, on the basis the ANZ was only seeking to recover the principal sum (and not any interest). The Court also dismissed the claim under the NCC. While the ANZ had accepted the recommendations of a Customer Advocate who found the residential loan had been improperly approved, the Court was not satisfied that this amounted to a concession of a breach of the NCC or that the ANZ acted unconscionably.  The Court also found that Ms Ngo had benefited from the residential loan. 

The Court distinguished the case from the unconscionable conduct in Stubbings v Jams 2 Pty Ltd [2022] HCA 6, and held that the ANZ’s conduct in this case went beyond that which the law requires and was the antithesis of unconscionable conduct.

Concluding remarks

The decision highlights that it can be very difficult for a borrower with financial nous to establish claims of unconscionable conduct and misleading or deceptive conduct, particularly where they have acquired a benefit from the transaction they have sought to impugn.  The decision also demonstrates that the conduct of banks and lending institutions that is the anthesis of unconscionable conduct, such as adopting recommendations of a customer advocate, and reducing the net principal advanced under a loan, may be taken into consideration by a Court in evaluating claims brought by a disgruntled borrower.

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