The bank lent money to fund the purchase of shares in Storm but the borrowers never invested because Storm went into liquidation. The borrowers defaulted and the bank sought summary judgment. The borrowers did not deny the debt and non-payment but deny liability on the grounds of conspiracy, misleading conduct, trespass and negligence.
The bank found no real prospect of defending the bank’s claim based on any of the grounds pleaded and found for the bank. However the court gave leave to the borrower to replead their claim for misleading and deceptive conduct based upon the bank supplying them with incorrect data about their LVR on a separate margin loan as a counterclaim. The court did not regard the counterclaim as one that could be set off against the bank’s claim because the two transactions (the loan and the margin loan) were not so closely linked that equity would regard the bank’s demand for payment on the loan in question unconscionable. The court said that the mere fact that the borrower’s ability to meet repayment obligations was reduced by the bank’s alleged misconduct is insufficient to establish setoff.
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