unconscionable dealing. The borrower had defaulted on the loan, which had been advanced for prosecuting litigation. It had been secured by mortgage and the lender was asking for repayment and possession of the property.
The borrower’s main argument was that he had signed the loan agreements under economic duress, and where the lender took illegitimate advantage of his dire financial circumstances.
The Judge looked at all the circumstances and reached the conclusion that, although the borrower certainly was in dire and pressing financial difficulties, (he was under significant pressure to refinance an earlier loan and was at risk of losing his home) that was not sufficient to be an unconscionable dealing. The Judge stated that in order to be an unconscionable dealing at law, the party seeking relief must have had some special disability at the time of entering into the transaction, which serious affects their capacity to judge or protect their own interests, and the other party must know this and take advantage of it.
The Judge considered that the following factors meant there was not unconscionable dealing:
- the borrower had obtained legal advice about the loans
- the borrower had a solicitor present when he signed the loans
- there were no onerous obligations imposed on the borrower in the loan agreement
- the dire financial circumstances of the borrower had not been brought about by the lender; who pursued a legitimate commercial interest
- although the borrower required funds urgently, there was no pressure from the lender to accept funds from their institution
The Judge was therefore not persuaded that the borrower signed the loan agreement under duress or as a result of any unconscionable conduct and, accordingly the mortgage and loan were enforceable. The lender was entitled to take possession of the property and exercise its rights under the mortgage.