Driat v Thomas [2012] NSWSC 683

A defacto wife was encouraged by her defacto husband to grant mortgages over her two properties to secure loans to be used in a project managed by her defacto husband. The wife claimed relief under the Contracts Review Act and equitable relief for unconscionable conduct.

The court rejected any duty on the part of the lender to ascertain whether the project was viable since there was nothing to put the lender on notice that the purpose of the loan was untrue or the project was not viable and the borrower had a solicitor acting for her. The court also found that the lender was not engaged in pure asset lending because he had no reason to think that the money would not be repaid. The wife was not a volunteer as far as the lender knew since he was told that she had an interest in the project by her agent and the wife was independently advised. The court dismissed the Contracts Review Act claim.

The court also dismissed the claim for unconscionable conduct because the wife was not in a position of special disadvantage. She understood what she was doing and she was not overborne by her husband, although she was influenced by him. The court also found it was not a case of undue influence or a wife not knowing what she was signing.

The court gave judgment for the money sum due on both loans to the lender and an order for possession of one of the properties. However in relation to the property where the lender was second mortgagee, the matter was stood over to allow the first mortgagee to execute its writ of possession.

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