The borrowers were duped into borrowing to invest in a company called ‘Streetwise’. The promoter a man called Kovelan Bangaru, was later sentenced to 8 years in the prison.
The borrowers brought a Contracts Review Act defence.
The wife claimed her annual income on the loan application form was changed from $60k to $160k after she signed it.
The court did not believe the husband and wife and found that the wife falsely represented an inflated income at the time the form was signed and knowingly provided other false information in the loan application. The court also noted that the wife’s dealings with another lender and the ATO showed a pattern of dishonesty.
The Contracts Review Act does not apply if the transaction is entered into for a business undertaking.
The question of whether or not the transaction is for a business is a question of substance not form. Thus whether the undertaking is carried out through a corporate vehicle is irrelevant.
The borrowers were found to have borrowed the money for the purpose of making an investment in ‘Streetwise’.
Conclusions on the Contracts Review Act
Although the judge found the Act did not apply, he decided to appeal proof his decision by determining what he would have held had it applied.
He found no failures on the part of the lender that gave rise to any injustice. He rejected that it was a case of asset lending given serviceability was considered.
The court noted that even if some injustice had been proved, the court would have refused relief on the basis that the wife’s dishonesty substantially outweighed any injustice that may have been found.
The court gave judgment for the lender.
Lenders will be refreshed by the length of this judge’s foot. After years of cases where borrowers are prepared to lie on application forms, and in the witness box and still attract the compassion of kind hearted judges who know not the damage their benevolence does to credit availability, finally there seems to be a new judge who seems to respect property rights.