Iaconis v Lazar [2007] NSWSC 1103

In this case the broker induced the borrower to sign a document entitled “Exclusive Mandate to Act”. In it the broker undertook to procure a loan of $1,550,000, with an interest rate 60% of per annum, a term of six months, brokerage of $60,000 and the application fee of a further $60,000 (plus GST). The mandate further purported to charge the property for the payment of the brokerage. The borrower brought the proceedings to remove the caveat.

Justice Peter Young, held that the charge (and therefore the caveat) failed because the loan introduced was not the one contracted for. However he also hinted a broader principle:

…if the facts show that there is a pro forma document and a person of limited commercial experience has signed it without … the clause [being] properly explained to the person … the court may very well come to the conclusion that the former person never intended to give a charge notwithstanding the words used in the document.

 His Honour then went on to say:

“Finally, I should note my concern with … correspondence that was issued [by] … one Ian Lazar, who … emailed the solicitor for the plaintiffs.. I may have led a sheltered life, but apart from the old time moneylending sharks, I would not have expected a reputable … broker in the 21st century: (a) to email a solicitor that it has always been successful in its litigation especially when it issues documents which are as poor as the present set of documents; and (b) where there is an implied threat on the debtor that unless the debtor pays promptly he will be black-listed. I hope not to see such correspondence again.

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