Lambden v Merrotsy [2005] NSWSC 278

To enable the defendants to borrow money from a third-party bank, the plaintiffs entered into a Deed of Security with the defendants who were the owners of the land. Clause 3 of the Deed stated:

In the event of Donald Leslie Merrotsy defaulting under the terms of the said loan, the said Wayne Richard Lambden and Kerry Leanne Lambden will accept responsibility for repayment of the loan to the bank and the said Donald Leslie Merrotsy will forthwith transfer the land to the said Wayne Richard Lambden and Kerry Leanne Lambden at the value then applicable as certified by the Valuer-General’s Office in exchange for the Consentors paying to the Borrower monies equivalent to the Valuer-General’s Valuation less monies outstanding to the Bank, after payment of costs and expenses incurred in the Borrower’s default and transfer of Title.

The defendants defaulted on the loan and the plaintiffs applied to the Court for the transfer of the land into their names as provided for in clause 3 of the Deed.

The defendants argued that the deed was harsh and unjust in that the valuation of the land failed as provided for in the Deed failed to allow for improvements made by the defendants to the land. There was no evidence of any improvements made by the defendants and therefore Associate Justice Cooper found that there was no injustice in the operation of clause 3 of the Deed. Further, there was no evidence of an inequality of bargaining power that would make it unconscionable for the plaintiffs to enforce the Deed. As a result, the defendants were ordered to take all necessary steps to transfer title in the land to the plaintiffs, including deliver up the certificate of title.         

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