Mete v Fiasco [2013] VSC 460

A transferor sought to have the sale of his property and the mortgage taken out by the transferee set aside on the basis of misleading and deceptive and unconscionable conduct on the part of the transferee and unconscionable conduct (at general law and under statute) on the part of the mortgagee.

The transferor alleged that the transferee represented to him that the mafia had been engaged to kill him if he did not pay her money by way of the transfer, however no evidence was given to that effect.

The court did not believe the transferor or his children, noting that they had deliberately lied to the mortgagee in their dealings with him in order to persuade him to lend money.

In relation to the claim of unconscionability against the mortgagee, the court noted:

Unconscionable conduct is a ground for relief both in equity and under statute. There are some similarities and some differences between the statutory provisions and the equitable doctrine…..

The elements are:

  1. the party seeking relief must, at the time of entering into the transaction, suffer from a special disability vis-à-vis the other party;
  2. the special disability must seriously affect the disabled party’s capacity to judge or protect its own interests;
  3. the other party must know of the special disability. The other party’s knowledge of the special disability may be actual or constructive.
  4. that party must take advantage of the opportunity presented by the disability; and
  5. the taking of the advantage must have been unconscientious. For the conduct to amount to unconscionable conduct in equity, it must involve a high level of moral obloquy. Statutory unconscionable conduct is broader and picks up the ordinary meaning of unconscionable, namely conduct irreconcilable with what is right.

The court held that the transferor did not have standing to have the mortgage set aside, but even if he did, the claim would still fail for the following reasons:

  1. No evidence was led as to how the transferor’s lack of financial sophistication established a special disability;
  2. The mortgagee’s superior position in terms of financial acumen alone was not sufficient to establish unconscionability;
  3. The mortgagee did not have actual or constructive knowledge of the alleged special disabilities;
  4. There was no moral obloquy in the mortgagee taking the mortgage, given what the family including the transferor told him, namely that the transferor had a gambling habit and had borrowed heavily;
  5. The statutory claim would fail at the outset because it was not pleaded that the mortgagee provided the transferor with financial advice.

The court gave judgment for the bank.

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