The plaintiff (Mizzi) was a widowed pensioner of Maltese origin with very limited English and very limited IQ. She was asked by her grandson Stefan Martin Allan for a mortgage over her home. She duly mortgaged her home to clients of RL Kremnizer and when the mortgage went into default proceedings were brought for possession. A defence was filed to those proceedings under the Contracts Review Act seeking to have the Kremnizer mortgage declared void.
The Kremnizer loan was then refinanced by the Defendant in these proceedings in the following circumstances:
“In November 2000, Stefan Allan had a conversation with the lender in which he said his grandmother was going to lose her house, and that it was his fault as she had lent Stefan the money, which he had borrowed for his business, using her house for security. Stefan asked if the lender could help, and the lender responded “Look I really want to help you but I could be putting myself in peril lending to an old woman as when it is time to pay back the money every excuse under the sun emerges. Even before I consider it she would have to get independent legal advice”. Stefan said: “I am begging you, I can’t have my Nan lose the house, my family will kill me, nobody knows I borrowed the money. Nan and I did it behind everyone’s back. My uncle Martin will kill me. He already thinks I am a scumbag”. Stefan said that he needed $120,000 and that it would be repaid in three months..”
The defendant then refinanced the Kremizer loan. These proceedings were subsequently brought to have the new loan declared void pursuant to the Contract’s Review Act. The Court rejected the claim and found the Reliance mortgage was not unjust because Mrs Mizzi was already facing eviction by RL Kremnizer things could not got any worse for her. His Honour wrote:
“The Reliance mortgage involved her home and only asset of significance. However, it did not place it in jeopardy, because the home was already in jeopardy as a result of the Kremnizer mortgage, which was in default, and unless she could somehow otherwise escape liability, a refinance was imperative to have any chance of saving her house. While Mrs Mizzi’s financial position was such that she would not be able herself to service the interest let alone repay the principal, a refinance at least gave her some time, and the prospect that Stefan would be able to arrange repayment, without materially worsening her position.”