Permanent Mortgages v Spartacus Enterprises [2013] NSWSC 911

The borrower (which was a company) argued that the loan agreement was unconscionable under the ASIC Act, and unjust under the Contracts Review Act.

The principal of the borrower gave evidence that the statement of assets contained false information about his financial circumstances, that it had been prepared by the mortgage broker and he had not known the contents at the time he was told to sign it. The borrower argued the mortgage broker was an agent of the lender.

The difficulty with this was that the borrower operated as a corporation, and the Contracts Review Act does not apply to corporations. A further difficulty was that there was no suggestion of any special disability or disadvantage on the part of the principal of the borrower. In fact, he had been investing in property since 2003 and he had taken out other loans for the same security property and acted as guarantor before.

Further, the judge did not accept that the principal of the borrower did not know the inflated figures in the statement of assets, as other evidence suggested he had previously provided similar figures in other loan applications not prepared by the same mortgage broker. He had also written some figures by hand in later documents. The judge found there were no grounds to support the borrower’s claim and dismissed it. The lender was granted possession of the property and a monetary judgment.

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