In this matter a Serbian immigrant, who was illiterate in English, who was on Centrelink benefits and had no job, obtained a compensation payout of $40,000 and decided to buy a unit. Some intermediary forged various documents and the loan was represented as being to a woman with a car and a dress making income. The lender failed to comply with its checks of the details on the application and the loan got through.
The judge decided that Contracts Review Act relief may be appropriate but he first wanted the property sold. Once the sale price was known, if there was a shortfall on the mortgage and/or the $40,000 invested by the woman he would make a decision as to how those losses should be shared. That was last year.
The court was approached again on the present occasion to be told that the borrower had not sold the property and now wanted to keep the property. The competing submissions of the lender and the borrower as to the appropriate relief were rejected in favour of the following orders:
(i) The unit should be sold;
(ii) The costs of the sale should be a first charge on the proceeds of sale;
(iii) The borrower should have no liability for penalty interest or legal costs;
(iv) The proceeds, net of the costs of sale, should be shared between the lender and borrower in proportion to the parties’ original capital contributions;
(v) The lender should not receive from the net proceeds more than all moneys due under the mortgage.