Perpetual Trustees Victoria v Kirkbride [2009] NSWSC 377

In this case the borrower defended on the basis of unjustness under the Contracts Review Act. The wife claimed she deferred to the husband and signed the documents without reading. She claimed her understanding was that the mortgage affected their investment properties but not the family home. The lender was accused of not adopting prudent lending practice. In particular lending on the basis of declarations by the borrower as to affordability (a LoDoc loan) which was said to be evidence of pure asset lending, giving rise to the principle in Khoshaba’s case.

Justice Hulme cited with approval Matthew Bransgrove’s textbook, noting:

The defendant, has the burden of establishing that the taking of the loan was improvident and, if so, then she must show that the plaintiff either knew of the improvident circumstances, or was put on notice of them, or was content to lend on the value of the asset and was thus recklessly indifferent to the existence of the improvident circumstances: see Khoshaba at [41]; Elkofairi at [53] and [79]; The Essential Guide to Mortgage Law in New South Wales, Bransgrove M, Young M, LexisNexis Butterworths, 2008, at [11.15], the latter appearing to be the source of the submission.

His Honour then considered all the circumstances of the loan and in particular found that there was nothing objectionable about LoDoc loans per se. He concluded finding that the onus described in The Essential Guide to Mortgage Law in New South Wales had not be discharged.

Click here to read the full judgment

Scroll to Top