RHG Mortgage Corporation v DLC Properties [2009] NSWSC 990

In this case the borrower admitted default under the mortgage but resisted possession on the basis of representations made by ‘Raymond the talking Ram’. The borrower pointed to a television commercial in which Raymond said;

RHG formally known as Rams Mortgage Corporation Ltd has always been known for its low rates. So we’ve kept our standard variable interest rates lower than any of the Big Banks.

The judge gave this argument short shrift noting “there is nothing in that statement which conveys a representation that Rams’ interest rates will remain lower than the “Big Banks” in the future.” The borrower also sought to rely on a clause of the general terms, which provided:

If you are unable reasonably because of injury, illness, retrenchment, maternity leave or parental leave to meet your repayment obligations under this loan agreement, then you may ask us for a repayment holiday. We have at all times absolute discretion to decide whether or not to agree to your request.

After DLC received the default notice it wrote to RHG explaining that DLC was owed a large amount of money by a client (in the order of $450,000) and expected the money shortly. The letter continued “We herewith request a moratorium on this account for eight weeks until the matter relating to our income is resolved.” The court found that RHG was under no obligation to grant this request under the repayment holiday clause.  

DLC also argued that early repayment fees of 2% if the loan was paid out within the first two years of the loan and 1.5% if the loan was paid out in the second year were unconscionable. The court rejected this argument noting that the standard rate was variable and so there was no significant detriment to being thus locked in.

Click here to read the full judgment

Scroll to Top