A loan and mortgage were held to be unjust on a re-trial and the lender appealed. The parents alleged they had been misled by their son to believe that their signature on a loan and mortgage simply refinanced their existing $100,000 guarantee for their son’s home loan. The son did not give evidence at the second trial and it was agreed that his evidence from the first trial could not be taken into account. However the judge mistakenly referred to the son’s evidence in rejecting the lender’s case about what the borrower knew about their exposure under the loan.
The Court of Appeal found that the son’s evidence that he told his father that the transaction was a guarantee of up to $100,000 was clearly critical to the judge’s ultimate acceptance of the father’s otherwise unreliable evidence that he understood he was refinancing a guarantee, not signing a loan for close to $1m. These findings were in turn critical to the court’s ultimate finding that the loan and mortgage were unjust. The court found that the lender was denied a fair trial and the miscarriage required a retrial.
The Court of Appeal also found that the trial judge erred in failing to draw a Jones v Dunkel inference from the parent’s failure to call their son as a witness (namely that his evidence would not have assisted the parent’s case) because the son could have corroborated their evidence, they were in a position to call him, they knew what evidence he could be expected to give from the first trial and their failure to do so was unexplained.
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