In this case Mr & Mrs Riz (the borrowers) sought to escape a mortgage to Perpetual (the lender) by filing a defence under the Contracts Review Act. Mr Riz gave evidence that he came to Australia from Lebanon in early 1977, his wife in 1981. That he can speak only basic English while his wife only understands some words and phrases. Neither Mr nor Mrs Riz have ever lodged a tax return in Australia. From 1989 to 1995, Mr and Mrs Riz owned and operated a business at Newtown, called the Beirut Pizza Shop. During that period, they applied for and obtained Centrelink Family Assistance benefits, and they continued to receive Centrelink benefits at least until the events in 2001. The Judge noted:
“I do not accept .. the deficiencies in their evidence can be .. benignly explained. They appeared very guarded, particularly in respect of their financial resources and the status of their relationship (including whether or not they were separated). Given the rate at which they reduced the Citibank mortgage, .. that they had six children to support, the funds available to them from time to time for a deposit on their home and other expenditures, including overseas travel, I am confident that they must have had sources of income that they have not disclosed, and which would have disqualified them from unemployment benefits and required lodgement of tax returns.”
The court denied relief under the Contracts Review Act finding that the assertion the borrower’s were “simple folk” was not made out, likewise the assertion that they could not afford the payments was not made out. The court also rejected the submission that the lender’s failure to ensure the borrowers were independently financially made it an unjust contract.