An elderly Lebanese couple with limited English claimed they were tricked into signing a loan and mortgage by their nephew and their signatures and loan withdrawals were all forgeries. The couple claimed that they had mistakenly understood they were guarantors for their nephew’s loan. The couple sought orders that the mortgage be set aside as a result of the fraud and brought a plethora of claims against the nephew, the mortgage originator and the lender. They sued the nephew for undue influence, unconscionability, moneys had and received and conversion. They sued the mortgage originator for unconscionable conduct and negligence. They sued the lender for negligence and sought relief on the basis that the contract was unjust.
The court did not believe the elderly couple, who were not prepared to admit that any signatures were theirs for fear it would damage their case, including those that appeared on their affidavits. The court found that they were unable to explain away the evidence which showed that they knew all about the loan. The court believed the nephew and accepted that the couple took out the loan and mortgage, paid out monies to the nephew when he requested and the nephew paid back about two thirds of what he borrowed. The court also believed the loan introducer and accepted that the couple met with her to obtain a loan and mortgage. The court rejected that the nephew or loan introducer were involved in any fraud.
Claims against the nephew
The court rejected the case against the nephew and found that the couple entered into the loan and mortgage freely, of their own accord, and only later agreed to provide money to their nephew. The court found that the nephew obtained some of the loan proceeds for his own benefit but it was with their consent. The court noted that no claim was brought against the nephew that the moneys he received were lent to him and that he had failed to repay the moneys in accordance with the terms of any loan.
Claims against the mortgage originator
The court rejected the case against the mortgage originator. The court noted that the originator could not be criticised for the borrowers’ failure to receive independent legal and financial advice because it was up to the lender to set the requirements for a loan to be approved.
Claims against the lender
The court found that the lender was not negligent. As regards the Contracts Review Act claim, the borrowers advanced two alternative cases. First that they did not sign the loan and mortgage, which the court rejected. Second, that they did not understand the nature of a loan and mortgage and had no ability to service the loan and mortgage. The court rejected this too because no evidence was given as to these matters. The court found that the couple were aware of the main features of the loan and mortgage and said:
The absence of legal advice in this case does not lead to the conclusion that the contracts were unjust. I also do not think that the absence of financial advice leads to any conclusion of unfairness…..It seems to me that, viewed overall, the plaintiffs were in a position to adequately protect their interests. I do not think that the failure of the lender or originator to insist upon the obtaining of further advice, or undertake any further enquiries, gives rise to any relevant unfairness. The lender (or originator) has not acted in any predatory or misleading fashion. For these reasons, the plaintiffs’ claim under the Contracts Review Act must also fail.