J P Morgan Trust Australia v Siahos [2008] NSWSC 207

In this matter a 81 year old Greek man and his 71 year old Greek wife (both with limited English) granted a power of attorney to their son who used it to transfer a third of the family home to himself and then borrow from Interstar. When that loan defaulted the son then refinanced with JP Morgan Trust Australia (absconding with the overborrowings in the process).

The parents defended the possession proceedings on the basis of Contracts Review Act and various Equitable defences. The lender was fortunate in that the Defendants acknowledged the benefit of the payout of the Interstar loan. This was probably a tactical mistake by the borrower’s inexperienced solicitors. From the recital of facts it appears that the Interstar loan all went to the son as well. As a result the lender prevailed completely.

I do not need to tell my regular readers that this is an unusual outcome for a case with these facts. Generally speaking lenders are well advised to never lend to elderly people for the benefit of their children and absolutely never rely upon a power of attorney.

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