A husband and wife advanced their friend’s son $300K for his panel beating business. The monies were in fact used in a get rich quick scam. When the lenders sued for the debt, the son raised multiple defences including that it was not his deed because of a lack of literacy and/or his education and that the provisions of the deed were not adequately explained to him, that it was unenforceable because no stamp duty had been paid and that it was unjust, unconscionable, and out of time.
The judge concluded:
There is no doubt in my mind that the borrower, perhaps sadly with his father, who he described as a gambler, contrived a story to procure funds from the lenders for the purposes of investing offshore. They may have been persuaded by persons who procured money from them that it was a safe investment and they may well have been persuaded they could simply repay the moneys. It seems to me that the plaintiffs were simply identified as a ready source of available cash.
The judge held that the action was not out of time because the action was pursuant to a deed and within the required twelve years from the date when the action first accrued.
The judge found that the deed was not invalidated by reason only of not being stamped because only secured loans attract duty.
The court found that the son, despite claiming to be brain damaged from childhood, did understand the terms of the loan he signed.
The court also found that the loan was not unjust under the Contracts Review Act, nor unconscionable, because there was no injustice at the time the son signed the loan.
Judgement was given in favour of the husband and wife.