Prime Finance v Randall [2009] NSWSC 361

In this case an elderly couple mortgaged their house for the benefit of their daughter. They raised the standard Contracts Review Act defence. In the course of the proceedings they filed affidavits in which they admitted that they gave a false residential address, lied that the loan was for investment purposes, and provided false information to the RTA to have their addresses falsely recorded on their licenses (for the purpose of deceiving the lender.

The borrower’s candour and motive is understandable in the light of Permanent Mortgages Pty Ltd v Cook [2006] NSWSC 1104 where Patten AJ, quite properly and in accordance with the Contracts Review Act, ignored the Equitable maxim of “He who comes to Equity must come with clean hands” deciding  in favour of a cheating borrower noting (emphasis added):

Whether I should hold the mortgage unjust in this case involves a balancing exercise. On the one hand are the circumstances that the Defendants speak English as their first language; were experienced borrowers; had the services of a solicitor; were extremely anxious to obtain the loan; and were prepared to sign false statements and procure false certificates. On the other hand, the beneficial nature of the Code indicates that it was intended to protect the unsophisticated and meagrely educated, such as the Defendants, from their own foolishness.

The lender naturally apprehended that the “just” outcome he was likely to get from the Court pursuant to the Contracts Review Act might consist of the Court awarding the borrowers the money they stole from him. Accordingly, he decided that if the Civil Courts would not respect his property rights then he might at least obtain retribution for their violation in the Criminal Courts. To that end the lender sought permission to show the affidavits to the police. Justice Johnson made the order commenting:

The subject affidavits in this case appear to provide evidence of the commission of offences of dishonesty, including obtaining a financial advantage by deception contrary to s.178BA Crimes Act 1900, an offence punishable by imprisonment for five years. There may be other dishonesty offences revealed in the subject affidavits. In my view, the circumstances here cannot be characterised as trivial or inconsequential.

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