Roxo v Normandie Farm [2015] NSWSC 895

A lender sought possession and the borrower challenged this on the basis that no monies were owing because the lender had agreed orally that the borrower was not obliged to repay any loans until the loans were refinanced and that no matter how long it took to refinance, no interest would be payable at all. The mortgage did not refer to any such agreement. The borrowers never repaid principal or interest.

The court found no evidence that the lender agreed to lend over $1m indefinitely until refinance, without any interest ever becoming payable. The court found that repayment was pressed by the lender and his considerable forbearance did not itself establish that the claimed oral agreement had been made. The borrower had also given evidence in Federal Court proceedings that contradicted this. The court found no unconscionable conduct on the lender’s part and found that the interest rates which were high but not out of the ordinary for such short term borrowings did not alone provide a basis for finding unconscionability. The court found that the lender was not estopped from charging interest under the mortgage. The court also found that no principal had been repaid. The payments that had been made to the lender were in relation to a separate loan made to the borrower’s husband.

The lender was granted possession and its costs.

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