No Fuss Finance Pty Ltd v Miller [2006] NSWSC 630

New South Wales Supreme Court

CITATION : No Fuss Finance Pty Ltd v Miller [2006] NSWSC 630

HEARING DATE(S) : 04/04/06, 05/04/06

JUDGMENT DATE : 27 June 2006

JURISDICTION : Equity Division

JUDGMENT OF : Barrett J

DECISION : Orders declaring deed of loan and mortgage void

CATCHWORDS : CONTRACTS - unjust contracts - agreement loan for three months at 72% per annum - secured on borrower's home - loan proceeds wholly paid to third party - whether contracts "unjust" within Contracts Review Act 1980 - consideration of various factual matters relevant to s.9 criteria

LEGISLATION CITED : Contracts Review Act 1980, ss.7, 9

Elkofairi v Permanent Trustee Co Ltd (2003) 11 BPR 20,841 Jones v Dunkel (1959) 101 CLR 298 CASES CITED : Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 West v AGC (Advances) Ltd (1986) 5 NSWLR 610 Wilton v Farnworth (1948) 76 CLR 646

PARTIES : No Fuss Finance Pty Limited - Plaintiff Danielle Therese Miller - Defendant

FILE NUMBER(S) : SC 2834/05

COUNSEL : Mr M.W. Young - Plaintiff Mr D. Gasic - Defendant

SOLICITORS : Bransgroves Mortgage Solicitors - Plaintiff A.R. Walmsley & Co - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BARRETT J

TUESDAY, 27 JUNE 2006

2834/05 NO FUSS FINANCE PTY LIMITED v DANIELLE THERESE MILLER JUDGMENT 1 The plaintiff, which trades under the name "Short Term Lenders", is a company that has been engaged in the business of providing short-term loans since October 2000. By its amended statement of claim filed in court on 4 April 2006, it seeks an order for possession of a property at 7 Marie Close, Bligh Park in consequence of default in respect of a secured loan made by it to the defendant, Danielle Therese Miller. The plaintiff also seeks an order against the defendant for the repayment of the principal sum of $190,000.00, plus interest. 2 It is common ground that a deed of loan was concluded on 19 May 2004 and that the defendant granted a mortgage in registrable form over the Bligh Park property to secure payment. She has been the registered proprietor of the property for some years. It is her home and substantially her only asset. The mortgage was registered on 20 December 2005 as number AB619817. The deed of loan or loan agreement required the defendant to repay the principal on 19 August 2004, that is, three months after the loan was advanced. The defendant did not do so and that sum, together with interest, remains unpaid. 3 The contracted rate of interest is 72% (seventy-two percent) per annum. Interest for the three months term of the loan was $34,200 and interest continued to accrue thereafter at the rate of $11,400 per month. 4 A significant role in relevant events was played by Mr Garry Rampling. He is (or was) a property developer known to the defendant. She describes him as a friend of some 14 years' standing. I will return to give a fuller account of their relationship. It is the plaintiff's case that the defendant was borrowing the money so that she could supply Mr Rampling with funds to assist with the purchase of a property at Queenscliff which he intended to redevelop. The money was paid by the plaintiff, as lender, direct to Mr Rampling. There is no evidence of any formal agreement between the defendant and Mr Rampling in respect of this sum. 5 The plaintiff claims that the defendant entered into an arrangement with Mr Rampling knowingly and in the capacity of an investor. The defendant's position, however, is that she did not understand what was going on and that she was induced to enter into the contracts with the plaintiff while in a position of disadvantage or disability. She says this resulted from factors including the nature of her relationship with Mr Rampling, which involved a high degree of trust on her part; her ignorance of various material facts concerning the form and provisions of the mortgage documents; a lack of education and experience in providing security; and a lack of opportunity to obtain independent financial or legal advice on the transaction and its consequences and effect upon her. She says that at all times the plaintiff was aware or should have been aware of her lack of comprehension and that it nevertheless pressed its resultant advantage, so that her participation and consent in the conclusion of the agreement should be vitiated. She also claims that conduct on the part of Mr Rampling and the plaintiff's principal representative, Mr George Zajakovski, separately or together, otherwise amounted to pressure falling within the general and statutory definitions of undue influence or unconscionable, misleading or deceptive conduct. 6 The defendant's contention is that the plaintiff may not rely on the loan agreement and the mortgage because they were a unjust within the meaning of s.7 of the Contracts Review Act 1980; b unjust within the meaning of s.70 of the Consumer Credit (New South Wales) Code; c unconscionable within the meaning of s.51AA, s.51AB or s.51AC of the Trade Practices Act 1974 (Cth); d unconscionable within the meaning of s.12CA, s.12CB, s.12CC or the Australian Securities and Investments Commission Act 2001 (Cth); e unconscionable within the meaning of s.43 of the Fair Trading Act 1987; f obtained as a result of misleading or deceptive conduct within the meaning of s.42 of the Fair Trading Act 1987; g obtained as a result of misleading or deceptive conduct and/or false or misleading representations within the meaning of s.52 and s.53, respectively, of the Trade Practices Act 1974 (Cth); h unjust or unconscionable in equity; i obtained as a result of undue influence or pressure at general law. 7 The defendant filed a cross-claim against Mr Rampling. But, despite reasonable efforts, she has been unsuccessful in locating him and he has not been served. The cross-claim is therefore not pressed. There is no cross-claim by the defendant against the plaintiff but the following agreed position was reached towards the end of the trial: "HIS HONOUR [to counsel for the defendant]: What outcome are you contending for?