Reported Decision : 70 NSWLR 611 2 BFRA 532 New South Wales Supreme Court CITATION : Perpetual Trustees Victoria Limited v Ford [2008] NSWSC 29 HEARING DATE(S) : 10 - 12 December 2007 JUDGMENT DATE : 1 February 2008 JUDGMENT OF : Harrison J 1. Judgment for the plaintiff for $268,629.33 together with interest from 11 December 2007. DECISION : 2. Defendant to pay the plaintiff's costs. 3. Cross claim dismissed with no order as to costs. CATCHWORDS : MORTGAGE – claim for possession of land – mortgagor illiterate and intellectually disabled – whether capable of understanding transaction – non est factum – Contracts Review Act 1980 – whether contract unjust – unconscionable bargain – agency – whether mortgage broker agent of mortgagee – restitution – moneys advanced on basis of mistake – unjust enrichment – restitution ordered notwithstanding defence of non est factum Contracts Review Act 1980 LEGISLATION CITED : Fair Trading Act 1987 Real Property Act 1900 CATEGORY : Principal judgment Beneficial Finance Corp Ltd v Karavas (1991) 23 NSWLR 256 Child v Commonwealth Development Bank of Australia Ltd [2000] NSWCA 256 Collins v May [2000] WASC 29 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 Crago v McIntyre [1976] 1 NSWLR 729 David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 Garcia v National Australia Bank Ltd (1998) 194 CLR 395 Gibbons v Wright (1954) 91 CLR 423 Goss v Chilcott [1996] AC 788 Israel v Foreshore Properties Pty Limited (in liq) (1980) 54 ALJR 421 Lander v Trigger [1999] NSWSC 1253 CASES CITED : Octapon Pty Limited v Esanda Finance Corporation Ltd (Supreme Court of New South Wales, Cole J, 3 February 1989, unreported) Permanent Custodians Ltd v Yazgi [2007] NSWSC 279 Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd [2001] NSWCA 20; (2001) 50 NSWLR 679 Perpetual Trustee Company Ltd v Khoshaba [2006] NSWCA 41 Petelin v Cullen (1975) 132 CLR 355 PT Limited v Maradona Pty Ltd (1992) 25 NSWLR 643 Rover International Ltd v Cannon Film Sales Ltd (No 3) [1989] 3 All ER 423 Saunders v Anglia Building Society (Gallie v Lee) [1971] AC 1004 Steele-Smith v Liberty Financial Pty Limited [2005] NSWSC 398 Schmierer and Anor v Taouk [2004] NSWSC 345; (2004) 207 ALR 301 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Yerkey v Jones (1939) 63 CLR 649 PARTIES : Perpetual Trustees Victoria Limited (Plaintiff) Patrick John Ford (Defendant) FILE NUMBER(S) : SC 15045 of 2005 COUNSEL : S B Docker (Plaintiff) M W Sneddon (Defendant) SOLICITORS : Kemp Strang (Plaintiff) Legal Aid New South Wales (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION POSSESSION LIST HARRISON J 1 February 2008 15045 of 2005 Perpetual Trustees Victoria Limited v Patrick John Ford JUDGMENT Introduction 1 Patrick John Ford ("the defendant") is the registered proprietor of a property in a suburb of Wollongong in the Illawarra region of New South Wales ("the property"). The defendant lives in the property as his home. He inherited it from his mother in 1994. Pursuant to a loan agreement and a mortgage each dated 5 July 2004, Perpetual Trustees Victoria Ltd ("the plaintiff") advanced $200,000 to the defendant secured over the property ("the transaction"). The plaintiff and the defendant are the only parties to the loan agreement and the mortgage. 2 The defendant was born in 1945. He was almost 58 at the date of the transaction and 62 at the date of the proceedings before me. He suffers from a congenital intellectual impairment and he is illiterate, although he has the ability to sign his name and to recognise some words and numbers. At the time of the transaction he was in receipt of a Disability Pension of $452.70 per fortnight. He had no capacity from his income or other resources to service the payment of interest on a loan of $200,000. 3 The loan was arranged by the defendant's son Scott Ford in order for Scott to purchase a cleaning business known as Melmat Cleaning for the sum of $180,000. In the events that occurred, the business was purchased in the defendant's name although he had neither the desire nor the need to acquire it himself. He clearly did not have the ability to manage it or conduct it. 4 Within twelve months of the date of the transaction the defendant had defaulted upon his obligations to the plaintiff under the loan agreement. On about 23 June 2005 the plaintiff served a notice upon the defendant pursuant to s 57(2)(b) of the Real Property Act 1900. The defendant did not comply with that notice. On 10 August 2005 the plaintiff issued a demand to the defendant for the repayment of the total amount outstanding pursuant to the loan agreement. The defendant failed to comply with that demand. The plaintiff commenced these proceedings on 28 October 2005 seeking recovery of the sum of $205,428.89 and possession of the property. The quantum of the plaintiff's claim was agreed between the parties to have become $268,629.33 as at 10 December 2007. 5 The amended statement of claim and the defence, as well as the defendant's cross claim and the plaintiff's defence to it, raise issues directly and indirectly related to the defendant's literacy and his capacity to enter into the transaction or to understand it. These matters were obviously treated by both parties as central to resolution of the issues joined on the pleadings. Even though findings about these matters did not necessarily or of themselves dispose of the whole or any particular part of proceedings, they were clearly essential, and pre-conditional, to the final result. Accordingly, they are dealt with first. What was the defendant's level of intellectual functioning or impairment? 6 There was both lay and expert evidence on these topics. The plaintiff relied upon a series of reports from a psychiatrist Dr Roberts. The defendant relied upon a psychological report from Ms Nasser. Their respective approaches and conclusions were quite different. Dr Roberts 7 Dr Roberts examined the defendant on 25 October 2007, some six weeks prior to the commencement of the hearing on 10 December 2007. He gave a history of having attended Bellambi and Corrimal catholic schools but was unable to learn. He then attended Greenacre Special School where he was taught "to wash and clean himself". The defendant left school at approximately 15 years of age. After initially obtaining employment at the Wollongong Coke Works he worked in the mines, as a bricklayer, bathroom attendant and labourer. 8 Dr Roberts said that the defendant presented with a pleasant demeanour and was capable of interaction and of engaging in conversation when straightforward language is used to communicate with him. Dr Roberts expressed the opinion that the defendant "clearly indicated in terms of his response to questions put that he has the capacity to understand the nature of the agreement into which he has entered and its obligations". 9 At paragraph 60 of his first report Dr Roberts said this: "60 In my opinion, in spite of Mr Ford being illiterate he admitted without hesitation that he understood the nature of the document that he was signing, that he understood, "If your son shot through or the business went bust you would be left holding the ball". Mr Ford clearly indicated that he knew he was engaged in a process whereby he would give his son money as a loan for his son's business, he knew that he was able to access those monies by virtue of the fact that he owned a house and he clearly indicated that he understood at the time of entering into this agreement that in the event of something going wrong his house would be affected and he could be left 'holding the baby' and clearly understood that the house was at risk, under such circumstances." 10 Dr Roberts went on to say that the defendant clearly understood that in spite of being unable to read the document relating to the contract into which he entered, he "understood the content of the document" and it was Dr Roberts' view that this understanding was present "by virtue of the answers that he gave to questions put by [Dr Roberts] to [the defendant] that were put in straightforward colloquial language". Dr Roberts then expressed the following conclusions: "(a) In my opinion [the defendant] is unable to read. (b) In my opinion in spite of being unable to read [the defendant] is capable of understanding that by signing a document such as a loan agreement and/or mortgage he is entering into an agreement, that under law, means that he has to do certain things, either by reading it [sic] or having it explained to him. (c) . . . (d) In my opinion [the defendant] is capable of understanding that by entering into the agreement that he entered into, he clearly understood that he was obtaining that money by virtue of him owning a house and that he was clearly aware that in the event of something going wrong, namely of the money not being returned to [sic] him, that his house would be compromised. (e) I am of the view that [the defendant] was as indicated by virtue of the answers given to me by virtue of questions posed, that in the event of moneys not being paid, that his house ownership would be compromised. (f) I am of the view that [the defendant] was capable of making a judgment in regard to the signing of the documents such as a loan agreement or a mortgage namely as to whether this was in his own best interest." 11 Finally, at paragraph 78, Dr Roberts expressed his ultimate conclusions as follows: "78. [The defendant] in my view clearly understood the nature of the agreement and the risks he was taking when entering into it, that he understood that he was receiving benefits by virtue of his ownership of the dwelling in which he resided, that he knew that in the event of him being unable to repay the moneys his home would be at risk, he entered into the agreement in the hope that by providing assistance to his son, his son would reciprocate by looking after him." Ms Nasser 12 Esme Nasser is a clinical psychologist who examined the defendant on 16 March 2007. Ms Nasser said that the defendant was disoriented in time knowing neither the day of the month nor the month of the year when she saw him. Although he knew the year, he thought 10 years ago was 1971. 13 The defendant was found to be functionally illiterate. The only word he could recognise was "the". Administration of the Wechsler Adult Intelligence Scale - Third Edition revealed that the defendant's overall level of intellectual functioning within the extremely low range (<1st percentile). There was no significant difference between his verbal IQ and performance IQ, both functioning in the extremely low range. The defendant's verbal comprehension skills, working memory and processing speed were all found to be equally severely impaired, functioning below the first percentile. His perceptual organisational skills were at the same level. 14 Ms Nasser found that the defendant had no sequencing or visual abstract reasoning skills. His visual scanning and motor speed were severely impaired. He also demonstrated a severely impaired ability to form judgments or to render appropriate action oriented decisions in relation to those judgments. 15 Ms Nasser concluded that the defendant was a man who suffered from a hearing impairment, macular degeneration, disorientation in time, illiteracy, and a severe congenital intellectual impairment that placed his overall level of intellectual functioning below the first percentile. All aspects of his intellectual functioning were equally severely impaired. In Ms Nasser's opinion, the defendant was not capable of entering into a contract, something that she considers "should have been apparent after a short conversation with the mortgagor's [sic] sales representative". Ms Nasser said that the defendant's intellectual functioning was comparable to an individual suffering from Down's syndrome. He could not read the word "contract" and could not spell it. He certainly could not define it. Ms Nasser said that the defendant "does not have the intellectual capacity to enter into a contract". 16 Dr Roberts and Ms Nasser each prepared an additional report in reply. They also gave concurrent evidence before me. It is sufficient for present purposes to observe that both Dr Roberts and Ms Nasser adhered to their original opinions. The defendant 17 The defendant also gave evidence. First, he swore two affidavits, which were read to him by his solicitor before they were executed. These affidavits were of limited use in the proceedings. The matters deposed to by the defendant tended to confirm that he has always had considerable difficulty undertaking even the simple transactions of ordinary life. Prior to her death the defendant's mother looked after him, with the exception of a period of approximately six years between 1970 and 1976 when he was married. She used to cook for him and make his bed and they would go out together to the bowling club. He said, "She gave me a house to put over my head. I had nothing". 18 When the defendant worked in the mines he was not permitted to use machinery. He said, "when I was at the mines, I could understand work but I could understand nothing else". He said he could not understand figures or what was written on his pay slip. He would ask those he worked with to read his pay packet to him. It would appear that his employer arranged for someone to teach him to read and write but without success. The defendant said, "The way I am today is the way I have been all my life. I have not changed. I had to have my sister come with me on the train to the city. I could not get into the city by myself". 19 After his mother died the defendant would drive to his sister's home and she would read his mail to him and help him pay his bills. She would attend doctors' appointments with him, take him to the credit union and do his shopping. The defendant said, "I need help with these things". 20 In 2003 the defendant invited his son Scott to come and stay with him at the property. He was not close to his son, his partner or their children but he said he hoped by asking them to stay that he would see more of them. As there were only two bedrooms in the house, the defendant offered to move into an old caravan in the backyard with his dogs. 21 Secondly, the defendant gave evidence and was cross-examined. Counsel for the plaintiff commenced his cross-examination with the following questions: "Q. Mr Ford, do you know why you're here today? A. Yes. Q. Why? A. Trying to save my house. Q. How is being here today going to save your house? A. Tell the truth. Q. Anything else? A. No, just tell the truth." 22 The defendant said that he knew that he became the owner of the property when his mother left it to him in her will. He said he understood what being the owner meant. The defendant said that he found out that he was the owner of the property because his mother told him. He could not remember whether he was given any pieces of paper that said that he was the owner. He was asked about the loan. "Q. When the loan was taken out, you gave the deeds to the bank, didn't you? A. I never. Me son must have. Me son. Q. But you don't have the deeds any more? A. No I don't. Q. And it was about that time that you gave the deeds away. Is that right? A. About that, yes. Q. They were given away for the loan. Is that right? A. Yeah. Q. You knew they were being given away for the loan? A. Yes. Q. And you knew that was one of the things which the bank wanted before it would give the loan? A. I wasn't real sure, but that's what happened." 23 During the course of his evidence it became clear that the defendant was often able to respond to questions in what appeared to be a meaningful and coherent fashion, provided that the content of the discourse was wholly contained within the question. His responses were almost always monosyllabic or of an equivalent value, and the defendant rarely contributed to the conversation in a way that was not suggested by the question. The topic of the cleaning business came up in cross-examination of the defendant and is a good example of this trend. It is as follows: "Q. Mr Ford, do you know what Melmat Cleaning is? A. Cleaning, that's all I know. Melmat Cleaning that's it. Q. It's a business? A. Yeah. Q. Or it was a business, wasn't it? A. Yeah. Q. It was a business that cleaned places and got paid for them, is that right? A. Yes. Q. You understand what a cleaning business is, don't you? A. Not really. I'm not a businessman. Q. You gave evidence before that Mat Ritchie was the owner of Melmat Cleaning. Do you remember that? A. Yes. Q. You meant by that didn't you, that he was the owner of the Melmat Cleaning business? A. Yes. Q. You understood that what that meant was that all the money people paid for the cleaning got paid to him. Is that right? A. Yes, that's right. Q. And that he had to pay the people who worked for the business. You understood that? A. Yeah. Q. It's true isn't it, that Scott your son, told you that he wanted to buy the business of Melmat Cleaning. Is that right? A. Yes. Q. What did you understand that to mean? A. Very little. HIS HONOUR Q. How much of it did you understand? A. I didn't understand any of it really." 24 At one stage I attempted to limit this trend in order that the extent of the defendant's knowledge and understanding of various topics might be better understood. I made the following suggestion: "HIS HONOUR: I didn't mean to interrupt you, it's sometimes more instructive if we get Mr Ford's view of what it is rather than you putting it. I'm not being critical of you the way you're putting your cross-examination." 25 Unfortunately, the defendant was cross-examined in much the same way thereafter as the following passage reveals: "Q. So what do you mean by borrow money? A. To buy something. Q. Does it involve firstly someone giving you money? A. I don't know what the word - I can't - I don't understand. Q. If you borrow money, do you have to pay it back? A. Yes. Q. Before you have to pay it back you have to be given it first, don't you? A. Yes. Q. So you understood didn't you, that if the business of Melmat Cleaning was going to be bought, then there would have to be a loan. You understood that? A. Yes. Q. And that that loan would have to be paid back. You understood that? A. Yes. Q. Where did you think the loan was going to be from? A. The house. Q. I'm sorry? A. The house. Q. What do you mean by that? A. I can't answer it because I'm not, I don't know. You say where that money is coming from? Q. Yes, that's the question? A. I don't know, can't answer it. Q. A moment ago you said the moneys were coming from the house. Why did you say that? A. Well I couldn't pick up what you said. The moneys coming from the house, yes I understand that. Q. How were they coming from the house? A. Can't answer it. I don't know what to say." 26 Another example of this is as follows: "Q. He told you to go and see a solicitor about the loan? A. I can't remember. Q. You understood what a solicitor was, didn't you? A. I know what a solicitor is, yes; I know what they do. Q. What do solicitors do? A. I'm not really sure . Q. They can tell you about legal documents, can't they? A. Yes. Q. Like loans, is that right? A. Yes." (Emphasis added). 27 That material is to be contrasted with the following series of questions and answers during which the defendant was able to volunteer some small amount of information without being prompted: "Q. And how was that going to be paid back? A. My business. Q. And did you know when the loan had to be paid back? A. No, I never, no. Q. Well, you knew, didn't you, that you didn't have to pay the $200,000 back straight away, you knew that? A. Yes, know that all. Q. Are you saying, Mr Ford, that you had no idea when the money had to be paid back to the bank? A. No, no. Q. What did you think was going to happen if the business couldn't pay the loan back to the bank? A. Well, I would have lost my house. Q. You understood that, didn't you? A. Not fully, no." 28 Finally, the defendant was cross-examined about the relationship between the money that was to be borrowed and the business that was to be purchased. Some of that cross-examination is as follows: "Q. You knew the money to pay back the loan was going to come out of the business? A. Yes. Q. You wanted to make sure that the money did come out of the business to pay back the loan, didn't you? A. But I knew nothing about that business. I never understood anything, didn't get a paper, didn't read it, how would I know. Q. But you wanted to make sure, didn't you, that the bank was paid back out of the business, that is right, isn't it? A. I had nothing to do with the business." 29 One of the criticisms levelled at Dr Roberts by Ms Nasser dealt with Dr Roberts' use of metaphors in his discussion with the defendant as a way of gaining some insight into the extent of the defendant's understanding of the transaction. Dr Roberts formed the view that the defendant's intellectual impairment was not as severe as Ms Nasser contended because the defendant was able to understand concepts such as "being left holding the ball". Indeed, the defendant was asked about this very matter during cross-examination as the following passage reveals: "Q. If someone said to you 'I was left holding the ball', what would you understand that to mean? A. I don't fully understand that." 30 This is to be contrasted with a question on the same topic that did not require the defendant to contribute to the content of the subject matter as follows: "Q. If I said to you 'my friend shot through and left me holding the ball', would you think that my friend had gone and left me with a problem? A. Yes." 31 Accordingly, I find that it is exceedingly difficult to accept, or to rely upon, answers given by the defendant to questions such as the following: "Q. So when Dr Roberts said to you, 'if Scott went broke and shot through and left you holding the ball', you knew that meant if Scott left and went broke, you would have to pay the loan? A. Yes." 32 It was Ms Nasser's contention that the defendant often responded in a way that appeared to be contextually appropriate when in truth his responses were no more than confabulations. I agree with Ms Nasser. Some of the material in the passages quoted above confirms this view. There were others. 33 In my opinion, the affirmative answer to the first question in the passage set out above at par [28] appears to be meaningful but is in effect shown to be meaningless in the light of the answers to the questions that follow it. Another example of this emerges from the following passage: "Q. Now, it is true, isn't it, that you now feel negatively towards Scott, is that right? A. Yes. Q. Do you understand what I mean by "negatively"? A. Not really, no I don't. Q. How do you feel towards Scott now? A. I don't feel nothing for him. Q. You feel badly towards him, is that right? A. Yes." 34 In a somewhat ironic way the defendant himself appears during cross-examination to have conceded this very propensity. The following question and answer are relevant: "Q. It is true, isn't it, that no matter what Mr Economos said to you, you would have signed the documents anyway, because you wanted the loan. That's true, isn't it? A. That's right." The defendant's sister 35 The defendant's sister Pam Marskell swore an affidavit in his case. She said that the defendant was unable to go to the bank to withdraw his money, his pension, or pay his bills. She said that she used to take the defendant to buy his clothes. Whenever the defendant tried to buy his own clothes they were always too big. She said that the defendant lacked confidence and will not even ask the shop attendant for assistance. According to her, the defendant could not even buy a pair of socks because he could not read the size. "He just buys anything". 36 According to Ms Marskell, grocery shopping was the same. She said that the defendant could buy chops or sausages because he knows what they look like but anything that he is not able to see he is unable to buy unless there is a picture of what he wants on the label. Ms Marskell said that the defendant could not tell the difference between hair conditioner and dishwashing liquid. Ms Pascoe 37 Leslie Jane Pascoe also gave evidence. She was the defendant's neighbour. He often came to her house. She described how he performed in a social setting. She said: ". . . if everyone is in a whole conversation, Pat very rarely comes into the conversations. If we have a family dinner, Pat is usually there but Pat very, very rarely comes in, unless somebody directs a question at him, he'll answer maybe "yes" or "no" to whatever, when something is simple, but he does not literally come into a lot of the conversations and we do have him over a lot for family dos and things." 38 Ms Pascoe also gave evidence that his son Scott treated the defendant very poorly. When Scott and his partner and their four children moved into the defendant's house, the defendant moved out to live in a caravan in the backyard. It would seem that he had little if any access to a shower or proper sanitation and washed rarely if it all. He appeared to pay no attention to his own personal hygiene. Conclusions on intellectual impairment and function 39 I have had considerable difficulty coming to terms with the conclusions expressed by Dr Roberts that someone who was both illiterate and who suffered from a severe congenital intellectual impairment that placed his overall level of intellectual functioning below the first percentile could have the capability of making a judgment about the wisdom or otherwise of signing documents such as the loan agreement or mortgage or whether or not it was in his best interests to do so. In my experience, adequately functioning members of the community often have difficulty with concepts such as mortgages and loan agreements, other than in the most general way, and rarely, if ever, read and understand them. The loan agreement in the present case extended over dozens of pages and was complicated and complex. I have no doubt, and I find, that the defendant could not have understood either document if it had been read to him. I reject entirely Dr Roberts' opinion that the defendant "clearly understood the nature of the agreement and the risks he was taking when entering into it". 40 The methods of assessment adopted respectively by Dr Roberts on the one hand and Ms Nasser on the other were different. Dr Roberts used a conversational technique as described in his first report. He assessed the defendant by relying upon his own experience as a psychiatric clinician. This consisted of an interview conducted over the course of approximately one hour during which Dr Roberts interrogated the defendant and utilised the appropriateness, or otherwise, of the defendant's responses to determine the defendant's level of intellectual function. He conducted no empirical tests or tests capable of being graded by reference to a scale or benchmark. 41 Ms Nasser administered a WAIS and analysed the results in accordance with the protocols applying to that test. She expressed opinions based upon these results that were unencumbered by her subjective views of the defendant's capacities or capabilities. She found the defendant could only repeat three digits in sequence on one of two trials. He could not reverse two single digits. He demonstrated negligible attention to detail. He was not able adequately to explain the meaning of verbally presented words such as ship, penny and winter. He could not explain at all the meaning of words such as repair and yesterday. He demonstrated no verbal abstract reasoning skills and was unable to explain the similarity between a fork and spoon. His arithmetic was so impaired that he thought four dollars plus five dollars equalled six dollars. He had no idea how much change he could expect to receive from ten dollars if he purchased an item worth four dollars. He possessed negligible general information. For example, he could not answer the question "What is a thermometer?" except to say, "I've heard of it but I can't say the word". Other questions such as the direction of the sunrise and the number of weeks in the year were answered, "I don't know". 42 Ms Nasser also said that the defendant had no sequencing or visual abstract reasoning skills. His visual scanning and motor speed were severely impaired. He demonstrated severely impaired ability to form judgments or to render appropriate action oriented decisions in relation to those judgments. For example, on the question "What are some reasons why we cook many foods before eating them?" He replied, "To eat". His performance was in Ms Nasser's opinion so poor that a question such as "Why should people pay taxes?" was not even asked. 43 As I have already indicated, Dr Roberts and Ms Nasser gave evidence concurrently. This served clearly to highlight the absence of any likelihood of agreement between them on important issues. It degenerated to some extent into an interdisciplinary brawl. It was in these circumstances inevitable that my views about the defendant's capacities and capabilities would have to draw to a correspondingly greater extent upon my own observations of him in the witness box. 44 The passages of evidence quoted earlier in these reasons are only some examples of the defendant's overall performance before me. Without wishing to be in any way disrespectful to the defendant, it was my opinion that the defendant was uncomfortable in the witness box and appeared to find the experience quite difficult. He proffered answers to questions in a way that appeared to me to be designed to bring the whole process of interrogation to an end as quickly as possible. He clearly lacked the capacity intellectually and socially to interrupt an explanation of a complicated document if at some stage he did not understand what was being put to him. For example, I did not observe him at any time during the course of his evidence before me to ask for a question to be repeated or to be explained. During the course of the proceedings when he was in court but not in the witness box the defendant sat for the most part motionless and apparently disengaged from what was happening around him. Both in the witness box and in the well of the court the defendant's face was expressionless and belied no particular emotion. This was in my experience exceptional in the case of a party to proceedings that had potentially disastrous consequences for that party. Consistently with that observation, the defendant did not in my opinion on any occasion provide an answer consciously formulated to assist his case. He appeared to me to be completely without guile. 45 Dr Roberts expressed the view that the defendant appeared to understand at the time that he entered into the agreement "that in the event of something going wrong his house would be affected". No part of Dr Roberts report suggests that he explored with the defendant precisely, or even generally, the concept of "something going wrong". I have absolutely no doubt that the defendant, if asked, would have had no comprehension of the concept of "the business going bust". In my opinion, Dr Roberts' reference to the defendant as someone who "presented with a pleasant demeanour, [was] capable of interaction and engaging in conversation . . . when straightforward language [was] used in regard to communication with him" was a description of the problem rather than the solution. The expression "straightforward language" is in my opinion a complete misunderstanding of the simplicity to which it was necessary to revert in order for the defendant to comprehend what was being put to him. I find it difficult within the context of the present case to describe in sober language what are surely meaningless statements and conclusions by Dr Roberts such as "in spite of being unable to read the document relating to the contract into which he entered [the defendant] understood the content of the document". I find as a fact that no explanation of the documents signed by the defendant would have been adequate to provide him with an understanding or appreciation of their true meaning or effect even at a basic or visceral level. I find that the defendant did not understand the loan agreement or mortgage at the time he entered into them and does not understand them now. The defendant appears at one level to understand that there is a connection between the prospect that he could lose his house and the actions of his son Scott, but the details of that connection in the defendant's mind are not apparent to me and I am satisfied that they are not apparent to him. The pleaded cases 46 There was no relevant dispute between the parties as to the nature of the plaintiff's claim or the structure of the anterior transaction upon which it is based. The plaintiff relied strictly upon the terms of the loan agreement as it was entitled to do and the defendant, whilst not admitting the case pleaded in reliance upon the loan agreement, did not take issue with the plaintiff's formal entitlement to the relief that it sought if the transaction were otherwise enforceable against him. On the contrary, the defendant pleaded in his defence and cross claim that he was not liable to the plaintiff because of, in summary, his congenitally impaired intellectual functioning. Accordingly, the defendant put his case in three ways. First, that he lacked the capacity to enter into any contract with the plaintiff. Secondly, the defendant relied upon the doctrine of non est factum. Thirdly, the defendant alleged that to enforce the transaction against him would in the circumstances be unconscionable and/or unfair or unjust within the meaning of s 7 of the Contracts Review Act 1980. 47 The defendant also relied upon a defence of undue influence. It will be necessary to return to this aspect later in these reasons. 48 In general response to these matters the plaintiff said that even if the defendant's incapacity were established, the plaintiff did not know, or was not put on notice, of it at any time prior to 5 July 2004 when the transaction was entered into. The plaintiff contended that it was entitled to enforce its rights under the loan agreement and the mortgage and that in any event the mortgage, being registered, is indefeasible. The plaintiff denied that the defendant was entitled to relief under the Contracts Review Act 1980 by reason of s 6(2) because the loan agreement and the mortgage were entered into for the purpose of a trade, business or profession carried on by the defendant. Furthermore, the plaintiff said that the circumstances pleaded were not reasonably foreseeable at the time that the loan agreement and the mortgage were made within the meaning of s 9(4) of that Act. 49 More particularly, the plaintiff pleaded in its amended statement of claim, but in effect in response to the defendant's cross claim, that if the court were to find that the loan agreement were void or unenforceable for the reasons promoted by the defendant, the money advanced by the plaintiff to the defendant was advanced on the basis of a mistake that the transaction was enforceable against the defendant according to its terms, and that the defendant was capable of entering into the transaction and understood the general nature of the loan agreement and the mortgage when he signed them. By reason of the advance of the monies to the defendant in those circumstances, he had been unjustly enriched. 50 Furthermore, the plaintiff alleged that the defendant engaged in conduct in trade and commerce contrary to the provisions of the Fair Trading Act 1987. The plaintiff alleged that the defendant represented that he was applying for a loan of $200,000 as a borrower intending to purchase a business with the proceeds of the loan and represented that Mr Economos was his mortgage broker. It alleged that the defendant represented that the loan was for investment or business purposes, that he was fully aware of his financial obligations under the proposed loan with the plaintiff and that he was fully able to meet his obligations under it. Finally, the plaintiff alleged that the defendant represented that the information in the loan application dated 17 May 2004 was true and correct and could be relied upon, and that the information in the loan agreement was true as was the information he had given about his capacity and financial position. Alternatively, the plaintiff alleged that the defendant was estopped from denying that that conduct occurred in trade or commerce. Facts relevant to the transaction 51 In 2003, the defendant's son, Scott, started living with him at the property along with Scott's partner, Sophie, and their four children. Scott was the second child of the defendant's first marriage. The defendant had been married on two occasions. There were no children of the second marriage. 52 On 12 May 2004, Peter Economos of Dolphinex Pty Limited ("Dolphinex"), a company that provided mortgage broking and financial planning services, went to the property and had a meeting with the defendant and his son. Mr Economos did not know who had made the appointment for him to visit. During the meeting, according to Mr Economos' evidence, he had a discussion with the defendant and his son in which they both participated approximately equally and in which the defendant gave him information about his assets, including the property, his bank accounts and investments. Mr Economos had a specific recollection of some questions that the defendant asked during the meeting that he set out in his affidavit. During that meeting Mr Economos made some handwritten notes for the purpose of preparing a mortgage reduction plan, which was part of a service offered by Dolphinex to help borrowers pay off their loans more quickly. The defendant told Mr Economos that he did not want his son on the title deeds. The ideas of the loan being in the defendant's name and for him to buy the business with his son were discussed. Mr Economos advised the defendant to see a lawyer. 53 On 15 May 2004, there was a second meeting at the defendant's house involving Mr Economos, the defendant and his son. At this meeting, according to Mr Economos, the defendant told him that he was going to buy the business and that his son was going to run it. At the meeting the defendant signed the loan application and other documents such as declarations as to purpose and said that he understood his obligations under the proposed loan and could meet them. The defendant also entered into an agreement with Dolphinex for it to provide him with its mortgage reduction service. A fee of $385 was paid for Mr Economos to draft a mortgage reduction plan and an irrevocable authority and permission to pay was signed in favour of Dolphinex so that it could be paid a fee of $3,245 from the loan funds or the defendant's funds on settlement of the loan. The irrevocable authority also gave Dolphinex authority to act on the defendant's behalf. Mr Economos again advised the defendant to see a lawyer. 54 On 19 and 21 May 2004, Dolphinex sent the loan application documents to Australian Financial Group Limited ("AFG"), a loan originator. These documents did not include the mortgage reduction plan that had been prepared by Mr Economos after his meetings with the defendant and his son. 55 AFG passed the loan application to the plaintiff's mortgage manager, Challenger (at that stage known as Interstar). Challenger assessed the loan application and, after making some enquiries which were answered by AFG and seeking and obtaining insurance for the loan, approved the loan on about 16 June 2004. Challenger then instructed its settlement agents, First Title Secure, to draft the documents and settle the transaction. 56 On or about 17 June 2004, First Title Secure sent loan and mortgage documents directly to the defendant for him to sign. Whilst Dolphinex's files contain a note that the defendant was proposing to sign the documents in front of a solicitor, he actually signed them in front of Mr Economos. Mr Economos was requested to attend the property, which he did for this purpose, and all the documents were duly signed after Mr Economos explained them to the defendant. Mr Economos did not take the documents to the property; First Title Secure had already sent them there. Mr Economos said he had no reason to believe or to think that the defendant did not understand the nature or content of the documents. 57 On 29 June 2004, Dolphinex sent the executed loan documents including the Loan Agreement, the Mortgage and a direct debit authority to First Title Secure by post along with directions about the disbursement of the loan. 58 On 1 July 2007, the defendant signed an agreement to purchase the business known as Melmat Cleaning from Matthew Ritchie and Melissa Ritchie for $180,000 as mentioned earlier. $10,000 of the purchase price was paid on exchange as a deposit. The amount of $10,000 was paid from the defendant's personal account with the Illawarra Credit Union. 59 On 5 July 2004, the transaction was settled. After the payment of expenses, the balance of the loan was disbursed by cheques drawn in favour of Matthew Ritchie for $170,000, the defendant for $24,857 and the Mortgage Reduction Centre (Dolphinex) for $3,245 for the mortgage reduction service. The first two of these cheques were sent by mail to the defendant at the property. He signed a document acknowledging their receipt and returned it to First Title Secure. The cheque to the defendant was banked into his personal account. The last cheque was sent to AFG along with a cheque to AFG for commission, which came out of the lender's funds. AFG forwarded the cheque for the mortgage reduction service to Dolphinex and was also required to remit 80% of the commission to Dolphinex. First Title Secure did not deal with Dolphinex. 60 It is reasonable to infer that the cheque for $170,000 was paid to Mr and Mrs Ritchie because there are numerous documents that show that Melmat Cleaning was transferred to the defendant. On 23 July 2004 the defendant opened another account at the Illawarra Credit Union in the name of the business. The application form listed the defendant as proprietor of the business and gave his son access to the account. There were no documents that suggested, nor did the evidence establish, that the defendant's son had access to the defendant's personal account. The Melmat Cleaning bank statements show activity suggesting that the business was trading. Non est factum 61 The plaintiff contended that the defendant's plea of non est factum was irrelevant to the extent it was directed at the mortgage because it had become indefeasible upon registration. 62 Non est factum was considered in Petelin v Cullen (1975) 132 CLR 355. In that case, the High Court laid down the following propositions with respect to the defence: 1. Where the document has actually been signed the law is designed to accommodate the competing policy considerations of the injustice of holding a person to a bargain to which the person has brought no consenting mind and the necessity of holding a person to a document who signs it. 2. The importance that the law assigns to the act of signing, and to the protection of innocent persons who rely upon the signature when there is no reason to doubt its validity, mean that the plea is one confined within narrow limits. 3. The defence is confined to certain categories of people who are illiterate and who must rely on others for advice about what they are signing. 4. To make out the defence a defendant must show that: (a) he or she signed the document in the belief that it was radically different from what it was in fact; and (b) at least as against innocent persons, that it was not due to carelessness on his or her part. Carelessness means the mere failure to take reasonable precautions in ascertaining the character of a document before signing it. 5. There is a heavy onus on a defendant who seeks to establish the defence. The High Court referred to the House of Lords decision in Saunders v Anglia Building Society (Gallie v Lee) [1971] AC 1004 at 1019. 63 The decision in Petelin v Cullen was referred to with approval by the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165. The reference is made in the course of a consideration of the effect of a signature on a legal document and in the context of the objective theory of contract. Authority is cited for the proposition that a person is generally bound by his or her signature whether or not he or she has read or understood the contents of the document and that the signature is a representation to that effect. The court said the following at pars [46] to [47]: "[46] The statements in the above authorities accord with the well-known principle stated by Scrutton LJ in L'Estrange v F Graucob Ltd (" L'Estrange v Graucob ") that "[w]hen a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not." Scrutton LJ, in turn, was repeating the substance of what had been said by Mellish LJ in Parker v South Eastern Railway Company . The principle was applied in Foreman v Great Western Railway Company . A consignor of cattle sent them for transportation by a railway company. They were put in the charge of a drover, who could not read. The drover signed a contract of carriage which contained an exclusion clause. The drover's employer was held to be bound by the clause. The Exchequer Division said that "the plaintiff who sends the [illiterate] servant to sign the document is in no better or worse position than if he had signed it himself without reading it." In his lecture published as "Form and Substance in Legal Reasoning: The Case of Contract", Professor Atiyah posed, with reference to L'Estrange v Graucob , the question why signatures are, within established limits, regarded as conclusive. He answered: 'A signature is, and is widely recognised even by the general public as being a formal device, and its value would be greatly reduced if it could not be treated as a conclusive ground of contractual liability at least in all ordinary circumstances.' Professor Atiyah added: 'However, what is, I think, less clear is what is the underlying reason of substance in this kind of situation. The usual explanation for holding a signature to be conclusively binding is that it must be taken to show that the party signing has agreed to the contents of the document; but another possible explanation is that the other party can be treated as having relied upon the signature. It thus may be a mistake to ask, as H L A Hart once asked, whether the signature is merely conclusive evidence of agreement, or whether it is itself a criterion of agreement.' These themes appeared in the judgment of this Court in Petelin v Cullen . There, the Court upheld a plea of non est factum. Under the common law rules, a plea of non est factum was a plea of the general issue which put in issue that the defendant had executed the deed alleged in its declaration. In their joint judgment in Petelin , Barwick CJ, McTiernan, Gibbs, Stephen and Mason JJ said: 'The principle which underlies the extension of the plea to cases in which a defendant has actually signed the instrument on which he is sued has not proved easy of precise formulation. The problem is that the principle must accommodate two policy considerations which pull in opposite directions: first, the injustice of holding a person to a bargain to which he has not brought a consenting mind; and, secondly, the necessity of holding a person who signs a document to that document, more particularly so as to protect innocent persons who rely on that signature when there is no reason to doubt its validity. The importance which the law assigns to the act of signing and to the protection of innocent persons who rely upon a signature is readily discerned in the statement that the plea is one 'which must necessarily be kept within narrow limits' ... and in the qualifications attaching to the defence which are designed to achieve this objective.' [47] The importance which, for a very long time, the common law has assigned to the act of signing is not limited to contractual documents. Wilton v Farnworth was not a contract case. The passage from the judgment of Latham CJ quoted above is preceded by a general statement that, where a man signs a document knowing that it is a legal document relating to an interest in property, he is in general bound by the act of signature. Legal instruments of various kinds take their efficacy from signature or execution. Such instruments are often signed by people who have not read and understood all their terms, but who are nevertheless committed to those terms by the act of signature or execution. It is that commitment which enables third parties to assume the legal efficacy of the instrument. To undermine that assumption would cause serious mischief." 64 According to the plaintiff, the passage from the judgment in Toll referred to above is significant for the application of the law concerning non est factum to particular fact situations. Although the first inquiry is as to the mind of the person who signs, the question of whether that person's belief was radically different to the effect of the document is informed by the context within which the plea operates. That is, it operates as an exception to the objective theory of contract because it does not require the other party to have any knowledge that the mind of the person who signs did not go with his or her pen. It is this circumstance that requires the defence to be kept within narrow limits. It is kept within narrow limits by a literal and strict application of the requirement that the belief and the effect of the document be radically different. 65 In the submission of the plaintiff, the plea of non est factum must fail because the defendant has not discharged the heavy onus he carries to establish both that he thought he was signing a document radically different to the loan agreement and that he was not careless. On the first of these issues the plaintiff cited the following examples: 1. In Gibbons v Wright (1954) 91 CLR 423 at 443, it was explained that what is required is that a finding that the mind of the person signing the document did not go with the pen, in the sense that it cannot be said at law that the person who signed the document did so because he or she never intended to sign a document of that class. Examples of this might be a "lunatic" writing his name on a piece of paper in a frenzy that happened to be a contract, or of a somnambulist writing his name in his sleep. 2. In Saunders v Anglia Building Society (supra), the defence failed because Mrs Gallie thought she was signing a gift of her property to her nephew when she was actually signing a document that effected a sale to someone else. In that case, Lord Reid at 1016 said that the defence is not available to a person whose mistake is as to the legal effect of the document. 3. In Petelin v Cullen (supra) the defence was made out because the defendant thought he was signing a receipt for $50 but he was signing an extension for 6 months of an option to purchase property. 4. In PT Limited v Maradona Pty Ltd (1992) 25 NSWLR 643, the defendant Mrs Thompson received no explanation for the mortgage and guarantee (666D) and Giles J found that she had nothing more than a transient appreciation of the questions she answered and no real understanding of her role in the proceedings (668C). The defence was made out because Mrs Thompson was found to have no understanding " at all " (675E) of the transaction. 5. In Crago v McIntyre [1976] 1 NSWLR 729 at 737, Holland J stated that if mental incapacity is relied upon for a plea of non est factum, the mental incapacity has to be such as to deprive the defendant of an understanding of what he or she is signing so that the mind does not go with the pen. His Honour used the expression "any real understanding of the purport of what he was signing" and at 738 said that if the defendant signed anything that was put in front of him, his intention was carried out by signing the document. 6. In Child v Commonwealth Development Bank of Australia Ltd [2000] NSWCA 256, the defence failed where the defendant had limited education and intelligence and signed loan and mortgage documents thinking the loan secured properties different to those that were secured. 7. Although it is not a case of non est factum, the remarks of Dixon J in Yerkey v Jones (1939) 63 CLR 649 at 689 show that a general description of the effect of the document is sufficient to avoid a guarantee being set aside as against the wife of the borrower in equity. Given the need to confine non est factum to narrow limits, its ambit could not be broader than for setting aside a guarantee in equity. 66 These cases identify two types of situation where the defence can succeed. The first is where the defendant has no positive belief at all about the nature and effect of the document (for example, Maradona). The second is where the defendant has a positive belief as to the nature and effect of the document but where that belief was radically different from its actual nature and effect. 67 In this case the plaintiff submitted on the first point that it could not be said that the defendant had no positive belief as to the nature and effect of the loan agreement. He knew when he signed it that it was a document required in order to obtain the loan, that he wanted to get the loan (and therefore he intended to sign it for that purpose), that he knew he was the borrower and he knew that if the loan was not paid back he could lose his house. According to this argument, he clearly had a positive belief as to the nature and effect of the document. 68 The plaintiff then argued that even if it were to be found that he knew only the first two of the matters listed in the above paragraph, the defendant's belief was not radically different from the document, because it was a loan agreement. Alternatively, he was prepared to sign whatever was put in front of him to get the loan so he did intend to sign it (see Crago v McIntyre at 738). The question of whether this was a wise thing to do bearing in mind his lack of ability to pay it back is irrelevant because that is a consideration that goes to his ability to make judgments as to his own interests rather than whether his mind followed the pen. 69 The plaintiff submitted that "on any view the defendant understood that by signing the loan agreement he was obtaining a loan and incurring legal obligations" to the plaintiff to repay it. A finding that this belief was radically different from the reality would be inconsistent with the result in Saunders v Anglia Building Society, where the belief and the reality were more different than in this case but the House of Lords did not find the defence made out. 70 Secondly, the plaintiff submitted that the defence fails because the defendant was careless in the sense that he did not take reasonable precautions to ascertain the character of the loan agreement before signing it. The defendant gave evidence that he did not care what Mr Economos said to him about the document; he was going to sign it anyway because he wanted the loan: see par [34] above and par [76] below. Moreover, according to the submission, the defendant was advised by Mr Economos to see a lawyer. He knew what a lawyer was because he had his certificate of title with a lawyer. He was going to see a lawyer before signing the documents yet he failed to do so. Discussion 71 In Toll (supra) at [57] the Court had this to say: "If there is a claim of misrepresentation, or non est factum, or if there is an issue as to whether a document was intended to affect legal relations or whether, on the other hand, it was tendered as a mere memorandum of a pre-existing contract, or a receipt, or if there is a claim for equitable or statutory relief, then even in the case of a signed document it may be material to know whether a person who has signed it was given sufficient notice of its contents. The general rule, which applies in the present case, is that where there is no suggested vitiating element, and no claim for equitable or statutory relie f, a person who signs a document which is known by that person to contain contractual terms, and to affect legal relations, is bound by those terms, and it is immaterial that the person has not read the document. L'Estrange v Graucob explicitly rejected an attempt to import the principles relating to ticket cases into the area of signed contracts. It was not argued, either in this Court or in the Court of Appeal, that L'Estrange v Graucob should not be followed. (Emphasis added)." 72 In my opinion, this case is akin to Maradona (supra) because the defendant had no understanding "at all" of the transaction. Giles J dealt with the distinction between mental infirmity and non est factum at 673 in the following terms: "Where mental infirmity is in question, the defence of non est factum must be distinguished from the defence that the instrument is voidable by reason of mental incapacity. In Gibbons v Wright (1954) 91 CLR 423 at 442-443, it was pointed out that it is erroneous to assume "that a plea that the defendant was unable to understand the nature of the document sued upon is equivalent to, or involves, an allegation that he did not intend to sign it". Such a plea does not deny the execution of the document, but assumes the execution. It concedes that the mind, such as it was, went with the act of execution, but it asserts that the state of mind was such that if the other contracting party were aware of it he ought not to be allowed to insist upon the contract. The basis of the defence of non est factum, however, is that in truth the document was not executed at all." 73 In Maradona to defendant was a 75-year-old woman who had suffered a stroke, was confused and unable to maintain a train of thought and who had signed, when asked to sign, a mortgage and guarantee as part of a complex financial transaction. Giles J expressed his conclusions on the defence of non est factum in the following terms at 675: "In my view the defence has been made out. Mrs Thompson had no understanding of the purport of the guarantee and the mortgage, and where the foundation for a plea of non est factum is mental incapacity usually there can be no question of a positive belief as to the nature of the documents radically different from their true nature, or of carelessness. A radical difference between the signatory's belief as to the nature of the document and their actual nature is one way in which it may be found that the mind of the signer did not accompany his signature, for example where he has been misled as to the transaction, but mental incapacity preventing any understanding at all of the transaction will also mean that there was in truth no signature of the document." 74 I have already found that the defendant's mental capacity prevented any understanding at all of the transaction. I reiterate that in my opinion the defendant did not have an understanding of the transaction simply because he was able to agree with Dr Roberts that if the defendant's son "shot through" the defendant "would be left holding the ball". Similarly, I consider that the defendant did not have an understanding of the transaction simply because he appears to have acknowledged that by signing certain documents he would be able to obtain a loan to assist his son to purchase a cleaning business. It is fundamental to the resolution of this question, and must constantly be borne in mind, that the defendant's ability to use English words, or to give answers to questions using them in a way that suggests he fully understood the import or the importance of the question, ought not to be confused with the existence in fact of a level of intellectual capacity or function necessary for the degree of understanding contended for. 75 Allowing for the subjective differences between the two cases, the defendant was in the same position as Mrs Thompson in Maradona. In my opinion, the following passage from that case at 668 applies equally to the present: "Mrs Thompson gave evidence before me. That is to say, she was sworn, sat in the witness box, and participated in an exercise in which he was asked questions and gave answers. Some were responsive, some were not; at times she was querulous, at times confused; I doubted whether she had anything but a transient appreciation of those questions she answered or any real understanding of her involvement in the proceedings." 76 I reject the submission referred to above at par [70] that the evidence given by the defendant at pages 86 and 91 of the transcript demonstrates that he was careless or did not take proper care to ascertain the true nature of the document that he was signing. The first of these passages is set out at par [34] above. The second is as follows: "Q. You knew, didn't you, after the loan was paid by the bank, that Mr Economos was going to provide advice about how to pay it back as fast as possible. Do you understand that? A. No, I don't, no. Q. You were happy to sign the loan documents anyway, is that right? A. Yes." 77 In my opinion, neither of these passages provides any support for a submission that the defendant was in some relevant sense careless. The notion that the defendant failed to take proper precautions to ascertain the true nature of the documents he was signing assumes that he was first capable of turning his mind to the issue and secondly that he was capable of making a satisfactory judgment about it if he were. Neither of these assumptions is accurate. There is in my opinion a sense of unreality about relying upon anything that the defendant said he did or would have done having regard to his intellectual capacity. It is for the same reason that it is not in my opinion possible to place any weight upon, or to give any significance to, the evidence of what the defendant said to Mr Economos, and for this purpose accepting in its entirety the version given by Mr Economos of what took place. The defendant's son had orchestrated all of the defendant's dealings with Mr Economos in order to procure funds for the purchase of a business that he could run. The defendant was in no real sense a participant in this scheme but rather a hapless victim of his son's manipulation. (The different question of whether or not the plaintiff's position is affected by this is considered below). 78 In my opinion the evidence establishes that the defendant in fact had no positive belief at all about the nature and effect of the documents he was signing. I reject the submission that the defendant knew when he signed the loan agreement that it was a document that he was required to sign in order to obtain the loan or that he wanted to get the loan in the first place as submitted by the plaintiff. I also reject the submission that the defendant knew that he was a borrower or that he knew that if the loan were not paid back he could lose his house. In my opinion the defendant did not have any real purport of the documents that he was signing, in contrast to the rejection of that suggestion by Holland J in Crago v McIntyre (supra) at 737. The decision in that case is distinguishable from the present case for a number of reasons, not the least of which is that the plaintiff in Crago was held to be the "driving force behind the creation of the settlement and the form it took", in contrast to the defendant who was in conscious and intellectual terms a stranger to transaction. In Crago the plaintiff's judgment was affected by mental illness whereas his understanding of what he was signing was not. In my opinion, in the present case, the defendant's judgment and his understanding of what he was signing were both affected by his congenital intellectual impairment. I find specifically that the defendant had no capacity either to make a judgment about, or to formulate an understanding of, any documents he was required to sign in order to effect the transaction. Must the plaintiff have known of the defendant's incapacity for the defence of non est factum to succeed? 79 Part of the plaintiff's argument on the question of the defendant's mental capacity included reliance upon passages extracted from an English case in the judgment of the High Court in Gibbons v Wright (supra) at 441. The passage is as follows: "Even while the doctrine still flourished, the courts allowed an exception from it in the case of a contract made by a lunatic with a person who at the time was aware of the lunatic's insanity: Imperial Loan Co. v. Stone, per Fry L.J. (1892) 1 QB 599, at pp 601-602 . But it came to be held, not only that proof of knowledge of the lunacy enabled the lunatic to avoid liability under the contract despite the rule against stultifying himself: Dane v. Viscountess Kirkwall (1838) 8 C & P 679 (173 ER 670), but also that without proof of that knowledge (or at least proof of "the greatest reason to believe" that the lunacy existed) the lunacy was not sufficient to enable the contract to be treated as invalid, even by the lunatic's privies in representation to whom the rule against pleading his insanity had never applied: Molton v. Camroux (1848) 2 Ex 487 (154 ER 584); (1849) 4 Ex 17 (154 ER 1107) . This step having been taken, it was possible for Lopes L.J. in Imperial Loan Co. v. Stone (1892) 1 QB 599 to state the principle to be deduced from the cases in these terms: "A contract made by a person of unsound mind is not voidable at that person's option if the other party to the contract believed at the time he made the contract that the person with whom he was dealing was of sound mind. In order to avoid a fair contract on the ground of insanity, the mental incapacity of the one must be known to the other of the contracting parties. A defendant who seeks to avoid a contract on the ground of his insanity, must plead and prove, not merely his incapacity, but also the plaintiff's knowledge of that fact, and unless he proves these two things he cannot succeed" (1892) 1 QB, at pp 602-603." 80 This is to be compared with what the Court had to say at 444: "We need not stay to consider whether, in order to avoid the deed, it is necessary to prove, in addition to the conveyor's incapacity, knowledge on the part of the conveyee that the incapacity exists, or whether other circumstances making the transaction less than fair to the conveyor will suffice." 81 I was also referred to the decision of Owen J in Collins v May [2000] WASC 29 at [53] as follows: "[53] The authorities generally speak in terms of "unsoundness of mind". I will continue to use that phrase even though it may not be particularly exact in this context. The contract of a person of unsound mind is binding upon her unless it can be shown that at the time of making the contract she was wholly incapable of understanding what she was doing and that the other party knew of her condition. In Imperial Loan Co v Stone [1892] 1 QB 599 Lord Escher MR said at 601: 'When a person enters into a contract, and afterwards alleges that he was so insane at the time that he did not know what he was doing, and proves the allegation, the contract is binding on him in every respect whether it is executory or executed, as if he had been sane when he made it, unless he can prove further that the person with whom he contracted knew him to be so insane as not to be capable of understanding what he was about'." 82 I have some doubt about the applicability of this principle to the establishment of a defence of non est factum. I was not referred to any High Court or New South Wales decision on this point. Collins v May was not a non est factum case. Crago was such a case but the issue was not referred to. There may be good reason for this. 83 In Petelin v Cullen (supra), in the context of a discussion about negligence or carelessness in connection with non est factum, the Court had this to say at 360: "It is now settled beyond any shadow of doubt that when we speak of negligence or carelessness in connexion with non est factum we are not referring to the tort of negligence but to a mere failure to take reasonable precautions in ascertaining the character of a document before signing it. The insistence that such precautions should be taken as a condition of making out the defence is of fundamental importance when the defence is asserted against an innocent person, whether a third party to the transaction or not, who relies on the document and the signature which it bears and who is unaware of the circumstances in which it came to be executed . It is otherwise when the defence is asserted against the other party to the transaction who is aware of the circumstances in which it came to be executed and who knows (because the document was signed on his representation) or has reason to suspect that it was executed under some misapprehension as to its character. In such a case the law must give effect to the policy which requires that a person should not be held to a bargain to which he has not brought a consenting mind for there is no conflicting or countervailing consideration to be accommodated - no innocent person has placed reliance on the signature without reason to doubt its validity." (Emphasis added) 84 It is difficult, in my opinion, to see any scope for the notion that knowledge of the incapacity relied upon is required before a non est factum defence is available if it extends to circumstances where an innocent party may suffer as a result. If the defence is available against someone "who is unaware of the circumstances in which it came to be executed", there can be no good reason why in a dispute between contracting parties, proof of knowledge of the relevant incapacity on the part of the other contracting party should have to be demonstrated. Any other approach would be likely to produce inconsistent outcomes. Was the conduct of the plaintiff unconscionable? 85 The defendant also argued that the conduct of the plaintiff in the circumstances of the present case was unconscionable. He relied upon what was said by Mason J in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 461 when his Honour said: "It goes almost without saying that it is impossible to describe definitively all the situations in which relief will be granted on the ground of unconscionable conduct." 86 The burden of the defendant's argument was that it was unconscionable for the plaintiff to enforce the transaction because it had effectively shut its eyes to the vulnerability of the defendant. The plaintiff had no direct dealings with the defendant. Even if Mr Economos were not the agent of the plaintiff (as to which, see below), the plaintiff should not be entitled to retain the benefit of the transaction, if it were not otherwise void, if it failed to make enquiries that it should in the circumstances have made about the literacy of the defendant or his intellectual capacity to enter into it. 87 The defendant relied upon what was said in Garcia v National Australia Bank Ltd (1998) 194 CLR 395 at [31] – [32] as follows: "[31] The principles applied in Yerkey v Jones do not depend upon the creditor having, at the time the guarantee is taken, notice of some unconscionable dealing between the husband as borrower and the wife as surety. Yerkey v Jones begins with the recognition that the surety is a volunteer: a person who obtained no financial benefit from the transaction, performance of the obligations of which she agreed to guarantee. It holds, in what we have called the first kind of case, that to enforce that voluntary transaction against her when in fact she did not bring a free will to its execution would be unconscionable. It holds further, in the second kind of case, that to enforce it against her if it later emerges that she did not understand the purport and effect of the transaction of suretyship would be unconscionable (even though she is a willing party to it) if the lender took no steps itself to explain its purport and effect to her or did not reasonably believe that its purport and effect had been explained to her by a competent, independent and disinterested stranger. And what makes it unconscionable to enforce it in the second kind of case is the combination of circumstances that: (a) in fact the surety did not understand the purport and effect of the transaction; (b) the transaction was voluntary (in the sense that the surety obtained no gain from the contract the performance of which was guaranteed); (c) the lender is to be taken to have understood that, as a wife, the surety may repose trust and confidence in her husband in matters of business and therefore to have understood that the husband may not fully and accurately explain the purport and effect of the transaction to his wife; and yet (d) the lender did not itself take steps to explain the transaction to the wife or find out that a stranger had explained it to her. [32] To hold, as Yerkey v Jones did, that in those circumstances the enforcement of the guarantee would be unconscionable represents no departure from accepted principle. Rather, it "conforms to the fundamental principle according to which equity acts, namely that a party having a legal right shall not be permitted to exercise it in such a way that the exercise amounts to unconscionable conduct". 88 It should immediately be noted that this is not a case in which it is possible relevantly to point to misconduct of the defendant's son of which it can be said the plaintiff should have been aware. As I have indicated elsewhere in these reasons, it seems clear that the defendant's son engineered the transaction for his own purposes and benefit. It is a reasonable inference that the defendant's son was content for a loan to be raised in circumstances where he had no legal obligation to repay it but in which he was the significant beneficiary. In addition, the defendant's son became the actual, but not the legal, proprietor of a cleaning business without interference from his father. If the business succeeded he would make money for himself; if it failed, the creditors would be unable to look to him for satisfaction. However, whether or not the plaintiff could or should have been aware of his role, or would in any event have become aware of it if it had made enquiries about it, cannot be established. Such a finding is, in my opinion, unnecessary for present purposes. 89 In the present case there is to be seen a combination of at least the following circumstances. First, as I have found, the defendant did not understand the purport or effect of the transaction. Secondly, the defendant was not a volunteer. Thirdly, the plaintiff should not be taken to have understood that the defendant may have reposed trust and confidence in his son or therefore to have understood that the son may not fully or accurately explain the purport and effect of the transaction to his father. Fourthly, the plaintiff did not itself take steps to explain the transaction to the defendant or to find out (other than to assume on the basis of documents prepared by Mr Economos) that a stranger had explained it to him. 90 On the question of whether or not the defendant was a volunteer, Deane J's comments in Amadio at 475 are pertinent: "In most cases where equity courts have granted relief against unconscionable dealing, there has been an inadequacy of consideration moving from the stronger party. It is not, however, essential that that should be so (see Blomley v. Ryan (1956) 99 CLR, at p 405; Harrison v. National Bank of Australasia Ltd. (1928) 23 Tas LR 1 ; but cf. Lloyds Bank v. Bundy (1975) 1 QB 326, at p 337 and Cresswell v. Potter (1978) 1 WLR 255, at p 257 ). Notwithstanding that adequate consideration may have moved from the stronger party, a transaction may be unfair, unreasonable and unjust from the view point of the party under the disability. An obvious instance of circumstances in which that may be so is the case where the benefit of the consideration does not move to the party under the disability but moves to some third party involved in the transaction." 91 In the present case, whatever view one may take about receipt of the benefit of the monies used to purchase the cleaning business, or whether or not the present circumstances are such that the benefit of the consideration moved to some third party involved in the transaction, the defendant's bank account was in fact credited with the net difference between the purchase price of the business plus expenses, and the sum of $200,000, amounting to $24,857. It is difficult in those circumstances to characterise the defendant as a volunteer, even notwithstanding his total inability by reason of his cognitive impairment to understand that fact. 92 Although it is not strictly necessary to do so by reason of my earlier findings, I would not be prepared to conclude in the circumstances of the present case that the plaintiff's conduct was unconscionable. Moreover, and significantly for present purposes, I must have regard to the conclusions of Kirby J in Garcia (supra) at par [72] where he said, "[c]onstructive notice should not be sufficient for unconscientious dealing". It was at the heart of the defendant's submissions on this topic that the plaintiff did not have actual notice of the defendant's disability but that it failed to take steps to inform itself of the true position. This, it seems to me, is it one step beyond the notion of "turning a blind eye" in the sense discussed in the authorities upon which the defendant relied. Undue influence 93 By a late amendment to his defence the defendant pleaded that the loan agreement and the mortgage were signed by the defendant in circumstances of undue influence and/or duress. It was alleged that the defendant's son arranged the loan for his own purposes in order that the cleaning business could be purchased using the defendant's house as security. The defendant's son was said to be continuously present at the defendant's side, including when he is said to have signed the documents, in the presence of Mr Economos. Mr Economos is alleged at no time to have spoken to the defendant in the absence of his son or to have satisfied himself that the defendant had independent third-party advice concerning the transaction. 94 The defendant's allegations of undue influence are not pleaded in the most specific of ways. However, as comments elsewhere in these reasons reveal, it is in my opinion patent that the defendant entered into the transaction as a result of, and under the influence of, his son. The defendant's allegation is that the plaintiff was on notice, or constructive notice, "to the same extent as Mr Economos" of the matters relied upon as demonstrating this undue influence or that Mr Economos was the plaintiff's agent or representative for the purpose of procuring the defendant's signature on the loan agreement and the mortgage. Clearly enough, establishment of at least one of these matters is central to the claim of undue influence. 95 It is a sufficient answer to this pleading to indicate my finding that there is no evidence that the plaintiff had actual notice of the matters relied upon as demonstrating undue influence, and constructive notice would be insufficient. I discuss below the question of whether or not Mr Economos was the plaintiff's agent. Was Mr Economos the agent of the plaintiff? 96 The plaintiff contended that the proposition that a finance broker as such is or becomes the agent of the lender is a novel one for which no authority exists. According to the plaintiff, the facts established that until the loan application was lodged on 19 or 21 May 2004 there was no contact between Dolphinex and anyone except the defendant or his son. Dolphinex sent documents to AFG and provided them with further documents. The defendant employed Mr Economos to send in the loan application and find him a suitable loan product and appointed him to provide the loan reduction and planning services. At no stage did Dolphinex deal with Challenger which approved the loan and notified AFG, which in turn notified Mr Economos. Once the loan was approved and First Title Secure was instructed to prepare the documents and settle the loan, the documents were sent directly to the defendant and not to Dolphinex or Mr Economos. It was the defendant who brought Mr Economos back into the transaction by asking him to attend his house for the signing of the documents. Neither the plaintiff nor anyone on its behalf involved Mr Economos at this stage. Mr Economos was entrusted by the defendant with the task of returning the loan and mortgage documents. 97 The defendant did not suggest that the plaintiff's summary of these facts was inaccurate. 98 The plaintiff referred me to the following cases. In Steele-Smith v Liberty Financial Pty Limited [2005] NSWSC 398, Palmer J said that just because a person introduced a loan did not make them the agent of the lender. At par [104] his Honour said: "[104] . . .The fact that a finance broker approaches a finance company for a loan to a client of the broker and assists in the execution of loan documentation, as occurred in the present case, does not in itself make the finance broker the agent of the finance company, let alone an employee: see e.g. Octapon Pty Ltd v Esanda Finance Corporation Ltd (NSWSC 3 February 1989, Cole J., p.28); see also Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 226, at 234." 99 In Octapon Pty Ltd v Esanda Finance Corporation Ltd (supra), the broker was found not to be the agent of the financier. Cole J found that it did not matter that the financier paid the broker commission. 100 In Permanent Custodians Ltd v Yazgi [2007] NSWSC 279, Harrison AsJ rejected the argument that the mortgage broker was the agent of the lender: see pars [86]-[95]). In that case the knowledge of the broker was not fixed upon the lender in a chain of entities not unlike the one in this case. Harrison AsJ referred to Perpetual Trustee Company Ltd v Khoshaba [2006] NSWCA 41 at [102]-[103] and to Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd [2001] NSWCA 20; (2001) 50 NSWLR 679. Neither of those cases is an example of the finance broker being found to be the agent of the lender. In Khoshaba, the relevant communications did not involve the finance broker so the issue did not arise. 101 In my opinion the facts do not demonstrate that the plaintiff made Mr Economos its agent for the purpose of procuring the defendant's signatures. Indeed, the plaintiff did nothing at all for that purpose. The documents were sent to the plaintiff's home address and, as far as the plaintiff was concerned, were returned having been executed in circumstances it knew nothing about. Contracts Review Act 102 Having regard to the views I have formed about the entitlement of the defendant to rely upon the defence of non est factum, it is strictly unnecessary to deal with the question of whether or not the contract upon which the plaintiff relies is or was unjust in the circumstances relating to the contract at the time it was made. However, if the plaintiff had been able to establish the existence of a contract it would have been my view that it was not relevantly unjust and that it was outside the scope of the Act by reason of the terms of s 6(2) in that it was a contract that was entered into in the course of or for the purpose of a trade, business or profession. 103 There can be little doubt that the circumstances relating to the contract at that time it was made were unjust. It was unjust for the defendant's son to conspire to commit his father to a series of transactions, including the loan transaction and mortgage, and the contract for the purchase of the cleaning business, in which the defendant had little, if anything, more than a nominal interest. Associated with that was the prospect, which became a reality, that if things went wrong the defendant's son would escape responsibility but that his father would not. 104 That is to be distinguished from a contention that the contract upon which the plaintiff sues is itself unjust. The defendant was unable to point to any particular provision of the loan agreement that was said to be unjust. As counsel for the plaintiff rightly observes, at the time the contract was entered into, all parties were full of hope. If the cleaning business had succeeded then presumably no occasion to scrutinise the justness or otherwise of the contract would have arisen. According to this submission, it is inappropriate in hindsight to formulate a view about whether or not the contract was unjust. The contract itself was arguably unexceptionable at the time it was made. 105 However, the terms of s 9 of the Act must be considered. It is convenient for present purposes to set out some of the terms of the section: " 9 Matters to be considered by Court (1) In determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the Court shall have regard to the public interest and to all the circumstances of the case, including such consequences or results as those arising in the event of: (a) compliance with any or all of the provisions of the contract, or (b) non-compliance with, or contravention of, any or all of the provisions of the contract. (2) Without in any way affecting the generality of subsection (1), the matters to which the Court shall have regard shall, to the extent that they are relevant to the circumstances, include the following: (a) whether or not there was any material inequality in bargaining power between the parties to the contract, (b) . . . (e) whether or not: (i) any party to the contract (other than a corporation) was not reasonably able to protect his or her interests, or (ii) any person who represented any of the parties to the contract was not reasonably able to protect the interests of any party whom he or she represented, because of his or her age or the state of his or her physical or mental capacity, (f) the relative economic circumstances, educational background and literacy of: (i) the parties to the contract (other than a corporation), and (ii) any person who represented any of the parties to the contract, (g) . . (h) whether or not and when independent legal or other expert advice was obtained by the party seeking relief under this Act, (i) the extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under this Act, and whether or not that party understood the provisions and their effect, (j) whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the party seeking relief under this Act: (i) by any other party to the contract, (ii) by any person acting or appearing or purporting to act for or on behalf of any other party to the contract, or (iii) by any person to the knowledge (at the time the contract was made) of any other party to the contract or of any person acting or appearing or purporting to act for or on behalf of any other party to the contract, (k) . . . (3) For the purposes of subsection (2), a person shall be deemed to have represented a party to a contract if the person represented the party, or assisted the party to a significant degree, in negotiations prior to or at the time the contract was made." 106 It would in my opinion be possible, having regard in particular to those parts of s 9 extracted above, to demonstrate in this case the existence of an unjust consequence or result within the meaning of that expression as it is used in s 7 of the Act. However, although unfairness by, or knowledge on the part of, the plaintiff is not essential for a finding that the contract was unjust, it is a factor which will tend against granting relief: see Beneficial Finance Corp Ltd v Karavas (1991) 23 NSWLR 256 at 277. In that case Meagher JA said: "There is jurisdiction under the Act to make orders in favour of a party to a contract who proves that at the date of the contract he suffers from a relevant disability even though the other party to the contract is unaware of that disability, although in general it would be unsound to exercise the jurisdiction in those circumstances. That is a view which I expressed in Collier v Morelend Finance Corporation (Vic) Pty Ltd . . . and I adhere to it. The reason for the view is that it is hardly just to deprive an innocent person of valuable property, of which contractual rights are a species. Nevertheless, such a jurisdiction undoubtedly exists." 107 Some may argue that a financial institution that is prepared to lend relying only upon a conservative debt to asset ratio, without any, or at least any apparent, regard to the resources of the borrower or to his or her capacity to make repayments of interest and capital from his or her own funds in a timely way, ought to be treated as constructively on notice of any relevant disabilities of a borrower that might potentially render the contract unjust if actual notice of them existed. However, asset lending is not illegal, and not always or necessarily unfair to the borrower. There is no evidence in the present case that the plaintiff was aware of the defendant's disabilities, nor any basis for concluding that it should have been. 108 Moreover, the plaintiff argued that the provisions of the Act did not in any event apply to the transaction as the loan was for business purposes within the terms of s 6(2) of the Act. Had it been necessary for me to decide it, I would have agreed with that submission. See Steele-Smith v Liberty Financial Pty Ltd [2005] NSWSC 398 and Lander v Trigger [1999] NSWSC 1253 at [51] – [55]. What is the plaintiff's position? 109 I have found that the defence of non est factum has been made out. The consequence of this is that the loan agreement and the mortgage are void: see, for example, Giles J in Maradona (supra) at 637A. The plaintiff has no ability to enforce the void loan agreement. The indefeasible interest secured by the mortgage rises no higher for the practical benefit of the plaintiff than its ability to enforce the terms of the loan agreement that it secures. The plaintiff's rights as mortgagee, including its cause of action to recover the debt, is no longer included in the rights rendered secure by registration of the mortgage. Restitution 110 As I have already indicated, the plaintiff's amended statement of claim contained a plea that it was entitled to restitution of the amounts paid, in the event that the assumption that the transaction was valid turned out to be ill founded. According to the plaintiff's submission, there was no relevant difference between money paid to the defendant and money paid at his request to satisfy debts he owed to third parties. Money paid at the request, and for the benefit, of another party may be recovered from that party: see Israel v Foreshore Properties Pty Limited (in liq) (1980) 54 ALJR 421 at 423-424. The defendant did not allege that his obligation to pay the vendors of the business under the contract for sale, or his obligation to pay the Mortgage Reduction Centre, did not exist. The defendant did not argue that he did not request that they be paid. Nor could he have, according to the plaintiff, because neither was a party to the proceedings and the defendant would have to make restitution to them if he were to avoid the agreements. Further, the plaintiff argued that the defendant signed documents authorising and directing payments to them, which were not the subject of any claim by him in the proceedings. 111 According to the plaintiff's submissions, the existence of a claim in restitution, where a loan agreement is void for any reason, was clearly acknowledged by the Court of Appeal in Child v Commonwealth Development Bank of Australia Ltd [2000] NSWCA 256 at [38]. As Handley JA said: "[38] . . .If the transaction had been void for any reason and the Bank had to sue for its debt in restitution it would have been entitled to interest under s 94 of the Supreme Court Act. See Goss v Chilcott [1996] AC 788, 795-6, 800." 112 Furthermore, the plaintiff alleged that if the defendant were found to have lacked capacity, that did not provide a defence to a claim by the plaintiff for restitution. In Gibbons v Wright (supra) at 449, the Court said: "The principle applied seems to be that which the Court of Appeal was later to explain in In re Rhodes (1890) 44 Ch D 94 , namely that a lunatic's receipt of goods or other benefits suitable to his position in life may give rise to an obligation, which is implied by law and to which the lunacy affords no answer, to pay for those necessaries (as they are called) out of his own property." 113 The plaintiff contended that whilst the precise doctrinal basis for the claim in restitution may not be settled, the plaintiff's claim could be justified in either of the following ways. First, that the payments were made pursuant to a mistake of fact that the loan contract was binding: Rover International Ltd v Cannon Film Sales Ltd (No 3) [1989] 3 All ER 423. Even if the mistake were one of law it would make no difference: David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 376. There is no issue in the present case that the funds would not have been advanced by the plaintiff if it had thought that the loan agreement would not be binding. No element of unjustness beyond the existence of the mistake in fact is required. 114 Secondly, the plaintiff contended that there was a failure of consideration. This was the alternative basis upon which Rover International was decided. The relevant focus is on what the paying party bargained for: see David Securities at 362. In the present case the plaintiff bargained for a binding promise by the defendant, secured by a mortgage, to repay the loan in accordance with the terms of the loan agreement. It did not receive this and it is not to the point that it received some payments before the invalidity was alleged or established. 115 The plaintiff conceded that as the mortgage only secured amounts payable under a Secured Agreement, the amount payable under the restitution claim is not secured by the mortgage. However, as the cause of action accrued when the money was paid, the plaintiff contended that it should earn interest from that date: see Child v Commonwealth Development Bank of Australia (supra) at par [38] and Goss v Chilcott [1996] AC 788, 795-6, 800. See also Schmierer and Anor v Taouk [2004] NSWSC 345; (2004) 207 ALR 301. 116 It is difficult at first sight to see that there can be any answer to these submissions. I did not have the benefit of detailed argument from the defendant on the possible availability or viability of any defence or defences that might have been available such as election, change of position and estoppel, or any matter or circumstance that shows that the defendant's receipt or retention of the payment is not unjust. 117 The defendant certainly argued that the payment of funds to third parties in apparent satisfaction of the defendant's obligations to them did not render the defendant liable to make restitution, all other things being equal. At one stage in this context I raised the following issue with counsel for the defendant: "HIS HONOUR: Your point is there is a tension between the proposition that Mr Ford had no capacity to enter into the contract on the one hand but would be required to restore to the plaintiff money paid to his son because he had a sufficient understanding of the benefit that went to the son on the other hand." 118 The defendant's submission is encapsulated in the following response: "SNEDDON: There is, because I think they need to be looked at separately because they are completely different causes of action. One cause of action in relation to our defence, we are not liable because of want of capacity. Another cause of action is the plaintiff's case to say under David Securities, do we make up the necessary ingredients, yes or no, in respect of a mistake of law or fact in respect of this contract. They paid moneys, and obviously the High Court is well established that you don't just get moneys back because something is unfair in restitution. You need a recognised category to get restitution for. That's restitution for mistake, things like that. So in relation to the moneys paid to the third party the question is, well, in relation to the benefit derived or received on the unjust enrichment, the recoupment, it wasn't to our benefit. We didn't get the benefit. I think the point is, I think they really, truly do need to be looked at completely separately. It is not a matter of one invites attention to the other. I think one is a defence, what's the effect. One is a cause of action, what's the effect, because if it is the case, for argument's sake, that we weren't seeking by way of defence restitution, perhaps that is another way of looking at it because what we have under unjust enrichment, have we been unjustly enriched as a matter of fact. We say absolutely no. The facts and circumstances of this case we say negate the circumstances where the plaintiff ought be entitled in any event to restitution." 119 In Understanding Unjust Enrichment edited by Jason W Neyers and others, Oxford and Portland Oregon, 2004, Mitchell McInnes, in a chapter entitled "Enrichment Revisited", makes the following comments at pages 219-220: "Despite the trend toward increasing complexity in restitutionary scholarship, it is necessary to revisit the basic concept of enrichment. Courts and commentators must more clearly recognize that the core issue is freedom of choice. It is not enough for the plaintiff to prove that she conferred an objective benefit upon the defendant. She must also overcome his right to subjective devaluation by showing that he either assumed the risk of financial responsibility or had no choice to make. Appreciation of that point will help to resolve a number of long-standing debates regarding the precise scope of enrichment. It will also affect several other aspects of the action in unjust enrichment. It will clarify the nature of the defence of change of position. It will better ensure the proper calculation of restitutionary relief. And perhaps most significantly, it will reveal the harmful redundancy that typically occurs when a reason for restitution is formulated with a view to protecting the defendant's freedom of choice." 120 In Australian Restitution Law, 2nd Ed by Sharon Erbacher, the learned author says at page 368: "As with claims for restitution brought under unenforceable contracts, the claim will fail where the recognition of the claim would frustrate the policy of the legislation or common law rule rendering the contract void." 121 In Mason and Carter, Restitution Law in Australia, dealing with the topic of void contracts, the learned authors indicate at [1010], uncontroversially, that they include "contracts made without authority, certain cases in which contracts are affected by statute, and some cases of lack of capacity". On the topic of contracts unenforceable at common law, the learned authors note at [1012] that "[t]he category of contracts unenforceable 'at common law' includes contracts the performance of which have been postponed by the agreement of the parties, and some cases of lack of contractual capacity". They go on to indicate at [1028] that "[v]oidness under statute implies an important question of policy" and that it "must therefore be considered whether a statute, in rendering a contract void and prohibiting contractual relief, also bars the restitutionary claim". Later in the same paragraph they indicate that "[p]ublic policy may also be relevant to claims arising out of benefits conferred under void contracts" and go on to note that "[w]here a transaction is both void and illegal, claims for reasonable remuneration are almost invariably refused, on the basis that neither the contractual concept of discharge nor the restitutionary concept of acceptance apply". 122 Portion of what the learned authors have to say at [1030] on the topic of fully performed unenforceable contracts is as follows: "A person suffering from a lack of contractual capacity, whether by minority, mental disability or intoxication, will be liable to pay for 'necessary' services, that is, services which although not necessarily essential to life, are suitable to the condition in life of the incompetent person. However, it is unclear whether under the general law the liability to pay for necessary services work is restitutionary or contractual. For example, to the extent that a minor may be bound by executory contracts of employment and analogous contracts, a genuine or implied contractual liability is suggested. On the other hand, the possibility of a restitutionary claim against a mentally incompetent person, in relation to acceptance of benefit after recovery from the disability, was recognized by Griffith CJ in City Bank of Sydney v McLaughlin. " (Citations omitted). 123 I was not referred to, and I have been unable to discover, a case dealing with a claim for restitution, in the context of a benefit delivered prior to the establishment of a successful defence of non est factum, in which any question of public policy has been raised in response to the restitutionary claim. The issue did not arise in Child (supra), although the facts were relevantly analogous to the present case. 124 It seems clear, as I indicated during the course of submissions, that there is considerable tension between the notion of an incapacitated defendant being able to establish a defence which avoids a contract on the one hand, and his nonetheless remaining liable for "benefits" arguably passing to him or given in discharge of his liabilities, which by definition he neither agreed to nor (in the context of the present case) desired or understood, on the other hand. Nor is this a case of a restitutionary claim against the defendant as a mentally incompetent person in relation to acceptance of benefits after recovery from the disability: the defendant's condition is chronic and permanent. 125 In one sense the issue distils into one of whether or not the defendant was truly enriched. Viewed simply as the arithmetical predicate of the plaintiff's loss, it may be that he was. In the case of the funds directly credited to his account, it is not possible to demonstrate otherwise. As a matter of substance and policy, it seems to me arguably to be wholly inconsistent with the underlying basis upon which the defendant has been able to avoid the contract - that is to say, congenital intellectual impairment - that he has been enriched at all or that he should be required to make restitution to the plaintiff in the particular circumstances of the present case of those funds which were not applied directly for his benefit. The same could not be said of the sum of $24,857, which the defendant clearly received. 126 However, this is not the law. It is not possible to elevate concerns about inconsistency to the level of policy applying, for example, as in the case of an illegal contract. The defendant has been unjustly enriched at the expense of the plaintiff and restitution should be ordered. Conclusion 127 In the net result, the plaintiff would ordinarily be entitled to restitution of the sum of $200,000 together with interest from the date of payment, less an adjustment to take into account payments of principal or interest that may have been made since then that may affect that calculation. Alternatively, having regard to the agreement between the parties concerning the amount outstanding and unpaid, it may be that the plaintiff is simply entitled to judgment for the sum of $268,629.33 together with interest from 11 December 2007. The amended statement of claim should otherwise be dismissed. It is unnecessary to make orders sought in the amended cross claim. However, I will hear the parties in relation to the final form of any orders that should be made, including costs, at some convenient time by arrangement with my Associate. *********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.