Australian Finance Direct Pty Ltd v Hakky Hamdy

[2007] NSWLC 15

Local Court of New South Wales

CITATION:	Australian Finance Direct Pty Ltd v Hakky Hamdy [2007] NSWLC 15
JURISDICTION:	Civil
PARTIES:	Australian Finance Direct Pty Ltd Hakky Hamdy
FILE NUMBER:	133261/05
PLACE OF HEARING:	Downing Centre Local Court
DATE OF DECISION:	06/15/2007
MAGISTRATE:	Magistrate H Dillon
CATCHWORDS:	Contracts – consumer contracts – whether defendant misled by plaintiff’s agent – whether terms of contract unjust – whether contract ought be enforced
LEGISLATION CITED:	Contracts Review Act 1980 ss.7(1)(a), 9
CASES CITED:	L’Estrange v Graucob [1934] 1 KB 394 Toll v Alphapharm (2004) 219 CLR
REPRESENTATION:	Ms S.K. Hill (Counsel for Plaintiff) NV Legal Solicitors (for Plaintiff) Self (for Defendant)
ORDERS:	1. Verdict for the defendant. ; 2. Costs to follow the event.

Judgment

1. Australian Finance Direct Pty Ltd (“AFD”) is a finance company with many interests. Among them, it has a relationship with an entity known as Maths and Learning Excellence Pty Ltd (“MALE”). MALE provides educational software to purchasers and ADF provides the finance for the purchase of the package.

2. In February 2005, Mr Hakky Hamdy, the defendant, signed a written agreement with AFD for a loan of $5695 to enable him to buy the MALE software package for his children. It is conceded by ADF that the loan was negotiated on ADF’s behalf by a representative of MALE and that he was an agent of ADF for that purpose.

3. Mr Hamdy admits having entered the contract but asserts that he was misled by the agent as to essential terms including the length of the contract and the relevant interest rate. He also asserts that he relied upon an offer that he would receive a laptop computer. He says that the computer supplied was not fit for the purpose. He also raises a defence of unconscionability.

The background

4. The salient facts in this matter are largely undisputed. In mid-February 2005 Mr Hamdy received an unannounced telephone call from MALE offering a no-obligation demonstration of its mathematics programme for school children. He accepted the offer on the basis that the demonstrator spoke Arabic (Mr Hamdy’s native language).

5. On 25 February 2005, Mr Salim Hakim visited Mr Hamdy’s home and conducted the demonstration. Mr Hakim and Mr Hamdy discussed the terms of the proposed agreement. The parties now dispute what was said in the course of that discussion but, at its conclusion, Mr Hamdy signed a written agreement.

6. The written agreement provided, among other things, that the amount of the loan was $5695, that an establishment fee of $100 was payable, that the total interest payable over the term of the loan was $3273.64, that there were to be 48 repayments, each of $188.93 over 48 months and that an interest rate of 24 per cent per annum would apply. The loan agreement also provided that the moneys borrowed would be paid by AFD to MALE.

7. In the body of the document was a prominent section entitled “Before you sign” which advised the reader to read the contract, read the information contained in the section of the document headed “Things you should know about your proposed credit contract”, to fill in or cross out any blank spaces, to get a copy of the contract and not to sign the contract “if there is anything you do not understand”.

8. In an adjoining section of the loan application was a block of text headed “Things you must know”. It advised that the applicant for the loan could withdraw his or her offer to borrow moneys at any time before AFD accepted the offer but that, once accepted, the contract would bind the parties. It also offered advice concerning consumer credit insurance and notified the applicant that once the offer was accepted by AFD the company could vary the interest rate, charges and repayments.

9. Finally, the document had a separate signature block in which the borrower was required to acknowledge that he or she had entered the contract freely, understood his or her contractual obligations and responsibilities under the contract. Mr Hamdy signed that acknowledgement.

10. It is common ground that Mr Hamdy made only one payment, in May 2005.

Did AFD mislead Mr Hamdy?

11. The key issue is that of unconscionability.

12. While witness statements by Mr Salim Hakim and Mr Michael Spencer, with accompanying documentation, were tendered by the plaintiff, neither was called to give oral evidence. Rule 31.4 provides that the court may direct that parties give evidence by witness statement. Although there was no objection from Mr Hamdy to the tender of these statements, ordinarily the witnesses would have been expected to be called for oral evidence unless a specific agreement had previously been reached by the parties that the witnesses were not required.

13. Mr Hakim stated that on 25 February 2005 he had visited Mr Hamdy’s home and demonstrated the MALE programmes to Mr Hamdy’s children. He stated that at the conclusion of the demonstrations Mr H had agreed to buy the programmes and a laptop computer.

14. He said that he had explained the payment options available to Mr Hamdy, including the option of financing the purchase with a loan from AFD. He said that he had explained to Mr Hamdy that the loan was subject to an interest rate of 24 per cent “over 48 months” with monthly repayments of $188.93. He said that Mr Hamdy had agreed to these conditions and had completed the loan application and other relevant documents. He said that he had given Mr Hamdy a copy of the sales contract, MALE terms and conditions, the AFD pre-contractual statement and terms and conditions. He also said that he had asked Mr Hamdy to read the documents to ensure that he understood them and then to sign the loan agreement where indicated.

15. Finally, he said that they had agreed upon a time and date for delivery which appears to have taken place on 4 March 2005.

16. Mr Hamdy and his family gave a radically different account of what had happened when Mr Hakim had visited. Mr Hamdy said that at the end of the demonstration he had asked Mr Hakim how much the software would cost and how long he would have to pay. He said that Mr Hakim had told him that the total cost would be about $2000 with monthly repayments of $188 for 12 months. He said that he had asked Mr Hakim whether he could cancel after three months if he was unhappy with the programme and that Mr Hakim had told him that he could not, that the repayments must be made for 12 months. Mr Hamdy said that he had then suggested that if MALE included a laptop computer worth at least $1000 that he would sign the contract. He said that Mr Hakim had said that he would talk to the company and see what he could do.

17. Mr Hamdy did not describe in his witness statement or in oral evidence what Mr Hakim did to follow up his offer to talk to the company.

18. In any case, Mr Hamdy agreed that he had signed the documents presented to him by Mr Hakim. He said, however, that Mr Hakim had told him just to fill in his children’s names and that he, Mr Hakim, would fill out the rest of the details. He said that Mr Hakim had said to him, “This will give us permission to deal with the finance company. Trust me, we are of the same country.”

19. In fact, Messrs Hamdy and Hakim, while both were from the Middle East and were Arabic speakers, were of different countries and spoke different Arabic dialects. Mr Hamdy is from Lebanon but Mr Hakim is apparently a Palestinian. Mr Hamdy said that he could understand only about 40 per cent of what Mr Hakim said in Arabic. He said that he and Mr Hakim had spoken in both English and Arabic.

20. Mr Hamdy denied that Mr Hakim had explained any of the documents to him or had allowed him to read them before he signed them. He denied that Mr Hakim had requested him to read the documents before signing them. He also denied receiving copies of any of the relevant documents Mr Hakim claims to have left with him on 25 February. He said that Mr Hakim told him that payments would commence in about one month from that date and that documentation would come to him advising him of the exact monthly payment and when payments were to commence.

21. Mr Hamdy said that on 3 March 2005 he had received the computer, with the software installed, and a number of discs.

22. He also said that in about mid-April 2005 he had received a copy of the Consumer Loan Schedule (the loan agreement) and had been very surprised to find that the total cost of the loan was $9068.64 and even more surprised to find that the interest rate was 24 per cent per annum. He said that if he had been told that this was the rate of interest to be charged he would have asserted that it was too high. By this he implied that he would not have entered the contract. He said that this was the first time he had seen the actual terms of the contract. He also stated that Mr Hakim had not told him that the term of the loan was 48 months, nor that the contract provided that he had five working days from the date the contract was formed to cancel the contract.

23. Ms Lobnah Hamdy gave evidence about the events of 25 February. She said that she had seen Mr Hakim speaking to her husband and children. She said that her husband had told on the evening that the children liked the programme, that it would run for 12 months and costs $188.90 per month. She said that she had told him that it was too expensive and that she did not think they could afford it. She said that he had told her that the company would include a computer in the price. She said that they had discussed the matter further and agreed to enter the contract and that her husband had then signed the contract. She said that she had not seen her husband being given any documentation. She said that about a month after Mr Hakim’s visit, some documents arrived. She said that she was very upset to discover that the loan was for $9068.64 and decided that they should not make any repayments.

24. Mostafa Hamdy, Mr Hamdy’s 11 year old son, also gave evidence. He said that he had been given a test paper by Mr Hakim. He said that he had heard his father ask Mr Hakim whether the contract could be cancelled after three months and that Mr Hakim had replied that it could not be cancelled for 12 months. He said that he had commented on the laptop computer and that Mr Hakim had said that he would try to get a laptop for the children. He said that his father had then said, “I will only sign the contract if we get a laptop. Can you talk to your company about it?” and that Mr Hakim had replied, “I will see what I can do.”

25. He said that he had seen his father sign the contract but that Mr Hakim had not given his father any documents.

26. Mr Hamdy’s reaction in April and May 2006 was telling. He said that the day after he had received the documents by mail from MALE he had called AFD and spoken to a person called “Cathy” complaining about what had happened. He said that he was asked to write to AFD, addressing his concerns to Mr Michael Spencer. He said that he made several attempts to fax the letter before managing to do so on 16 May.

27. He said that he had telephoned AFD, speaking to Cathy and being told that AFD had received the fax and was asking as a show of good faith that he respond by making at least one payment. He said that he had complied with the request and made a payment. It is common ground that he made a payment in May. He said that he had again telephoned Cathy and been told that if he did not pay in full, legal action would be taken.

28. He also gave evidence that the computer provided by MALE had been very slow and inefficient and had been discouraging for the children who used the maths programme only for six weeks. He said that the computer provided was running a Windows 98 operating system (whereas the installation receipt asserts that it was operating with the more up to date Windows XP system).

29. The records of AFD confirm that in May 2006 Mr Hamdy complained that he had been told that the contract was for 12 months and that he maintained this position. They do not show that he had expressly stated that he had not received the documents from Mr Hakim or that Mr Hakim had filled out the documents without his knowledge but the implication that he had been misled by Mr Hakim is unmistakeable even in what is recorded by AFD. Furthermore, the notes kept by AFD are self-evidently a summary of what the AFD clerk considered most important but is not the entirety of the conversation. Mr Hamdy gave a fuller account of what he said had been said in the conversations. His version is largely consistent with AFD’s but adds detail.

30. As Mr Hakim’s evidence was not tested by cross-examination, the critical witness in the matter was Mr Hamdy.

31. In cross-examination, he conceded that he was a taxi-driver, that he had passed the relevant tests imposed by the Roads & Transport Authority for a taxi licence, including an English competency test. He also agreed that he had previously obtained a bank loan for a house. He said that in that case, he had used a Lebanese lawyer who translated the relevant documents into Arabic for him and that he had used an Arabic-speaking bank loans officer. He agreed that he had previously bought a motor vehicle.

32. In relation to the AFD transaction, he said that he had specifically asked for an Arabic speaker to visit but said that Mr Hakim’s Arabic was poor.

33. He conceded that he had written in the names of his children on the loan application form but denied that he had provided all the other details. He specifically corrected some of the details in the document and appeared at times genuinely surprised by some of the entries on the document. That tended to support his assertion that Mr Hakim taken the document away and filled out details later. For example, in the document the balance of mortgage was recorded as being $180,000. Mr Hamdy, appearing confused by this, said that it had been about $250,000. He also said that he had not told Mr Hakim that his house was worth $600,000. He said it was really worth about $450,000. There was a significant numbers of these examples.

34. Mr Hamdy, although he is reasonably competent in the use of ordinary English, also appeared genuinely confused by some questions asked by counsel for the plaintiff. It seemed self-evident that he may have struggled to fully comprehend complex contractual or other legal documents.

35. He conceded in cross-examination that he had made an offer to pay $2000, about 12 months worth of the contract.

Findings of fact

36. The plaintiff, by opting not to call its witnesses, deprived the court of the advantage of seeing its witnesses give evidence orally. That was probably unimportant insofar as Mr Spencer was concerned but Mr Hakim gave very important evidence and his credit and credibility were obviously in issue because he gave an entirely different of what had happened at Mr Hamdy’s house on 25 February.

37. While Mr Hamdy may have exaggerated somewhat his inability to deal with legal documents, the facts that he specifically requested an Arabic speaker to provide the demonstration for MALE, that he relied on a Lebanese solicitor to advise him concerning his mortgage loan, that he appeared on occasions in his oral evidence to have some difficulty understanding a question in English but appeared to be making a genuine effort to communicate in English all suggest that his ability to understand the complexities of legal English is limited. A person in such a situation, notwithstanding any warnings or advice given within the document itself, may well tend to rely more on the advice of someone more expert in the law and the use of the English language than would otherwise be the case for a native English speaker.

38. Mr Hakim stated that he had clearly explained the documents and had left copies for Mr Hamdy. Mr Hamdy denied that and his evidence was plausible and persuasive. It is telling that both Mr and Mrs Hamdy asserted that they had been surprised to find out how much they had borrowed when the documents arrived about a month after Mr Hakim’s visit. If that is true, Mr Hakim’s evidence that he had given a copy of all the relevant documents to Mr Hamdy cannot be.

39. Mr Hakim’s evidence that he had gone through the terms of the loan contract with Mr Hamdy is contradicted not merely by Mr Hamdy’s flat denials of that proposition but by his and his wife’s evidence of being taken by surprise by the discovery of the terms when the documents came in the mail and the evidence from AFD’s business records, as well as the Hamdy’s evidence, that Mr Hamdy had complained to AFD after receiving the documents by mail that he had been told that the contract would last for 12 months only.

40. Another piece of evidence tending to undermine Mr Hakim’s is the evidence concerning the computer. Mr Hakim made no mention of the computer in his statement, yet it was an important consideration for the Hamdys. Moreover, the computer supplied, according to Mr Hamdy, operated with a Windows 98 system whereas MALE’s installation invoice claims that it used a Windows XP system. The computer supplied by MALE was, according to its own documents, an ex-lease model. From that it is reasonable to infer that it was, if not obsolete, at least an older model as Mr Hamdy claims. Moreover, Mr Hakim made no mention of any negotiations with his company about sweetening the deal by including a laptop computer.

41. Finally, Mr Hakim’s statement implies, if it does not say so in terms, that all the relevant details had been entered on the documents by the time Mr Hamdy signed them. If Mr Hamdy’s evidence is accepted, that cannot have been the case. There appears to be a real question as to whether it was Mr Hakim or Mr Hamdy who filled in relevant details and when this was done. On Mr Hamdy’s account, Mr Hakim took the documents away with him and later filled them out but for the names of the Hamdy children and the signatures. If Mr Hakim had filled out the details about, for example, the value of the Hamdy house, when he was with Mr Hamdy, and had asked Mr Hamdy to check those details, it is highly unlikely that Mr Hamdy would have overlooked basic mistakes made. Yet that is what Mr Hamdy says has happened. There is no evidence that contradicts Mr Hamdy’s version on these peripheral but, in the circumstances, important issues.

42. Where a witness whose evidence is adduced by the tendering of a statement, and that witness is not called to give oral evidence, and that evidence is in contest the court can only give it limited weight unless it is corroborated in other ways.

43. Where Mr Hakim’s account conflicts with that given by the witnesses for the defendant, I would give it little weight. In my view, for the reasons I have already given and because Mr Hamdy is corroborated not only by members of his family in significant degree but also by the indisputable record of his complaint to AFD about being misled by Mr Hakim, I prefer Mr Hamdy’s account of what happened on 25 February.

Should the Contracts Review Act be applied?

44. On its face, the Contracts Review Act may apply. This is not a commercial contract but a consumer contract. See s.6. There is no argument on that score.

45. The relevant parts of s.7 of the Act provides:

(1) Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, …(a) decide to refuse to enforce any or all of the provisions of the contract…

46. The Local Court has power only to refuse to enforce a contract term or terms.

47. The plaintiff argues that the court ought not apply its power under s.7(a) but ought grant it the relief it seeks, namely damages for breach of contract. It argues that there is no basis for a finding that it would be unjust in the circumstances to enforce the contract because Mr Hamdy’s evidence is not credible. Finally, it relies on the High Court’s decision in Toll v Alphapharm (2004) 219 CLR 165. In Toll the High Court said (at [45], [47]):

It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents, as Latham CJ put it, whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it…

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.

48. In Toll, however, the High Court also acknowledged the development of consumer protection law since L’Estrange v Graucob [1934] 2 KB 394. was decided in 1934. It said (at [48], [57]):

In most common law jurisdictions, and throughout Australia, legislation has been enacted in recent years to confer on courts a capacity to ameliorate in individual cases hardship caused by the strict application of legal principle to contractual relations. As a result, there is no reason to depart from principle, and every reason to adhere to it, in cases where such legislation does not apply, or is not invoked…

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 relief, 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.

49. Therefore the very question Mr Hamdy raises is addressed in Toll. If the Contracts Review Act does not apply, he will be bound by his signature on the written contract. If on the other hand, there is a “vitiating element” the Act will apply.

50. As I have stated above, I accept Mr Hamdy’s account. That, however, is not the end of the matter.

51. Section 9 of the Act outlines the matters the court must take into account before deciding whether a provision of the contract is unjust. It requires the court to have regard to the public interest and to all the consequence of the case, including the consequence of compliance and non-compliance with the contract: s.9(1).

52. In s.9(2) the Act then lists twelve matters the court must consider insofar as they are relevant to the particular case. I list them with my observations:

(a) Whether or not there was any material inequality in bargaining power between the parties to the contract

54. In my view, there was an obvious inequality of bargaining power between AFD and Mr Hamdy. AFD is a financial institution with offices in the Sydney central business district. Mr Hamdy is a struggling immigrant taxi-driver living in a relatively modest area of Sydney. He had little or no market power and therefore little or no capacity to persuade AFD to alter its standard terms and conditions.

(b) Whether or not prior to or at the time the contract was made its provisions were the subject of negotiation

55. The AFD contract (as opposed to the MALE contract) was not the subject of negotiation. Mr Hamdy was offered certain terms and asked to sign. His one effort to negotiate the terms, by asking whether he could cancel the contract after one month, was rebuffed.

(c) Whether or not it was reasonably practicable for the party seeking relief under this Act to negotiate for the alteration of or to reject any of the provisions of the contract

56. As I noted above, Mr Hamdy made one unsuccessful attempt to negotiate terms. It is self-evident that he had no practicable opportunity or any capacity to alter or reject the terms of the contract. He could have refused to sign the contract but the weight of evidence demonstrates that it was a take-it-or-leave-it proposition for him.

(d) Whether or not any provisions of the contract impose conditions which are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the contract,

57. I do not consider that this factor has any real application in the circumstances.

(e) Whether or not any party to the contract was not reasonably able to protect his or her interests, because of his or her age or the state of his or her physical or mental capacity,

58. Once again this does not appear to apply to the present circumstances.

(f) The relative economic circumstances, educational background and literacy of the parties to the contract

59. Compared with AFD’s resources, Mr Hamdy’s circumstances seem to have been relatively poor. He spoke English as a second language. He relied to some degree on his 11 year-old son for translation purposes. He has had no legal training. I am unaware of his educational background in Lebanon, but in Australia he works in a relatively humble profession (taxi-driving), which is traditionally an occupation for hard-working people with low attainments in the Australian educational system. (Sometimes taxi-drivers are highly educated but do not have Australian qualifications or sufficient skill in English to work in more highly-paid professions.) I formed the strong impression that AFD had a significant advantage overall in terms of economic circumstances, education and literacy insofar as they played a role in the formation of this contract.

(g) Where the contract is wholly or partly in writing, the physical form of the contract, and the intelligibility of the language in which it is expressed,

60. This contract was in a standard form, written in the modern Plain English style to a significant extent. That is not to say that I would consider it easy to read but it is reasonably intelligible to an educated English speaker. As has been noted above, certain sections contain warnings and advice and those warnings are highlighted for the reasonably careful reader. In my view, a person of Mr Hamdy’s background, not withstanding his generally competent English, would have found this document difficult simply because it condenses so much information into a relatively small space. For this reason, I do not doubt Mr Hamdy’s evidence that he sought to rely on Mr Hakim to explain the document to him.

(h) Whether or not and when independent legal or other expert advice was obtained by the party seeking relief under this Act

61. Mr Hamdy did not seek, nor was he offered, independent legal advice. Mr Hakim did not suggest that he obtain independent legal advice. There was no obligation, of course, for Mr Hakim to do so.

(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

62. Mr Hamdy’s account is that Mr Hakim did not accurately explain the true extent of the contractual obligations he was undertaking by signing the loan agreement. Mr Hamdy certainly understood that he was entering a loan agreement, that monthly repayments would be in the order of $188 per month, that the loan was to finance the purchase of the MALE mathematics programme and computer. Beyond this the evidence suggests that Mr Hamdy did not accurately understand the provisions of the contract and there is a strong possibility that either Mr Hakim positively misled him or, in any event, failed to ensure that Mr Hamdy comprehended the terms of the agreement.

(j) Whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the party seeking relief under this Act by any other party to the contract or that party’s representative

63. There is no direct evidence of undue influence or unfair pressure being applied by Mr Hakim to induce Mr Hamdy to enter the agreement but, in my view, it is highly likely that he employed unfair tactics by giving Mr Hamdy a document which had not been fully or adequately explained, by filling in significant details later without allowing Mr Hamdy the opportunity of checking them, by implying that the contract ran for 12 months and by failing to provide Mr Hamdy with a copy of the agreement.

64. Had Mr Hamdy been given a copy of the agreement on 25 February he could have read for himself, even after he had signed it, that the loan agreement was 48 months and would cost him over $9000, a colossal sum for a second-hand computer and some software. It seems unlikely that if Mr Hamdy and his wife considered an outlay of about $2000 a large sum of money, which Ms Hamdy regarded as too much to pay for mathematics software, given their financial circumstances, that they would have voluntarily paid $9000 for the same benefits. He would also have been able to discover that he was entitled to rescind the agreement at any time before the credit was actually provided by AFD. In other words, before AFD approved the loan and paid MALE, it would have been open to Mr Hamdy to terminate the agreement without penalty (but for any fees incurred in such a cancellation).

65. By failing (or deliberately refusing) to give Mr Hamdy a copy of the agreement, Mr Hakim unfairly deprived Mr Hamdy of the opportunity he almost certainly would have taken had he been aware of it of terminating the agreement.

(k) The conduct of the parties to the proceedings in relation to similar contracts or courses of dealing to which any of them has been a party

66. Mr Hamdy was cross-examined at some length about his previous experiences of obtaining credit. None of the evidence he gave significantly undermined the impression he gave during his evidence-in-chief that he lacked the capacity to understand a sophisticated commercial document in legal English without the assistance of someone trained in dealing with such documents. Mr Hakim did not provide the assistance Mr Hamdy needed.

(l) The commercial or other setting, purpose and effect of the contract

67. It is of some significance that Mr Hamdy did not approach AFD for a loan but was presented with the loan application by an agent whose primary purpose was to persuade Mr Hamdy to purchase what appears to have been a product – the mathematics software – at a grossly inflated price relative to its actual value. The insignificant value of the software can be gauged from the fact that the children stopped using it after a few weeks, according to Mr Hamdy, and from the fact that it is a matter of common knowledge that most educational computer software costs at most hundreds rather than thousands of dollars when purchased from shops.

68. MALE, with the obvious endorsement of AFD, which stood to make a large profit from the loan, used the availability of finance as a marketing tool for its products. It must have been obvious to Mr Hakim, however, that 24 per cent per annum was a very high interest rate when bank interest is in single digits and home loan rates are about 7.8 per cent per annum and may well, if the potential borrower was made aware of the interest rate, deter him from buying the MALE product. There was a strong incentive for Mr Hakim not to reveal the real interest rate to Mr Hamdy.

69. That is not to say that AFD management itself endorsed any unconscionable conduct on Mr Hakim’s part but, by engaging him as its agent, they became vicariously liable for his conduct in relation to the contract.

The parties’ conduct since the contract was formed

70. A final matter that s.9(5) allows the court to take into account in considering whether it is just to grant the relief sought under s.7 is the conduct of the parties to the proceedings in relation to the performance of the contract after it was made. To some extent I have already dealt with Mr Hamdy’s conduct after the contract was made. His response to finding out the true extent of his contractual obligations was, first, to refuse to pay anything and then, apparently believing that AFD would let him out of the contract if he made a payment, to make one payment.

71. AFD, on the other hand, appears to have taken an intransigent position. It stood on its contract and refused to budge on it. No doubt finance companies are bombarded with hard-luck stories from people who have foolishly entered contracts they cannot afford or which they regret. Nevertheless, for whatever reasons it had, it clearly refused to accept Mr Hamdy’s protestations that he had been misled by Mr Hakim. It did little or nothing to investigate the complaint except to make demands on Mr Hamdy. It certainly appears to have given his complaints little or no credence.

Conclusion

72. Taking the findings of fact I have made and having considered the various factors set out in s.9 I conclude that in the circumstances it would be unjust in the circumstances to enforce AFD’s agreement with Mr Hamdy.

73. There will be a verdict for the defendant and judgment accordingly. Costs will follow the event.

Hugh Dillon

Magistrate