Fast Fix Loans Pty Limited v Mladenko Samardzic - [2011] NSWSC 19

Supreme Court

New South Wales

Medium Neutral Citation: Fast Fix Loans Pty Limited v Mladenko Samardzic and Anor [2011] NSWSC 19
Hearing dates: 22/11/2010, 23/11/2011, 6/12/2011
Decision date: 04 February 2011
Jurisdiction: Common Law
Before: Hoeben J
Decision:
Declaration that the deed of loan between Fast Fix Loans Pty Limited, TT's Management Group Pty Limited, Milan Samardic, Mladenko Samardzic and Dragica Samardzic, dated 22 February 2008 (deed of loan) is unjust within the meaning of s4 of the Contracts Review Act 1980 (CRA) insofar as it relates to Mladenko Samardzic and Dragica Samardzic.
The deed of loan is varied to remove Mladenko Samardzic and Dragica Samardzic as parties.
A declaration that the deed of variation of loan between Fast Fix Loans Pty Limited, TT's Management Group Pty Limited, Milan Samardic, Mladenko Samardzic and Dragica Samardzic (deed of variation of loan) is unjust within the meaning of s4 of the CRA insofar as it relates to Mladenko Samardzic and Dragica Samardzic.
The deed of variation of loan is varied to remove Mladenko Samardzic and Dragica Samardzic as parties.
Pursuant to s7(1)(d) of the CRA Fast Fix Loans Pty Limited is to do all things necessary, including the signing and filing of documents but not limited thereto, to discharge registered mortgage No AD789081 over the property located at 54 Boardman Road, Bowral being the land contained in Certificate of Title Folio Identifier 27/1052316.
Fast Fix Loans Pty Limited is to pay the costs of Mladenko Samardzic and Dragica Samardzic incurred in these proceedings.

Catchwords: Claim for possession of land by mortgagee/lender - elderly parents mortgage their home to secure borrowings by son and his company - defence of undue influence and cross-claim under Contracts Review Act 1980 - Application of Contracts Review Act - asset lending - improvident transaction from parents' point of view - failure by mortgagee to make any inquiries as to financial circumstances of parents - effect of explanation by solicitor of loan documents - loan agreement unjust as it affected parents - whether Court should exercise its discretion to apply Contracts Review Act in favour of parents.
Legislation Cited: Contracts Review Act 1980
Conveyancing Act 1919
Real Property Act 1900
Cases Cited: Baltic Shipping Co v Dillon ("The Mikhail Lermontov") (1991) 22 NSWLR 1
Beneficial Finance Corporation v Karavas (1991) NSWLR 256 per Meagher JA at 277
Elkofairi v Perpetual Trustee Co Ltd [2002] NSWCA 413; (2003) 11 BPR 20,841 at [57]-[59]
Hraiki v Beljon [2008] NSWSC 775 per McDougall J at [35]
Kowalczuk v Accom Finance [2008] NSWCA 343
Melverton v Commonwealth Development Bank of Australia (1989) NSW Conv R 55-484
National Australia Bank v Hall (1993) NSW Conv R 55-684
Pasternacki & Anor v Correy [2000] NSWCA 333, [2001] ANZ Conv R Cases 240
Patrick John Ford by his tutor Beatrice Anne Watkinson v Perpetual Trustees Vic Ltd [2009] NSW 186
Perpetual Trustee Company Limited v Khoshaba [2006] NSWCA 41
Spina v Permanent Custodians Ltd [2009] NSWCA 206
Reisch v Commonwealth Bank of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2011] NSWSC 19
Decision Date: 04 February 2011

CaseChat Overview and Summary

Fast Fix Loans Pty Limited has sought an order for possession of residential property after the borrower, Mladenko Samardzic, defaulted on repayments. Samardzic's parents had previously mortgaged their home to secure loans by Samardzic and his company. The parents now seek to set aside the mortgage on the basis of undue influence and have made a cross-claim under the Contracts Review Act 1980. The court was required to determine whether the mortgage was the result of undue influence and, if so, whether the court should exercise its discretion to set aside the mortgage under the Contracts Review Act.

The court examined the nature of the transaction, whether it was improvident from the parents' point of view, and whether the mortgagee failed to make any inquiries as to the parents' financial circumstances. The court found that the parents had signed the mortgage documents without independent legal advice, but that a solicitor had explained the contents of the documents to them. The court held that the transaction was improvident from the parents' point of view and that the mortgagee had not made any inquiries as to the parents' financial circumstances. The court held that the explanation by the solicitor did not negate the effect of the improvidence of the transaction.

The court held that the mortgage was unjust as it affected the parents and that the court should exercise its discretion to set aside the mortgage under the Contracts Review Act. The court ordered that the mortgage be set aside and that the parents be compensated for their losses. The court also ordered that the parents be released from their liability under the mortgage.

Orders