Permanent Custodians Limited v John Nobilo

The matter before the court involved a dispute between Permanent Custodians Limited, a lender, and John Nobilo, a borrower, regarding the enforceability of a mortgage. The mortgage was executed over Nobilo's property to secure a loan, but the signatures on the mortgage appeared to be forged. Permanent Custodians sought to enforce the mortgage, arguing that despite the forgery, the contract was otherwise valid and enforceable. Nobilo contested the enforceability of the mortgage, claiming that the contract was unjust and unfair due to the lender's failure to make adequate inquiries about the mortgagees' ability to service the debt.

The court was required to determine whether the contract was unjust and unfair in all the circumstances, as per the Contracts Review Act. Additionally, the court needed to assess whether Permanent Custodians had conducted sufficient inquiries into the mortgagees' capacity to service the debt, and whether the mortgage was enforceable despite the presence of forged signatures. The court also needed to consider the credibility of evidence presented by both parties, particularly the inferences that could be drawn from the failure of either party to call specific witnesses.

In reaching its decision, the court found that the contract was unjust and unfair due to the lender's inadequate inquiries about the mortgagees' ability to service the debt. The court emphasised that lenders have a duty to ensure that borrowers can reasonably service the debt and that Permanent Custodians had not fulfilled this duty. The forged signatures on the mortgage further contributed to the contract being deemed unjust and unfair. The court also noted that the failure of Permanent Custodians to call certain witnesses could be seen as an indication of the unreliability of their case. Ultimately, the court held that the mortgage was not enforceable due to the unjust and unfair nature of the contract.

Consequently, the court ordered that the mortgage be declared unenforceable and that Permanent Custodians take no further action to enforce it. The court also directed that Nobilo be compensated for any losses incurred as a result of the lender's actions.