Permanent Custodians Ltd v Grida - [2014] SASC 75

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal from a Master)
PERMANENT CUSTODIANS LTD v GRIDA & ANOR
[2014] SASC 75
Judgment of The Honourable Justice Bampton
13 June 2014
MORTGAGES - MORTGAGEE'S REMEDIES - POSSESSION - UNDER CLAUSE ENTITLING MORTGAGEE TO POSSESSION UPON DEFAULT OF MORTGAGOR
Appeal against making of order for possession – order made without opposition – warrant for possession made – appeal out of date – whether loan application assessed incorrectly – whether loan based on false income declaration – appellant signed income declaration – independent legal advice given – order not made in error.
Held: Permission for an extension of time to lodge the appeal refused – appeal dismissed – order was not made in error – no satisfactory reason for the delay – appeal has no substantive merit – stay of warrant for possession is removed.

EQUITY - GENERAL PRINCIPLES - UNCONSCIONABILITY, UNCONSCIONABLE DEALINGS AND OTHER FORMS OF EQUITABLE FRAUD - SPECIAL DISABILITY
Unconscionability – whether a special disability exists – whether known to the lender – whether unconscientious advantage has been taken of the special disability – no special disability existed and no evidence of exploitation.
Real Property Act 1886 (SA) Part 17; Supreme Court Civil Rules 2006 (SA) r 204A, referred to.
Moonta Town Corporation v Rodgers (1980) 26 SASR 143; Andrew Garrett Wine Resorts Pty Ltd v National Australia Bank Ltd [2004] SASC 60; Micarone v Perpetual Trustees Australia Ltd [1999] SASR 1; Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; Citibank v Nicholson (1997) 70 SASR 206; Tonto Home Loans Australia Pty Ltd v Tavares & Ors [2011] NSWCA 389, considered.

PERMANENT CUSTODIANS LTD v GRIDA & ANOR
[2014] SASC 75
Civil: Appeal from a Master
BAMPTON J.
Introduction

The applicants, Giuseppe Grida and Lynette Grida (Mr and Mrs Grida), are the registered proprietors of a property at 45 Bradbury Road, Mylor (the property). Mr and Mrs Grida borrowed money from Bluestone Mortgages Pty Ltd (Bluestone) secured by a mortgage over the property.
The respondent, Permanent Custodians Ltd ACN 001 426 354 (Permanent Custodians) appointed Bluestone to manage mortgages granted in its favour.[1]
[1] Affidavit of Reginald Duquilla sworn 7 August 2009 (FDN 2).
As Mr and Mrs Grida defaulted on the loan repayments Permanent Custodians obtained an order for possession in respect of the property on 30 June 2010 (the Order). A warrant for possession was issued on 23 December 2013. Mr and Mrs Grida now seek to appeal against the Order on the grounds that:
Permanent Custodians Ltd through their mortgage administrator, Bluestone Mortgages, and their agent/broker Malcolm Reynolds have:
(1)acted in an unconscionable manner in approving the loans; based on clearly incorrect income
(2)have mal-administered the loans since drawdown.
As the Notice of Appeal was not filed until 7 March 2014 (almost four years outside the 21 day period within which appeals must be commenced), Mr and Mrs Grida must first be granted an extension of time within to appeal the Order.
Mr and Mrs Grida rely on two affidavits sworn by Mr Grida on 17 December 2013 and 4 April 2014.
Permanent Custodians rely on the following affidavits:
-affidavit of Reginald Duquilla, collections officer employed by Bluestone, sworn 7 August 2009 filed in support of summons for possession;[2]
-affidavit of Chloe Parker sworn 28 January 2014;[3]
-first affidavit of Graham Lee Horne, General Manager of Bluestone, sworn 8 April 2014,[4] exhibiting extracts from two facsimiles received from Malcolm Reynolds of The Loan Arranger on behalf of Mr and Mrs Grida; and
-second affidavit of Graham Lee Horne, sworn 11 April 2014,[5] exhibiting full copies of the facsimiles referred to in his affidavit 8 April 2014:
oGLH8 a 47 page facsimile received from fax number 08 82322017 on 21 November 2006 at 3:18:49pm; and
oGLH9 a 51 page facsimile received from fax number 08 82322017 on 24 November 2006 at 12:47:38pm.
[2]    FDN 2.
[3]    FDN 14.
[4]    FDN 19, exhibit 19a.
[5]    FDN 20.
Background
As this matter has had a protracted history it will be of assistance to set out a summary of that history.
The loan application and loan agreement
On 20 November 2006 Mr and Mrs Grida completed a loan application with Malcolm Reynolds, a Lending Manager at The Loan Arranger.
In his first affidavit,[6] Graham Horne deposes that in 2006 Bluestone had a referral arrangement with Citibank Pty Ltd. Mr Horne states it is his understanding that “The Loan Arranger” is a firm of finance brokers located in Adelaide who dealt with Citibank Pty Ltd. Bluestone received the application for a loan of $630,000 from The Loan Arranger through this arrangement on or about 21 November 2006.
[6] FDN 19, exhibit 19a.
Mr Horne also deposes that Citibank and The Loan Arranger as the mortgage introducer are the agents of the proposed borrower. Copies of the loan application are Exhibit GLH8 and GLH9 to Mr Horne’s second affidavit.
By reference to the exhibits it appears that in making the loan application that:
-On 20 November 2006 Mr and Mrs Grida apparently signed a “Self Certified Income Declaration” forming part of the loan application declaring that they understood that Bluestone would be relying on their confirmation of that their total combined annual net income of $140,400 and that they could meet repayments and would not suffer any hardship in doing so. In signing the declaration they also warranted “that the figures above provided by me/us are a true and accurate representation of my/our financial situation”.[7]
[7]    FDN 20, page 22.
-Mr Grida declared that he was self employed, that he had been self employed for eight years and that his net monthly income was $8,000.[8]
[8]    FDN 20, page 56.
-Under the heading “Declarations” in the loan application Mr and Mrs Grida have answered yes to the following question:[9]
[9]    FDN 20, page 65.
Purpose of Credit
Is the loan wholly or predominantly for business or investment purposes.
Warning: by selecting “Yes” you may lose your protection under the Consumer Credit Code.
-On the page headed “Self- Certified Income Declaration” Mr Grida’s monthly income is noted to be $8,000 and Mrs Grida’s is $3,500. Their total monthly expenses (including Bluestone loan repayments) and total monthly surplus are also detailed.[10]
-On the same document under the heading “Section B- Declarations – All Applicants”, Mr and Mrs Grida by signing the document on 20 November 2006 have apparently acknowledged that:
othe information provided is true and correct;
oBluestone will rely on the information when assessing the loan application;
oThey are able to meet repayments and will not suffer any financial hardship;
oThey have proper authority to commit to the repayments for the loan and have lodged and kept up to date Business Activity Statements;
oThey have not relied on Bluestone to verify their financial position and ability to make repayments for the loan;
oBluestone has recommended that they obtain independent legal and financial advice in relation to the loan and have carefully considered the same.
[10] FDN 20, page 86.
The loan documentation apparently faxed to Bluestone on 21 November 2006 includes a Loan Serviceability Worksheet[11] which records a gross annual PAYE income for Mr Grida of $14,248, a secondary income of $96,000. It also includes Mr Grida’s PAYG group certificate for the financial year ending 30 June 2006 recording gross payments of $44,265.
[11] FDN 20, page 28.
On the basis of that application Bluestone approved a loan of $601,796. The loan comprised a three year fixed rate interest only loan in the amount of $501,796 and a line of credit of $100,000.
On 22 December 2006 Mr and Mrs Grida signed declarations certifying they had received legal advice from the solicitor William Ouwens to the effect that they understood the nature and effect of the loan agreement and mortgage, and the obligations and risks involved in signing the loan agreement and mortgage.[12]
[12] FDN 2, exhibits 2b and 2d.
On 14 February 2007 Bluestone advanced by way of loan the principal sum of $601,796 to Mr and Mrs Grida.
By May 2009 the Gridas were in default of their repayments. On 2 June 2009 they were served with notices of default.
The making of the order for possession
Permanent Custodians commenced these proceedings seeking an order for possession of land under Part 17 of the Real Property Act 1886 (SA) (the RPA) on 28 August 2009.
Thereafter followed a series of late payments, adjournments of the proceedings at Bluestone’s request to monitor ongoing repayments, arrears, the activation of the acceleration clause under the loan agreement despite payment of the arrears, dishonoured payments and warnings to Mr and Mrs Grida that an order for possession would be sought. Against this background a Master made the Order on 30 June 2010.
Mr and Mrs Grida did not attend any of the hearings before the Master who made the Order.
On 17 July 2010 Mr and Mrs Grida paid $17,000 which cleared the arrears at that time.
Mr Horne deposes in his first affidavit that between December 2010 and August 2012 Bluestone received various lump sums from Mr and Mrs Grida “but the loan accounts were in arrears for much of that time, due to a consistent failure to pay monthly loan repayments when those repayments fell due”.[13]
[13] FDN 19, exhibit 19a.
The Order was served on Mr Grida on 27 July 2010 and Mrs Grida on 22 November 2010.
On 1 June 2011 Permanent Custodian’s solicitors sent correspondence to Mr and Mrs Grida warning that if the amount then outstanding was not paid within seven days a warrant of possession would be obtained pursuant to the Order.
Complaint to the Credit Ombudsman
In August 2012 Mr and Mrs Grida complained to Credit Ombudsman Service Limited (COSL) alleging that the loan application had been altered without their knowledge or consent and as a result their income had been overstated. They further complained that they were unable to afford the payments under the loan, that Bluestone failed to verify the information provided in the loan application, and that Bluestone engaged in asset lending.
By letter dated 26 February 2013 COSL advised that it could not consider the complaint as its Rules prevented it from hearing the fraud aspect of the complaint and going behind the Order to investigate whether the loan was unjust.
In March 2013 Permanent Custodians’ solicitors again wrote to Mr and Mrs Grida warning that a warrant of possession would be sought unless the amount of $61,148.63 was paid.
Request for warrant of possession
On 12 April 2013 Permanent Custodians made a request for issue of a warrant of possession. As Permanent Custodians sought to execute the warrant of possession more than six months after the Order was made a Certificate of Compliance with Rule 204A of the Supreme Court Civil Rules 2006 (SA) was filed in support of their request.
Mr Grida instructed solicitors to act on his behalf in April 2013. Those solicitors wrote to Permanent Custodian’s solicitors stating that from their preliminary review of the matter “it appears that a claim should be brought against the broker who acted on our client’s behalf at the time the subject loan was entered into”. The solicitors requested that Permanent Custodians not take further action regarding the warrant of possession to allow COSL time to deal with the complaint against the broker. Permanent Custodian declined to await the outcome of the investigation by COSL.
In May 2013 Mr and Mrs Grida made a hardship application to Permanent Custodians. The application was declined in a letter from Permanent Custodian’s solicitors dated 17 May 2013 on the grounds that “the information provided by your clients indicates that they are unable to afford the loan and your clients’ poor financial situation and ability to maintain the loan appears to be a long term situation”.[14]
[14] FDN 19, page 158.
Further complaint to COSL
In May 2013 the Gridas made a further complaint to COSL regarding Bluestone’s refusal to grant hardship assistance.
On 13 July 2012 Mr Grida sent an email to Nathan Mackay, Risk Manager at Bluestone Asset Management raising concerns regarding, in particular, the approval of the loan based on an annual income of $96,000. Mr Grida asked for a review of the loan and requested that a freeze be put on the repayments and any threat of possession whilst the review was being carried out.
Nathan Mackay replied by email 17 July 2012 stating that Bluestone:[15]
… would never accept a group certificate for a self employed borrower unless tax returns and assessment were provided, these were not forwarded with your application. However the salary you earn and the income your business earns are considered two separate things and along with the bank statements supplied demonstrate payments to yourself and more than sufficient turnover (at 50% of business) to support your declared income.
[15] FDN 19, page 125.
Complaint to COSL regarding the broker
In his second affidavit sworn on 7 April 2014,[16] Mr Grida deposes that he made a complaint to COSL regarding the broker Malcolm Reynolds in August 2013. The outcome of that complaint or whether it is ongoing is not known.
[16] FDN 18.
COSL’s request that Mr and Mrs Grida obtain a valuation
By email on 4 November 2013 Mr and Mrs Grida’s solicitors advised them that correspondence had been received from COSL to the effect that Bluestone may consider giving them time to sell the property subject to a satisfactory valuation. The solicitors sought a reply from Mr and Mrs Grida to their email as a matter of priority.
By letter dated 26 November 2013 COSL informed Mr Grida that COSL was not able to consider his complaint against Bluestone further and that his complaint was closed. In the letter COSL stated it had no information to support the Gridas’ claim that they could refinance, or maintain minimum monthly payments or contribute to the outstanding arrears. Further COSL noted that Bluestone had not received any payments and it had not received a real estate appraisal or agency agreement from Mr and Mrs Grida as requested. COSL also advised it had received communication from Bluestone to the effect it was looking at a loss as it had received a valuation of $650,000 on the property and that the balance of the loan was then $692,476. In those circumstances, Bluestone would not agree to allow Mr and Mrs Grida time to sell.[17]
[17] FDN 14.
Exhibited to Mr Grida’s affidavits is a copy of a valuation prepared by LJ Hooker dated 4 December 2013 valuing the property at $890,000 to $920,000.
Request by Mr and Mrs Grida for hearing to oppose issue of warrant of possession
On 16 December 2013 Mr and Mrs Grida filed a Request by Defendant for hearing to oppose issue of warrant of possession. Mr Grida’s affidavit sworn 17 December 2013 was filed in support of the request.[18]
[18] FDN 12.
On 20 December 2013 a Master granted leave to Permanent Custodians to apply for the warrant of possession but stayed execution of it until 30 January 2014. The Master noted Mr Grida had complaints regarding conduct underlying the loan approval. He noted that Mr Grida accepted he had to sell the property and proposed to take steps to do so. The matter was adjourned allowing time for Mr Grida to enter into an agency agreement to sell the property.
The warrant of possession was issued 23 December 2013.[19]
[19] FDN 13.
On 29 January 2014 the Master noted the complaint to COSL against the broker was continuing, that Mr Grida intended to make a monthly payment in February 2014, and that he was to give further consideration to listing the property with an agent. The execution of the warrant was stayed until 27 February 2014.
On 27 February 2014 the Master noted the matter had a long history, that the Order had been made in June 2010, that the application for the warrant was made in late 2013, that Mr Grida had not made the February payment he intimated he would make, and that he had not engaged an agent. The Master stated that there was no basis to further stay the execution of the warrant. The stay was extended until 7 March 2014 to allow Mr Grida time to obtain legal advice regarding his right to appeal against the refusal to extend the stay.
By reference to the first Horne affidavit as at 7 April 2014:[20]
-the amount outstanding on the loan agreement was $718,713.09;
-the arrears on the loan account was $136,374.48;
-the last payment made by Mr and Mrs Grida in respect of their first loan account was $267 on 2 April 2012; and
-the last payment made in respect of the second account was $927.85 on 14 November 2012.
[20] FDN 19, exhibit 19a.
The appeal
Upon receipt of the appeal filing fee on 27 March 2014 the matter was listed for urgent hearing before me.
On 27 March 2014 I made orders for the filing of responding affidavits and adjourned the matter to 9 April 2014 for hearing. I also stayed execution of the warrant until 9 April 2014. On the adjourned date I stayed the execution until further order. Argument was heard on 9 and 22 April 2014.
Mrs Grida
Mr Grida appeared in person at the hearings before me and purported to act on his wife’s behalf. Mrs Grida did not appear at any of the hearings, either before the Master or before me. Mr Grida told me that he has always had his wife’s approval to speak on her behalf at hearings. He said that she is quite elderly and unwell.
Whilst I have some disquiet about this, I proceeded to hear the matter in the absence of Mrs Grida.
The appeal is out of time
Whether an extension of time should be granted involves in particular a consideration of the reason for the delay, the length of the delay, the prejudice to Permanent Custodians, a consideration of whether the making of the Order was correct and whether the appeal has any prospects of success.
The appeal is well out of time, without any proper explanation for the delay. During submissions Mr Grida said that during 2010 he almost suffered a nervous breakdown, that he was very unwell, and was under the care of a psychologist. He also said he did not know he could oppose the Order. It is to be noted that the second page of the Summons under Part 17 of the RPA served on Mr Grida on 8 September 2009 states:[21]
If you wish to defend the claim, you must attend either personally or by Solicitor at the Supreme Court …
Further order 4 of the Order served on Mr Grida on 27 July 2010 states:
Any party be at liberty to apply to the Court for discharge or variation of this Order.
I am satisfied that Mr Grida received adequate notice of his entitlement to oppose, discharge or vary the Order.
[21] FDN 4.
It was open to the Master who made the Order on 30 June 2010 to make the Order in the event that he was satisfied that there was no triable issue raised by the evidence.[22] As Mr and Mrs Grida did not appear at the hearing of the application for the Order, the Master accordingly made an uncontested order for possession. The Order was not made in error.
[22] Moonta Town Corporation v Rodgers (1980) 26 SASR 143 at 160.
Permanent Custodians submit they will suffer significant irremediable prejudice if an extension of time is granted. I now turn to consider whether the proposed appeal raises a triable issue such that the appeal has any prospect of success.
Mr Grida’s submissions

Mr Grida complains that the loan application was assessed incorrectly and the loan entered into was based on income that was never declared by him. As a result Mr Grida asserts that he and his wife were never in a position to pay the loan. He maintains the reason the loan account is in default is that the loans were not affordable right from the start.
Mr Grida submitted that he and his wife struggled for years trying to meet the repayments. They have accessed their superannuation to service the loan. Mrs Grida was made redundant in 2009. Most of her redundancy payout was used in an attempt to make up repayments on the loan. Mr Grida said that it was not until 2012 that he “got tired of all of this” and so he asked to see his loan application documentation. Upon receipt of a copy of the loan application, in particular the Loan Serviceability Worksheet (the Worksheet), he said he noted a number of errors.
He said that at the time of making the application he and his wife provided their payslips and group certificates which showed a total income of $88,000. However, the Worksheet attributes to him as applicant 1 a gross annual PAYE income of $14,248 plus secondary income of $96,000 plus Department of Social Security payments of $17,940. He said he did not receive that sort of money and does not know how the figures came to be included in the Worksheet.
In response to my questions about the documents in the loan application that bear his signature and that of his wife, Mr Grida said he does not remember that far back about signing every single piece of paperwork.[23] Mr Grida said he signed the forms in the loan application where the figures of $8,000 and $96,000 appear but he cannot say whether those figures were recorded on the documentation at the time he signed or not. He says he has no way of explaining it.
[23] T9.
He said he would have made an assessment of what he could afford by way of repayments and that at the time he thought whilst it was going to be steep he could actually maintain the repayments. He said that very early in the piece it became evident that there was no way he could keep on affording the repayments.
Mr Grida also complains the loan application documentation incorrectly records that the loans were approved for business purposes rather than as a residential loan. He said $400,000 of the loan went straight to the Commonwealth Bank to refinance his mortgage and $30,000 was paid to his company, A1 Computing.
Mr Grida said he and his wife saw a solicitor who had been arranged by the broker for that solicitor to explain the loan to them. He said that he and his wife signed the loan agreement but at no time were they given copies of the loan application or the Worksheet. He said had he seen those documents before he signed he definitely would have corrected them. He maintains that the solicitor only provided advice at the time of signing the loan agreement and that he and his wife believed in good faith that the loan had been properly assessed and approved. Mr Grida contends Bluestone should have make inquiries and checked the information provided in the loan application and asked for further information prior to approving the loan.
Mr Grida also contends that Bluestone should have asked how he and his wife were going to service a loan once his wife retired; having regard to the fact she was aged 63 at the time of entering into the loan.
He believes Bluestone approved the loan purely based on the fact that there would be enough equity in the house such that if anything went wrong they could just repossess the house.
Mr Grida said he is currently not making any payments toward the loan and has not paid anything since 2012. He said “I am not paying anything at the moment as I have previously said, if I employ somebody to do work for me and they don’t do it correctly, I don’t pay them until it’s fixed. I see this exactly the same way.”[24]
[24] T19.
Mr Grida asks the Court to rescind the Order so that COSL can review his complaint against Bluestone. He says that if COSL find Bluestone have no case to answer he will sell the property and clear his debt to Bluestone but he will not allow Bluestone to sell his property at the valuation it has obtained.
Permanent Custodian’s submissions
Permanent Custodians submits that it will suffer significant prejudice if an extension of time were to be granted. Counsel referred to the decision of Besanko J in Andrew Garrett Wine Resorts Pty Ltd v National Australia Bank,[25] where it was recognised that where there is an arguable case holding a mortgagee out of a possession order there would normally be a requirement for payment into Court. Counsel pointed to the fact that solicitors acting for Mr and Mrs Grida in April 2013 intimated an application to Court pertaining to the Order would be made and that it was only when the warrant was issued that Mr and Mrs Grida have sought to appeal the Order.
[25] [2004] SASC 60
It was submitted that the Court was being asked to allow an appeal so that COSL could conduct an investigation. It was submitted that this was to invite the Court to act other than judicially.
Further, it was submitted that the broker, Malcolm Reynolds, was the agent of Mr and Mrs Grida not Bluestone even though commission was paid to him by Bluestone. I accept that in this case The Loan Arranger recommended the Bluestone loan to Mr and Mrs Grida. I am satisfied there is no relationship of agency between Bluestone and The Loan Arranger. It was Bluestone which assessed the application and offered the loan to Mr and Mrs Grida. The Loan Arranger did not create the legal relationship between Mr and Mrs Grida and Bluestone.[26]
[26] Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389.
Counsel contended that the income of $96,000 recorded in the loan application about which Mr Grida complains emanated exclusively from him.
Counsel submitted that whilst he is not able to explain why the sum of $14,248 or the Department of Social Security payments appear in the Worksheet, what is significant is the loan application documentation complained about by Mr Grida emanated from Malcolm Reynolds of The Loan Arranger.
The fax details at the top of each page of the exhibits to the first and second Horne affidavits enable me to draw the inference that the loan documentation was provided to Bluestone by the broker, Malcolm Reynolds. The fax number corresponds to the fax number recorded on the front sheet to The Loan Arranger’s coversheet at page 50 of the second Horne affidavit. In this regard I also note Mr Grida’s assertion that he had nothing to do with Bluestone and that all his communications were with The Loan Arranger. I accept counsel’s submission that even if there is an error in the loan application or Worksheet, the primary source of the income emanates from the self certified income declarations apparently signed by Mr and Mrs Grida on 20 November 2006. This is the documentation that Bluestone apparently relied on in assessing eligibility for the loan.[27] The sum of $8,000 per month, or $96,000 per year, has emanated from the two forms that Mr Grida has apparently signed in the loan documentation.
[27] FDN 20, page 125.
Permanent Custodians that there is no arguable case of special disability. It was pointed out that the unaffordability of the loan seems to be the gravamen of Mr Grida’s complaint and yet the impugned income is recorded on two documents signed by him.
Finally, Counsel pointed out that the essence of unconscionability is that not merely is there a special disadvantage and that is known to the lender, but a third key feature is that an unconscientious advantage has been taken of the special disability. As the Full Court made clear in Micarone v Perpetual Trustees Australia Ltd,[28] there cannot be unconscionable disadvantage when what has occurred is a refinance of one set of loans with a fresh set of loans. As counsel submitted, it cannot be the unconscientious taking of advantage to give a party in the Gridas’ position the money and then ultimately do no more than to ask for the money back.
[28] (1999) 75 SASR 1.
In Micarone, Debelle and Wicks JJ held:[29]
The jurisdiction of the court to grant relief in equity where a party has been guilty of unconscionable conduct is of long standing. It is sufficient to refer to such cases as Blomley v Ryan … That jurisdiction may be invoked whenever one party, by reason of some condition or circumstance, is placed at a special disadvantage vis-à-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created…
A party would not act unconscientiously if he did not know of the other’s disability. Therefore, it is necessary also to show that the stronger party knows or ought to know of the existence of the disability and its effect on the weaker party…
[29] (1999) 75 SASR 1 at 584.
As stated by Mason J in Commercial Bank of Australia Ltd v Amadio:[30]
I qualify the word “disadvantage” by the adjective “special” in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasise that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests when the other party knows, or ought to know, of the existence of that condition or circumstance of its effect on the innocent party.
[30] (1983) 151 CLR 447.
Having regard to the fact that Mr and Mrs Grida declared Mr Grida’s monthly income at $8,000 per month or $96,000 on two pages of the loan application, there is no special disability of the kind identified in Micarone or Amadio.
Counsel referred to the decision in Citibank v Nicholson[31] in response to Mr Grida’s allegation that, despite the declarations certifying that he and his wife had received legal advice, Bluestone was under a duty to enquire and verify information provided in any event. In Citibank v Nicholson, Perry J made it clear that a lender:[32]
… it is entitled to rely on its insistence that independent legal advice be given to displace the possibility that any such equity could arise and be enforced against it.
I find it a strange proposition, to say the least, that where guarantors, or persons acting on their behalf, have given misleading information to a proposed lender in support of a loan application, any supposed failure by the lender to ascertain the true position can support an argument based on constructive notice. What inquiries a lender makes to verify information given in support of a loan application is entirely its concern. It may choose to make no independent inquiry.
[31] (1997) 70 SASR 206.
[32] (1997) 70 SASR 206 at 229.
In this case both Mr and Mrs Grida declared on 22 December 2006 that they had received legal advice to the effect that they understood the nature and effect, obligations and risk of the loan agreement and mortgage.
As contended by Counsel there is no duty on a lender to check the information provided by a loan applicant. Bluestone was entitled to rely upon the accuracy of the information and application submitted by The Loan Arranger on Mr and Mrs Grida’s behalf. Bluestone also had the benefit of the solicitor’s certificate indicating that legal advice had been given to Mr and Mrs Grida concerning the loan agreement and mortgage.
Conclusion
There is no evidence of any exploitation of Mr and Mrs Grida’s situation. They sought a loan and Bluestone agreed to grant it on usual terms. There was no inducement to enter into the contract, nor any pressure applied. There is nothing in any of Bluestone’s interactions with the Gridas that in any way deprived them of a real choice to enter into the transaction, the terms of which were reasonable. On default, Bluestone can enforce its security. Upon default Bluestone recovers no more than the money it had loaned, interest and costs in realising the security. Bluestone seeks to be restored to its original position with reimbursement of the costs it had incurred.[33] However there is evidence to suggest that upon enforcing its security Bluestone may well suffer a loss.
[33] (1999) 75 SASR 1 at [650].
Mr and Mrs Grida have not established that their appeal has merit.
Independent legal advice was obtained prior to entering into the loan. The loan application documentation submitted to Bluestone included their declarations regarding their income, their ability to service the loan and that the loan was for predominantly business purposes. All that documentation emanated from their agent, the broker Malcolm Reynolds. Any complaint Mr and Mrs Grida have about the loan application should be directed to Malcolm Reynolds as identified by their solicitor in April 2013.
By Mr Grida’s own admission he and his wife are not able to service the loan they are in a poor financial situation and their inability to maintain the loan appears to be a long term situation. Had I been satisfied that there was a triable issue, I would have restrained Bluestone from exercising its powers under the loan agreement on condition of payment of monies into court by Mr and Mrs Grida pending determination of the matter. It is apparent Mr and Mrs Grida are not in a position to satisfy such a condition.
In my view Mr and Mrs Grida have been afforded ample opportunity and leeway by Permanent Custodians to comply with their obligations under the loan agreement.
As the appeal lacks substantive merit there is no point granting an extension of time. No satisfactory reason has been given for the delay and the Order was not made in error. It would be inappropriate to allow an extension of time.
I refuse Mr and Mrs Grida an extension of time in which to commence the appeal. Accordingly the appeal is dismissed.
I remove the stay over the execution of the warrant for possession.