Permanent Custodians Ltd v McLanders

In the matter of Permanent Custodians Limited versus McLanders, the dispute was heard by the Supreme Court of Victoria. The plaintiff, Permanent Custodians Limited, sought possession and monetary order against the defendant, McLanders, who had defaulted on a loan agreement secured by a mortgage over a property. McLanders raised a defence and cross-claim under the Contracts Review Act 1980, arguing that the contract was unjust due to the circumstances surrounding its formation. The central legal issues before the court were whether the contract or the circumstances of its making were unjust, and whether the lender could be held liable for any unfairness arising from the borrower's reliance on a misleading agent.

The court examined the evidence regarding the relationship between McLanders and her mortgage broker, who had provided misleading advice leading to the loan agreement. The court determined that while the circumstances leading to the contract were indeed unjust, this did not equate to the contract itself being unjust. The court held that the borrower had freely entered into the contract and had knowingly placed her trust in the agent, despite being aware of the potential for conflict of interest. Consequently, the court found no basis to hold the lender responsible for the misleading conduct of the agent. The defence and cross-claim under the Contracts Review Act 1980 were dismissed, and the plaintiff's claim for possession and monetary order was upheld.

The court ordered that the defendant McLanders pay the outstanding amount of the loan to the plaintiff, along with interest and costs, and that possession of the mortgaged property be delivered to the plaintiff. The court also noted that the defendant had the right to seek redress from her mortgage broker for any losses incurred due to the misleading advice. The decision reinforces the principle that while the circumstances leading to a contract may be unjust, the contract itself is not void if it was entered into voluntarily and with knowledge of those circumstances.