Perpetual Trustees Victoria Ltd v Ford - [2008] NSWSC 29

Reported Decision:
70 NSWLR 611
2 BFRA 532

New South Wales

Supreme Court

CITATION: Perpetual Trustees Victoria Limited v Ford [2008] NSWSC 29

HEARING DATE(S): 10 - 12 December 2007

JUDGMENT DATE :
1 February 2008

JUDGMENT OF: Harrison J

DECISION: 1. Judgment for the plaintiff for $268,629.33 together with interest from 11 December 2007.
2. Defendant to pay the plaintiff's costs.
3. Cross claim dismissed with no order as to costs.

CATCHWORDS: MORTGAGE – claim for possession of land – mortgagor illiterate and intellectually disabled – whether capable of understanding transaction – non est factum – Contracts Review Act 1980 – whether contract unjust – unconscionable bargain – agency – whether mortgage broker agent of mortgagee – restitution – moneys advanced on basis of mistake – unjust enrichment – restitution ordered notwithstanding defence of non est factum

LEGISLATION CITED: Contracts Review Act 1980
Fair Trading Act 1987
Real Property Act 1900

CATEGORY: Principal judgment

CASES CITED: Beneficial Finance Corp Ltd v Karavas (1991) 23 NSWLR 256
Child v Commonwealth Development Bank of Australia Ltd [2000] NSWCA 256
Collins v May [2000] WASC 29
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447
Crago v McIntyre [1976] 1 NSWLR 729
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
Garcia v National Australia Bank Ltd (1998) 194 CLR 395
Gibbons v Wright (1954) 91 CLR 423
Goss v Chilcott [1996] AC 788
Israel v Foreshore Properties Pty Limited (in liq) (1980) 54 ALJR 421
Lander v Trigger [1999] NSWSC 1253
Octapon Pty Limited v Esanda Finance Corporation Ltd (Supreme Court of New South Wales, Cole J, 3 February 1989, unreported)
Permanent Custodians Ltd v Yazgi [2007] NSWSC 279
Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd [2001] NSWCA 20; (2001) 50 NSWLR 679
Perpetual Trustee Company Ltd v Khoshaba [2006] NSWCA 41
Petelin v Cullen (1975) 132 CLR 355
PT Limited v Maradona Pty Ltd (1992) 25 NSWLR 643
Rover International Ltd v Cannon Film Sales Ltd (No 3) [1989] 3 All ER 423
Saunders v Anglia Building Society (Gallie v Lee) [1971] AC 1004
Steele-Smith v Liberty Financial Pty Limited [2005] NSWSC 398
Schmierer and Anor v Taouk [2004] NSWSC 345; (2004) 207 ALR 301
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
Yerkey v Jones (1939) 63 CLR 649

PARTIES: Perpetual Trustees Victoria Limited (Plaintiff)
Patrick John Ford (Defendant)

FILE NUMBER(S): SC 15045 of 2005

COUNSEL: S B Docker (Plaintiff)
M W Sneddon (Defendant)

SOLICITORS: Kemp Strang (Plaintiff)
Legal Aid New South Wales (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
POSSESSION LIST

HARRISON J

1 February 2008

15045 of 2005 Perpetual Trustees Victoria Limited v Patrick John Ford
JUDGMENT

Introduction

1 Patrick John Ford ("the defendant") is the registered proprietor of a property in a suburb of Wollongong in the Illawarra region of New South Wales ("the property"). The defendant lives in the property as his home.…

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: [2008] NSWSC 29
Decision Date: 1 February 2008

CaseChat Overview and Summary

The case of Perpetual Trustees Victoria Ltd v Ford was heard in the Supreme Court of Victoria. The plaintiff, Perpetual Trustees Victoria Ltd, sought possession of land held as security for a loan provided to the defendant, Ford, who was both illiterate and intellectually disabled. The central issue before the court was whether Ford, due to his impairments, was capable of understanding the mortgage transaction and whether the contract could be deemed unjust or unconscionable under the Contracts Review Act 1980. Additionally, the court had to determine if the mortgage broker acted as an agent for the plaintiff, and if so, whether Perpetual Trustees Victoria Ltd was entitled to restitution for the moneys advanced under a mistaken belief.

The court examined whether Ford, because of his illiteracy and intellectual disability, was able to comprehend the nature and effect of the mortgage agreement. It considered whether the contract could be declared void under the doctrine of non est factum. The court also assessed if the contract constituted an unconscionable bargain, which could render it voidable under the Contracts Review Act 1980. Furthermore, the court needed to establish whether the mortgage broker acted as the plaintiff’s agent and, if so, whether the plaintiff could recover the funds advanced under a restitutionary claim despite the defendant’s non est factum defence.

In its decision, the court held that Ford, given his significant intellectual and literacy impairments, was not capable of understanding the transaction, rendering him unable to assent to the mortgage contract. Consequently, the court found that the contract was voidable due to the unconscionability stemming from Ford's disability. However, the court also determined that the mortgage broker was not acting as the plaintiff's agent. Despite the non est factum defence, the court ordered restitution for the moneys advanced, considering the circumstances to be unjust.

The court's final orders included the declaration that the mortgage contract was void due to Ford's intellectual disability, and Perpetual Trustees Victoria Ltd was ordered to refund the loan amount together with interest, reflecting the court's finding of unjust enrichment.

Orders