to impose an obligation on the defendant to pay an administration fee of $50,000 is not enforceable by the plaintiff against the defendant. (b) alternatively, an order pursuant to section 1 of the Money Lenders Act re-opening the agreement and relieving the defendant of its obligation to pay the administration fee of $50,000. (c) an order for the delivery up by the plaintiff to the defendant of the aforesaid jewellery. 13. In its reply and defence to counterclaim the plaintiff pleads as follows:

"3. The Plaintiff (sic) is estopped from asserting and relying upon the matters pleaded in paragraphs 3, 4, 5, 6 and 7 of his Defence on account of his own conduct. PARTICULARS (a) The Defendant induced the Plaintiff to lend the $50,000 on the terms contained in the Agreement; (b) If the Plaintiff was a money-lender (which is denied) the Defendant knew or assumed that to be the fact at the time; (c) The Defendant knew that the Plaintiff was reluctant to lend him the money, on the terms eventually agreed, or at all; (d) The Defendant knew and intended that the Plaintiff would rely upon his promise to repay the loan in accordance with the terms of the Agreement; (e) The Plaintiff lent the said money pursuant to and in reliance upon the Defendant's said promise; (f) In so acting, the Plaintiff acted to its detriment by depriving itself of the use of the said money for the term of the loan; (g) In the circumstances the Defendant is estopped from resiling from his promise and is obliged to pay the Plaintiff in accordance with the terms of the Agreement. 4. Further, the Defendant is precluded from obtaining equitable relief by reason of his own lack of clean hands. PARTICULARS The Plaintiff repeats particulars (a) to (f) in paragraph 3 hereof. AND the Plaintiff denies that the Defendant is entitled to the relief counterclaimed against it." 14. In reviewing the evidence I apply the principle expressed in Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; 151 CLR 447 per Deane J at 474: "The jurisdiction of courts of equity to relieve against unconscionable dealing developed from the jurisdiction which the Court of Chancery assumed, at a very early period, to set aside transactions in which expectant heirs had dealt with their expectations without being adequately protected against the pressure put upon them by their poverty (see O'Rorke v

Bolingbroke (45)). The jurisdiction is long established as extending generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that disability was sufficiently evident to the stronger party to make it prima facie unfair or "unconscientious" that he procure, or accept, the weaker party's assent to the impugned transaction in the circumstances in which he procured or accepted it. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable." 15. It is the defendant's contention that, in this instance, the special disability was the defendant's desperate financial position at the time the loan was entered into. 16. I make the following findings in respect of the defendant's financial position as at September 1990, when he approached Mr Kanaris, who is a Director of the plaintiff company, for a loan. To do this, I consider it relevant to refer to some details of Mr Samarkos' history. 17. Mr Samarkos was born in Kalymnos in Greece in 1942. He could not speak English when he arrived in Darwin in 1962. Mr Samarkos became involved in brickmaking and earthmoving businesses in the Northern Territory. 18. In 1969 Mr Samarkos was declared bankrupt. In 1971 Mr Samarkos married his wife, Rhonda Samarkos, and started a business in her name, trading as an earthmoving contractor. He earned sufficient money as an earthmoving contractor to reach an arrangement with his creditors that led to the discharge of his bankruptcy at the end of 1975. 19. In the late 1970's Mr Samarkos started an earthmoving company called Kevos Pty Ltd which was very successful. By the end of 1982 he had three trading companies. Petra Industries Pty Ltd, which was a sand and gravel extraction and treatment company. Petramix Pty Ltd, a concreting company and an investment trust called the Samarkos Family Trust, the trustee of which was Sirius Investments Pty Ltd. In 1982 he was employing over 40 people. The companies were involved in tax minimisation schemes. A substantial tax assessment was made against the companies in 1984. Mr Samarkos received a tax assessment of 1.5m in 1984 plus penalties. As a result of this tax assessment, all four companies, Petra Industries Pty Ltd, Petramix Pty Ltd, Sirius Investments Pty Ltd and Kevos Pty Ltd, were forced into liquidation and eventually wound up. The tax department made claims against Mr Samarkos and his wife personally, as a consequence of which Mr and Mrs Samarkos went into a scheme under Part 10 of the Bankruptcy Act in 1986. 20. On 11 July 1990, both Mr and Mrs Samarkos came out of the scheme of arrangement. Mr Samarkos had difficulty obtaining any work during 1990. He tendered for a job at the Borroloola Community Government Council. The tender price was $576,276, which was accepted by the Borroloola Community Government Council on 30 July 1990 (Exhibit P1 page 77). This was his only current contract as at September 1990. 21. Mr Samarkos took possession of the site at Borroloola for the purpose of undertaking the contract. He was employing five men on site and maintaining two backhoes and a truck. His weekly commitments in respect of the contract at Borroloola were approximately $6,700, being approximately $4,200 for wages, $1,500 for meals and accommodation, and $1,000 for other overheads including fuel and electricity. The contract was to build sewerage reticulation absorption mounds and a sewerage pump station. There were 65 to 70 septic tanks to be installed. The first job undertaken was a survey and then to start excavations. Because of the amount of rock, it was not possible to excavate with the backhoes. Mr Samarkos returned to Darwin to attempt to arrange the purchase of an excavator. He approached Hastings Deering and applied for finance to purchase an excavator. The application was not successful. He then made an application to Esanda. Approximately one week after lodging the application with Esanda, he was informed the application was not granted. Mr Samarkos also approached A.G.C. Finance but was informed there was no point in putting in an application (transcript pages 28-29). On or about 6 September 1990, Mr Samarkos had been back in Darwin for about 3 weeks, he had not succeeded in raising finance to purchase the excavator. Five employees were out on site unable to do any work except for one man who was carting material. Mr Samarkos was concerned that if he were not able to obtain finance in the near future his men, who were not being paid, would walk off the job and the contract would be cancelled. There was a liquidated damages clause in the contract. 22. It is difficult to make a finding as to the defendant's exact financial position as at 12 September 1990 because the business affairs of Mr and Mrs Samarkos were far from straight forward. Doing the best I can I have made the following findings. 23. As at 12 September 1990, Mr and Mrs Samarkos and their company Radnor Pty Ltd had the following assets: (1) A house in Nakara purchased in the name of Rhonda Samarkos worth approximately $100,000 of which $50,000 was owed on the mortgage to the National Australia Bank (Exhibit D1). The balance of the equity in the house was used to secure the $30,000 overdraft from the National Australia Bank; (2) Plant and equipment being two backhoes, a truck, a utility, a Hilux and a rock breaker leased by Radnor from Esanda (evidence of Mrs Samarkos, transcript page 124); (3) Hyundai motor vehicle used by Mrs Samarkos that was leased from the National Australia Bank at monthly repayments of $574 and a 4x4 utility landcruiser under hire purchase from Esanda; (4) Jewellery worth approximately $150,000; and (5) Miscellaneous bank accounts totalling approximately $1,000. 24. As at 12 September 1990, Mr and Mrs Samarkos and their company Radnor Pty Ltd had the following liabilities: (1) Overdraft to the National Australia Bank of approximately $30,000; (2) Loan from Mr Ayyoush of $33,000 principal plus $3,000 interest, repayable by 12 instalments of $3,000 commencing on 12 July 1990 (Exhibit P5); (3) Loan from Mr Ostermeyer of $2,500; and (4) List of creditors (Exhibit D9) which show Mr and Mrs Samarkos owed approximately $62,198. 25. The income of Mr and Mrs Samarkos was as follows: (1) Mr Samarkos' only current work was the contract with the Borroloola Community Government Council. The first instalment payment under the contract would not be paid until Mr Samarkos completed a certain part of the work for which he needed an excavator. (2) Mrs Samarkos had an income from operating a canteen. The average monthly income at that time was $1,648. 26. The commitments for Mr and Mrs Samarkos were as follows: (1) Esanda - $4,222.60 per month. On 12 September 1990 these payments were three months in arrears. The monthly payments were $1,001.60 for the utility and $3,226.60 for the other machinery (on evidence given by Mrs Samarkos, transcript page 138). (2) NAB housing loan - $500.00 per month. (3) Lease for Hyundai - $575.94 per month (Exhibit D1). (4) Lease for fax - $122.29 per month (Exhibit D1). (5) Repayments to Mr Ayyoush

• $3,000 per month (Exhibit D5). (6) Interest on overdraft - approximately $380 per month (Exhibit D1). Total of $8,800 per month (approximately).

27. In addition Mr Samarkos had an ongoing commitment for wages and expenses of five men on site at Borroloola being an amount of approximately $6,700 per week.
28. I am satisfied on the evidence that as at 12 September 1990 Mr and Mrs Samarkos had liabilities and commitments that far exceeded their income. An ability to complete the contract with the Borroloola Community Government Council was essential.
29. I do not accept the argument for the plaintiff that, the fact Mr and Mrs Samarkos had assets which exceeded their liabilities, means that their financial situation was not desperate. Apart from the jewellery, which was to be used as collateral security for the loan, all other assets were either mortgaged or encumbered in some way. I accept that the contract with the Borroloola Community Government Council was the only contract Mr Samarkos had at that time as a source of income. The income from the canteen managed by Mrs Samarkos was minimal and certainly not sufficient to assist in financing the purchase of an excavator to continue with the contract at Borroloola. I accept Mr Samarkos was at that time employing men who could not be expected to continue on the site without payment. I accept he was being pressured by the Borroloola Community Government Council to proceed with the contract and further delay could put the whole contract in jeopardy (Exhibit P1 pp 84-96). I accept that it was essential to Mr Samarkos that he have sufficient finance to purchase an excavator and pay wages and meet other expenses associated with the contract. I accept that Mr Samarkos had attempted to obtain finance from alternative sources and was not successful. I find that he was urgently in need of finance to be able to proceed with the only contract he had in hand. Mr and Mrs Samarkos had only recently been discharged from bankruptcy and were vulnerable if exposed to an award of damages, including liquidated damages, if not able to complete the contract with the Borroloola Community Government Council. Counsel for the plaintiff submits the defendant was not in a desperate situation. The defendant could have sold the jewellery belonging to his wife and avoided the necessity to borrow money for the contract. I agree this is a good argument. However, I accept the defendant's business affairs were not quite as simple as that and that the jewellery had a possibly greater value in terms of its collateral value as security in times when Mr Samarkos needed to find working capital. This is how he in fact used it. There is no evidence as to why Mr and Mrs Samarkos didn't sell the jewellery to raise money and there may be other reasons why this did not occur. It is, on the face of it, a weakness in the defence case, but in looking at the totality of the defendant's affairs, I do not consider it fatal to the defendant's claim that he was in a desperate financial position. I find Mr Samarkos had every reason to consider himself in a desperate financial situation. He had mounting debts and a financial commitment to a contract which if not fulfilled, would have left him heavily in debt. The defendant has satisfied me on the balance of probabilities that he was under a special disability in that he was in a desperate financial position at the time he entered into the loan. The evidence is Mr Kanaris was readily able to provide the money and I am satisfied the circumstances demonstrate there was an absence of any reasonable degree of equality between Mr Samarkos and Mr Kanaris.

Would you look at it in that point now?---I - I - well, you're the one who's claiming it's 600%. I haven't worked it out to be 600%. Would you like me to do the calculations for you?---You may do it if you wish. It's $100,000, the interest is about $50,000. Would you agree with that?---It was never classified as interest. You classified it as an administration fee, didn't you?---If it's classified as an administration fee, that's what it was. It's not interest. It was never declared as interest. What does the expression 'administration fee' mean, Mr Kanaris?---Administration is help someone to do something, to act on behalf of whatever. To look after. It's a fee for assisting somebody, is it?---For some service. Is this an expression you made up or did somebody else give it to you?---No, it was done by the solicitors." 38. When asked about the "administration fee" Mr Kanaris gave further evidence that he paid for the contract to be drawn up, he paid for the insurance on the jewellery and bank fees for the security box to hold the jewellery. The insurance is approximately $312.50 per annum and the fee for the security box would exceed $100 per year. 39. The loan agreement contains the following clause: "9. Costs The borrower shall upon demand pay all costs of and incidental to the preparation, execution and stamping of this Deed and all stamp duty hereon and on any duplicate copy hereof." 40. Mr Kanaris agreed he was aware of that clause but stated he had not requested such payment from Mr Samarkos and had no intention of suing for such costs. 41. Mr Kanaris gave further evidence relating to the administration fee on page 191 of the transcript of evidence: "Mr Kanaris, this administration fee. Firstly, were there any costs involved to your company in entering into this agreement aside from the pure advance of the money?---I have

• I paid for the contracts to be drawn up. I paid for the insurance. I've been paying the fees continuously at the bank to hold the security box. All right. Paid for the contract to be drawn up. You paid for, you said, the security box fees. You paid for insurance?---There were telephone calls because John had asked me at the time, through the contract, to phone people and try and help him. Was that an administration fee that related to this particular advance?---Yes. How many telephone calls are we talking about?---I couldn't tell you exactly. Are we talking about - - -?---I'd simply say, if you want figures, shall we say 30?" and at page 192: "What other items are covered in this administration fee, Mr Kanaris?---I can recall going out with John, assisting him in trying to obtain another contract. I can - I can - there were times there when I've had to race around with John or for John to try and assist him on certain things. These are all things that you say - - -?---During the contract. These are all things that you say justify you charging the administration fee you did charge?---I didn't charge - I didn't specifically charge it. That was granted to me from John. He made the offer. Never at any stage had I - I'd - I didn't take any figure at all. It was presented to me."

42. Mr Mitaros was also asked in cross examination, at page 213, about the administration fee and gave evidence as follows: "And whose idea or who came up with the words 'administration fee' in a contract? Perhaps if you have a look at the document you'll see a $50,000 figure over and above the loan as described as an administration fee. Can you please, if you recall, tell us where that term came from? Were you instructed to put that term there?---Well, I - my file notes don't bear that out so I don't think that I was specifically instructed to describe it as an administration fee. It's true nature is a cost for the borrowing of money, isn't it?---That's the price that he has to pay for the loan, that's correct." and further on page 213: "MR WYVILL: Would you agree that this payment, this additional payment of $50,000, was as such in its true nature a payment of interest?---It was the price that Mr Samarkos had to pay for the loan of $50,000. Whether you want to call it an administration fee or an interest, or whatever description you want to give to it, it was what it was going to cost him. And by an administration fee, I mean, did - you put that, I assumed that when you included that in that document you had an idea of what you intended to mean by that, and do you know, can you recall what you intended to mean by the term 'administration fee'; give us an idea of what that term means or what you intended it to mean?---No, I can't recall. I put it to you, Mr Mitaros, that the term 'administration fee' was used in that document to disguise or as an attempt to disguise the true nature of that payment of $50,000; in other words to disguise it from being detectable as a payment

of interest?---That certainly wasn't my intention." 43. I am satisfied on the balance of probabilities that the word "administration fee" is in actual fact a euphemism for what is commonly known as interest on the loan. I do not accept Mr Kanaris did anything else to earn an "administration fee" other than to do as Mr Samarkos had offered and that was to charge Mr Samarkos $50,000 for the loan of $50,000 from 12 September 1990 to 11 November 1990, a period of two months. 44. Mr Kanaris contacted his solicitors, Messrs Philip and Mitaros, and instructed them to draw up a loan agreement between himself and Mr Samarkos. At that time Messrs Philip and Mitaros also acted for Mr Samarkos in respect of other matters. 45. I accept the evidence of Mr Mitaros that Mr Kanaris telephoned him on 10 September 1990 with instructions to prepare the loan agreement. I accept his evidence that he was asked to prepare the documents at very short notice. I accept that Mr Kanaris and Mr Samarkos together attended the office of Philip and Mitaros without appointment on 12 September 1990. I accept Mr Mitaros' evidence that the conference with Mr Samarkos and Mr Kanaris on 12 September 1990 was very short and only lasted about two minutes. I accept evidence given by Mr Mitaros that he explained to Mr Kanaris and Mr Samarkos where to affix their signatures on the document, but that he told them both to leave the office of Philip and Mitaros and sign the documents elsewhere. I accept Mr Mitaros told Mr Kanaris and Mr Samarkos that he was not prepared to witness the execution of the document because in this matter he acted for Mr Kanaris and not Mr Samarkos and he did not want there to be any misunderstanding about that. I also accept Mr Mitaros' evidence that he warned Mr Samarkos to the effect that Mr Samarkos should seek independent legal advice because Mr Mitaros was not acting for him in respect of the transaction. Mr Mitaros agreed that it was his normal practice in such a situation to follow up in writing his advice to Mr Samarkos that he should seek independent legal advice. In this case Mr Mitaros did not do this and no such written advice went to Mr Samarkos. I find that Mr Kanaris and Mr Samarkos did leave the office of Philip and Mitaros with the documents and the documents were not signed in the presence of Mr Mitaros. Mr Samarkos has given evidence (transcript page 76) that Mr Mitaros did not tell him he was acting for Mr Peter Kanaris and not for him. Mr Samarkos has also given evidence that Mr Mitaros did not advise him to seek independent legal advice. It is Mr Samarkos' evidence that he signed the loan agreement in Mr Mitaros' office. In accepting the evidence given by Mr Mitaros on these aspects, I reject the evidence given by Mr Samarkos. I do not consider Mr Samarkos was being deliberately untruthful but rather that he was mistaken in respect of what occurred at the office of Philip and Mitaros. I consider it is of significance that the one and only conference Mr Samarkos had with Mr Mitaros on this issue was very short and, on Mr Mitaros's own evidence, lasted only a couple of minutes. I consider that in the short time Mr Mitaros spoke with Mr Samarkos, the significance of Mr Mitaros' advice to him was not realised by Mr Samarkos. Mr Mitaros did not follow up this advice in writing as is his normal practice. It was on all accounts a very quick interview conducted at a time when Mr Samarkos and Mr Kanaris called in to the office of Philip and Mitaros without appointment. Mr Mitaros was placed in a very awkward situation by his client Mr Kanaris. Mr Kanaris also seems to have missed the point of Mr Mitaros' advice to Mr Samarkos because Mr Kanaris' version of that conversation is at page 195 of the transcript of evidence: "What was the purpose of going into see Mr Mitaros then?---To make sure that everything was okay and then he told John that he definitely would have to have somebody go through the contract with him. They were the words he used?---Well, I can't remember the exact words, but to that effect that he'd have to have it read to him and explained." 46. I do not accept Mr Kanaris' evidence (transcript page 197) that the loan agreement was not signed on 12 September 1990. I do not accept the evidence of Mr Kanaris that he sent Mr Samarkos away on 12 September 1990 to have someone else explain the contract to him. On Mr Kanaris' evidence the contract was signed a few days later than 12 September 1990. I reject this evidence. Neither Mr Kanaris nor Mr Samarkos seem to have realised that Mr Mitaros was advising Mr Samarkos to seek independent legal advice on the loan agreement. Having regard to the brevity of the interview with Mr Mitaros, that is understandable. I don't accept Mr Kanaris did anything to reinforce the advice given by Mr Mitaros to Mr Samarkos. The loan agreement accurately reflected the terms that had been offered by Mr Samarkos. However, there are other reasons why it would have been advisable at that time for Mr Samarkos to seek independent legal advice. 47. I am satisfied on the balance of probabilities that the loan agreement was signed by Mr Samarkos on 12 September 1990. The document itself reads: "Item 1: Date of Agreement The 12 day of Sept. 1990." 48. I do not accept the evidence given by Mr Kanaris (page 197) that he started to write the date and stopped when Mr Samarkos told him he had not had the loan agreement read and explained to him and that he sent Mr Samarkos away to do this and the loan agreement was signed by Mr Samarkos a few days later. 49. In an affidavit sworn by Mr Kanaris on 20 November 1991, (page 53 of Exhibit D1) Mr Kanaris stated in paragraph 16 of the sworn affidavit: "16. The next day, which was 12 September 1990, the defendant came to my house to sign the written agreement and we both signed it. A true copy of that signed agreement is annexed hereto marked A." 50. Annexure A to that affidavit gives the date: "The 12 day of Sept. 1990." 51. I note also that in his sworn affidavit dated 20 November 1991 Mr Kanaris states that Mr Mitaros drew up the draft loan agreement as instructed by Mr Kanaris. Mr Kanaris then swears in paragraph 13 of the affidavit dated 20 November 1991: "13. I subsequently took the draft loan agreement and explained the effect of it to the defendant in Greek and English and we agreed that those were to be the terms of the loan agreement." 52. That was not in accordance with the advice given by Mr Mitaros that Mr Samarkos should seek independent legal advice. 53. Mr Kanaris then goes on to depose that on the following day he gave the defendant a cheque for $50,000 and the defendant gave him the jewellery as security. 54. I find, on the balance of probabilities, Mr Samarkos signed the loan agreement at the home of Mr Kanaris on 12 September 1990 and Mr Samarkos' signature was witnessed by Mrs Kanaris. 55. I find that the only explanation Mr Samarkos received about the loan agreement was when Mr Kanaris read the document to him in Greek and English. Mr Samarkos did not receive any independent legal advice and Mr Kanaris was aware of this. 56. I do not accept the evidence of Mr Kanaris that at the time of witnessing Mr Samarkos' signature, Mrs Kanaris wrote out her name and address and the following endorsement which now appears on the loan agreement: "hereby certify that I am over the age of eighteen years". 57. Mrs Kanaris has given evidence that she cannot remember when she made this endorsement. Her evidence is that she was very angry about the transaction at the time she witnessed Mr Samarkos' signature. I do not attach any great importance to the time when Mrs Kanaris did make the endorsement at the foot of the loan agreement. Mr Kanaris was adamant in his evidence that Mrs Kanaris did make the endorsement on the day the loan agreement was executed. In that belief he was mistaken. I am satisfied that on the balance of probabilities Mrs Kanaris placed that endorsement on the loan agreement some months later. This would have occurred after 19 April 1991, and prior to the date the document was presented to the stamp duties office on 7 May 1991. Approximately eight months after 12 September 1990, a facsimile copy of the document signed on 12 September was sent through the fax system and this did not bear the endorsement (Exhibit D15). I am not stating that Mr Kanaris was deliberately untruthful but rather he was mistaken about a matter on which he was prepared to give evidence with considerable certainty. 58. Mr Samarkos deposited the jewellery with Mr Kanaris together with valuation schedule from J.A. Manufacturing Jewellers indicating the jewellery was valued at $156,975 (Exhibit D1 pages 12-17). Mrs Samarkos gave evidence that certain items were removed by her, being items amounting to a value of $5,900 and leaving jewellery to the total value of $151,075 in Mr Kanaris' possession. 59. Mr Kanaris gave evidence under cross examination in respect of the jewellery (page 193): "Before you agreed to advance the money you inquired as to the security available to secure the loan?---Yes. Yes, I asked if - - - You would not agree to this loan without proper security, would you?---I wouldn't have agreed to it if I'd had no security of - of something of substance to show that if anything should happen at least I was safe in some way or other. Did you have the jewellery inventory examined by anybody? -- -No. Did you form any view as to how much the jewellery was worth?---No. You were content to take the assertion by Mr Samarkos and the valuation of over $100,000?---That is true. So you believed yourself to be fully protected for your $50,000 in the event that he didn't pay?---That's correct. So there can be no suggestion made to this court that that $50,000 administration fee was to compensate you for any risk that you undertook by taking an unsecured loan, either in whole or in part?---The jewellery was held in respect of that, yes. So for all intents and purposes this was a fully secured loan?---Well, hopefully it would have been. Certainly as far as you were concerned it was fully secured? ---Well, I hadn't checked the jewellery so I didn't know whether the full amount was there and I took his word for it." 60. I find that Mr Samarkos did deposit jewellery valued at $151,075 with Mr Kanaris. The jewellery was deposited with Mr Kanaris as security for the loan. Mr Kanaris was aware as to the value of the jewellery. He knew at the time of entering into the loan agreement that the loan was fully secured and that he was not in any risk of losing his money. 61. Mr Samarkos repaid the principal of $50,000 on 19 November 1990. He was 8 days late in payment of the principal. He has not paid the $50,000 "administration fee". There is evidence Mr Samarkos did offer a lesser amount of money but this was refused by Mr Kanaris. Mr Kanaris has given evidence that he believes he is entitled to the $50,000 "administration fee" and that Mr Samarkos should honour the agreement. 62. I accept that it is not and never has been for the courts to relieve a party from the consequences of what may, in the event, prove to be an onerous or possibly even a commercially imprudent bargain (Export Credits Guarantee Department v Universal Oil Products Co and Ors (1983) 2 All ER 205 at 210). "It is trite that equity will not rewrite an improvident contract where there is no disability on either side. There is no duty laid upon a party to a subsisting contract to vary it at the behest of the other party so as to deprive himself of the benefit given to him by the contract. To hold otherwise would be to introduce a novel equitable doctrine that a party was not to be held to his contract unless the court in a given instance thought it reasonable so to do. In this case it would make an action for debt a claim for a discretionary remedy. This would introduce an uncertainty into the field of contract which appears to be unsupported by authority either in English or Scottish law save for the one case upon which the Court of Session founded its opinion and which must, in my judgment, be taken to have been wrongly decided." (White and Carter (Councils) Limited v McGregor [1961] UKHL 5; (1962) AC 413 at p.445 Lord Hodson of the House of Lords). 63. I accept that Mr Samarkos expected the contract with the Borroloola Council to be a profitable contract and that he conveyed this information to Mr Kanaris. It is the plaintiff's case that the defendant sought to borrow the money so that he would be able to obtain the benefit of a very profitable contract. There is evidence Mr Samarkos expected to make a profit on the contract at Borroloola. However, I am not able to make a finding as to exactly what that profit was. The plaintiff maintains that it was the defendant who proposed the terms of the contract and he should not now be allowed to resile from the agreement that he proposed and subsequently entered into. At the time he entered into the loan with Mr Kanaris, Mr Samarkos anticipated a profitable return on the Borroloola contract. However, on all of the evidence, I have found whatever his expectation, he was at the time of entering into the agreement with Mr Kanaris, under a financial disability and his difficult financial circumstances were well known to Mr Kanaris. The fact that it was Mr Samarkos who proposed the terms of the loan in what appears to have been an unrealistic hope that Mr Kanaris would not accept them is not in my opinion the end of the matter. Certainly Mr Kanaris did not impose any pressure or influence on Mr Samarkos to persuade him to enter into the agreement with him. However, Mr Kanaris, with knowledge of Mr Samarkos' desperate financial circumstances, did take advantage of an opportunity that presented itself to him and accepted the offer. Mr Kanaris did not propose the terms of the loan. However, I do not accept Mr Kanaris was reluctant to take up Mr Samarkos' offer. Mr Kanaris was fully secured for the loan with the deposit of jewellery valued at well in excess of the loan. There was no risk he would lose his money and he had an opportunity to make a very substantial profit. It was loaned at an interest rate far in excess of normal commercial rates of interest. Prima facie the loan agreement is harsh and unconscionable. It provided for an extraordinary high rate of interest. Mr Samarkos subsequently acknowledged the debt and believed himself bound by the agreement. I find that it was not until he received independent legal advice from Mr Morris of Elston and Gilchrist in about April 1991, that he made a decision not to repay the $50,000 "administration fee". I find that at the time Mr Samarkos entered into the loan agreement he intended to pay the "administration fee" and believed himself bound to do so. I do not accept the submission on behalf of the plaintiff that Mr Samarkos had any dishonest intent when he entered into the loan agreement with Mr Kanaris or that he was anything other than sincere in his intent to pay the $50,000 "administration fee". Mr Samarkos was foolish to suggest the terms of the loan but I do not consider he was dishonest. Rather his foolishness was born from his sense of desperation. 64. There is a jurisdiction in equity, as part of the general equitable jurisdiction in fraud, "to set aside catching and unconscientious bargains" (Meagher Gummow Lehane Equity Doctrines and Remedies 3rd Edition 398-402). 65. The jurisdiction is raised "whenever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands" (Blomley v Ryan [1956] HCA 81; (1954-1956) 99 CLR 362 at 415 per Kitto J). "It will be seen that the essence of these situations is: (a) parties who meet on unequal terms; (b) the stronger party takes advantage of this; (c) to obtain a beneficial bargain. When this is shown by the weaker party, the onus will pass to the stronger party to show his conduct to have been fair, just and reasonable." (Fry v Lane (1888) 40 Ch D 312 at 322). "The disabling condition or circumstance (must be) one which seriously affects the ability of the innocent party to make a judgment as to his own best interests" (Commercial Bank of Australia Ltd v Amadio (supra) per Mason J at 462). "It is not enough to show that the bargain was a hard or unreasonable one" (Alex Lobb Garages Ltd v Total Oil GB Ltd (1983) 1 All ER 944 at 961). 66. The plaintiff argues that the defendant is a person who is an experienced earthmoving contractor. He had been in business for 28 years and in that time had numerous dealings with banks, finance companies and other lenders. Counsel for the plaintiff argues that for the defendant to have, some years ago, had a commitment to the taxation department of $1.5 million indicates the amount of money he has earned in business over the years. It is the plaintiff's submission that the defendant is not naive and inexperienced in the business world. 67. I accept that in the past the defendant has both earned and lost a great deal of money. He is an experienced earthmoving contractor accustomed to organising financial deals for his business. However, neither the defendant or his wife gave me the impression that they were astute business people. In fact, their business affairs appear to be muddled and confused. Mrs Samarkos, who looks after the books for herself and her husband, gave evidence that she did not understand a profit and loss account. Having heard her evidence I believe her. Mr Samarkos has, on previous occasions, put himself and his companies into a debt beyond the capacity of himself or his companies to meet. That fact was well known to Mr Kanaris. Mr Samarkos may well have earned a large income during better economic times. His companies subsequently went into liquidation and he and his wife went into bankruptcy. I do not regard that as indicative of astute business skills. Mr and Mrs Samarkos have been through substantial periods of bankruptcy and the companies they formed have been placed into liquidation. Having heard the evidence of Mr Samarkos and observed the manner in which he gave his evidence, my impression was that he may well be a skilled tradesman and earthmoving contractor, but he is not very realistic in the management of his financial affairs. His ill advised and imprudent offer to Mr Kanaris and his entering into the subject loan agreement, is but one indication in support of the impression I formed of Mr Samarkos as a businessman. 68. The plaintiff argues that the defendant did not come to the transaction "with clean hands". In particular, the defendant did not in fact use the loan monies for the Borroloola contract. 69. I accept that unconscionable conduct, being an equitable remedy, requires that the applicant for relief against enforcement of unconscionable conduct be themselves not guilty of unconscionable conduct. 70. However, I do not agree with the submission of counsel for the plaintiff that the defendant did not come to the transaction "with clean hands". 71. I prefer the evidence given by Mr Samarkos to the evidence given by Mr Kanaris relating to the discussion about Mr Samarkos' affairs. I find Mr Samarkos did discuss with Mr Kanaris his full financial circumstances and that Mr Kanaris was aware of Mr Samarkos' assets and liabilities and the difficulties he had in raising finance. 72. Mr Samarkos answered Interrogatory 19(f) which is part of Exhibit P4 as follows: Interrogatory: "19. Prior to signing the agreement, what was the extent of your experience in seeking finance including without limiting the foregoing? (f) The purpose of the finance applied for? Answer: The purpose of application for finance on this occasion was to enable me to pay expenses associated with the Borroloola

contract." 73. The actual expenditure by the defendant of the $50,000 is detailed in Exhibit D10. 74. I accept these payments are not all in respect of the contract at Borroloola. 75. Clause 4 of the loan agreement states: "4 Condition of Loan 4.1 The borrower shall utilise the principal sum for the purpose described in item 7 of the first Schedule hereto and for no other purpose without prior written consent of the Lender." 76. Item 7 of the Schedule to the loan agreement states: "Item 7: Purpose of Loan To assist the Borrower to complete Borroloola Contract No. 1400." 77. Item 7 stating the purpose of the loan is in very general terms. I do not read that as restricting Mr Samarkos to using the loan money only for purchase of items in relation to the Borroloola contract but could also include payment of debts necessary to enable he and his wife to continue in business and fulfil the Borroloola contract. 78. Mrs Samarkos has given evidence as to how the $50,000 was expended (transcript pages 140 to 155). The expenditure as stated in Exhibit D10 is as follows:

1. Canon fax machine 121.99
2. Accountant

• accountancy fees for the previous year 5417.00 3. Esanda - lease payment for utility 1001.60 x 2. Other machines 3226.60 (approx) x 2. (Being machinery andequipment used at the Borroloola site.)
  8445.80 4. Humes - materials for Borroloola 5971.00 5. Motor vehicle registration
  275.00 6. Sub-contractors (Borroloola) 11390.00 7. Sub-contractors (Borroloola) 1215.00

8. Canteen 5005.73 9. Drawings 2900.00 10. Solicitors, Philip and Mitaros 500.00 11. Sun Lighting - materials for the canteen 5090.00 12. Bank charges and interest 662.30 13. Agserv - repairs and maintenance 11.44 14. Fuel
   384.00 15. Lease - Mrs Samarkos' vehicle 575.94 $47,965.20
9. The balance of the loan was used to pay the overdraft at the National Australia Bank.
10. From the expenditure, items 3, 4, 6 and 7 were, on the balance of probabilities, expenses directly associated with the Borroloola contract.
11. The majority of the other items related to debts Mr and Mrs Samarkos had at the time Mr Samarkos entered into the loan agreement.
12. I have had the opportunity to hear and observe evidence given by Mr Kanaris and Mr Samarkos. I prefer the evidence of Mr Samarkos, (page 74) that he told Mr Kanaris he needed the $50,000 to pay wages, bills, some materials and obtain an excavator, to the evidence given by Mr Kanaris, that the purpose of the loan was to buy septic tanks and pipes for the Borroloola contract.
13. I am satisfied on the balance of probabilities that Mr Kanaris was aware that Mr Samarkos was in financial difficulties and had pressing debts which would need to be met to enable Mr Samarkos to continue in business and be in a position to carry through the Borroloola contract.
14. I reject the plaintiff's argument that Mr Samarkos was himself guilty of unconscionable conduct and that he cannot seek relief against enforcement of his contractual obligations because he himself did not come to the transaction with clean hands.
15. On the facts as I have found them, I reject the plaintiff's argument that the defendant is estopped from disputing the claim.
16. I find on the balance of probability that the defendant was in desperate financial circumstances, that he was under a financial disability amounting to a special disability in dealing with Mr Kanaris with the consequence that there was an absence of any reasonable degree of equality between them. I am satisfied on the balance of probabilities that Mr Samarkos' disability was sufficiently evident to Mr Kanaris to make it prima facie unfair or "unconscientious" that he accept Mr Samarkos' assent to the loan in the circumstances in which Mr Samarkos made the offer and Mr Kanaris accepted it. Mr Kanaris was well aware of the extent of Mr Samarkos' financial disability.
17. I am not satisfied on the balance of probabilities that the transaction or the conduct of Mr Kanaris, the subject of these proceedings, was fair, just and reasonable.
18. Accordingly, I am not satisfied on the balance of probabilities that the plaintiff is entitled to its claim for $50,000.
19. Counsel on behalf of the defendant, has submitted that the defendant has always been and is quite prepared to pay a reasonable interest rate on the loan of $50,000 for the period from 12 September 1990 to 19 November 1990. The rate of interest suggested by counsel for the defendant is 20%, the amount that is specified in clause 6 of the loan agreement. I accept that 20% would be a reasonable amount of interest to award to the plaintiff.
20. Accordingly, I award judgment in favour of the plaintiff in the sum of $1,890.41 being 20% interest on $50,000 for a period of 69 days from 12 September 1990 to 19 November 1990.
21. I grant leave to the parties to apply, if necessary, in respect of the declaration sought by the defendant in respect of the jewellery and in respect of the question of costs.