No Fuss Finance Pty Ltd v Miller

CATCHWORDS : CONTRACTS - unjust contracts - agreement loan for three months at 72% per annum - secured on borrower's home - loan proceeds wholly paid to third party - whether contracts "unjust" within Contracts Review Act 1980 - consideration of various factual matters relevant to s.9 criteria

LEGISLATION CITED : Contracts Review Act 1980, ss.7, 9

Elkofairi v Permanent Trustee Co Ltd (2003) 11 BPR 20,841 Jones v Dunkel (1959) 101 CLR 298 CASES CITED : Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 West v AGC (Advances) Ltd (1986) 5 NSWLR 610 Wilton v Farnworth (1948) 76 CLR 646

PARTIES : No Fuss Finance Pty Limited - Plaintiff Danielle Therese Miller - Defendant

COUNSEL : Mr M.W. Young - Plaintiff Mr D. Gasic - Defendant

SOLICITORS : Bransgroves Mortgage Solicitors - Plaintiff A.R. Walmsley & Co - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2834/05 NO FUSS FINANCE PTY LIMITED v DANIELLE THERESE MILLER JUDGMENT 1 The plaintiff, which trades under the name "Short Term Lenders", is a company that has been engaged in the business of providing short-term loans since October 2000. By its amended statement of claim filed in court on 4 April 2006, it seeks an order for possession of a property at 7 Marie Close, Bligh Park in consequence of default in respect of a secured loan made by it to the defendant, Danielle Therese Miller. The plaintiff also seeks an order against the defendant for the repayment of the principal sum of $190,000.00, plus interest. 2 It is common ground that a deed of loan was concluded on 19 May 2004 and that the defendant granted a mortgage in registrable form over the Bligh Park property to secure payment. She has been the registered proprietor of the property for some years. It is her home and substantially her only asset. The mortgage was registered on 20 December 2005 as number AB619817. The deed of loan or loan agreement required the defendant to repay the principal on 19 August 2004, that is, three months after the loan was advanced. The defendant did not do so and that sum, together with interest, remains unpaid. 3 The contracted rate of interest is 72% (seventy-two percent) per annum. Interest for the three months term of the loan was $34,200 and interest continued to accrue thereafter at the rate of $11,400 per month. 4 A significant role in relevant events was played by Mr Garry Rampling. He is (or was) a property developer known to the defendant. She describes him as a friend of some 14 years' standing. I will return to give a fuller account of their relationship. It is the plaintiff's case that the defendant was borrowing the money so that she could supply Mr Rampling with funds to assist with the purchase of a property at Queenscliff which he intended to redevelop. The money was paid by the plaintiff, as lender, direct to Mr Rampling. There is no evidence of any formal agreement between the defendant and Mr Rampling in respect of this sum. 5 The plaintiff claims that the defendant entered into an arrangement with Mr Rampling knowingly and in the capacity of an investor. The defendant's position, however, is that she did not understand what was going on and that she was induced to enter into the contracts with the plaintiff while in a position of disadvantage or disability. She says this resulted from factors including the nature of her relationship with Mr Rampling, which involved a high degree of trust on her part; her ignorance of various material facts concerning the form and provisions of the mortgage documents; a lack of education and experience in providing security; and a lack of opportunity to obtain independent financial or legal advice on the transaction and its consequences and effect upon her. She says that at all times the plaintiff was aware or should have been aware of her lack of comprehension and that it nevertheless pressed its resultant advantage, so that her participation and consent in the conclusion of the agreement should be vitiated. She also claims that conduct on the part of Mr Rampling and the plaintiff's principal representative, Mr George Zajakovski, separately or together, otherwise amounted to pressure falling within the general and statutory definitions of undue influence or unconscionable, misleading or deceptive conduct. 6 The defendant's contention is that the plaintiff may not rely on the loan agreement and the mortgage because they were a unjust within the meaning of s.7 of the Contracts Review Act 1980; b unjust within the meaning of s.70 of the Consumer Credit (New South Wales) Code; c unconscionable within the meaning of s.51AA, s.51AB or s.51AC of the Trade Practices Act 1974 (Cth); d unconscionable within the meaning of s.12CA, s.12CB, s.12CC or the Australian Securities and Investments Commission Act 2001 (Cth); e unconscionable within the meaning of s.43 of the Fair Trading Act 1987; f obtained as a result of misleading or deceptive conduct within the meaning of s.42 of the Fair Trading Act 1987; g obtained as a result of misleading or deceptive conduct and/or false or misleading representations within the meaning of s.52 and s.53, respectively, of the Trade Practices Act 1974 (Cth); h unjust or unconscionable in equity; i obtained as a result of undue influence or pressure at general law. 7 The defendant filed a cross-claim against Mr Rampling. But, despite reasonable efforts, she has been unsuccessful in locating him and he has not been served. The cross-claim is therefore not pressed. There is no cross-claim by the defendant against the plaintiff but the following agreed position was reached towards the end of the trial: "HIS HONOUR [to counsel for the defendant]: What outcome are you contending for?

GASIC: I would like that the judgment be for Ms Miller and the mortgage to be set aside.

HIS HONOUR: Where is that claim, or don't you need it?

GASIC: My submission is, that if we establish that there was unconscionable conduct or undue influence or there was any procedural fairness [scil. 'unfairness'] falling under the unconscionable umbrella, that that is the form available to your Honour.

HIS HONOUR: You would say that the matters you are putting in defence would deny the right of the plaintiff to have judgment for the money and possession of the land?

GASIC: That the lender deliver to the borrower a discharge of the mortgage in registrable form.

YOUNG: Those matters are not actually raised on the pleadings. But, certainly, if the plaintiff failed in this case, on the basis the mortgage was found to be unenforceable by reason of the matters in the defence, effectively, the consequence is that the mortgage would be worthless, and there is some ancillary order about having it discharged, I do not think there would be any resistance.

HIS HONOUR: Thank you." 8 I will therefore proceed with a consideration of the effect that the various matters raised in the defence will have upon the plaintiff's claim for relief. Mr Young of counsel submitted on behalf of the plaintiff that the various grounds have a largely similar operation and that the legal tests necessary to establish injustice or unconscionability in each case are, in general terms, the same, with minor variations in scope of application. With the exception of some argument directed towards the applicability of the Consumer Credit Code, none of the individual grounds was developed in submissions in any specific detail that would differentiate one from the other. 9 I should refer to the defendant's background and circumstances. The defendant is 50 years of age. She was educated at Blacktown Girls High School and the Holy Family High School at Marayong where she completed her Year 10 School Certificate. She completed about six months of Year 11 studies and then, in or about 1972, left school aged 16 to work for the Commonwealth Bank as a general clerk in administration. She remained in this job for about 10 or 11 years. She performed various duties over the course of her employment including data entry, switchboard operation, some counter enquiries, processing of dishonoured cheques, reprographics work and eventually processing of foreign currency transactions and travellers cheques. 10 In the course of her employment at the Commonwealth Bank, the defendant met Mr Dail Miller, who was also employed by the Bank. They married on 21 March 1982 and purchased a home together. They obtained a mortgage loan to do so. The marriage lasted until 1995. The defendant and Mr Miller separated in 1995 and were divorced in 1996. 11 The defendant has three sons from her marriage: Damien, 21, Donovan, 19, and Dean, 16. Donovan and Dean presently reside with the defendant at her home at Bligh Park.

12 The property settlement between the defendant and Mr Miller involved the sale of the former matrimonial home. The defendant applied the net proceeds of this sale, which came to about $80,000, towards the purchase of the Bligh Park property in September 1996. The purchase price was approximately $145,000. The defendant and Mr Miller disagree in their evidence on whether the whole of the proceeds were applied in this way or whether the proceeds were split between them, but nothing turns on that. It is clear that the Bligh Park property was purchased by the defendant alone, to serve as her new home. Mr Miller did, however, help the defendant to secure finance to complete the purchase. This was done by way of a mortgage over the property in favour of AMP, executed by both Dail Miller and Danielle Therese Miller. They agreed that the defendant would be responsible for all repayments, which are presently about $700 per month. According to the defendant, Mr Miller continued to discuss certain financial matters with her in the period after 1995 on occasions when she is in need of assistance or advice. Mr Miller, on the other hand, denies this.

13 At the time she swore her primary affidavit, the defendant was earning about $300 per week as a house cleaner. She was also receiving $100 per fortnight in child support, $255 per fortnight in family payments, and a single parent's pension of $400 per fortnight. This added to a yearly income of around $35,230. However, with the advent of Dean's 16th birthday in or around October of 2005, Mrs Miller no longer receives the single parent pension. Apart from some $15,000 in savings she appears to have no assets of any appreciable value.

14 A brief history of the defendant's acquaintance with Garry Rampling is necessary. Ms Jennifer Maley had been the defendant's hairdresser and sometime touch football team mate since about 1991. At that time, Mr Rampling was Ms Maley's partner. They lived at North Richmond. The defendant cleaned their house regularly to earn some extra income and became acquainted with Mr Rampling through this job. 15 Ms Maley separated from Mr Rampling in or around 1999 and moved out of the North Richmond property. Mr Rampling continued to reside there and the defendant continued her cleaning services for him. Her contact with him, which had previously been seldom and intermittent, became more frequent. She says that she would have phone conversations with him about once a month and occasionally see him face to face. They would converse about each other's daily lives but never, according to the defendant, about business projects of any kind. She says that, based on this interaction, she considered him to be a friend from at least 1999 and a reasonably close one at that. 16 The defendant deposes that, in April or early May 2004 Mr Rampling called her at home and that a conversation to the following effect took place: "RAMPLING: Would you let me use your home for a business project? This is a once in a lifetime opportunity and I didn't want to see it slip. MILLER: Yes. But I don't know what that means, you do whatever needs to be done for your business. I don't know that side of business." 17 This response by the defendant encapsulates the essence of the defendant's evidence. She consistently professed an almost complete ignorance and lack of comprehension about loans and financial matters, and also an extremely trusting and generous attitude as regards favours done for those persons she considers to be her friends. The defendant says that nothing of a financial nature had ever been discussed between her and Mr Rampling before; neither had she ever been involved in any kind of secured borrowing (apart, no doubt, those associated with home purchases). Nonetheless, she says that she agreed to Mr Rampling's request with little to no deliberation or comprehension of what was actually going on.

18 A few days later, Mr Rampling came to the defendant's home to pursue the proposal. The defendant says that she was shown various papers and pictures related to the Queenscliff development. He described his intentions to the defendant in the following manner, according to her evidence: "RAMPLING: This is what I'm doing. I'm buying properties, doing them up and then reselling them. This project is on its way, it's already happening. What I'm doing now is buying a place at Queenscliff. I want to redevelop the site and resell them [sic]. I have invested heavily in a property at Fairlight and I need your home so that I can get a loan for the Queenscliff project. I have money coming in from Suncorp in six weeks. This is a once in a lifetime opportunity and I didn't want to see it slip." 19 Not long afterwards, Mr Rampling telephoned the defendant to request various documents in relation to the Bligh Park property, including papers concerning the existing mortgage to AMP, rates notices, and title details. The defendant duly assembled some documents and gave them to Mr Rampling. 20 Concurrently with these events, Mr Rampling was in touch with loan providers. One of these was the plaintiff. Mr George Zajakovski is one of two directors of the plaintiff. He gave evidence of a phone call that he received some time in mid-May of 2004 from Mr Rampling. Mr Rampling, according to Mr Zajakovski, called to enquire whether the plaintiff would provide a loan. He referred to the proposed involvement of the defendant and represented her as being an experienced investor looking to make a return from the proceeds of the development of the Queenscliff property. I quote from Mr Zajakovski's account of the conversation: "RAMPLING: [Emanuel Spanos, an employee at Sydney Home Loans] told me you specialize in short term loans. ZAJAKOVSKI: We do, as long as they are for business purposes, there is plenty of equity, and you need to have an exit strategy. RAMPLING: It's not for me, it's for one of my investors. Her name is Danielle Miller. ZAJAKOVSKI: What does she want it for? RAMPLING: She is investing in one of my developments. ZAJAKOVSKI: So she is going to use the money to invest with you? RAMPLING: Yes. ZAJAKOVSKI: What does she get out of it? RAMPLING: She will be getting a percentage of my profit on one of my property developments. This particular money is being used to pay the deposit on a property in Queenscliff. I need to exchange now because otherwise someone else will buy the site. Within the next month or so I will be completing a development and refinancing the construction funding with another lender. The pre-sales will allow me to borrow enough to repay Danielle Miller. ZAJAKOVSKI: What return will she be getting? RAMPLING: For the three months I will be able to offer her the equivalent of 120% per annum. ZAJAKOVSKI: Our rate is 6% per month which is 72% per annum. RAMPLING: She should be happy with that. I need to borrow from her $190,000 for the three months. How much will that cost her from you? ZAJAKOVSKI: It will cost $34,000 in interest. If you pay her 120%, which is $57,000 she will make a $22,800 profit. RAMPLING: She should be happy with that. ZAJAKOVSKI: Why don't you borrow the money from us directly yourself? RAMPLING: I don't deal with caveat lenders because I will have caveats over all my properties. ZAJAKOVSKI: Alright, how old is this woman? RAMPLING: She is about 45. ZAJAKOVSKI: Has she invested with you before? RAMPLING: Yes, she is an experienced investor. ZAJAKOVSKI: Well we will need to find out how much her property is worth to make sure she has the equity. RAMPLING: That's not a problem. ZAJAKOVSKI: Also you have to understand we have to cover ourselves. She will need a solicitor to explain the documents to her. I also want to interview her to make sure she knows what she is getting into and where the money is going. RAMPLING: That's not a problem, she is completely happy with everything." 21 Mr Zajakovski then conferred with Mr Emanuel Spanos of Sydney Home Loans (a business associated with the plaintiff) in relation to Mr Rampling's record as a developer. He says that, on the strength of the documents he reviewed, he formed the opinion that Mr Rampling was a reputable and successful developer and resolved to pursue the proposal he had introduced. Mr Gasic, counsel for the defendant, sought to question the thoroughness of Mr Zajakovski's assessment of Mr Rampling's record as a property developer but, in the end, I do not consider that matter significant. Mr Zajakovski had reasonable grounds on which to conclude that Mr Rampling had at least some experience in such matters. 22 It is, however, necessary to notice the way in which Mr Zajakovski was furnished with particulars about the defendant and her property. The plaintiff put into evidence facsimile correspondence sent by Mr Rampling to various people at both the plaintiff and Sydney Home Loans. The first relevant fax is dated 19 April 2004 and is addressed to Emanuel Spanos of Sydney Home Loans. It consists of a brief curriculum vitae of Garry Brian Rampling. In it, he provides contact details of his solicitor and accountant as follows: Solicitor: Herbert Weller Solicitor Contact - Herbert Weller 6 Bridge Street, Windsor NSW 2756 Tel; 02 4587 8688 Fax; 02 4587 DX; 8608 Windsor

Accountant: R L Goldspink & Co Contact - Richard Goldspink PO Box CC Newport Beach NSW 2106 Tel; 0411 7233 86 Fax; 02 9999 6467 23 This is relevant when it comes to considering a "Personal Particulars" document furnished to the plaintiff and referring to the defendant. It appears to be a form purportedly filled out by the prospective borrower, but bears no signature. The defendant's name, address and contact details appear on this document, along with the details of the Bligh Park property in a section titled "Property Offered as Security". In the section marked "Borrower's Contacts", the details of Herbert Weller, solicitor, and Richard Goldspink, accountant, have been filled in. 24 The defendant deposed to having had some dealings with Herbert Weller as a solicitor involved both in her divorce proceedings and in the purchase of her house in 1996. However, she said she had not had any dealings with him since then. She also said she had never heard of Richard Goldspink. 25 Mr Zajakovski was cross-examined on this document and accepted that the handwriting did not appear to be the same as that of the defendant on other documents. It is apparent that someone other than the defendant filled out this form instead of the defendant, inserting the details of Mr Rampling's solicitor and accountant. The "Personal Particulars" form shows evidence of having passed through several fax machines, one of them apparently being that of Mr Rampling's company, Essendon Constructions. I am satisfied that Mr Rampling played a part in the preparation of the document. I am also satisfied that the plaintiff took its contents wholly at face value, except by obtaining the rates notice for the Bligh Park property. 26 The next document is dated 19 April 2004. The following words appear on it: "Emanuel, In addition I have attached:- Rate Notice for 14 Fulton Place North Richmond and Notice of Valuation. The Rate Notice is in the name of my partner Jennifer Maley as is the property. Statement of Assets and Liabilities. Should you require any further financial information please contact me or my accountant." 27 The document bears no signature or sender's name but the address and the mention of Ms Maley as "my partner" show that the author is Garry Rampling. It may be inferred that he sent this in order to furnish Sydney Home Loans with details of his own personal assets in an earlier effort to secure loan financing for a venture that clearly did not involve the defendant. 28 The third item is dated 14 May 2004. It is a transmission from Essendon Constructions, Mr Rampling's company, addressed to "Tony Atana" (Mr Atanasovski, a director of the plaintiff). In it Mr Rampling sets out terms and sums of the proposed loan for confirmation. At no point is the defendant's name mentioned. 29 The fourth item is also dated 14 May 2004. It is a cover sheet which indicates that the rate notice and the loan statement for the Bligh Park property are attached, along with a statement of the market value of the property as being $360,000 - $380,000. Again, these documents came from Mr Rampling with no mention of the defendant. 30 The fifth item is dated the same day and addressed to Mr Zajakovski. It indicates that a "bank confirmation" is attached for a deposit on the loan of $1,000. It is clear on the evidence that the defendant did not pay any deposit at any point in the proceedings. The deposit was paid by Mr Rampling and Mr Zajakovski must be taken to have known this. 31 According to Mr Zajakovski's evidence, he arranged for the defendant and Mr Rampling to attend the plaintiff's offices at 71-75 Princes Highway, Kogarah on 19 May 2004. Loan and security documents had already been prepared. He says he "insisted" on two things. The first was that Mr Rampling attend with the defendant so that there could be certainty that both the defendant and Mr Rampling were in agreement with the transaction. Second, he insisted that the defendant attend the premises in person to verify her identity and also to receive legal advice, because he generally did not trust borrowers to obtain independent legal advice. 32 The defendant denies that she was ever personally contacted by Mr Zajakovski. She also says that at no stage before 19 May did anyone advise her that a lawyer would be involved or that it was necessary for her to obtain legal advice. It is consistent with the evidence of both parties that Mr Zajakovski was at that stage dealing only with Mr Rampling and that these requests were communicated to him. It is clearly because of those requests that, on or about May 18, Mr Rampling telephoned Ms Miller and offered to drive her to Kogarah the next day. 33 There are several factual disputes about the events of 19 May 2004. Before dealing with them, I should note that, before the defendant and Mr Rampling arrived at the meeting, Mr Zajakovski, on his account, had already arranged for cheques to be drawn in anticipation of signing of loan documents and advance of the loan (this is a matter to which I shall return). There were two bank cheques copies of which are in evidence, plus a third cheque which was apparently not a bank cheque. There can be no doubt that details of desired payees and amounts were given to Mr Zajakowski by Mr Rampling in advance of the meeting. The payees named in the bank cheques were persons to whom payments were due by Mr Rampling or his companies in connection with the Queenscliff project, plus a balance (by means of the third cheque) in favour of Mr Rampling's company, Essendon Constructions. 34 It is also necessary to note that loan, mortgage and associated documents (at least ten in number) had been prepared by Mr Zajakovski in advance. These had not been sent by the plaintiff to the defendant (or, for that matter, to Mr Rampling) in advance of the meeting on 19 May 2004. The defendant had had no opportunity to read and consider them or to seek advice on them beforehand. 35 As I have said, there are factual disputes about the events of 19 May 2004. The only evidence is that of Mr Zajakovski and the defendant. A factor in the resolution of factual differences is the defendant's demeanour at trial. She presented as being extremely timid, hesitant, confused, and almost childlike. In cross-examination, she responded to many questions by saying "I don't know" or falling silent for a period. 36 On the morning of May 19 2004, Mr Rampling, by arrangement, picked the defendant up from Wyong station. He informed her that Mr Zajakovski would need a copy of her council rates notice. They drove to the Bligh Park property where the defendant obtained her rates notice. They then drove to Kogarah, where they attended the offices of the plaintiff at 71-75 Princes Highway. 37 The defendant says she was briefly introduced to Mr Zajakovski and then, along with Mr Rampling, shown into an office or conference room, where she was introduced to Alex Attapallil, a solicitor. In her affidavit she states that she understood he was a solicitor from Lexes Lawyers, a Rockdale firm, and that she received his business card at the end of the meeting. In cross-examination, however, she denied that he had introduced himself as a solicitor or explained his role in the proceedings that day. She says that Mr Attapallil merely began, in her words, to "read out" a large number of documents to her without introduction or explanation. She sometimes said positively that he did not explain his role and what he was doing, and sometimes that she did not remember him doing so. She also says that to the best of her recollection he did not actually converse with her other than by reading documents aloud to her. In spite of this, she says she did not inquire as to his role because, in her words, she trusted Mr Rampling and Mr Attapallil as they were "professionals" or "businessmen" and "knew what they were doing" in contrast to herself. She says that she trusted Mr Rampling and feared Mr Attapallil and later Mr Zajakovski. 38 The fact of Mr Attapallil's presence at the plaintiff's premises is confirmed by Mr Zajakovski's evidence. He also confirms having arranged for Mr Attapallil to be there. Mr Zajakovski also says that Mr Attapallil and the defendant were together in a conference room from which Mr Zajakovski himself was absent. It is the defendant's evidence that Mr Rampling was in the conference room with Mr Attapallil and herself throughout the whole time they were there. Mr Zajakovski was vague and unsure about whether Mr Rampling went into the conference room with the defendant and Mr Attapallil. He did say, however, that when he later went into the conference room (or, perhaps, saw the others as they came out of it), Mr Rampling was there with the defendant and Mr Attapallil. On the balance of probabilities, therefore, I find that Mr Rampling was with the defendant and Mr Attapallil throughout the period they were together in the conference room away from Mr Zajakovski. 39 The only evidence of what was said and done in the conference room is that of the defendant. There is no evidence from Mr Rampling. On the basis of evidence about the unsuccessful attempts to serve him with the cross-claim (showing that, despite reasonable efforts, he could not be located), I am satisfied that neither party can be criticised for failing to call him. But the same conclusion cannot be reached in relation to the absence of evidence from Mr Attapallil. 40 Mr Attapallil's attendance at the plaintiff's office on the day in question was, as I have said, arranged by Mr Zajakovski. It was his intention that Mr Attapallil should provide legal advice to the defendant. However, Mr Zajakovski's motive was related to the welfare of the plaintiff and only in a purely incidental way to that of the defendant. In other words, he was concerned with the defendant's welfare only because (and to the extent that) protection of her welfare served the interests of the plaintiff and, it was apprehended, would, from the plaintiff's perspective, avoid possible consequences adverse to the plaintiff. 41 Neither party called Mr Attapallil. There is no suggestion that he was not available. Indeed, there was evidence at trial that he continued in practice as a solicitor at Rockdale. Faced with the matters raised in the defendant's defence, the plaintiff ought logically have called in aid in reply the fact that Mr Attapallil had given legal advice to the defendant. There may have been an apprehension that any such attempt would be met by a claim that the communications between Mr Attapallil and the defendant were privileged, so that there was no point in persisting with the attempt. But, on the evidence, Mr Rampling was also present (so that privilege could not attach) and the defendant, in her affidavit, had already disclosed her recollection of what passed between her and Mr Attapallil. The plaintiff should therefore not have seen the possibility of a claim for privilege as an obstacle (or, at least, an insurmountable obstacle) to the calling of Mr Attapallil. 42 It is therefore open to me to have regard to the plaintiff's failure to call Mr Attapallil when I come to the question whether the plaintiff has made out its case: Jones v Dunkel (1959) 101 CLR 298. This, coupled with the defendant's evidence that Mr Attapallil really did no more than read out long passages from documents that she did not understand, leave me in a position where I cannot find that Mr Attapallil gave the defendant an explanation of the meaning and effect of the documents she was about to sign and of the implications of the transaction as it affected her. 43 That leads to the question of the defendant's understanding of the transaction and what it meant for her. 44 The defendant says that she had had no understanding of the function of any of the documents, although she says she knew that they were somehow important and that they involved her and her house in some way, but that she thought it was not important for her to understand what was going on. She says that her understanding was that she was giving permission for Mr Rampling to use her house for whatever it was that he was doing in relation to property development. She also knew that there was a loan being taken out, but that she thought Mr Rampling was the borrower. She says that at no time did she ever form in her mind a connection between the "loan" of her house and the loan she thought was being made to Mr Rampling. She professed at trial not to have ever turned her mind to the question of why her house was necessary to the loan agreement at all, at least until well after that day. She did, however, express a strong opinion that if she had known that she was borrowing money then she would not have entered into the agreement. 45 The defendant must have made some connection in her mind between her house and a loan of money. She had a general idea of what a mortgage was and, having made regular repayments on the mortgage of her home over a long period, must be taken to have understood the consequences of default. She says that she did not ever think that that was the nature of the transaction. She proceeded to sign and initial a number of documents. I think it unlikely that a person, even one who was merely doing what she was told, could put their name to so many without once encountering the word "borrower" or "mortgagor" in very close proximity to the space reserved for signature. 46 On her own evidence, the defendant had a reasonable apprehension of some kind of negative consequence that might affect her as a result of the agreement. She says in her affidavit that when Mr Attapallil was reading out the documents, she did in fact note that the words "borrower" and "lender" were being used frequently and that Mr Rampling's name was not coming up in connection with them. She then says that she became frightened and consulted Mr Rampling, saying: "Are you sure about this, this sounds scary?" 47 She says that Mr Rampling proceeded to reassure her that everything would be "fixed up" in six weeks, and spurred on by this reassurance, she signed. The only inference that can be drawn from that evidence is that she knew there was a loan being negotiated, and if Garry Rampling's name was not being mentioned, then the only reason she would have cause for concern was that at least the possibility of her own involvement in the loan, however imperfectly grasped, must have been in her mind. 48 I am of the opinion that, when the defendant said, "This sounds scary", she was not frightened in the way that she says she is when she does not understand something, but rather that she was actually apprehensive that she might suffer some kind of liability or loss. This is the more natural and understandable reaction to a situation of this nature. I have difficulty, in all the circumstances, in accepting that when faced with the proposition of "lending" her home in some way to Mr Rampling or for his benefit the defendant would, precisely because she did not understand, agree and proceed with the transaction by signing so many documents. That is an extraordinary course of action. Accordingly, I find that she understood enough about the transaction to form an apprehension that there was some kind of risk involved for her; but that she decided to take that risk based on the assurances of Mr Rampling. 49 The subsequent events of that day are also contentious. Mr Zajakovski's account stands in total opposition to that of the defendant. His evidence is that when Mr Attapallil had finished his meeting with the defendant in the conference room, Mr Zajakovski had a conversation with the defendant, Mr Rampling and Mr Attapallil. According to Mr Zajakovski's account of this conversation, the defendant appeared quite informed and indeed somewhat relaxed. At paragraph 27 of his affidavit he gives the following account of the conversation which, he says, took place in the conference room: "ME: My name is George, I represent the lender.

ME: Danielle, the reason that I asked you to come here today is because I represent the lenders and I need to make sure you really are you and that you understand what your doing, that you want to do it.

DANIELLE: Yes, here it is. [I took her driver's license and photocopied it with two bank cheques which I had obtained earlier in the day].

ME: Has Mr Attapallil explained the documents to you.

ATTAPALLIL: She knows what the documents are all about.

ME: So you realize you are giving a mortgage over your house?

ME: The loan is for $190,000 with an interest rate of 72% per annum which is $11,400 per month. That means the loan will cost you $34,200 for the three month term.

DANIELLE I understand, I might invest some money with you MILLER: next time.

DANIELLE I am investing it with Gary [she nodded towards MILLER: Gary Rampling].

GARY: I am using it for a deposit and related expenses on a development site at Queenscliff. I am refinancing another property and I will be able to repay Danielle in the next couple of months.

ME: Danielle, what is going to happen if Gary has financial difficulties and cannot pay.

DANIELLE Gary is a very experienced developer, we have MILLER known each other for a long time. I am certain he will be able to repay the money.

ME: What I am getting at is that do you realize you are taking a risk. Developers are not perfect and make mistakes if Gary goes belly up we will be looking for you to repay the money. That will mean you will have to refinance your property and pay out our loan.

DANIELLE I understand. However I am comfortable that he MILLER: knows what he is doing and I am getting a very good return from this.

ME: Danielle Gary told me you owe $20,000 on your mortgage to AMP. Did you bring your original statements?

DANIELLE Yes, I did here it is. MILLER:

ME: Thank you I will make a photocopy now. [I made a photocopy]

ME: OK. Well I have drawn two bank cheques for the loan in accordance with Gary's directions. There are going to be: Helen Jane Warren and Katherine Louise Phillips $53,250 Beswick Solicitors $53,250

DANIELLE Who are they for? MILLER

GARY That is the vendor of the Queenscliff property and RAMPLING: their solicitors.

ME: And there is also a cheque here made payable to Gary's company which is Essendon Constructions for $52,287.50. Are you happy for him to receive that?

DANIELLE That's the balance of my loan to Gary. MILLER:

ME: Ok, well I would like you to sign a photocopy of the cheques to certify that you got them today and then handed them on to Gary. [I gave her the photocopy of her driver's license with the two bank cheques].

ME: Please write in your own hand: "Received in full the above two bank cheques and the balance of my loan $52,287.50 made payable to Essendon Constructions is being used for business purposes" and then sign it. [she did] Alex can you please witness her signature.

ATTAPALLIL: Ok [he signed the document]" 50 The defendant deals with this very briefly in her affidavit: "Paragraph 27. I deny the conversation ever occurred as alleged. George [Zajakovski] never entered the conference room apart from leading Gary [Rampling] and I into the office." 51 The matter of what happened after the defendant, Mr Rampling and Mr Attapallil had finished in the conference room was traversed in the cross-examination of both the defendant and Mr Zajakovski. 52 Mr Zajakovski was ultimately unclear about the exact location of the subsequent conversation, that is, the conversation recounted in paragraph 27 of his affidavit. In cross-examination he adhered to his version of the conversation and accompanying events, including the handing over of bank cheques and the writing and signing of an acknowledgment of receipt by the defendant. When I say that Mr Zajakovski was unsure about the exact location of the conversation, I am speaking only of location within the plaintiff's premises (that is, whether it was in the conference room or elsewhere). The defendant, by contrast, says that the cheques were handed over and the acknowledgment written and signed at a branch of the Commonwealth Bank to which she and others walked from the plaintiff's premises. She says that they went upstairs in the bank (not to the banking chamber) and that the events happened there. There was evidence that Mr Attapallil's office is on an upper floor of a building in Rockdale some 1.3 kilometres along Princes Highway from the plaintiff's premises and that there is a Commonwealth Bank branch on the ground floor of that building. 53 In the course of her cross-examination, the defendant was taken through paragraph 27 of Mr Zajakovski's affidavit. The separate elements of the conversation and events deposed to by him were put to her one by one. She gave 23 outright negative answers; twelve answers, "I don't think so" (or equivalent); twelve answers, "I don't know" (or equivalent); and two answers, "I don't recall". Some aspects were accepted by her, but not as to location. She accepted that Mr Zajakovski asked her for her driver's licence and photocopied it, but says that happened at "the other office" (the one above the Commonwealth Bank). She also accepted that she wrote in her own hand and signed the acknowledgment of receipt. This also took place at "the other office", according to the defendant. 54 The acknowledgment of receipt is in evidence. It bears the defendant's signature. I am satisfied that it was signed by the defendant at Mr Zajakovski's request. It is in the following terms: "Received in full the above two bank cheques and the balance of my loan $52,287.50 made payable to Essendon Constructions is being used for a business transaction."

The paper on which this appeared carried photocopied images of two bank cheques. One is for $53,250.00 in favour of a solicitor and the other for the same sum in favour of persons acknowledged to be the vendors of the Queenscliff site. 55 It is common ground that Mr Zajakovski dictated words to the defendant and that she wrote those words, although, as she says, with a modification. She says that the dictated version contained the words "for my own financial gain" but she did not include those words because they did not correspond with her understanding of what was happening. 56 In relation to the creation and signing of the acknowledgment, the defendant said in her affidavit that Mr Rampling was standing next to her when she was asked to write and that she "felt intimidated". The cross-examination on that was as follows: "Q. You are not suggesting that Gary was intimidating you on that occasion, are you? A. I felt intimidated by the whole situation.

Q. But no-one was acting towards you in an intimidating fashion, were you they? A. They were telling me what to do and I didn't understand what I was doing, so I felt intimidated. I just...

Q. So, it wasn't so much about what anybody else was doing, it was that you felt within yourself intimidated, is that right? A. I didn't understand and they were just telling me what to do." 57 The defendant's denial of part of the spoken words attributed to her by Mr Zajakovski was backed up by statements that she does not "speak like that". I quote again from the cross-examination: "Q. You said: 'I understand, however, I am comfortable that he knows what he is doing and I am getting a very good return from this.'; you said that, didn't you? A. No, sir. I do not even speak like that.

Q. I am not suggesting you necessarily used these exact words but that you used, you said something similar to that even if you used different words? A. No.

Q. What sort of words do you say you did not use? A. I didn't use any words.

Q. What about the words that I put to you before. You say you would not speak like that, were there some particular words in what I read that you say you would not have used?

WITNESS: I wouldn't speak like that. I wouldn't say, 'I am investing', or 'returns', or whatever. I wouldn't do that.

YOUNG: Q. But you were familiar with words like "investment" and 'return', were you not? A. It is not something that I use, no. I don't invest. I don't.

Q. You never talked to anyone at your 10 years at the bank about investments or returns? A. I don't even know what returns are.

Q. So, your husband, or your ex-husband now, the lending manager and financial adviser, he never talked to you about returns or investments at any stage in the course of your marriage? A. Not really, no. I don't think so. It is not...

Q. You are pretending, aren't you, that you know far less about money than you really do; that is the case, isn't it? A. No, it is not." 58 Because of the widely divergent accounts of the conversation between Mr Zajakovski and the defendant and its central importance to the proceedings, I am compelled to come to a conclusion as to which version should be accepted. In my opinion, I should accept the defendant's version and reject Mr Zajakovski's version. The main reason for this is that, on my observation of her in the witness box, the defendant is not a woman who would say the things Mr Zajakovski's version attributes to her. I have already described her as appearing "extremely timid, hesitant, confused, and almost childlike". It would have been quite contrary to her nature, as I observed it, to respond to Mr Zajakovski's alleged statement about the amount of the loan and the extremely high interest rate of 72% per annum in the confident and assured way he reports. I do not think that she would have said, "I might invest some money with you next time". I do not believe that she would have been assertive in that way or that she would have seen Mr Zajakovski as a potential recipient of investments. And she did not have any money to speak of available for investment, whether "next time" or at all. I also accept her evidence that it was not in her vocabulary to speak of "a very good return" in the investment sense. Nor am I satisfied that the defendant, having seen the cheques on the spot at the time, would have been able to say of the cheque for $52,287.50, in an apparently confident way, "That's the balance of my loan to Gary". All in all, the version to which Mr Zajakovski testifies exhibits a flow of words, mode of expression, apparent self-assurance and confidence and degree of comprehension quite foreign to both the defendant's evidence and her demeanour in the witness box. 59 On the question of credibility, one matter about the defendant's own evidence about events after she and Mr Rampling finished the meeting with Mr Attapallil needs to be considered. The defendant says that those events took place in part at the plaintiff's office and in part at another office upstairs at a Commonwealth Bank branch some distance away; and that she and others (she cannot remember precisely who) walked from one to the other. As I have already noted, the evidence shows that Mr Attapallil's office is above a Commonwealth Bank branch at Rockdale, distant about 1.3 kilometres from the plaintiff's premises in Kogarah. I was invited to infer that the defendant (and perhaps others) were unlikely to have walked that far; also that there was no need for anyone to go to Mr Attapallil's office in any event. 60 I have referred to Mr Zajakovski's evidence that two bank cheques to advance the loan had been prepared before the defendant and Mr Rampling arrived at the plaintiff's premises. The defendant's evidence is that she did not recall them being there in advance. Indeed, it might be thought curious that Mr Zajakovski should go to the trouble of obtaining bank cheques for an aggregate of more than $100,000 (thereby outlaying that sum to the bank) before even meeting the borrower - let alone obtaining her signature on any documents. An affidavit of Ms Malakovski, an officer of the Commonwealth Bank, establishes that the bank cheques were issued at the Rockdale Branch. Mr Attapallil's office is on an upper floor of the building housing the Rockdale Branch. The bank cheques were photocopied on to the paper on which the defendant later wrote the form of acknowledgment of receipt. It is thus quite believable that the defendant and others went from the plaintiff's premises to the building in which the Rockdale Branch and Mr Attapallil's upstairs office are situated, that the plaintiff there obtained the issue of the bank cheques (having by then had the various documents signed by the defendant) and that Mr Attapallil's office was then made available for the purpose of preparation of the form of acknowledgment (on paper on to which the bank cheques and the defendant's driver's licence were photocopied) and subsequent signing of it by the defendant. In summary, there is a degree of plausibility and logic to the defendant's account of the relevant events that consolidates the conclusion that Mr Zajakovski's version should be rejected. 61 Finally on this, there is again the significance that Mr Attapallil was not called by the plaintiff. On Mr Zajakovski's account, Mr Attapallil was present during the conversation related at paragraph 27 of his affidavit. The affidavit refers to things said by Mr Attapallil. But the plaintiff made no attempt to obtain corroboration from Mr Attapallil. 62 Because I reject Mr Zajakovski's version of his conversation with the defendant, I must also treat his other evidence with reserve, except where it coincides with the defendant's evidence. I accordingly approach with considerable caution his account of the conversation with Mr Rampling set out at paragraph [20] above. I must proceed on the basis that a conversation in those terms may not have occurred. 63 I pause at this point to state findings as follows:

1. The defendant is a woman of reasonable intelligence who was educated to Year 11 standard and then worked in a bank for ten years. While her functions in the bank did not directly concern lending, she cannot but have gained some basic knowledge of the concepts involved in loans and mortgages. In addition, she herself had been party to borrowing and the granting of mortgages on earlier occasions related to purchase of homes.

2. The defendant willingly became party to the concept that she should "lend" her house to assist Mr Rampling in connection with a business venture. She regarded him as a friend and was happy to help him.

3. The Bligh Park property - her home - was substantially the defendant's only asset. She had a very modest income and a small amount in savings. 4. When taken by Mr Rampling to the plaintiff's premises at Kogarah on 19 May 2004, the defendant knew that she was going there to become party to the arrangement that involved her "lending" her house for Mr Rampling's benefit. He had told her that the purpose of the visit was "to sign papers".

The defendant had not, however, had any advance contact with Mr Zajakovski or anyone else associated with the plaintiff. All information required by the plaintiff had been supplied by Mr Rampling. This included information about the defendant, her property and her circumstances. The plaintiff did not take steps to verify any of the information, except by sighting the rates notice for the Bligh Park property.

The documents to be signed by the defendant had not been made available to her in advance of the 19 May 2004 visit, whether in draft or in final form. She had had no advance opportunity to read them or to seek legal or other advice in relation to them. Furthermore, the way in which the loan was to be advanced had been notified by Mr Rampling to Mr Zajakovski in advance of the meeting.

Mr Attapallil, a solicitor, was asked by Mr Zajakovski to attend on 19 April 2004 for the specific purpose of giving the defendant legal advice.

Mr Attapallil, whom the defendant had never met before, spoke with the defendant about the loan and mortgage documents. Mr Rampling was present with the defendant and Mr Attapallil at the time. Neither Mr Zajakovski nor anyone else associated with the plaintiff was present.

I cannot conclude that Mr Attapallil gave the defendant a full and accurate or comprehensive (or even satisfactory) explanation of the substance and effect of the documents, but I have no hesitation in finding that he did refer on several occasions to "borrower" and "lender" and read out parts of the documents to her. I have no basis on which to find that such explanation as Mr Attapallil may have given was such that it should have caused the defendant to have any kind of reasonably informed appreciation of the commitments she was undertaking.

The defendant signed the loan and mortgage documents in Mr Attapallil's presence. No one spoke words of compulsion or command or otherwise expressed verbal inducements that could have operated to overbear any unexpressed wish of hers not to sign. The words "borrower" and "mortgagor" appeared very near places in which she signed and she saw those words. The defendant did, however, have a general feeling of being intimidated and overwhelmed by the whole of the surrounding circumstances. She also expressed reservations to Mr Rampling ("… this sounds scary") and received reassurance from him.

The defendant knew that the transaction with the plaintiff involved a loan of money. She accordingly appreciated that someone would be in a position where they became indebted to the plaintiff.

Although the defendant maintains that she thought the person indebted to the plaintiff would be Mr Rampling, she knew that she was herself incurring liability and exposure. It is this that caused her to express apprehension on her own account ("… this sounds scary") and to seek reassurance from Mr Rampling.

The defendant's appreciation of the meaning of "loan" conditioned not only her understanding of the need for money outlaid by the plaintiff to be repaid but also her understanding that a "loan" of her house for Mr Rampling's benefit entailed risk for her. She knew that someone who makes a "loan" (whether of money, a house or anything else) runs the risk that the person to whom the "loan" is made will not give the subject matter back when required to do so.

The defendant knew that Mr Rampling was the key to her getting her house back. When she expressed apprehension ("Are you sure about this, this is scary?"), it was he who gave her the reassurance that everything would be "fixed up" in six weeks. It was on the strength of that reassurance given by him that she went ahead and signed.

Actual advance of the loan moneys - by way of bank cheques payable to persons nominated by Mr Rampling and a third cheque payable to his company - occurred after the signing of the loan and mortgage documents by the defendant. On the balance of probabilities, this happened at Mr Attapallil's office above the Commonwealth Bank at Rockdale.

At the time the loan moneys were so advanced, the plaintiff complied with Mr Zajakovski's oral request that she write out and sign a form of acknowledgment in words given to her by him. She had sufficient presence of mind, independence of thought and understanding of the circumstances to act on her own initiative to omit certain of the words he asked her to write but which she thought did not serve her interests. She did so in order that the words as written should more accurately reflect her appreciation of the situation - which was that she was accepting a financial commitment not for her own benefit but for the benefit of Mr Rampling.

The defendant did not, on the occasion of the advance of the loan and the preparation and signing of the acknowledgment act in the knowledgeable and self-assured manner portrayed at paragraph 27 of Mr Zajakovski's affidavit. The defendant is, by nature, timid, hesitant and unsophisticated. 64 In assessing these findings, I start with a proposition stated by Latham CJ in Wilton v Farnworth (1948) 76 CLR 646 at p.649: "In the absence of fraud or some other of the special circumstances of the character mentioned, a man cannot escape the consequences of signing a document by saying, and proving, that he did not understand it. Unless he was prepared to take the chance of being bound by the terms of the document, whatever they might be, it was for him to protect himself by abstaining from signing the document until he understood it and was satisfied with it. Any weakening of these principles would make chaos of every-day business transactions." 65 That passage was the subject of the following observation of Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at pp.180-181: "It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents, as Latham CJ put it, whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it." 66 In the present case, I must accordingly start from the position that, even if the defendant did not read or did not understand the documents she signed, she must be taken to have shown a willingness to take the chance of being bound by the contents; and that she will be so bound unless it can be seen to be unjust (within the Contracts Review Act) or unconscionable (within the contemplation of remedial legislation or according to general equitable principle) for the plaintiff to hold her to her bargain. 67 In considering whether any such vitiating elements may be found, the first matter to consider is whether the defendant acted under some kind of pressure from Mr Rampling. The evidence shows that he was a friend of the defendant's, that she trusted him, that she was willing to help him for the sake of friendship, that he was the person with the real need for money; that his need was urgent; that he made the approaches to the plaintiff and its associated entity Sydney Home Loans; that it was he, not the defendant, who gave to the plaintiff the particulars it needed about the defendant and her property; that he supplied the name of his own accountant as the accountant for the defendant; that he made the appointment to go to the plaintiff's office on 19 May 2004; that he was with the defendant at all times when Mr Zajakovski dealt with her on that day; that he was also present when Mr Attapallil spoke to the defendant about the documents; that he gave the defendant re-assurance when she said, "This sounds scary"; and that he received the whole of the loan proceeds from the plaintiff - or, at all events, that the proceeds were advanced by means of cheques drawn as Mr Rampling specified (including to his own company). 68 Because I do not accept Mr Zajakovski's account contained in paragraph 27 of his affidavit, I have no evidence of the defendant's having represented herself to him as party to an arrangement between herself and Mr Rampling involving on-lending by her to him. On the defendant's evidence, there was no such arrangement as she did not consider herself to be borrowing money. Mr Zajakovski was apparently led by Mr Rampling to think that he had such an arrangement with the defendant. But the defendant, on her account, thought Mr Rampling was the borrower and that she was merely "lending" (in some undefined way) her house. The interest alone for the three months term of the loan (some $34,200) was roughly equivalent to what Mr Rampling knew to be the defendant's annual income from her work as a house cleaner. 69 The evidence given by Mr Zajakovski sought to portray the situation as one in which the defendant was taking a calculated risk of making from Mr Rampling's development project a short-term return that would leave her with a profit after payment of the principal and interest to the plaintiff. Because I do not accept the account in paragraph 27 of Mr Zajakowski's affidavit, I have no evidence of the defendant having expressed herself to be of that mind. Given her circumstances and what appears to be a simple way of life - coupled with the fact that she thought she was merely "lending" her house - there is no basis for concluding that she made any such calculated decision. And, as it appears, Mr Rampling's development never produced any return that could have provided profit to the defendant. It was a failure and fell into disarray shortly after the events with which I am concerned. What really happened was that Mr Rampling took unfair advantage of the defendant by causing her, out of friendship, to hazard her home (and only asset of substance) in a way which, as he must then have known, entailed no benefit to her and exposed her to the risk of serious loss. 70 I turn next to the position of the plaintiff - effectively, Mr Zajakovski. He knew that Mr Rampling was not only the arranger of the loan to the defendant but also the source of all the information about the defendant and her affairs given to the plaintiff in connection with the transaction. It was Mr Rampling, not the defendant, who told Mr Zajakovski of the supposed rationale for the defendant's borrowing $190,000 for three months at the extremely high rate of 72% per annum, representing a cost of $34,200. On my findings, the defendant never gave Mr Zajakovski any reason to believe that she was knowingly and willingly taking the risk involved in the transaction. Mr Zajakovski must have known, when he eventually met her, that she was a timid and unsophisticated person. That, coupled with the fact that all dealings had been with Mr Rampling who, as Mr Zajakovski knew, was to be the real beneficiary of the plaintiff's loan to the defendant, should have instilled in Mr Zajakovski a sense of caution. Mr Zajakovski knew that Mr Rampling was not, from the defendant's perspective, a friend committed to looking after her interests. He was - and must have been seen to be - a person with interests directly in conflict with those of the defendant and whose apparent attempts to help the defendant obtain the loan should have been seen at once for what they were, namely, selfish actions of Mr Rampling to ensure that money flowed to himself with the aid of a mortgage of the defendant's home. 71 Mr Zajakovski gave evidence of having made inquiries that led him to the view that Mr Rampling had had some success in property development projects. Even if that were so, it would not change the reality to which I have just referred, namely, that Mr Zajakovski must have been aware that Mr Rampling was, as it were, orchestrating for his own purposes a transaction that put the defendant at risk in respect of a loan which, having regard to the amount and the extremely high rate of interest, represented an extraordinarily onerous burden for a person in her circumstances. 72 It is also of particular relevance that the transaction was rushed. Before the defendant arrived at the plaintiff's Kogarah premises on 19 May 2004, she had seen no document concerning the transaction. She had not been given any letter of offer or terms sheet. She had received no summary - in "plain English" or otherwise - of what was to be achieved by the transaction or what her exposure and commitment would be. When she arrived with Mr Rampling at the plaintiff's office, she was presented with a quantity of legal documentation and guided through the process of signing. The defendant had no opportunity to read any of the documents. She could not take them away and study them at leisure or ask a friend or adviser about them. She had no such opportunities because the plaintiff did not offer them to her. Mr Zajakovski was content to see the defendant play out a submitting and docile role in a plan which, as he well knew, had been formulated by Mr Rampling to obtain money that he needed. 73 Then there is the matter of the advice supposedly given by Mr Attapallil. The defendant says that he merely read out a lot of words which included "borrower" and "mortgagor" which she thought referred to Mr Rampling who, on my findings, was with her throughout the meeting with Mr Attapallil. The plaintiff, having failed to obtain any evidence from Mr Attapallil despite the absence of any apparent reason not to seek to do so, cannot seek to repair the effects of Mr Zajakovski's actions to which I have already referred by falling back on the proposition that the defendant was adequately advised by Mr Attapallil. With the evidence as it is, I cannot make any such finding. The most that can be said is that the plaintiff, without any request from the defendant and with a view to its own protection, took steps to make a solicitor available on the day and that that solicitor spoke with the defendant together with Mr Rampling, a person whose interests were in conflict with those of the defendant. 74 Mr Zajakovski took pains to obtain a written acknowledgment from the defendant. He wanted her to say in her own writing not only that she had received the loan proceeds for use "in a business transaction" but also that this was for her "own financial gain". This aspect of the events showed that the plaintiff was concerned to arrange matters in such a way that they appeared on paper to be the produce of informed and calculated decision-making by the defendant, whether or not that was in fact the case. 75 I proceed to an assessment of the matter from the perspective of the Contracts Review Act. I have already completed the first of the three stages referred to by Basten JA in Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41 as necessary in considering cases under s.7 of that Act. That first stage entails making findings of fact as to the circumstances revealed in the evidence. The second step is, in his Honour's words (at [107]), "a finding that a contract or a provision of a contract is 'unjust'" - which entails the court making "an evaluative judgment as to whether the facts as found satisfy a statutory description which in turn engages a discretionary power". I pause at this point to set out relevant provisions of the Contracts Review Act. Section 7 is as follows: " Principal relief

(1) Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following: (a) it may decide to refuse to enforce any or all of the provisions of the contract, (b) it may make an order declaring the contract void, in whole or in part, (c) it may make an order varying, in whole or in part, any provision of the contract, (d) it may, in relation to a land instrument, make an order for or with respect to requiring the execution of an instrument that: (i) varies, or has the effect of varying, the provisions of the land instrument, or (ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the land instrument.

(2) Where the Court makes an order under subsection (1) (b) or (c), the declaration or variation shall have effect as from the time when the contract was made or (as to the whole or any part or parts of the contract) from some other time or times as specified in the order.

(3) The operation of this section is subject to the provisions of section 19." 76 In determining whether a contract or provision is of the nature contemplated by s.7(1), the court must, in accordance with s.9(1) of the Act, have regard to the public interest and all the circumstances of the case. The court is directed by s.9(2) to have regard to certain specific matters to the extent that they are relevant to the circumstances. Section 9 is in these terms: " Matters to be considered by Court (1) In determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the Court shall have regard to the public interest and to all the circumstances of the case, including such consequences or results as those arising in the event of: (a) compliance with any or all of the provisions of the contract, or (b) non-compliance with, or contravention of, any or all of the provisions of the contract.

(2) Without in any way affecting the generality of subsection (1), the matters to which the Court shall have regard shall, to the extent that they are relevant to the circumstances, include the following: (a) whether or not there was any material inequality in bargaining power between the parties to the contract, (b) whether or not prior to or at the time the contract was made its provisions were the subject of negotiation, (c) whether or not it was reasonably practicable for the party seeking relief under this Act to negotiate for the alteration of or to reject any of the provisions of the contract, (d) whether or not any provisions of the contract impose conditions which are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the contract, (e) whether or not: (i) any party to the contract (other than a corporation) was not reasonably able to protect his or her interests, or (ii) any person who represented any of the parties to the contract was not reasonably able to protect the interests of any party whom he or she represented, because of his or her age or the state of his or her physical or mental capacity, (f) the relative economic circumstances, educational background and literacy of: (i) the parties to the contract (other than a corporation), (ii) any person who represented any of the parties to the contract, (g) where the contract is wholly or partly in writing, the physical form of the contract, and the intelligibility of the language in which it is expressed, (h) whether or not and when independent legal or other expert advice was obtained by the party seeking relief under this Act, (i) the extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under this Act, and whether or not that party understood the provisions and their effect, (j) whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the party seeking relief under this Act: (i) by any other party to the contract, (ii) by any person acting or appearing or purporting to act for or on behalf of any other party to the contract, or (iii) by any person to the knowledge (at the time the contract was made) of any other party to the contract or of any person acting or appearing or purporting to act for or on behalf of any other party to the contract… (k) the conduct of the parties to the proceedings in relation to similar contracts or courses of dealing to which any of them has been a party, and (l) the commercial or other setting, purpose and effect of the contract.

(3) For the purposes of subsection (2), a person shall be deemed to have represented a party to a contract if the person represented the party, or assisted the party to a significant degree, in negotiations prior to or at the time the contract was made.

(4) In determining whether a contract or a provision of a contract is unjust, the Court shall not have regard to any injustice arising from circumstances that were not reasonably foreseeable at the time the contract was made…" 77 By s.4 of the Act, "unjust" is defined to include "unconscionable, harsh or oppressive". 78 I return to the judgment of Basten JA in Perpetual Trustee Co Ltd v Khoshaba (above). The third step or stage to which his Honour referred in the decision as to exercise of the power to grant relief which may, but need not, follow from a conclusion that the contract or a provision of it is unjust. 79 Basten JA's threefold approach is, it seems to me, an enlarged version of that referred to by Beazley JA in Elkofairi v Permanent Trustee Co Ltd (2003) 11 BPR 20,841 where there was reference to the second and third stages, it no doubt being implied that facts would first be found. Beazley JA said at [69]: " In Nguyen v Taylor (1992) 27 NSWLR 48, the Court was careful to draw a distinction between the consideration as to whether a contract was unjust (the s 9 issue) and the discretion to grant relief (the s 7 issue): per Kirby P at 54-55; Sheller JA at 71. In Nguyen the Court held that the contract (an option to purchase real property) was unjust in the circumstances in which it was made where the vendor had been misled by his agent into making the contract. However, the Court, in the exercise of its discretion, refused relief, because the purchaser had been both innocent and ignorant of any misleading conduct. Relevant to the Court's consideration in refusing relief was not only McHugh JA's observation in West v AGC at 620 quoted above, but also the notion that 'the general policy of the law is that people should honour their contracts' : per Sheller JA at 70. As Gleeson CJ pointed out in Baltic Shipping v Dillon 'Mikhail Lermontov' (1991) 22 NSWLR 1 at 9 'that policy forms part of our idea of what is just' ." 80 The passage in the judgment of McHugh JA in West v AGC (Advances) Ltd (1986) 5 NSWLR 610 at 620 to which her Honour referred is as follows: "Under s 7(1) a contract may be unjust in the circumstances existing when it was made because of the way it operates in relation to the claimant or because of the way in which it was made or both. Thus a contractual provision may be unjust simply because it imposes an unreasonable burden on the claimant when it was not reasonably necessary for the protection of the legitimate interests of the party seeking to enforce the provision: cf s 9(2)(d). In other cases the contract may not be unjust per se but may be unjust because in the circumstances the claimant did not have the capacity or opportunity to make an informed or real choice as to whether he should enter into the contract: cf s 9(2)(a), 9(2)(e), 9(2)(f), 9(2)(g), 9(2)(i), 9(2)(j). More often, it will be a combination of the operation of the contract and the manner in which it was made that renders the contract or one of its provisions unjust in the circumstances. Thus a contract may be unjust under the Act because its terms, consequences or effects are unjust. This is substantive injustice. Or a contract may be unjust because of the unfairness of the methods used to make it. This is procedural injustice. Most unjust contracts will be the product of both procedural and substantive injustice." 81 On the facts as I have found them, the deed of loan and the associated mortgage executed by the defendant must be found to be "unjust" within the meaning of the Contracts Review Act. There was unequal bargaining power: the defendant was an unsophisticated woman of timid disposition who had never entered into a similar transaction before (she had only ever been party to traditional home loans and, in such cases, she had been guided by her husband), while the plaintiff was a commercial lender and a purveyor of loans at extremely high rates of interest bespeaking a disposition to finance situations that might be considered too risky by the general run of commercial lenders. There was never any negotiation between the plaintiff and the defendant: she was simply presented with a set of pre-prepared documents. It was not reasonably practicable for the defendant to negotiate for alterations or to reject the documents: she was under pressure from Mr Rampling; the plaintiff knew this; and the plaintiff co-operated with Mr Rampling to cause the defendant to sign on the spot. It is shown that a solicitor spoke with the defendant about the documents but it is not shown that any advice of relevance or value was given by that solicitor; added to which the defendant had no opportunity to seek out a lawyer of her own choice. I cannot be satisfied that the nature, terms and effect of the contracts were explained to the defendant by anyone; nor can I be satisfied, having declined to accept the evidence in paragraph 27 of Mr Zajakovski's affidavit, that the defendant understood the provisions and their effect. Indeed, on the basis of her evidence, she did not. Finally, I am satisfied that unfair pressure was, to the knowledge of the plaintiff, exerted against the defendant by Mr Rampling, having regard to the central role he played in the events that led to her entering into contracts that he had arranged with the plaintiff, being contracts for his benefit and in relation to which his own self-interest was opposed to the interests of the defendant, as the plaintiff must have known simply by reason of their respective roles. 82 The catalogue of findings in the immediately preceding paragraph warrants a conclusion that the contracts were, for the defendant, "unjust" in respect of the several matters mentioned in paragraphs (a), (b), (c), (h), (i) and (j) of s.9(2) of the Contracts Review Act. The cumulative effect of those findings can only be the conclusion I have mentioned. That conclusion is confirmed and consolidated by the following observation of Basten JA in Perpetual Trustee Co Ltd v Khoshaba (above) at [128] which I consider equally applicable to this case: "To engage in pure asset lending, namely to lend money without regard to the ability of the borrower to repay by instalments under the contract, in the knowledge that adequate security is available in the event of default, is to engage in a potentially fruitless enterprise, simply because there is no risk of loss. At least where the security is the sole residence of the borrower, there is a public interest in treating such contracts as unjust, at least in circumstances where the borrowers can be said to have demonstrated an inability reasonably to protect their own interests, for the purposes of, for example, s 9(2)(e) or (f)." 83 I move now to the final stage of the Contracts Review Act inquiry, that is, the question whether relief should be granted and, if so, what that relief should be. That question is answered by considering whether it is "just" to grant relief "for the purpose of avoiding as far as practicable an unjust consequence or result". 84 The unjust consequence or result that must be avoided here is twofold: first, that the defendant must repay $190,000 plus interest at the extremely high rate of 72% per annum and, second, that if she does not do so, she will lose her home. That result is unjust in the circumstances of this case because it represents the playing out of the unjust contracts. If the unjust contracts were allowed to stand, one injustice would be seen to proceed from another in circumstances where, as the plaintiff well knew, the defendant did not receive any part of the loan. 85 Therefore, the result should be to the effect referred to at paragraph [7] above, with relief being granted under the Contracts Review Act. 86 The orders of the court are as follows: 1. Pursuant to s.7(1)(b) of the Contracts Review Act 1980, declare that each of (a) deed of loan dated 19 May 2004 and made between No Fuss Finance Pty Limited of the one part and Danielle Therese Miller of the other part; and (b) mortgage registered number AB619817 between Danielle Therese Miller as mortgagor and No Fuss Finance Pty Limited as mortgagee affecting the land in certificate of title Folio Identifier 1804/809669 is void in whole. 2. Pursuant to s.7(1)(d) of the Contracts Review Act 1980, order that the plaintiff execute and deliver to the defendant any instrument relating to the mortgage registered number AB619817 which the defendant shall reasonably require to enable her to cause the notation or memorial of registration of that mortgage to be removed from certificate of title Folio Identifier 1804/809669. 3. Grant liberty to apply on seven days notice in relation to any question arising in relation to Order 2. 4. Order that the plaintiff pay the defendant's costs of the proceedings. 87 Having reached this position under the Contracts Review Act, I need not consider the alternative bases on which the defendant attacked the loan agreement and mortgage. **********

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