Permanent Custodians Ltd v McLanders [2013] NSWSC 627 (23 May 2013)

Last Updated: 30 May 2013

Supreme Court
New South Wales

Case Title:
Permanent Custodians Ltd v McLanders

Medium Neutral Citation:
[2013] NSWSC 62

Hearing Date(s):
17 - 19 July 2012, 2, 10, 14 August 2012

Decision Date:
23 May 2013

Common Law

Rothman J


The plaintiff to provide a Short Minute of Order reflecting these reasons for judgment, including judgment for the plaintiff on the statement of claim, judgment for the cross-claimant, Ms McLanders, against the cross-defendant, Mr Kumar, and judgment for the cross-defendant, Permanent Custodians Ltd, in the second cross-claim by Ms McLanders.


REAL PROPERTY - CONTRACTS - mortgages - loan agreements - default and proceedings against borrower for possession and monetary order - defence and cross-claim under Contracts Review Act 1980 - evaluation of whether contract or circumstances of the making of the contract were unjust - no unjustness as against lender - borrower misled by her agent in whom she wrongly placed trust

Legislation Cited:         

Australian Securities and Investments Commission Act 2001 (Cth)

Contracts Review Act 1980

Privacy Act 1988

Real Property Act 1900

Cases Cited:

Beneficial Finance Corporation v Karavas (1991) 23 NSWLR 256

Elkofairi v Permanent Trustee Company Limited [2002] NSWCA 413

Esanda Finance Corporation Limited v Tong (1997) 41 NSWLR 482

Nguyen v Taylor (1992) 27 NSWLR 48

Perpetual Trustees Victoria Ltd v Longobardi [2009] NSWSC 654

Provident Capital Limited v Papa [2013] NSWCA 36

Tonto Home Loans Australia Pty Ltd v Tavares; FirstMac Ltd v Di Benedetto; FirstMac Ltd v O'Donnell [2011] NSWCA 389

West v AGC (Advances) Limited (1986) 5 NSWLR 610


Principal judgment


Permanent Custodians Ltd (Plaintiff/Cross-Defendant to Second Cross-Claim)

Diane Lee McLanders (Defendant/Cross-Claimant)

Bashir Kumar (Cross-Defendant to First Cross-Claim)

File Number(s):


Publication Restriction:



1.                  Permanent Custodians Ltd (hereinafter, "Permanent Custodians") sues Diane Lee McLanders for possession of land over which it holds a registered mortgage and/or for the payment of the amount outstanding in relation to the loan, secured by the mortgage.

2.                  Ms McLanders alleges that the money was never provided to her and, if it were, the terms of the loan were unjust, which, by operation of various statutes, relieves her (either in whole or in part) of the obligation to repay the loan (or the interest on it or both).

3.                  Ms McLanders also cross-claims against Bashir Kumar for the amount of any liability and alleges an agency relationship between Permanent Custodians and a "mortgage originator" called Horizon Financial Services Pty Ltd (hereinafter, "Horizon"), which, according to Ms McLanders, in turn, had a commercial relationship, possibly one of agency, with Mr Kumar.

4.                  There is little, if any, controversy in the evidence. I accept that the witnesses did not seek to dissemble and were not lying. Ultimately, the Court must evaluate the circumstances to determine whether there was an unfairness of a kind that the Court would remedy, and, preliminary thereto, whether the loan moneys were lent and therefore need to be repaid. It is necessary to recite some of the circumstances.

Facts and explanation of proceedings

5.                  Ms McLanders was born in 1952 and, in March 2006, when many of the events with which these proceedings are concerned unfolded, Ms McLanders was 53 years of age. She owned and occupied the property contested in these proceedings at Quakers Hill. The property had been purchased in 2005 and was the fourth property owned by Ms McLanders.

6.                  In 1972, she and her former husband purchased their first property. In 1981, they purchased a second property and, in 1994, she moved into a third property purchased and/or built by her and her former husband.

7.                  Ms McLanders was married in 1972, ceased work in 1972, when her daughter was born, and re-entered the workforce in 1994. She was divorced in 2005.

8.                  Each of the three houses to which reference has been made were purchased in circumstances where the paper work was organised by Ms McLanders' then husband and, while Ms McLanders attended meetings at solicitors or the bank, the details were always handled by him. She would sign the documents without having a real understanding of the paper work.

9.                  As at March 2006, Ms McLanders was unemployed and in receipt of Centrelink benefits.

10.              Ms McLanders first met Bashir Kumar on an internet dating site, some time after her divorce. They corresponded electronically for a few months and Ms McLanders invited him to visit her at her house for the first time in or about November 2005. They formed a romantic and sexual relationship shortly thereafter.

11.              Notwithstanding that relationship, they saw each other only at Ms McLanders' house as Mr Kumar told Ms McLanders that he could not "be seen with another woman because of issues with his ex-wife and step daughter". Mr Kumar told Ms McLanders that he was a finance broker.

12.              When Ms McLanders complained of her inability to effect car repairs, or manage some other personal expenses, Mr Kumar suggested to Ms McLanders that she take out a loan over her property and invest the money with him to earn an income. Ms McLanders agreed.

13.              Mr Kumar informed Ms McLanders that she should use the equity in her house. Ms McLanders and Mr Kumar had a conversation in which Mr Kumar said:

"You can use some of the equity that's in your house. You can borrow $75,000 and invest it. You could obtain an advance against the equity in your house and then lend that money out to a third party with interest. You would get about $2,000 per month interest on that loan and it would help to pay your bills."

14.              Ms McLanders agreed to an arrangement of the kind described by Mr Kumar. Her evidence was that she thought this was a good idea and accepted the advice. Her evidence at transcript page 113.35-114.4 was in the following terms:

"Q: His suggestion was that you use the equity in your home, as he put it, to borrow some money?

A: That's right.

Q: And you understood at that time using the equity in your home meant taking a mortgage on your home?

A: That's right.

Q: And you knew from past experience that when a loan was taken out it needed to be repaid?

A: That's right.

Q: And you knew from past experience that when a mortgage is taken out to secure the loan, if the loan wasn't repaid the lender was entitled to take the house and sell the house, is that right?

A: Yeah.

Q: And you knew that that was precisely what was being suggested?

A: Yes."

15.              At transcript page 115.13-116.39, Ms McLanders gave evidence concerning the relationship between her and Mr Kumar in respect to the financial advice and the degree to which she depended upon him. The evidence was to the following effect:

"Q: You said that at the time that it was - the loan was suggested and you took out the loan, you were trusting Mr Kumar as a finance broker?

A: Yes, I trusted him.

Q: And you knew he was a finance broker?

A: I beg your pardon?

Q: You knew that he was a finance broker?

A: Yeah.

Q: And is it correct that your understanding of a finance broker is a person who finds the right loan for a borrower?

A: Yes.

Q: If a borrower needs a large loan, for instance, the loan might include a mortgage, is that right?

A: I don't really know.

Q: And a finance broker would be someone who presumably understands the needs of a borrower and select[s] the loan to meet the needs of that borrower, is that right?

A: Yes.

Q: And a finance broker generally gathers the information needed both to make that decision about which loan is best and also to give information to a lender, from the borrower?

A: Yes.

Q: The finance broker would bring an application form to the borrower, is that right?

A: Yes.

Q: And that is what Mr Kumar did in this case?

A: Yes.

Q: You ... expected [him] to open [help the] borrower to fill out the paper work, is that right?

A: Yes.

Q: And that is what Mr Kumar did in this case?

A: Yes.

Q: A finance broker would be expected to put the application to an appropriate lender, is that right?

A: Yes.

Q: And that is what Mr Kumar did in this case?

A: Yes.

Q: The finance broker would be expected to do all the things necessary to obtain approval of the loan and communicate that to the borrower, that is what Mr Kumar did in this case?

A: Yes that's right.

Q: And a finance broker would be expected to do all the other things necessary to help that loan to be completed, is that right?

A: Yes that is right.

Q: And that is what Mr Kumar did in this case?

A: Yes.

Q: In doing that, the finance broker would speak to the lender, provide all the information required to ensure that that loan could be completed, is that right?

A: That is right.

Q: And that is what Mr Kumar did for you in this case?

A: Yes.

Q: And you were happy for Mr Kumar to undertake all of those steps?

A: Yes because I trusted him.

Q: You were happy for him to communicate all of that information to the lender?

A: That is right.

Q: And you understood he was communicating all of that information to the lender on your behalf?

A: That's right."

16.              On 8 March 2006 Ms McLanders signed a loan application on a form provided by Horizon (Exhibit A, Volume 2, page 154-161). The document sets out Ms McLanders' name and address and describes Ms McLanders as a property consultant employed by Kumar Investments Solutions, having been employed there for 20 months on a salary of $60,000 per annum. The document seeks a loan of $75,000 repayable as principal and interest on the security of the existing property which is valued, for the purpose of the loan, at $285,000. It is signed at pages 4, 6, 8 and twice on page 9 by Ms McLanders. The signature is hers. The statements as to employment and income are seemingly in a different writing from that which identifiably belongs to Ms McLanders. The document provided copies of Ms McLanders' drivers' licence, passport photo and details, medicare details and a credit card.

17.              The loan application, to which reference has been made, seeks to refinance the property the borrower currently lives in and declares that the purpose of the loan is for the money to be used for investment. The declaration of purpose, which forms part of the application, declares that the moneys will be applied "wholly or predominantly for business or investment purposes". There is a warning in bold that the declaration should not be signed unless it is true and there is a statement, also in bold, warning as to the consequences of a false declaration and the loss of protections available as a consequence of signing the declaration.

18.              The Horizon loan application form, to which reference has been made, includes a consent and acknowledgment under the Privacy Act 1988; a document entitled "Loan Purpose Checklist"; and a document nominating an address for notices; and other documents.

19.              On 24 March 2006, Ms McLanders signed the Permanent Custodians Loan Agreement (hereinafter, "Loan Agreement") for $75,000 loan advance (Exhibit A, Volume 2, page 175 and following). That Agreement refers to Permanent Custodians, in its capacity as trustee, as the lender and Ms McLanders, with her address, as the borrower. It is in the form of an offer that is accepted.

20.              The terms of the Loan Agreement are not unusual and include a variable interest rate of 6.8 per cent (at the time that it was signed) and a default rate of a further 2 per cent per annum. It requires monthly repayments over 30 years. It describes the mortgage servicer as Horizon and describes the purpose of the loan (notwithstanding the documentation signed by Ms McLanders and given to Horizon) as "to assist with refinance of an owner/occupied property and renovations".

21.              The Loan Agreement describes the security for the loan as the residential address to which reference has already been made. It is signed by Ms McLanders, as earlier stated, on 24 March 2006, as acceptance of the offer and the terms of the Loan Agreement.

22.              Immediately above the signature of Ms McLanders in the Loan Agreement is a warning, headed "IMPORTANT", urging the person signing to read the contract documentation, particularly that part of it which deals with the things you should know about your proposed credit contract; to ensure that all blank spaces are either filled in or crossed out; to retain a copy; and, not to sign anything if it is not understood. There are other explanations in the box immediately above the signature of Ms McLanders.

23.              On the same day, 24 March 2006, Ms McLanders signed an authority to complete which was provided to Permanent Custodians (and its solicitors). It also refers to Horizon and authorises the proceeds of the loan to be paid for Permanent Custodians' fees and disbursements, the discharge of any existing mortgage, and, relevantly, "as our agents direct". Ms McLanders' signature is witnessed by Mr Kumar.

24.              On 24 March 2006, the same day as the Loan Agreement and authority to complete were signed, Ms McLanders completed (by signature) a direct debit request form in which Ms McLanders requested Permanent Custodians "to debit my account described below with all amounts due and payable in accordance with the loan contract plus any additional amounts as requested by a borrower/guarantor from time to time". The details of the bank pertain to an account with NAB at Blacktown in the name of DLM Renovations Account. The account, it transpires, was an account controlled by Mr Kumar.

25.             On 27 March 2006, Horizon wrote to Permanent Custodians advising them that the settlement was due to be effected on 29 March 2006 and certifying that the warranties given in the "Correspondent Deed" will be true and correct, that "we" are not in default under the aforesaid Deed, we are not aware of any reason or circumstances under which the borrower might be unable to pay in accordance with the terms set out in the loan contract, have found the solicitor's certificate and schedule etc. to be in order for settlement, and the like. It is signed on behalf of Horizon. There is a solicitor's certificate by Paul C Fabian & Co, also addressed to Permanent Custodians of the same date.

26.              The aforesaid letter from Horizon to Permanent Custodians attached, as earlier stated, the solicitor's certificate. It also attached a current insurance certificate, details of the bank account deposit slip, a copy of the direct debit request form, and a mortgage signed by Ms McLanders (witnessed by Mr Kumar) in relation to the property, together with an executed copy of the Loan Agreement which formed an annexure to the mortgage. The mortgage was registered on 29 March 2006 (Exhibit A, Volume 2, page 220).

27.              On 29 March 2006, $73,917.25 was paid to the account in the name of DLM Renovations Account, to which the direct debit request form referred. On the same day Rachael Ralston of Paul C Fabian & Co wrote to Ms McLanders in relation to the mortgage advance from Permanent Custodians. It referred to the security, being the residential address. Relevantly, it confirmed the details of the disposition of the amounts on settlement and, in particular, that a telegraphic transfer of the balance of the moneys to DLM Renovations (an amount of $73,917.25) had occurred. That letter was sent to Ms McLanders at her home address (see Exhibit A, Volume 2, page 236).


28.              Ms McLanders' evidence (affidavit of 18 November 2012 at [41]) was to the effect that Mr Kumar told her that she should "sign these documents, I will sort out the rest". On the basis of that proposition, Ms McLanders signed the documents and "trusted him to act in accordance with [her] interests".

29.              There can be no doubt that Ms McLanders, at the time that these transactions occurred, understood that she was borrowing, on the security of her home, an amount of $75,000, of which $1,100 would be used for costs, for the purpose of having that money utilised by Mr Kumar to on-lend in order to receive an amount that she understood was $2,000 per month.

30.              Assuming, without at this stage deciding, that Ms McLanders was not a sophisticated business entrepreneur, she would, nevertheless, have understood that $2,000 per month is $24,000 per year, which is approximately one third (32 per cent) of $75,000, the total amount of the loan. In order words, it does not require sophisticated business or arithmetic ability to understand that Mr Kumar was promising a return of 32 per cent on investment moneys Ms McLanders was to provide him.

31.              As to her understanding of what was to occur with the money, Ms McLanders, in oral evidence, said at transcript page 120.28:

"Q: You knew that he was going to borrow the money and receive that money so that he could on-lend it?

A: Oh, yes, I knew that, yes.

Q: You didn't expect him to keep the money as cash, did you?

A: No.

Q: You thought it would be placed into a bank account for that purpose?

A: Yes that's right, to invest it."

Further, at transcript page 121, Ms McLanders said:

"Q: And so if the bank statement I handed to you a few moments ago had the credit of $73,900, and then debits of, for instance, debit $20,000 and then some repayments coming out of it to repay the monthly repayments on these loans, that is what you would have expected to see, is that right?

A: I think I would have queried a lot of it.

Q: But at the time that is certainly what you expected to happen, you expected the moneys to go into a bank account, Mr Kumar would then lend the money out of that bank account so it would be withdrawn and given to third parties, that the interest of payments would come in and the monthly repayments would go out to the plaintiff in this case, is that right?

A: Yeah but I didn't think - you are saying third parties.

Q: Well one third party or several third parties, whichever?

A: Well one, yeah.

Q: So you didn't think the whole $75,000 would be lent at the one time?

A: Yes that is what I thought, yes.

Q: But other than that, the scenario that I have given you, that the money would go into the account, come back out to be loaned to a third party, there would then be money coming in for interest each month for that amount and there would be repayment going out to the lender in this case, that is what you expected?

A: I think so.

Q: And as at the end of April or early May 2006 where you received your first $2,000 from Mr Kumar, that is what you thought had happened?

A: Yes.

Further, Ms McLanders, in evidence at transcript page 117, said:

"Q: You said that the intention was always to have Mr Kumar organise the loans, is that right?

A: That's right.

Q: I'm speaking now of loans to a third party.

A: M Mm-hmm.

Q: And your expected Mr Kumar to put in place the structure required to facilitate the making of those loans?

A: That's right.

Q: You expected Mr Kumar to get the money borrowed from the lender for on-lending, is that right?

A: Yes.

Q: You expected him to place that into an account that he would have control over?

A: I really don't know.

Q: And you expected him to be the person that would loan that money out on your behalf, is that right?

A.: That's right, yes.

Q: He was to organise all the paperwork in relation to the loans to third parties?

A: That's right.

Q: And you expected there to be proper paperwork that would protect your interests?

A: Yes.

Q: And you expected him to be responsible for that, is that right?

A: Yes.

Q: Did you expect that on the loans made to third parties you would sign the documents as a lender or would he sign for you?

A: Well I thought we both had to sign.

Q: So you thought when this money was to be loaned out to third parties by way of loan contracts, you and Mr Kumar would both sign those documents as lender?

A: Well I knew I had to sign but, the him being the broker I naturally thought he was to sign as well, I I'm not sure.

Q: This was in relation to loans to third parties, is that your answer?

A: Well I don't really know.

Q: Was that not discussed in detail?

A: No, no.

Q: But you certainly knew that when the money was loaned out to third parties you would in essence be the person lending it out and you would be entitled to money coming back, is that right?

A: That's right, yes."

32.              As to the issues of the completion of the documents and the evidence of Ms McLanders that she signed them in blank, Ms McLanders, in evidence at transcript page 128, said:

"Q: But you knew from previous experience, if you'd turned your mind you knew from previous experience they [the lender] would want to know what your income was, is that right?

A: Yes.

Q: And you knew from previous experience that a bank always wanted to know whether a borrower could repay a loan before they'd approve that loan, that's right, isn't it?

A: Yes.

Q: You knew that a bank would look at that part of the form to see what your occupation was and what your income was, is that right?

A.: Well, I was just relying on everything, trusting him [Mr Kumar] to do everything for me.

Q: But you knew the bank would look at those issues and want to know what your occupation was and what your income was, is that right?

A: Yes.

Q: You knew that would be important to the bank in approving a loan?

A: A lot of it I didn't understand.

Q: And you knew that a loan couldn't be approved without the lender knowing the occupation and income of the borrower, that's right, isn't it?

A Yes.

Q: So you knew that prior to this loan being approved something would have to be written into those blank parts of this form?

A: Well, it was just done very quickly, a lot of the signing, very fast.

Q: But you knew that the information as to your occupation or lack thereof and your income would need to be given to the lender before the loan could be approved?

A: Oh, yes, yes, yes, but I naturally thought that Mr Kumar would, would be doing everything for me.

Q: So you expected Mr Kumar to give that information to the lender?

A: Yes, but as I said, I, there was no occupation there, because I wasn't working at the time.

Q: And as you said earlier, you thought Mr Kumar would pass that information on to the lender on your behalf?

A: Yes.

Q: And this was some of the information you expected him to pass along on your behalf as to your occupation and income?

A: Well, as I said, I naturally thought he'd, he was doing everything for me, yeah."

 33.              Further, at transcript page 142, Ms McLanders said:

"Q: Now, you gave evidence a little while ago that you were aware when you signed the loan application form that it didn't disclose your occupation or your income, is that right?

A: Yes.

Q: And you also gave evidence that you knew that was something the bank would need to know?

A: Well, I don't really know.

Q: And you also gave evidence that you expected Mr Kumar to pass that information on on your behalf?

A: Yes, he was, he was the financial broker, I trusted him.

Q: See, I'll be putting to his Honour that having the knowledge that the bank would need to know your income details and leaving those parts blank was something that you knew at the time may mislead a lender in relation to your income?

A: Sorry, would you repeat?

Q: I'll be putting to his Honour, and I want you to comment on it if you wish to, that leaving those matters blank and signing the form, in any event you knew that a lender might be misled as to your income; do you have any comment about that?

A: No.

Q: You see, by leaving those blank you knew that the bank would not be informed of the true position, that's the case, isn't it?

A: Yes.

Q: And if they were not informed of the true position they were likely to be misled, that's right, isn't it?

A: Yes."

34.              In late March 2006, Ms McLanders received a payment of $2,000, presumably from Mr Kumar in relation to the "investment" undertaken by him on her behalf (affidavit of Ms McLanders of 24 March 2011 at [15]).

35.              By 27 July 2010, the Loan Account was in arrears to the amount of $12,865.09 and a default notice issued pursuant to s 57(2)(b) of the Real Property Act 1900 and s 88 of the National Credit Code was prepared seeking a payment of the amount owing plus $288 expenses for enforcement.

36.              On 28 July 2010, the Statutory Default Notice referred to in the immediately preceding paragraph was served by affixing it to the front door of Ms McLanders' property and placing another copy under the front door and a further copy in the mailbox.

37.              On 5 September 2010, the period of the default notice expired without payment to Permanent Custodians of the amount demanded.

38.              On 16 January 2012, Pepper Australia Pty Ltd acquired from AFIG Wholesale Pty Ltd (hereinafter, "AFIG") (GE) the day-to-day control of the management of Permanent Custodians' residential portfolio (including control of the loan to Ms McLanders).

39.              On 28 September 2010, Permanent Custodians filed proceedings for possession and payment of the debt said to be owed. The latest defence, being a further amended defence, was filed on 17 July 2012. A cross-claim and statement of cross-claim was filed by Ms McLanders against Mr Kumar on 13 May 2011, to which a defence was filed on 19 September 2011. A second cross-claim was filed by Ms McLanders against Permanent Custodians, to which a defence was filed on 17 July 2012.

40.              Omitted from the foregoing are the circumstances relating to the relationship, if any, between Mr Kumar and Horizon and between Horizon and Permanent Custodians. It is necessary to deal with some of that evidence and the relationship, although the conclusions will be dealt with later in these reasons.

41.              The only evidence (if it be evidence of a relationship between Mr Kumar and Horizon or Permanent Custodians) is a statement at Exhibit A, Volume 2, page 305 in the following terms:

"Diane McLanders hired a private investigator to track down Bashir Kumar of Horizon Finance, a broker for afig/ge (sic) who convinced her to use the equity in her home to borrow $75k from us. Diane was then to pass the $75k onto Mr Kumar who made a verbal agreement with Diane McLanders to pay the loan off on her behalf."

42.              It is said by Ms McLanders, or on her behalf, that this is an admission that Mr Kumar was associated with or an agent of Horizon. I do not understand the document to have that status. Firstly, for it to be an admission it would have to be a statement of either Mr Kumar or Horizon. It is a statement of neither. If it is anything, it is a representation (for internal purposes) by an agent or employee of Permanent Custodians of her understanding of Mr Kumar's relationship with Horizon.

43.              Secondly, I do not understand the document in the way suggested. In my view, given its context, the document was a description by an employee or agent of Permanent Custodians of the steps taken by Ms McLanders and her understanding. In neither case is the document evidence that would prove, or on which the Court could rely to draw an inference, that Mr Kumar was either an agent or employee of Horizon. Ms McLanders relies on other matters.

44.              Ms McLanders relies on the fact that Mr Kumar had access to Horizon's pro forma documents (see Exhibit A, Volume 2, page 154). The material upon which Ms McLanders relies for that inference does not withstand scrutiny. The documents were available electronically and no inference can be drawn other than that any finance broker could access the same documents.

45.              The second aspect is the speed with which the loan application was processed. The dates are set out above. Between the date of the application on 8 March 2006 and the signing of the Loan Agreement on 24 March 2006 is a period of over two weeks during which time application for mortgage insurance and credit searches had been commenced or made (see Exhibit A, Volume 2, pages 147, 297 and 298).

46.              Despite extensive subpoenas and discovery, there is no evidence before the Court that would warrant a finding that Mr Kumar worked for or was the agent of Horizon. There is abundant evidence, including from Ms McLanders and going beyond the evidence recited above, that Mr Kumar was Ms McLanders' agent.

47.              It is however necessary to set out the relationship between others in the transaction (excluding Ms McLanders). First, it is necessary to recite that Permanent Custodians is the trustee of a lending operation. The lending operation program was known as "Arms II Program". The trust related to both a pool of funds used for lending and the interest in property to which the mortgages related.

48.              The lending program was handled by Australian Mortgage Securities Pty Ltd (hereinafter, "AMS") and AFIG. The relationship was described as "master servicer" and AMS had overall responsibility for the origination and servicing of loans. It was able to delegate its powers. AMS appointed AFIG as the mortgage manager whose role was to perform, supervise and implement the operational procedures involved in making loans to borrowers from Permanent Custodians' funds.

49.              Beyond AFIG, Correspondents actually procured loan applications from borrowers. Such Correspondents operated under a "Correspondent Deed" which regulated the arrangements between AFIG, and Correspondents. Horizon was a Correspondent.

50.              Pursuant to that Deed, a Correspondent was entitled to appoint its own delegates, known as "Introducers", who were authorised to receive and submit loan applications and to source loan proposals. The Deed (or an example thereof) is found at Exhibit A, Volume 2, page 115 and following. By operation of that Deed, Permanent Custodians organised itself in a way that it played no part in the marketing or obtaining of loan applications, but Introducers and Correspondents, purportedly acting on behalf of borrowers, made applications to Permanent Custodians for loans. Permanent Custodians was not bound by any conduct (at least according to the documents describing the relationship between Permanent Custodians and Correspondents or Introducers), including any application for loan, and Permanent Custodians was not bound to approve a loan for which any Introducer or Correspondent was an applicant or by which they made application on behalf of another borrower.

51.              Relevant to the loan to Ms McLanders, the Court has already outlined the date and circumstances of the loan application, loan purpose checklist and declaration of purpose signed by Ms McLanders on 8 March 2006. As already noted, Ms McLanders obtained mortgage insurance (as required under the Loan Agreement). The application for mortgage insurance was lodged by Horizon purportedly on behalf of Ms McLanders on 9 March 2006.

52.              On 16 March 2006, a valuation certificate was obtained which valued the residential property at $270,000.

53.              On 17 March 2006, the application was accepted and, on the same date, Horizon, or a person on its behalf, entered the information on the AFIG web interface on a file dedicated to the McLanders loan application.

54.              On 20 March 2006, AFIG sent a facsimile to Horizon informing them that there had been no documentation received in relation to the McLanders loan application (Exhibit A, Volume 2, page 146).

55.              On 21 March 2006, Horizon faxed the loan application documents to AFIG including the documents to which reference has been made, being the residential mortgage valuation certificate, the lenders mortgage insurance certificate, the loan application and supporting documents (Exhibit A, Volume 2, page 303 and following).

56.              On 21 March 2006, AFIG obtained a consumer and commercial report on Ms McLanders and, on 22 March 2006, AFIG instructed Paul C Fabian & Co (Solicitors) to prepare and to serve the loan contract, mortgages and other ancillary documentation as well as to settle the loan in accordance with the AFIG Wholesale Solicitors Pack (Exhibit A, Volume 2, page 299). As already noted, on 24 March 2006, Ms McLanders signed the relevant documentation and on 27 March 2006, Horizon prepared the settlement notice. On the latter date, again as already noted, Paul C Fabian & Co issued the solicitor's certificate and the settlement notice, and other documentation, to which reference has been made, was faxed from Horizon to AFIG.

57.              Paul C Fabian & Co prepared the cheque requisition schedule and the refinance settlement requirements checklist and, again, as already stated, the loan settled on 29 March, at which time Paul C Fabian & Co sent the aforementioned letter to Ms McLanders relating to the distribution of the amount of the loan.

58.              From the foregoing, Ms McLanders submits that the relationship between Permanent Custodians and Horizon is one of principal and agent. As already indicated, counsel for Ms McLanders also submits that Mr Kumar was an agent of Horizon.

59.              Reliance is placed upon the terms of the Deed and the terms of the policy documents relating to loans and what is alleged to be breaches of them in relation to the loan to Ms McLanders. Those breaches are part of the reason the loan contract between Permanent Custodians and Ms McLanders is said, by Ms McLanders or on her behalf, to be unjust.

Unjust contract and agency principles

60.              The claim for possession and payment to the plaintiff is a claim that depends on the terms of the contract being the Loan Agreement. Apart from the issue relating to whether moneys were paid under the Loan Agreement to Ms McLanders or as she directed, the circumstances giving rise to a breach of the Loan Agreement are not in issue. If the Loan Agreement is binding on Ms McLanders, it has been breached, again assuming that the debt has arisen.

61.              Under the Loan Agreement, the loan moneys must be paid to the borrower or as she directs and the obligations on the borrower arise as a result of the payment of those loan moneys. Assuming that precondition is satisfied, there is no suggestion that the debt is not owed, other than the operation of s 7 of the Contracts Review Act 1980. Other legislative schemes were the subject of submission including unconscionability under both the general law and under the Australian Securities and Investments Commission Act 2001 (Cth) (hereinafter, "ASIC Act"). It is difficult to imagine that the conduct of Permanent Custodians, or the contract between Permanent Custodians and Ms McLanders could be unconscionable, either under the general law or under the ASIC Act and yet, at the same time, not be an unjust contract under the Contracts Review Act. As a consequence, I will concentrate on the claim under the Contracts Review Act.

62.              The operation and effect of the Contracts Review Act has been the subject of much authority and has been described by many judicial officers. While its operation may have been described many times, the number of descriptions does not detract from the fact that "sheeting home ... the consequences of ... unjustness may be a difficult evaluative exercise" (Provident Capital Limited v Papa [2013] NSWCA 36 at [7], per Allsop P, with whom Sackville AJA agreed).

63.              While in Provident Capital the borrowers had access to legal advice, the comments in relation to legal advice are apposite to any expert advice, and the provision of expert advice greatly enhances the ability of a borrower, as against the lender, to protect her interests: see Provident Capital, at [113]. If the advice received were inadequate (or fraudulent) that is not the fault of the lender: Provident Capital, at [7]; and see also Esanda Finance Corporation Limited v Tong (1997) 41 NSWLR 482 at 491, per Handley JA (with whom Santow and Simos AJJA agreed).

64.              In this case there is some question as to whether the Contracts Review Act applies to the Loan Agreement, but I leave that issue to later. In terms of dealing with the principles, it is appropriate to remind ourselves of the purpose described by McHugh JA in West v AGC (Advances) Limited (1986) 5 NSWLR 610 at 620-621, in which his Honour said:

"It is in my opinion a mistake to think that a contract or one of its terms is only unjust when it is unconscionable, harsh or oppressive. Contracts which fall within any of those categories will be 'unjust'. But the latter expression is not limited to the so-called 'tautological trinity'. The Contracts Review Act 1980 is revolutionary legislation whose evident purpose is to overcome the common law's failure to provide a comprehensive doctrinal framework to deal with 'unjust' contracts."

65.              As otherwise described, notwithstanding the foregoing, the Contracts Review Act is not an anodyne - soothing every ill caused by contract. The jurisdiction of the Court under the Contracts Review Act is predicated on an evaluation, by the Court, that the contract was unjust: Nguyen v Taylor (1992) 27 NSWLR 48 at 71; Beneficial Finance Corporation v Karavas (1991) 23 NSWLR 256 at 260, 270; Elkofairi v Permanent Trustee Company Limited [2002] NSWCA 413.

66.              The Court of Appeal has made it clear, on a number of occasions, that a contract may be unjust in one of two ways: the contract, or the terms thereof, may be, in and of themselves, unjust; and/or, the circumstances that led to the making of the contract may make the contract itself unfair (within the statutory meaning). To recite another extract from West, supra, at p 620, where McHugh JA said:

"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. ... 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."

67.              As the High Court has described it, albeit in a different context, when dealing with "unfairness" in an employment relationship:

"The distinction between procedure and substance is elusive. This is so even in those fields of private international law, the statute law dealing with limitations of actions and the effect of repeal upon accrued rights, and the Statute of Frauds, where it has an entrenched operation. In our view, it is unhelpful and contrary to the tenor of the Award to introduce it into [this provision]." (Byrne v Australian Airlines Limited [1995] HCA 24; (1995) 185 CLR 410 at 465, per McHugh and Gummow JJ.)

68.              In a different industrial context, the "tautological trinity" (as McHugh JA described it in West, supra) of "unconscionable, harsh or oppressive" was defined in the following terms:

"Those three words are used objectively in the clause and each of them is to be given its ordinary strong meaning. Plainly, their meanings overlap and definition is liable to adulterate the strength which the words possess. Nonetheless, it seems desirable that I indicate the meaning which I ascribe to them. To be oppressive, a condition, obligation or restriction must be burdensome, harsh and wrongful (see, for example, Scottish Co-Operative Wholesale Society v. Meyer (1959) A.C. 324 at p. 342; Re Germyn Street Turkish Baths Ltd. (1971) 3 All E.R. 184 at p.199; Allen v. Townsend [1977] FCA 10; (1977) 16 A.L.R. 301 at p. 337). To be unreasonable, it must be immoderate and inappropriate. To be unjust, it must be contrary to right and justice and to ordinary standards of fair play (see, for example, Re Kempthorne Prosser & Co's New Zealand Drug Co. Ltd. (1964) N.Z.L.R. 49)." (Re Municipal Officers' Association of Australia v Kenneth Lawrence Lancaster and Michael James Canny [1981] FCA 151; (1981) 54 FLR 129, per Deane J at 165.)

69.              It is, of course, inappropriate to apply definitions from one context to another without regard to the statutory context in which they are found. However the Contracts Review Act discloses no context which renders the above description of the terms "unconscionable" and "oppressive" (or "unjust") as inappropriate. I apply them. The terms of the contract must, either by their very nature or by the circumstances that gave rise to them, be contrary to the ordinary standards of fair play or burdensome, harsh or wrongful.

70.              It is appropriate at this stage to refer to the fact that the Contracts Review Act does not deal with unfair conduct, per se, it provides appropriate remedies in circumstances of an unfair contract. The conduct leading to the making of a contract is relevant only to the extent that it renders the contract between the parties unfair (as that term was discussed in West, supra, and as otherwise described above). It is unnecessary for there to be a pre-existing relationship or a supervening duty between the parties, the circumstances of the making of the contract (together with the terms of the contract) may, in and of itself, render the contract unjust.

71.              Next, it is appropriate that the Court note that s 9 of the Contracts Review Act requires the Court to consider the public interest and all of the circumstances of the case, including the consequences arising from compliance or non-compliance with the contract and any or all of its provisions. The Court is required to take into account those matters set out in s 9(2) of the Contracts Review Act.

72.              As to the question of public interest, it is sufficient to refer to the passage from the judgment of the Court of Appeal in Tonto Home Loans Australia Pty Ltd v Tavares; FirstMac Ltd v Di Benedetto; FirstMac Ltd v O'Donnell [2011] NSWCA 389 in which the Court (Allsop P, with whom Bathurst CJ and Campbell JA agreed) said:

"[269] The public interest is the subject of particular reference in the CRA, s 9(1). One aspect of the public interest recognised early is keeping people to their freely entered bargains: Baltic Shipping Co v Dillon (1991) 22 NSWLR 1 at 9. By stating the importance of this aspect of the public interest shortly, I should not be thought to be consigning it as a matter of mere note only. It is fundamental, indeed it inheres in the CRA itself. It is an aspect of society that is of vital importance. As Story J said, writing extra-judicially ('Contract' (1832) 9 Encyclopaedia Americana 156), 'confidence in promises is ... essential to the existence of social intercourse among men ...'. Its strength as an operative legal norm that can be seen as fundamental is directly related to circumstances which give it strength - the just and free circumstances that give rise to the bargain. As Finn J said, writing extra-judicially in 'Unconscionable Conduct' (1994) 8(1) Journal of Contract Law 37 at 49, if parties are to be held to their bargains once made, the law should act with vigour to promote the conditions necessary to make the freedom of contract effective, free and just.

[270] Another aspect of the public interest is the advancement of the protection, which the CRA manifestly intends to give, to those not able fully to protect themselves and to those preyed upon by dishonesty, trickery and other forms of predation. The Peden Report (J R Peden Harsh and Unconscionable Contracts: Report to the Minister for Consumer Affairs and Co-operative Societies and the Attorney-General for New South Wales, 1976) said that the reference to public interest 'would direct the courts' attention to the underlying purpose of the Bill, namely to prevent unjust dealings which offend against community standards of business morality': J R Peden The Law of Unjust Contracts (Butterworths, 1982) at 122.

[271] ASIC sought to draw into the public interest contemplated by s 9(1) aspects of the aims, functions and powers of ASIC in performing its duties under the ASIC Act. By the ASIC Act, s 1(2)(a) in performing its functions and exercising its powers ASIC must strive, amongst other things, to promote and facilitate commercial certainty and efficiency of the economy; and by s 12A it has the function of promoting market integrity and consumer protection in relation to the Australian financial system. These concepts can be seen as relevant to the public interest, not because of the direct operation of the Commonwealth statute, but by their inherent appropriateness to the concept of public interest in respect of financial contracts and the operation of the financial market insofar as an individual contract is concerned. Procedures that promote suitable borrowings and operate as checks against fraud should be seen not only as matters for the lenders to comply with or not as they choose, but as indirect guards against conduct that can produce injustice to members of the public and thus undermine confidence in the free and fair operation of financial markets. That said, it is not part of the purpose of the CRA to promote an efficient banking system or to lay down rules for good banking practice: cf Cook v Permanent Mortgages Pty Ltd [2007] NSWCA 219 at [14]. Nevertheless, to the extent that the organisation of lending programmes, through sub-contracted intermediaries, has the capacity to generate risk of lending to duped, misled or inappropriate borrowers and such structures are administered without clear operational regard for the lending guidelines, it is in the public interest to administer the CRA to protect such people. Such protection will, in the public interest, encourage the recognition by lenders that the safeguards in such structures to avoid or minimise fraud or misleading conduct should be rigorously applied. For example, here, it was not good enough to be precise and perspicacious only about the taking of security and its value. Care must be taken not to misuse a statute, designed for the protection of individuals, by employing it to regulate the financial system. But when people are duped, misled, defrauded or taken advantage of by participants in the financial system by means that have been, in significant part, facilitated by inhering obvious risk and lax operation of appropriate safeguards, it conforms to the public interest to take into account such systemic and operational failure in order to assist to promote conditions that will make it more difficult for such conduct to exist, and thus encourage circumstances more conducive to free and just contracts."

73.              It is also appropriate for the Court, as presently constituted, to refer to two other passages in the judgment of Allsop P (as his Honour then was) in dealing with "carelessness" on the part of a person claiming relief under the Contracts Review Act. His Honour referred to the comment of McDougal J in Perpetual Trustees Victoria Ltd v Longobardi [2009] NSWSC 654, in which McDougall J took the approach to borrowers who sign documents in blank that:

"such borrowers should bear the responsibility for fraud because they permitted it to happen. Judges are not obliged to follow other judge's findings of fact. One needs to understand all the facts in any case to form relevant views as to their importance."

74.              Nevertheless, in Tonto, supra, as to carelessness, Allsop P said:

"[218] First, the appellants complained that the primary judge understated the conduct by his Honour by merely calling it 'careless'. It was said to be reckless, intentional and grossly misleading conduct, which had a direct consequence on the conduct of Tonto and the lenders. To the extent that reckless and grossly misleading seek to import a notion of intention or perception of the risk to others, the primary difficulty standing in the way of the submission is that senior counsel appearing for the appellants at first instance did not put this matter to the borrowers in cross-examination. That is not a criticism of his cross-examination. The conduct of the borrowers, in its carelessness, speaks for itself. As to whom they actually perceived might be misled by this depended, in significant part, upon who they thought the lenders were at the time they were doing things. The failure to press the borrowers with notions of intentionally misleading conduct and actual perception of risk of others puts it out of the hands of the appellants now to rely on such submissions.

[219] There can be no doubt that the borrowers were careless and careless in a significant degree. But they were misled with blandishments and worse. They thought they were dealing with a substantial organisation, perhaps they should not have done so. They expected Streetwise to deal honestly with their applications and there is no evidence that they actually anticipated any fraud. It can be accepted that, as a matter of objective fact, they left the forms concerned in a misleading state. That they were aware that they were misleading people or may mislead lenders was not put to them. In any re-exercise of power, the cause or place of the plain carelessness of the borrowers is to be given significance, which conclusion will involve the capacity of the forms to mislead the lender should they be filled in incorrectly or falsely by Streetwise. However, given the way the matter was conducted, it is not to be found that the borrowers intentionally misled anyone or were conscious of the risk of doing so.

[223] For present purposes the important question is whether or not the primary judge was correct (and this Court can apply a similar finding) that the fraud of Streetwise was not reasonably foreseeable by the respondents. This is not a tort case. It can be readily accepted, for the purpose of argument, that if one gives a signed document to a stranger (or someone of whom one has little knowledge) with blank sections to be filled in, which document is to be given to a third party for a business purpose, it is reasonably foreseeable that if the person is dishonest or careless the wrong information may be placed on the documents. That objective analysis is readily acceptable. The primary judge was engaged, however, in a more subtle exercise. He was assessing the people before him and characterising their conduct. All these borrowers trusted Streetwise. In particular with the benefit of hindsight, they should not have done so. Other people in the community may have been more cautious. His Honour found them to be careless. They were careless because they were giving open documents signed by them to commercial persons they had just met. The finding as to lack of reasonable foreseeability was based on the trust of ordinary people who had accepted the blandishments of rogues. That is how his Honour's findings should be understood; they were open and should not be disturbed."

75.              A major aspect of the judgment of the Court of Appeal in Tonto, supra, that is relevant to the proceedings before the Court, as presently constituted, is the analysis of agency for the purpose of loan arrangements. Accepting, without deciding, that the arrangements between Permanent Custodians and Horizon are similar to the arrangements between Tonto and Streetwise, it could, in those circumstances, not be said that Horizon was an agent of Permanent Custodians. However, for current proceedings, the issue is not particularly significant for reasons that will become obvious.

76.              Nevertheless, without reciting them, the principles applied by the Court of Appeal in Tonto, supra, are principles applied by me to the question of whether Horizon is an agent of Permanent Custodians.

Consideration of defendant's submissions

77.              I have already dealt with the factual contentions and findings of fact, reciting extensive excerpts from the transcript, relating to the attitude of Ms McLanders to her loan and what she understood she was seeking to effect.

78.              The defendant relies upon Ms McLanders' lack of sophistication in commercial matters. There is no suggestion that Ms McLanders did not sign the documents involved. There is also no suggestion to the contrary of Ms McLanders' evidence that the misleading aspects of the document she signed were filled in after her signature had been placed on the document. The overwhelming inference is that the blank spaces were completed by Mr Kumar and then lodged with Horizon. I so find.

79.              As already stated, Mr Kumar was Ms McLanders' agent. It is not only for that reason that Ms McLanders, as a matter of what is just and fair, should be bound by his conduct. As is made clear from the extracts of the transcript in which Ms McLanders described the arrangement that she sought to effect, the trust and reliance on Mr Kumar in completing the forms, and her understanding of the effect of leaving blank spaces in the documents (particularly her acceptance that she understood at the time that she was facilitating actions that may mislead Permanent Custodians), the direction to pay was a direction generally consistent with the arrangement that Ms McLanders was seeking to implement with Mr Kumar, namely, a loan of $75,000 from Permanent Custodians to be paid into an account from which Mr Kumar could on-lend for Ms McLanders to receive interest.

80.              The submissions of Ms McLanders rely heavily on the lack of procedure to ensure that a borrower is properly identified and understands the terms of the loan. Yet there is nothing in the terms of the loan that are said to be inconsistent with the understanding of Ms McLanders at the time that the arrangement was sought. Further, whatever be the shortcomings in the identification of borrowers, Permanent Custodians, either themselves or through Horizon, sighted a number of identifying documents, including the passport and drivers' licence, already described. More importantly, there was no mistake in the identification of the borrower. If there were difficulties or loopholes in the process adopted by Permanent Custodians and/or Horizon they are not loopholes that were causative of any damage or unjustness.

81.              It cannot be said of any of the terms of the Loan Agreement that they are burdensome, harsh or wrongful. No complaint is made as to the level of the interest rates. No complaint is made that the charges are penalties rather than proper recompense for the moneys that were borrowed and/or the protection of the lender.

82.              Neither the terms of the contract nor the processes involved in entering into the Loan Agreement can be described, in ordinary parlance, as burdensome, harsh or wrongful. None of these processes are contrary to the ordinary standards of fair play.

83.              I take into account that there needs to be certainty in commercial dealings and that persons who knowingly sign documents, understanding the nature of the document being signed, ought to be responsible for the arrangement into which they understand they are entering. In that sense, people are, and need to be, responsible for the debts that they knowingly incur and should be kept to bargains, which are freely entered.

84.              At the same time the Contracts Review Act, and the other statutory provisions, are protections which society, through the legislature, considers important in the proper regulation of relationships, commercial and otherwise. If the conduct of Permanent Custodians (or Horizon) were such as to offend business morality, then it would be more important to ensure that those duped or misled are protected from such immorality. Likewise, it is important that there be appropriate protection to ensure that inappropriate borrowers are not induced to incur debts beyond their means or beyond their ability to repay.

85.              Nevertheless, in this case, neither Permanent Custodians nor Horizon have facilitated an obvious risk or fraud. Nor have they involved themselves in the lax operation of appropriate safeguards. They have not induced, duped or misled Ms McLanders.

86.              If there be recklessness, it has not been conduct of Permanent Custodians or Horizon that has been reckless. To the extent that recklessness involves a knowing intention or perception of risk in the conduct in which a person is engaged, it is Ms McLanders who has been reckless, on her own testimony. Permanent Custodians has dealt honestly with the application before it (as did Horizon). Neither has taken advantage of a known or foreseeable disadvantage, special or otherwise, suffered by the borrower.

87.              As stated, nothing was achieved by the Loan Agreement that Ms McLanders did not desire. Ms McLanders trusted Mr Kumar and it was her conduct that facilitated the fraud or increased the risk of fraud. Neither Permanent Custodians nor Horizon facilitated the fraud or increased its risk and they, as a matter of fairness, ought not be held liable.

88.              The first aspect that is, therefore, necessary to recite, by way of the submissions of the defendant, is the issue relating to the relationship between Permanent Custodians, AMS, AFIG and Mr Kumar. The Court has already made findings that the evidence does not support a proposition that Mr Kumar was an agent of Horizon, nor, in turn, Permanent Custodians. In some senses, the relationship between Permanent Custodians, AMS and AFIG is somewhat irrelevant. I will treat Permanent Custodians, AMS and AFIG as if they were one and the same.

89.              Ms McLanders' submission that Permanent Custodians were able to establish a network of brokers who would meet with potential borrowers and seek to source loan applications for submission to AFIG without having to incur the capital cost otherwise involved in establishing its own network is accurate. It is also accurate to suggest that the arrangement effectively outsourced "the whole of the retail operation involved in the procurement of loan applications".

90.              As already stated, I do not accept that Mr Kumar worked for or was associated with Horizon. Even if he were "associated with Horizon" it would be impossible, on the evidence before the Court, to determine that he was associated with Horizon other than peripherally or in a manner that rendered his conduct independent of Horizon.

91.              The submission as to the difficulties with the conduct of Horizon and/or Permanent Custodians has merit. There was no direct meeting with Ms McLanders by any person associated with either Horizon or Permanent Custodians (unless one were to conclude that Mr Kumar was associated with Horizon). Further, there was no independent investigation of the disclosed earnings of Ms McLanders.

92.              Nevertheless, the material presented to Horizon and upon which it and Permanent Custodians relied included material identifying Ms McLanders and her signature (which accorded with the signature on the documents), two pay advices, which corroborated the false material relating to earnings, and a letter attesting to the employment by a person who, on the face of the document, was independent of Ms McLanders.

93.              Further, the completion material was sent directly to Ms McLanders at her home address. Ms McLanders made no complaint as to the arrangements described therein. Nor would one expect her to have a complaint. The evidence recited above makes clear that Ms McLanders trusted Mr Kumar implicitly.

94.              It was Ms McLanders' intention to borrow $75,000. This intention was effected. It was Ms McLanders' intention to have Mr Kumar on-lend that money to third parties and obtain the income associated with that subsequent loan arrangement. This may also have occurred. The moneys were paid into account and, at least in part, paid some of the liability to Permanent Custodians.

95.              The unjustness associated with the arrangement relates to the arrangement between Ms McLanders and Mr Kumar in the subsequent lending to third parties or Mr Kumar's use otherwise of the moneys made available to him. The arrangement between Ms McLanders and Permanent Custodians effected precisely that which Ms McLanders wanted. The provision of the material in those applications that was misleading or deceptive was facilitated by Ms McLanders. Further, the misleading conduct was executed for the purpose of achieving that which Ms McLanders desired as an outcome in the arrangement between her and Permanent Custodians.

96.              While I accept, as submitted by Ms McLanders, that the evidence discloses Ms McLanders had no direct recollection of the transaction involving the request for completion to the account DLM Renovations, this transaction was disclosed in the letter from Paul C Fabian & Co to Ms McLanders, dated on the day of the transaction (Exhibit A, Volume 2, page 236).

97.              No attempt has been made to suggest that, if Ms McLanders were unhappy with that arrangement, the transaction could not have been reversed at the time Ms McLanders first saw the letter from Paul C Fabian & Co.

98.              It may be true, as submitted by Ms McLanders, that Mr Kumar did not "invest" the money on behalf of Ms McLanders. But that is not the result of any conduct of Permanent Custodians (or Horizon) or the result of the terms of the Loan Agreement.

99.              Much attention was paid to the relationship between Permanent Custodians and Horizon. I do not accept that an analysis of the documents renders Horizon an agent of Permanent Custodians. I apply to the documentation the same principles as were applied by the Court of Appeal in Tonto, supra.

100.          Even accepting the analysis of the documentation submitted by Ms McLanders, I do not accept that for relevant purposes, Horizon had authority to bind AFIG, AMS or Permanent Custodians in a manner, which rendered it an agent of Permanent Custodians.

101.          As to the submission that no debt is owed, that submission depends upon the proposition that there was no direction given by Ms McLanders to complete the loan in the manner effected. I reject that submission. There is a direction, signed by Ms McLanders, to complete the loan precisely in the manner it was completed. Further, even if the terms of the disbursements were added after Ms McLanders' signed the document, on the evidence before the Court, Mr Kumar inserted them.

102.          Mr Kumar was the agent of Ms McLanders. The improper or inappropriate conduct of Mr Kumar cannot be sheeted home to Permanent Custodians. Moreover, given the notice that was sent, on completion or immediately after the completion was effected, to Ms McLanders as to the manner in which the moneys were disbursed, nice questions arise as to whether Ms McLanders would be estopped from now asserting that the completion was not in accordance with her wishes.

 103.          In any event, Ms McLanders does not so assert. Her oral testimony gives rise to the inference, which I draw, that a completion in accordance with Mr Kumar's writing was generally a completion that she supported. The completion direction was in accordance with the then wishes of Ms McLanders. The submission is an ex post facto justification to overcome the unjustness of subsequent dealings between Ms McLanders and Mr Kumar.

 104.          As a consequence of the finding of fact that Ms McLanders signed the document and the document was in accordance with that which Ms McLanders then desired, i.e. to provide the money to Mr Kumar for his reinvestment and to trust him to look after her interest, the money has been paid in a manner consistent with Ms McLanders' direction and not in a manner that gives rise to any unjustness.

 105.          Even though the most relevant of the issues in s 9(2) of the Contracts Review Act have already been dealt with in the reasons, it is necessary, given the terms of the subsection, to state that I have had regard to each of the matters set out in s 9(2) of the Contracts Review Act. I will briefly deal with each of them in turn.

 106.          There is a material inequality in bargaining power between Permanent Custodians, on the one hand, and Ms McLanders on the other. That inequality did not affect the bargain struck.

107.          The terms of the contract are, as stated, not unfair or unjust, but the contract was not the subject of negotiation. Nor was it reasonably practicable for Ms McLanders to negotiate for the alteration of or to reject any of the provisions of the Loan Agreement. Nevertheless, I do not consider either of those criteria to give rise to an unjustness, given that no aspect of the Loan Agreement is unjust.

 108.          As at least implicitly stated already, no aspect or provision of the contract imposes conditions on Ms McLanders which are unreasonably difficult to comply with or not reasonably necessary for the protection of legitimate interests of Permanent Custodians. Likewise the criterion prescribed by s 9(2)(e) is not a relevant consideration in the circumstances of the conduct leading up to the making of this contract or the terms of the contract itself.

109.          The relative economic circumstances, educational background and literacy of Ms McLanders, relative to Permanent Custodians (if that be allowed given the exception to corporations in s 9(2)(f)(i) of the Contracts Review Act) is manifest and, were the terms of the contract different or oppressive, even marginally, would have put Ms McLanders at a disadvantage. However, no complaint is made about the terms of the Loan Agreement as between Ms McLanders and Permanent Custodians. As already stated, not even the interest rates are the subject of complaint. Likewise, whatever be the form of the contract, Ms McLanders understood the conditions of the contract, the necessity to repay the loan and understood the consequences of non-repayment. Ms McLanders, as already stated, understood the arrangement with Permanent Custodians. Ms McLanders misunderstood the trustworthiness of Mr Kumar.

110.          The latter comment brings me to the criteria in s 9(2)(f)(i) and, to a lesser extent, s 9(2)(h) of the Contracts Review Act. Ms McLanders understood the provisions of the contract and their effect and she is the party seeking relief under the Contracts Review Act. Further, the knowledge and understanding of Ms McLanders cannot be separated from the knowledge and understanding of Mr Kumar in evaluating a number of these aspects. Ms McLanders received independent expert advice. Unfortunately for her, that expert advice was given by a person who proved to be untrustworthy. But the advice was from a person purporting to act in her interests and not purporting to act in the interests of Permanent Custodians or any of the other actors in the formation of the contract.

111.          I have already remarked that there was no undue influence, unfair pressure or unfair tactics exerted on Ms McLanders by any other party to the contract, by Horizon or any person acting for Horizon in any relevant sense. As earlier stated, I have taken into account each and every one of the criteria in s 9(2) including the similarity of other contracts that I infer were executed by Permanent Custodians and the commercial setting of the contract. For the reasons already given, I do not consider that the contract, or the circumstances leading to its formation, were unjust, except as between Ms McLanders and Mr Kumar, who in every relevant sense, was quite separate from Permanent Custodians and Horizon.

112.          For the foregoing reasons, the claim under the Contracts Review Act must fail. The claim under the general law and other statutory protections of like effect, raised by Ms McLanders, also fails. Further, there is money owing under the Loan Agreement which is payable.

113.          The Court has great sympathy for the predicament in which Ms McLanders is now placed. Nevertheless, the unjustness perpetrated has not been perpetrated by Permanent Custodians. It is a result of a somewhat naïve trust in a person whose conduct should have given rise to serious misgivings.

114.          Whatever be the shortcomings in terms of investigation, Permanent Custodians (and Horizon) had documents signed by Ms McLanders, in original; documents confirming and corroborating both her signature and her identity; and seemingly independent documents confirming her employment and wage.

115.          Permanent Custodians are entitled to possession and to payment of the debt. To the extent it is of any use, Ms McLanders is entitled to relief from Mr Kumar on the cross-claim and otherwise the cross-claims shall be dismissed.

116.          I direct the plaintiff to provide a Short Minute of Order reflecting these reasons for judgment, including judgment for the plaintiff on the statement of claim, judgment for the cross-claimant, Ms McLanders, against the cross-defendant, Mr Kumar, and judgment for the cross-defendant, Permanent Custodians Ltd, in the second cross-claim by Ms McLanders.

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