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

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

The loan and mortgage agreements in these appeals were found to be unjust under the Contracts Review Act 1980 (NSW) due to being procured through the dishonest and fraudulent conduct of the sub-introducer/broker (Streetwise) and the lenders' systemic failures to rigorously apply lending guidelines and to guard against inherent risks in their chosen commercial arrangements, even though legal agency was not established. The relief granted was tailored to avoid unjust results, reflecting the varying degrees of responsibility and participation by each borrower.

Jurisdiction
Australia
Judgment Date
21 December 2011
Procedural Posture
Appeal / Court of Appeal Judgment
Outcome
Appeals allowed in part; primary orders set aside and substituted with relief tailored as between parties reflecting degrees of injustice and responsibility.
Legal Topics
['unjust Contracts' 'agency Principal Relationship' 'fraud in Loan Applications' 'systemic Lender Risk and Lending Guidelines' 'asset Based Lending' 'contracts Review Act 1980 (nsw)' 'unconscionable Conduct Under ASIC Act']
['contract Law' 'banking and Finance Law' 'agency Law' 'consumer Law'] ['unjust Contracts' 'agency Principal Relationship' 'fraud in Loan Applications' 'systemic Lender Risk and Lending Guidelines' 'asset Based Lending' 'contracts Review Act 1980 (nsw)' 'unconscionable Conduct Under ASIC Act']

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Procedural Posture

Appeal / Court of Appeal Judgment

Legal Issues

  1. 1 ['Whether the loan and mortgage contracts were unjust under Contracts Review Act 1980 (NSW) in circumstances involving fraudulent conduct by a mortgage introducer/sub-introducer' 'To what extent the actions and knowledge of the mortgage originator/broker are attributable to the lender under agency law' 'Characterisation and consequences of asset-based lending where lending guidelines are not followed' 'Whether the conduct of the lenders or their agents amounts to unconscionable conduct under statutory provisions']

Ratio Decidendi

The loan and mortgage agreements in these appeals were found to be unjust under the Contracts Review Act 1980 (NSW) due to being procured through the dishonest and fraudulent conduct of the sub-introducer/broker (Streetwise) and the lenders' systemic failures to rigorously apply lending guidelines and to guard against inherent risks in their chosen commercial arrangements, even though legal agency was not established. The relief granted was tailored to avoid unjust results, reflecting the varying degrees of responsibility and participation by each borrower.

Court Disposition

Appeals allowed in part; primary orders set aside and substituted with relief tailored as between parties reflecting degrees of injustice and responsibility.

Orders

  • ['Mortgagee Tonto Home Loans Australia Pty Ltd to deliver up a registrable discharge of mortgage to Tavares and Rowe, conditional on payment of sums referred to in Supreme Court order 4 of 26 February 2010.' 'Permanent Trustee Company Limited (or FirstMac Limited, to extent of acceded rights) to deliver up a...