Legal Hypothetical: Lucy gets last laugh?

BILL and Matilda recently purchased a ‘renovator’s delight’.

Lucy, a young builder, was hired by Bill and Matilda to assist with the renovation.

The three formed quite the team and enjoyed long working days and the not-so-occasional knock-off drinks.

Their friendship grew strong.

One day, Lucy informed her friends that her rental accommodation was coming to an end, and that she was struggling to find housing, as she owns dogs.

The three decided that Lucy could purchase the property from Bill and Matilda.

As bank finance was not yet an option for Lucy, Bill and Matilda suggested vendor finance.

Mortgage documents were drawn-up.

Bill and Matilda valued the property at $650,000 and Lucy agreed, not knowing that only six months prior Bill and Matilda paid just $400,000.

Under the loan, Lucy would pay $500 principal and interest per week for two years, then pay the balance of $625,000 to settle the loan.

Noting that Lucy thought in two years she could obtain bank finance.

At the end of the two years, Lucy was unable to obtain finance as lenders valued the property at $475,000.

Bill and Matilda pursued legal action to recover the loan.

The Court considered many factors including whether the plaintiffs had acted unconscionably when negotiating the loan with Lucy.

However, as the facts did not concern exploiting a vulnerable borrower due to her lack of education, unfamiliarity with English, or disability, it instead looked at whether the loan contract was just and reasonable.

The Court determined that the contract price was unjust and amended the loan principal to $450,000.

The Court calculated that the outstanding balance was $415,000.

This ruling shines a spotlight on the Court’s power to ensure equity in contractual agreements. In this instance, the Court has ignored the convention of ‘let the buyer beware’.

Thank you to Anthony Fogarty for his assistance with this column.

Email Manny Wood, principal solicitor at TB Law at or call him on (02) 66 487 487.

This column is only accurate at today’s date and cannot be relied upon as legal advice.

By Manny WOOD, Solicitor

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