Lender responsible for unconscionable conduct of intermediaries

In Perpetual Trustees Victoria Ltd v Burns [2015] WASC 234, the Court considered the enforceability of loans granted by a lender through intermediaries in circumstances of unconscionable conduct.

BACKGROUND

The plaintiff lent the defendants, each on a disability pension, over $840,000 in a series of six "low doc" loans used to purchase a number of properties over a period of several years.

Both defendants had significant disabilities and it was contentious whether either defendant fully appreciated and understood the nature of the security arrangements and documentation they had entered into.

Various intermediaries assisted the defendants in applying for and obtaining their loans. The agreements between the intermediaries and the plaintiff purported to deny the existence of any "agency" type arrangement.