I appeared in a case before Jackson J where a guarantor sought to avoid an action for recovery of possession by asserting the mortgage was void for statutory unconscionable conduct.
The guarantor was unsuccessful in so doing, and the court held that if restitution for the loan is not offered, the mortgage ought not be avoided.
The result was that even if s12CB ASIC Act had been made out (cognate to ss 21 & 22 ACL) it would have been insufficient to invoke relief.
Where equitable relief avoiding loans & their securities is sought for breach of statute, the usual requirement is "to do equity by making restitution to the lender of the advances made under the loan contract as a condition of the relief avoiding the loan agreement & setting aside the mortgage": at .
Even if the section was engaged, setting aside the loan & securities would not compensate the borrower for being worse off, but rather, punish the lender & give the borrower the undue windfall of the full benefit of the advance absent restitution for it.
The decision addresses the usual matters often raised by recalcitrant debtors who seek to sheet blame home to a lender for making the advance requested of it, including that “asset based lending” is sufficient to impugn a mortgage.