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Loan agreement. Mortgage. Property law. Property Lawyer. Shire Legal, Miranda, Sutherland Shire, Sydney

Can you be bound by a written agreement even if you claim you didn’t sign it, and the signature on it is a forgery?

estoppel loan agreements mortgage property Jan 17, 2024

Well Nigh Funding No 1 Pty Ltd v Tang [2023] NSWDC 564

This matter concerned a lender seeking to recover the outstanding balance of a 2017 loan it made to the defendant, after the defendant made some repayments (including the net proceeds of the sale of the security property at Parramatta) but not enough to payout the total amount owing.

The unrepresented defendant acknowledged that whilst she borrowed money from the lender, she should not have to pay any interest and costs associated with the loan, arguing that she did not sign an agreement (although also agreeing that she ought to pay interest).

The main argument, then, related to the actual amount to be paid under the loan, and if it was the case that here was no interest payable at all, then there was a chance that the defendant was entitled to a refund of part of the monies already paid.

Issue 1 – the written agreement

The defendant contended that she did not sign the written loan agreement, and in response to the lender producing a written agreement purportedly signed by the defendant, the defendant claimed her purported signature was a forgery.

Held – because the defendant failed to prove that the signature was a forgery, and the lender failed to satisfy the Court on the balance of probabilities that the purported signature was the defendant’s, the Court proceeded on the basis that there was no signature on the document that had any legal consequence for the defendant.

Issue 2 – alleged estoppel arising from earlier Supreme Court proceedings

The defendant had lodged a caveat on the title of her own property, in an attempt to stop the lender from exercising its power under the registered mortgage. The resultant Supreme Court proceedings were dismissed by consent, and so the lender argued that the defendant was estopped from arguing that there was no written loan agreement.

Held – the earlier proceedings had not bearing on the present proceedings.

Issue 3 – adoption / estoppel by convention

The defendant knew that she was borrowing money to assist with the property purchase, and that the lender was taking a mortgage.  She also understood that the lender would be charging her interest around 5%. There was also a loan disbursement advice issued by the lender to the defendant’s solicitor, which set out amounts consistent with charges under the written agreement. Once the defendant was definitely aware of the terms of the loan, she took no steps to refinance or sell the property.

The lender argued that even if the defendant did not sign the written agreement, she accepted its terms by her subsequent conduct.

Held – once becoming aware of the terms of the loan agreement, the defendant nevertheless failed to take steps to either refinance or sell, but instead retained the loan funds for her own benefit. Therefore she is bound by the terms of the written agreement because judged objectively her conduct was such that she accepted those terms.

Orders – the defendant was ordered to pay the lender an amount of $135,350.13 being the balance of the loan (including interest).

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