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Key decisions

  • Stubbings v Jams 2 Pty Ltd [2022] HCA 6
  • Kozarov v Victoria [2022] HCA 12


Unconscionable conduct

In the High Court decision of Stubbings v Jams 2 Pty Ltd [2022] HCA 6 (16 March 2021) the High Court was required to determine whether the respondent (‘Jams’) engaged in unconscionable conduct when it secured an asset-based loan from the appellant (‘Stubbings’). The resolution of this issue ultimately hinged on what Jams’ agent knew.

Stubbings had lived in a rental property and worked repairing boats for the property owner. After Stubbings fell out with the owner, he found himself unemployed and needing to move. Stubbings’ personal finances were also something of a mess. Stubbings was in arrears on rates payments for two houses he owned in Narre Warren (both mortgaged) and had not filed tax returns for several years. After his home loan application was rejected by a bank, Stubbings was introduced to Zourkas. Zourkas styled himself as a ‘consultant’ who introduced potential borrowers to Ajzensztat Jeruzalski & Co (‘AJ Lawyers’). AJ Lawyers assisted clients (like Jams) in making secured loans. Stubbings told Zourkas that he wanted to buy a little house to live in. Instead Zourkas persuaded Stubbings to purchase a five acre property with two houses on it in Fingal, in a green wedge, for about $900,000. Zourkas told Stubbings that he could borrow a sum of money to discharge the mortgages over the Narre Warren properties, buy the Fingal property and have $53,000 left over to pay the first three months’ interest on the loan. Zourkas also advised Stubbings that he could sell the unencumbered Narre Warren properties and, with the proceeds of the sale, reduce the loan to about $400,000 which he could then refinance with a bank at a lower rate of interest.

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