Georgio is 73 and in the mid-stages of dementia. His wife, on whom he had relied for many years died three years ago. He owns his home outright-that is, there is no mortgage on it – and it is currently valued at $450,000. Georgio receives a war widower’s pension and has a number of small investments that, all up, bring in about $400 a week. He is completely reliant on his daughter, Lila for all his needs.

Lila convinced Georgio to approach Easy Finance Company and enter into an agreement with it to borrow $60,000. She told him that the money was needed for an operation on his grandson, but it was actually for a business venture that Lila wanted to enter into. She told Georgio that she would handle the documentation and the loan repayments once the money was approved, and that he was not to worry.

Georgio duly made an application to the finance company with the help of Lila, who filled out the entire application. After Easy Finance investigated Georgio’s financial background, it approved his loan on the basis of his ownerships of his house. A first mortgage was taken out over the property as security. When Georgio attended the loan company’s office with Lila, an employee told him that, as the loan was for less than $100,000, it was not necessary for him to consult a solicitor. Therefore, there was no need to take the papers away to read or to get independent advice on them. Further, Lila told him that she had read through the documents, and that there was nothing to worry about. Georgio was not told what would happen if Lila failed to make repayments on the loan, nor did he think to ask.

The repayments on the loan-that is, principal plus interest – are $2000 per calendar month, and in fact exceed Georgio’s monthly pension entitlement. Three months into the loan, Lila defaulted and Easy finance is now threatening to sell Georgio’s house.

Advice Georgio, Considering both the common law position and the statutory position,