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Case Summary

High Court Declares Asset Lending Unconscionable

Stubbings v Jams2 Pty Ltd [2022] HCA 6

Asset lending is lending that relies on the assets given as security and disregards the borrower’s capacity to service the loan.

Peter Jackson


Mr Jeffrey Stubbings wanted to buy a home to live in. He did not have a regular income, was unsophisticated but owned two investment properties having equity of about $500,000.

Through an intermediary, Mr Zourkas he applied for two loans from Jams 2 Pty Ltd. One loan for about $900,000 for the purchase of the home and a second loan of about $100,000 to cover the first month’s interest, payment of commissions, fees and expenses. He was required to borrow the money through a company and for this purpose set up Victorian Boat Clinic Pty Ltd so that the lender could circumvent the National Credit Code. Mr Stubbings guaranteed the repayment of the loans. He was also required to obtained certificates of independent legal and financial advice.

Mr Stubbings paid the first three months’ interest and then defaulted. The lender started proceedings to recover the debt.

The High Court in considering whether the loan was unconscionable and should be set aside looked at whether Mr Stubbings was in a position of special disadvantage, whether the lender had knowledge of that special disadvantage and exploited its position.

The court found that the certificates of independent advice that the lender heavily relied on were mere window dressing; the documents were drafted by the solicitor for the lender, were not truly independent because the providers of the certificates would only be paid if the Ioan was advanced. The court held that the borrower did have a special disadvantage and it could be inferred that the lender had knowledge of the vulnerability or special disadvantage of the borrower by their “ wilful blindness “ of his true position which was a lack of sophistication and an inability to service the loan. To draw this inference the judges of the court relied heavily on the lending scheme that had been set up by the lender through his solicitor including the way in which the certificates of independent advice were prepared and signed.

The loans, mortgages and the guarantee were set aside as unconscionable.

ACCC and claims for environmental or for green credentials

On 4 October 2022 the ACCC issued a media release indicating an intention to do a sweep of at least 200 companies for misleading environmental claims. The targeted sectors include energy, vehicles, food and drink packaging.

ACCC Deputy Chair Delia Richard said:

“The sweep forms a core part of our work in actively monitoring for “greenwashing “in the market and will help inform what steps businesses can take to improve the integrity of their environmental claims.”

Words and phrases that will attract the attention of the ACCC are:

  • all-natural
  • clean
  • eco friendly
  • environmentally friendly
  • environmentally sustainable
  • responsible
  • carbon offset
  • environmentally responsible
  • ethical

We recommend not using such words or phrases unless the claim is backed up by incontrovertible evidence that support the claim and be precise about the exact environmental benefit with specific information on how this is achieved and measured.


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Principal Lawyer - Dispute Resolution and Insolvency