Plaintiff, the mortgagor of a business, sought to evade a collateral advantage that the value of the loan and its resulting interest was recalibrated when there were movements in the exchange rate between the sterling and Swiss franc.
Browne-Wilkinson J rejected Plaintiff’s claim.
An index linked money obligation was not against public policy and is therefore valid (it is in fact a more accurate way to determine inflation than RPI because governments can more easily distort the latter and the Swiss currency was fairly stable).
A term collateral to the main mortgage agreement was only unfair and unconscionable if it was imposed in a morally reprehensible manner.
The court might assume that an unfair advantage had been taken of the borrower if there were an unusual or unreasonable stipulation, but that depended on the facts, that the Swiss franc uplift was not a premium and the parties were of equal bargaining power so that, while the terms may have been unreasonable, they were not unfair, oppressive or morally reprehensible.
He denied that Goff J really meant to establish a test of reasonableness rather than unconscionability in Cityland, because in that case the plaintiff failed on either.
(Bishop and Hindley suggest that this case is reconciled with Citylandbecause there is a different test for businesses- in Multiservice- and individuals – in Cityland, as evidenced by BW’s references to bargaining power. They are more likely to find unconscionable behaviour in the case of a peculiar term against an individual).
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