Reference no: EM133458583

Mary is 78 years old, she owns her home outright without mortgage on it, and it is currently valued at $990,000. Mary receives a weekly pension of $290 per week from the Government. She is reliant on her son, Steve. Steve convinced Mary to approach ANZAC BANK and entered a guarantee agreement with them so that Steve can borrow $80,000. He told her the money was needed for a business venture that Steve wanted to enter. He told Mary that he would handle the documentation and the loan repayments once the money was approved, and that she does not need to worry. Mary duly made a guarantee agreement with ANZAC BANK with the help of Steve, who filled out the entire application. After ANZAC BANK investigated her medical background, it approved the guarantee based on her ownership of his house. The mortgage was taken out over the property as security. ANZAC BANK employee advised Mary that consulting a solicitor or a financial specialist was not necessary. Further, the bank told her that Steve had read through the documents and Mary did not need to have the signed guarantee agreement, and that there was nothing to worry about. Mary was not told what would happen if Steve failed to make repayments on the loan. The repayments for the loan exceeded Mary's weekly pension entitlements. One year into the loan, Steve defaulted, and ANZAC BANK is now threatening to sell Mary's house.

Questions

1. Advise Mary whether ANZAC BANK can enforce the loan guarantee against Mary based on relevant finance-related statutory laws and codes of practice.

2. Advise Mary whether ANZAC BANK can enforce the loan guarantee against Mary based on the common law.