Reference no: EM133203065

Rhonda was a 70-year-old widow with one child, Christina. Christina is 40 years old and married to Damien. They live together on ten acres in the Blue Mountains, west of Sydney NSW with their two children aged 10 and eight. Rhonda always relied on her late husband in financial and business matters and has little or no experience in the commercial world. Rhonda's only real asset a modest cottage at Skeeterville, NSW valued at $250,000. Rhonda has lived in the small village of Skeeterville all her life and has often stated she will 'die there'. Although mentally as sharp as ever, Rhonda's physical health is starting to fail her, such that she struggles to maintain her home and can no longer cope with the extensive gardens which had long been her pride and joy. She also misses her daughter and grandchildren. In order to assist Rhonda, Christina and Damien suggest that Rhonda sell her Skeeterville property and relocate to the Blue Mountains. Christina wants to have her mother closer to her as it will allow her [Christina] to return to part-time work as Rhonda can help mind the children. Christina's old boss had recently offered her part-time back at her old job, stating that he needed someone "urgently". Christina is keen to take up this offer. Christina and Damien offer to transfer half their land into Rhonda's name and allow her to erect a new, smaller dwelling on that portion (a 'granny flat'). They know that it will take all the money from the sale of the Skeeterville property to erect the new house, so they offer to transfer the land as a gift. After discussing this, Rhonda agrees. No documentation is completed in witness of this arrangement. She does enter into a contract with a building company to construct the 'granny flat' on Damien's and Christina's land in a suitable location which would allow for equal division of the land into two five acre plots.1 The price of the dwelling is $240,000. Unfortunately, properties in Skeeterville are not in high demand and Rhonda reluctantly must settle on a sale price of $220,000.

In order to fund the $20,000 shortfall, Rhonda decides to consult a financial planner seeking advice as to her borrowing options. She sees Barry Blunder, a licensed financial advisor based at Katoomba.2 Barry tells Rhonda that banks and similar institutions all charge too much, but that he has a client who is looking for such an opportunity, Blue Sky Property Investing (BSPI). Barry fails to disclose to Rhonda that he is a director of that company. In addition, the interest rate offered by BSPI is 5% above that readily available in the market. The loan is unsecured. These arrangements are duly entered into. The granny-flat is completed in accordance with the contract and Rhonda moves into her new home. All is well for a while, but Damien becomes increasingly annoyed at Rhonda who seems to spend more time at their house than in her own. After some months Damien gives Christina an ultimatum: "it's her or me. Either your mother leaves or I do". Following a heated argument between the three, Rhonda reluctantly agrees to sell up and return to Skeeterville. Rhonda consults a solicitor. He informs her that she has no property to sell and that the house she constructed legally belongs to Damien and Christina as the land upon which it stands was never sub-divided at all. The solicitor is also aghast when he reads the contract for loan between Rhonda and BSPI and tells her that the interest rate is "outrageous" and that numerous other terms contained in it are outside the accepted industry practices for such loans. He asks why she did not seek legal advice before entering into it, to which Rhonda replies "Barry seemed in a hurry to have me sign it then and there and got quite annoyed when I asked to have someone else have a look at it for me".

Advise Rhonda what remedies she may have against Damien and Christina. Also advise her in relation to her dealings with Barry Blunder and the enforceability of the contract with BSPI.

Word Limit: 2,000 (words), excluding footnotes and bibliography. (A bibliography is required). All assignments must comply with the AGLC, 4th edition.