Category Archives: Commercial Law

Equity – Guarantee – Mortgage – Guarantor under disability – Setting aside – Unconscionable bargain – Misrepresentation

Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 (12 May 1983).

http://www.austlii.edu.au/au/cases/cth/HCA/1983/14.html

“Equity – Mortgage and guarantee – Right to set aside – Unusual transactions between bank and customer – Bank’s failure to disclose to mortgagor guarantor – Misrepresentation.

Guarantee – Guarantor under disability – Dealing with bank – Bank knowing of disability – Unconscionable bargain – Onus of proof – Whether transaction should be set aside unconditionally.”

An elderly Italian migrant couple had mortgaged land they owned as a guarantee for a loan from the bank to their son’s business. The business then went into liquidation and the bank demanded payment of the guarantee and then attempted to exercise a power of sale over the land.

The Amadios argued that the guarantee and mortgage should set aside as:

  • they spoke limited English;
  • they did not receive independent advice and were not advised to do so;
  • they were not aware of their son’s financial situation, although the bank was; and
  • they mistakenly believed that the liability was limited to $50,000.

The court held that the mortgage and guarantee must be set aside as it was unconscionable for the bank to enter into those transactions in circumstances where the bank through it’s superior bargaining power had gained an unconscientious advantage to the detriment of the Amadios who suffered a special disability.

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Commercial Bank of Australia Ltd v Amadio [1983] HCA 14 | 12 May 1983

ON THIS DAY in 1983, the High Court of Australia delivered Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 (12 May 1983).

http://www.austlii.edu.au/au/cases/cth/HCA/1983/14.html

“Equity – Mortgage and guarantee – Right to set aside – Unusual transactions between bank and customer – Bank’s failure to disclose to mortgagor guarantor – Misrepresentation.

Guarantee – Guarantor under disability – Dealing with bank – Bank knowing of disability – Unconscionable bargain – Onus of proof – Whether transaction should be set aside unconditionally.”

An elderly Italian migrant couple had mortgaged land they owned as a guarantee for a loan from the bank to their son’s business. The business then went into liquidation and the bank demanded payment of the guarantee and then attempted to exercise a power of sale over the land.

The Amadios argued that the guarantee and mortgage should set aside as:

  • they spoke limited English;
  • they did not receive independent advice and were not advised to do so;
  • they were not aware of their son’s financial situation, although the bank was; and
  • they mistakenly believed that the liability was limited to $50,000.

The court held that the mortgage and guarantee must be set aside as it was unconscionable for the bank to enter into those transactions in circumstances where the bank through it’s superior bargaining power had gained an unconscientious advantage to the detriment of the Amadios who suffered a special disability.

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Sydney, Australia

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Korda v Australian Executor Trustees (SA) Limited [2015] HCA 6

ON 4 MARCH 2015, the High Court of Australia delivered Korda v Australian Executor Trustees (SA) Limited [2015] HCA 6 (4 March 2015).

http://www.austlii.edu.au/au/cases/cth/HCA/2015/6.html

The High Court allowed an appeal against a decision of the Victorian Court of Appeal, declaring that the respondent was not entitled to certain monies that were payable to a forest company (“the third appellant”) under Land Sale Contracts and a milling company (“the fourth appellant”) pursuant to a tree Sale Agreement. The Court held that the proceeds of the sale of at the timber and land scheme payable to the third and fourth respondent were not subject to an express trust in favour of the scheme of investors.

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Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66 | 23 December 1938

ON 23 DECEMBER 1938, the High Court of Australia delivered Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286 (23 December 1938).

http://www.austlii.edu.au/au/cases/cth/HCA/1938/66.html

Only nominal damages should be awarded when a breach of contract causes no identifiable loss. The right to nominal damages follows as “a matter of course”.

A term of a contract will be regarded as a condition if it goes to the very substance of the contract.

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Sydney, Australia

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Australian Knitting Mills Ltd v Grant [1933] HCA 35 | 18 August 1933

ON 18 AUGUST 1933, the High Court of Australia delivered Australian Knitting Mills Ltd v Grant [1933] HCA 35; (1933) 50 CLR 387 (18 August 1933).

http://www.austlii.edu.au/au/cases/cth/HCA/1933/35.html

Per Dixon J at 418:

“The condition that goods are of merchantable quality requires that they should be in such an actual state that a buyer fully acquainted with the facts and, therefore, knowing what hidden defects exist and not being limited to their apparent condition would buy them without abatement of the price obtainable for such goods if in reasonably sound order and condition and without special terms.”

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NSW Civil and Administrative Tribunal

The NSW Civil and Administrative Tribunal (NCAT)http://www.ncat.nsw.gov.au/ncat/index.html commenced on 1 January 2014 pursuant to the NSW Civil and Administrative Act 2013 and Civil and Administrative Regulation 2013.

The NCAT takes over the functions of 22 former state tribunals, including:

  • Aboriginal and Torres Strait Islander Health Practice Tribunal
  • Aboriginal Land Councils Pecuniary Interest and Disciplinary Tribunal
  • Administrative Decisions Tribunal
  • Charity Referees
  • Consumer, Trader and Tenancy Tribunal
  • Dental Tribunal
  • Guardianship Tribunal
  • Chinese Medicine Tribunal
  • Chiropractic Tribunal
  • Medical Radiation Practice Tribunal
  • Medical Tribunal
  • Nursing and Midwifery Tribunal
  • Occupational Therapy Tribunal
  • Optometry Tribunal
  • Osteopathy Tribunal
  • Pharmacy Tribunal
  • Physiotherapy Tribunal
  • Podiatry Tribunal
  • Psychology Tribunal
  • Local Government Pecuniary Interest and Disciplinary Tribunal
  • Local Land Boards
  • Victims Compensation Tribunal (transferred into the ADT in June 2013)
  • Vocational Training Appeals Panel.

The NCAT is constituted by a President (a Supreme Court judge), Deputy Presidents of each of the four divisions, a Principal Registrars and Members including Principal Member, Senior Members and General Members.

The NCAT has four divisions:

  • Administrative and Equal Opportunity, which deals with review of administrative decisions of government agencies and resolution of discrimination matters.
  • Consumer and Commercial, which deals with a broad number of disputes about the supply of goods and services, including agent commissions and fees; agricultural tenancies; boarding houses; consumer claims; conveyancing costs; dividing fences; holiday parks (long-term occupancy); home building; motor vehicles; pawnbrokers and second-hand dealers; residential parks; retail leases; retirement villages; social housing; strata and community schemes; tenancy; travel compensation fund appeals.
  • Guardianship, which has jurisdiction over people who live in NSW or hold property or financial assets in NSW: to make guardianship orders for the appointment of a private or public guardian; make financial orders for a private or public financial manager; provide consent for medical or dental treatment; review enduring powers of attorney; review an enduring guardianship appointment; approve a clinical trial involving people with decision-making disabilities.
  • Occupational, including: administrative review of licensing decisions with respect to transport drivers/operators, security guards, builders, real estate agents, motor dealers and repairers, pawnbrokers and second hand dealers, stock and station agents, business agents, travel agents, valuers and licenced conveyancers; professional discipline of occupations governed by a statutory council, board, panel or authority.

The current President is Justice Robertson Wright SC and the Deputy-Presidents are Magistrate Nancy Hennessy, Mr M D Schyvens, Mr Stuart Westgarth, The Hon. Wayne Haylen QC and Judge Kevin O’Connor AM.

The principal registry is located at Level 9, John Maddison Tower, 86-90 Goulburn Street, Sydney NSW 2000, tel 1300 006 228.

The divisional registries are:

  • Administrative and Equal Opportunity: Level 10, John Maddison Tower, 86-90 Goulburn Street, Sydney NSW 2000.
  • Consumer and Commercial: Level 12, 175 Castlereagh Street, Sydney NSW 2000 (also at Liverpool, Hurstville, Newcastle, Penrith, Tamworth and Wollongong).
  • Guardianship: Level 3, 2a Rowntree Street Balmain NSW 2041.
  • Occupational: Level 10, John Maddison Tower, 86-90 Goulburn Street, Sydney NSW 2000.

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Australian Financial Services and Leasing Pty Limited v Hills Industries Limited [2014] HCA 14

ON 7 MAY 2014, the High Court of Australia delivered Australian Financial Services and Leasing Pty Limited v Hills Industries Limited [2014] HCA 14 (7 May 2014).

Australian Financial Services and Leasing Pty Limited (AFSL) had sought to recover monies had and received by the first and second respondents (Hills and Bosch) on the grounds that Hills and Bosch were paid under a mistake of fact arising from a fraud committed by a third party (Sharzynski) who controlled a group of companies (TCP) who traded with Hills and Bosch.

Sharzynski had led Hills and Bosch to expect that monies transferred from AFSL (TCP’s finance company) were for a reduction of debt owed to Hills and Bosch by TCP. On the faith of receiving the monies, Hills and Bosch continued to trade with TCP and chose not to pursue their remedies against TCP for the recovery of outstanding debts. However, the monies had been transferred from AFSL under a mistake of fact induced by a fraud committed by Sharzynski, who had falsified invoices from Hills and Bosch to represent that the monies in question were for AFSL to acquire equipment from Hills and Bosch to be leased back to TCP.

Hills and Bosch argued that on the faith of receiving the monies, they had suffered an irreversible detriment by choosing not to pursue their remedies against Sharzynski and TCP.

The NSW Court of Appeal held that Hills and Bosch were not required to repay the monies as they had established a complete defence that they had changed their position and suffered an irreversible detriment on the faith of the receipt of the payments.

The High Court unanimously rejected AFSL’s appeal of the Court of Appeal’s decision. The High Court held that the relevant inquiry is whether or not the retention of the monies would be inequitable in all of the circumstances and concluded that it would be inequitable if Hills and Bosch were required to repay AFSL. The High Court rejected the approach proposed by AFSL that it must take into account the extent to which Hills and Bosch had been “disenriched” as this principle, like the principle of unjust enrichment, is inconsistent with the Australian law of restitution.

http://www.austlii.edu.au/au/cases/cth/HCA/2014/14.html

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Security of Payment changes

ON 21 APRIL 2014, changes to the Building and Construction Industry Security of Payment Act 1999 took effect with the commencement of the Building and Construction Industry Security of Payment Amendment Act 2013 No 93.

http://www.austlii.edu.au/au/legis/nsw/num_act/bacisopaa2013n93713.pdf

http://www.austlii.edu.au/au/legis/nsw/num_act/bacisopaa2013n93713

The changes include:

  • prompt or maximum payment terms for progress payments
  • a requirement that head contractor claims have a supporting statement declaring subcontractors engaged have been paid what is due and payable
  • a removal of  the requirement that a claim state that it is made under the Act

https://www.procurepoint.nsw.gov.au/supplying/security-payment

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May v Speedway Cammeray (Motor Vehicle) [2008] NSWCTTT 830

May v Speedway Cammeray (Motor Vehicle) [2008] NSWCTTT 830 (5 February 2008).

http://www.austlii.edu.au/au/cases/nsw/NSWCTTT/2008/830.html

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Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234

ON 12 MARCH 1992, the NSW Court of Appeal delivered Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234.

This is one of the earliest instances in which an Australian court was willing to imply a contractual duty of good faith.

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