Category Archives: Equity

The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239 | 28 October 2008

ON 28 OCTOBER 2008, Justice Owen of the Supreme Court of WA delivered The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239 (28 October 2008).

http://www.austlii.edu.au/au/cases/wa/WASC/2008/239.html

One of Australia’s longest cases.

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Bofinger v Kingsway Group Limited [2009] HCA 44 | 13 October 2009

ON 13 OCTOBER 2009, the High Court of Australia delivered Bofinger v Kingsway Group Limited [2009] HCA 44 (13 October 2009).

The High Court held that guarantors of a secured loan may recoup contributions they made to the repayment of the loan to a first mortgagee from the remaining surplus securities before the surplus is applied to repay any second or subsequent mortgagee with security over the same property, even if the guarantors have also guaranteed the second or subsequent loans. The guarantors were found the be subrogated to the first mortgagee. Upon repayment of the first loan, first mortgagee had a fiduciary obligation to in good conscience provide the guarantors with the surplus funds and remaining properties.

On the principle of unjust enrichment and how it applies to subrogation, Gummow, Hayne, Heydon, Kiefel and Bell JJ said at [85]:

“The appeal to this Court in Friend v Brooker [63], which concerned the equitable doctrine of contribution, was correctly conducted on the footing that the concept of unjust enrichment was not a principle supplying a sufficient premise for direct application in a particular case. The same is true of the equitable doctrine of subrogation. The oral submissions for the Solicitors correctly recognised this.”

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Elderly widow awarded costs in pro bono litigation

In the matter of Mainieri & Anor v Cirillo [2014] VSCA 227 (17 September 2014), the Victorian Court of Appeal awarded costs to the successful plaintiff who was represented on a pro bono basis.

Rita Cirillo sold her property and contributed the proceeds towards her son and daughter-in-law’s mortgage on the condition that she live with them indefinitely and that they take care of her. Her relationship with her son and daughter-in-law later broke down and it was not longer practical for her to remain living with them. When she sought repayment, her son and daughter-in-law alleged that the monies were an out and out gift.

The Court of Appeal held that Cirillo was entitled to an equitable lien or charge over the property to secure repayment with interest.

On the question of costs, there was a dispute over whether or not the Cirillo was entitled to costs as she was represented on a pro bono basis. The court held that the costs payable to her lawyers, Clayton Utz and Dr Glover, were payable under costs agreements that were contingent upon a costs order being made.

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Commonwealth Bank of Australia v Iinvest Pty Ltd (In Liq) [2014] NSWSC 1257

Commonwealth Bank of Australia v Iinvest Pty Ltd (In Liq) [2014] NSWSC 1257

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Garcia v National Australia Bank Ltd [1998] HCA 48 | 6 August 1998

ON 6 AUGUST 1998, the High Court of Australia delivered Garcia v National Australia Bank Ltd [1998] HCA 48; 6 CCL 81; 194 CLR 395; 155 ALR 614; 72 ALJR 1243 (6 August 1998).

http://www.austlii.edu.au/au/cases/cth/HCA/1998/48.html

The High Court considered its earlier decisions of Yerkey v Jones [1939] HCA 3; (1939) 63 CLR 649, Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 as well as the English decision of Barclays Bank Plc v O’Brien [1994] 1 AC 180.

Yerkey v Jones provides a special rule for married women who, regardless of other characteristics, voluntarily guarantee their husband’s loans. There are two limbs: (1) a wife may have a guarantee set aside if the consent was obtained by undue influence, unless she received independent advice (at 649, per Dixon J); and (2) a wife has a prima facie right to have a guarantee set aside if she failed to understand the effect of the guarantee or its significance, unless steps were taken by the lender to inform the wife of such matters (at 683, per Dixon J).

Commercial Bank of Australia Ltd v Amadio is the leading Australian case on unconscionability. Unconscionable dealings are defined as the “unconscientious use of a superior position to the detriment of a party who suffers some special disability or is or is in some special position of disadvantage” (Mason J at 461). Such dealings occur when “one party by reason of some condition or circumstance is placed at a special disadvantage vis-a-vis another and unfair or unconscientous advantage is taken” ((Mason J at 462). In other words, entry into the contract must be caused by taking advantage of a special disability, not mere inequality or impaired judgment.

In Garcia, the High Court rejected the submission that the rule in Yerkey v Jones had been overruled by or subsumed in Amadio. The court at [34] per Gaudron, McHugh, Gummow and Hayne JJ reaffirmed Yerkey v Jones as being a separate rule of unconsciounability (1) applying to married women and not dependant on any presumption of undue influence by the husband over the wife or the husband as acting as agent for the creditor and (2) dependant on “the surety being a volunteer and mistaken about the purport and effect of the transaction, and the creditor being taken to have appreciated that because of the trust and confidence between surety and debtor the surety may well receive from the debtor no sufficient explanation of the transaction’s purport and effect”.

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Sydney, Australia

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