Baira v RHG Mortgage Corporation Limited

In the New South Wales Court of Appeal, the appellants, Rosa Baira and Rosario and Domenica Ianni, sought to challenge findings made by a trial judge in proceedings brought against them by RHG Mortgage Corporation Limited. The dispute concerned loan agreements and guarantees, with the appellants alleging issues with their capacity at the time of contract formation, the harshness or injustice of the contractual terms, and that they were unaware of significant changes to their status as borrowers.

The Court of Appeal was required to determine whether the trial judge's rejection of the appellants' evidence regarding their credibility was contrary to compelling inferences or glaringly improbable, and whether the judge had failed to use or had palpably misused his advantage in hearing the witnesses. Further, the Court considered whether a retrial should be ordered, particularly in light of allegations of mental disability affecting contractual capacity and the appellants' alleged lack of awareness of their changed status as primary borrowers following a loan restructuring. The Court also examined the application of provisions relating to harsh or unjust contracts, including sections 12CA and 12CB of the *Australian Securities and Investments Commission Act 2001* (Cth), section 51AC of the *Trade Practices Act 1974* (Cth), and the *Contracts Review Act 1980* (NSW).

The Court of Appeal applied principles established in cases such as *Fox v Percy*, *Devries v Australian National Railways Commission*, and *Abalos v Australian Postal Commission* concerning appeals against findings of fact and credibility. The Court found that the trial judge's assessment of credibility was flawed, necessitating a retrial. The Court reasoned that the distinction between challenging credibility and challenging inferences from admitted or found facts was crucial, and that the trial judge's approach had blurred this distinction.

Consequently, the Court of Appeal set aside certain orders made by the Common Law Division, specifically those relating to costs, and ordered a retrial of the claims by RHG Mortgage Corporation Limited against each of the appellants, as well as the first cross-claims brought by the appellants. The Court also ordered the respondents to pay the costs of the appellants in the Court of Appeal.