Bakarich v Commonwealth Bank of Australia

The appeal concerned guarantees provided by the appellants to the Commonwealth Bank of Australia in relation to financial accommodation provided to a company, Demson. The appellants contended that the guarantees were unjust and unconscionable, and that they should be discharged due to the Bank's conduct and variations to the principal debtor's loan arrangements. The primary judge had found against the appellants on these issues, determining that the guarantees were executed on specific dates, that there was no unconscionable conduct or misleading conduct by the Bank, and that the contracts were not unjust under the Contracts Review Act 1980.

The legal issues before the Court of Appeal included whether the primary judge erred in his findings regarding the timing of the execution of the guarantees and mortgage, the existence of representations by the Bank concerning the pre-selling of air conditioners, and the Bank's alleged misleading conduct. Further issues concerned whether the guarantees should be discharged due to variations in the principal contracts, whether the guarantees and mortgage were unjust or unconscionable under the Contracts Review Act, and whether the appellants were estopped from challenging the validity of the guarantees by a subsequent acknowledgement. The court also considered the form of relief that might be granted under the Contracts Review Act, including ancillary orders concerning corporate co-guarantors.

The Court of Appeal considered the evidence presented, including the conflicting accounts of the appellants and the Bank's witnesses. The primary judge's findings of fact, particularly regarding the credibility of witnesses and the timing of the execution of documents, were central to the appeal. The court examined whether the Bank's conduct, including the provision of financial accommodation without strict adherence to a pre-sale condition, constituted unconscionable conduct or rendered the guarantees unjust. The interpretation of the "all monies" clauses within the guarantees and mortgage, and their effect on the Bank's ability to vary the terms of the principal contracts without discharging the guarantors, was also a key aspect of the reasoning.

The Court of Appeal ultimately made orders directing the appellants to provide submissions regarding any proposed enquiry within 21 days, with a further 21 days for the Bank's response. If the appellants failed to provide these submissions within the initial 21-day period, the appeal would be dismissed with costs.