Burns & v AMP Finance Ltd

The Full Federal Court heard an appeal from a decision concerning a loan agreement between Burns & (the borrower) and AMP Finance Ltd (the lender). The dispute arose from a request by the borrower for the release of two lots from the lender's security. The primary judge had found that subsequent conversations between the parties led to an agreement that these lots would remain as security until they were needed by the borrower, thereby excusing the lender from its initial contractual obligation to release them and meaning no breach of contract had occurred.

The Full Federal Court was required to determine whether this finding of agreement was correct, and if so, whether the lender had breached any implied obligation to act in good faith in relation to a subsequent request for the lender's endorsement of a linen plan for a "boundary adjustment" involving the exchange of land over which the lender held security. The court also considered whether it was necessary to establish that the borrower had suffered some damage, as would normally be the case.

The Full Federal Court upheld the primary judge's finding that an agreement had been reached whereby the two lots would remain as security until required by the borrower. The court found no question of principle arose from this finding. Regarding the "boundary adjustment," the court assumed, for the sake of argument, that an implied obligation of good faith existed in relation to the lender's endorsement of the linen plan. However, it concluded that a breach of this obligation had not been established, again finding no question of principle.

The appeal was dismissed with costs.