Carrafa v Gomez

In *Carrafa v Gomez*, the Supreme Court of New South Wales was asked to determine a dispute concerning the enforceability of a deed of release. The plaintiff, Mr Carrafa, sought to set aside the deed, alleging it was procured by misleading and deceptive conduct. The defendant, Ms Gomez, contended that the deed was valid and binding, thereby precluding Mr Carrafa from pursuing his original claim.

The central legal issue before the Court was whether the deed of release, which purported to extinguish all claims between the parties, was vitiated by misleading or deceptive conduct contrary to section 18 of the Australian Consumer Law. This required the Court to consider the nature of the representations made by Ms Gomez, whether they were misleading or deceptive, and if so, whether they induced Mr Carrafa to enter into the deed. The Court also had to assess whether the terms of the deed itself were sufficiently clear to encompass the claims Mr Carrafa sought to revive.

Judge Riley found that the representations made by Ms Gomez were indeed misleading and deceptive, as they misrepresented the financial position of a company relevant to the dispute. Crucially, the Court determined that these misrepresentations induced Mr Carrafa to enter into the deed of release. His Honour reasoned that the misleading conduct went to the very foundation of the agreement, rendering the deed unenforceable. The principles of contract law concerning misrepresentation and the application of consumer protection legislation were central to this determination.

Consequently, the Court made orders setting aside the deed of release and allowing Mr Carrafa to proceed with his original claim against Ms Gomez.