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Choice Constructions Pty Ltd v Janceski [No 3]

Choice Constructions Pty Ltd v Janceski [No 3]

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Case Copied 21 December 2011 77 min read

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JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: CHOICE CONSTRUCTIONS PTY LTD -v- JANCESKI [No 3] [2011] WASC 358

CORAM: SIMMONDS J

HEARD: 22-24 SEPTEMBER, 16-20 NOVEMBER 2009, 912 MARCH, 16-18 MARCH, 21-23 JULY, 2627 JULY & 11 AUGUST 2010

DELIVERED : 21 DECEMBER 2011

FILE NO/S: CIV 1500 of 2005

BETWEEN: CHOICE CONSTRUCTIONS PTY LTD
Plaintiff
AND
METODIJA JANCESKI
First Defendant
DOSTA JANCESKI
Second Defendant

Catchwords:

Equity - Unconscionable conduct or dealing - Whether it was unconscionable within the principles in Commercial Bank of Australia v Amadio for the vendor to take the benefit of a replacement mortgage securing vendor finance - Parents mortgaging their home as security for the vendor finance extended to their son acting as trustee for a family trust under which the parents were beneficiaries - Whether special disadvantage - Whether any special disadvantage sufficiently evident to vendor financer to make it prima facie unfair or unconscionable for that part to accept or retain the benefit of the replacement mortgage

Equity - Unconscionable conduct or dealing - Whether the evidence of ages of parents; their linguistic, educational and business background; their trust and reliance on their son; their concern for his condition; and the circumstances of the entry into and the nature of the mortgage was sufficient to show special disadvantage - Relevance of advice from a solicitor/translator not extending to the risk of default by the son

Equity - Unconscionable conduct or dealing - Whether on the evidence of advice from the solicitor/translator and the apparent knowledge of parents the vendor was aware of facts which would raise the possibility of the special disadvantage in the mind of a reasonable person

Equity - Unconscionable conduct or dealing - Whether it was unconscionable for the vendor to take the benefit of the replacement mortgage within the principles of Garcia v National Australia Bank - Relationship of parents and son - Whether the principles extended to such relationship - Whether the principles extended to a case where the other party was at most a partial volunteer - Whether the parents understood purport and effect of transaction - Whether parents volunteers or partial volunteers - Whether vendor had taken steps to find out that a stranger had explained the purport and effect of the mortgage to the parents

Legislation:

Evidence Act 1906 (WA), s 79C
Rules of the Supreme Court 1971 (WA), O 21 r 5

Result:

Judgment for the plaintiff

Category: B

Representation:

Counsel:

Plaintiff:     Mr M N Solomon
First Defendant             :     In person
Second Defendant         :     In person
McKenzie friend           :     Ms E Van der Meulen

Solicitors:

Plaintiff:     B W Duckham & Co
First Defendant             :     In person
Second Defendant         :     In person
McKenzie friend           :     In person

Case(s) referred to in judgment(s):

Australia & New Zealand Banking Group Ltd v Dzienciol [2001] WASC 305
Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd [2003] HCA 18; (2003) 214 CLR 51
Bridgewater v Leahy [1998] HCA 66; (1998)…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2011] WASC 358
Decision Date: 21 DECEMBER 2011

CaseChat Overview and Summary

The case of Choice Constructions Pty Ltd v Janceski [No 3] involved a dispute regarding the enforceability of a mortgage. The plaintiffs, Choice Constructions, sought to enforce a mortgage against the defendants, Mr and Mrs Janceski. The defendants had originally mortgaged their home to secure a loan provided to their son, who acted as trustee for a family trust. Subsequently, a replacement mortgage was executed, with the defendants mortgaging their home again as security for vendor finance. The defendants argued that the transaction was unconscionable, and therefore, unenforceable.

The central legal issue in this case was whether it was unconscionable for the vendor to take the benefit of the replacement mortgage. The court had to determine if the vendor was aware of facts that would have raised the possibility of special disadvantage in the mind of a reasonable person. Additionally, the court examined whether the principles of unconscionability extended to the relationship between the parents and their son and whether the parents were volunteers or partial volunteers.

The court found that the parents were not special volunteers, and their son was not a stranger to the transaction. While the parents had placed their trust and reliance in their son, and the son had a fiduciary duty towards them, this did not automatically make the transaction unconscionable. The court held that the vendor was not aware of facts that would have raised the possibility of special disadvantage in the mind of a reasonable person. Therefore, the replacement mortgage was not unconscionable, and the plaintiffs were entitled to enforce it.

The court's decision resulted in the plaintiffs being granted an order enforcing the replacement mortgage against the defendants. The defendants were required to provide the necessary documentation to satisfy the mortgage and any associated costs. The court's ruling in this case highlights the importance of the relationship between parties and the need for awareness of potential unconscionability when entering into transactions.

Orders