Davey v Challenger Managed Investments

CITATION:	Davey v Challenger Managed Investments [2003] NSWCA 172
HEARING DATE(S):	18 March 2003
JUDGMENT DATE:	30 June 2003
JUDGMENT OF:	Handley JA at 1; Hodgson JA at 28; Grove J at 29
DECISION:	Appeal dismissed with costs
CATCHWORDS:	EQUITY - unconscionable transactions - no question of principle
LEGISLATION CITED:	Contracts Review Act
CASES CITED:	Esanda Finance Corporation Ltd v Tong (1997) 41 NSWLR 482
PARTIES :	Beryl May Davies Gladys Mary Crees v Challenger Managed Investments Ltd and Permanent Trustee Australia Ltd
FILE NUMBER(S):	CA 40548/02
COUNSEL:	Appellants: R Sofroniou Respondents: P B Walsh
SOLICITORS:	Appellants: Jackson Smith Sydney Respondents: O'Hara & Company, Strathfield

LOWER COURTJURISDICTION:	Supreme Court - Common Law Division
LOWER COURT FILE NUMBER(S):	CLD 1141/01
LOWER COURT JUDICIAL OFFICER :	Cripps AJ

40548/02
CLD 1141/01
HANDLEY JA
HODGSON JA
GROVE J



30 June 2003

BERYL MAY DAVEY & ANOR v CHALLENGER MANAGED INVESTMENTS & ANOR

equity –

unconscionable transactions – no question of principle

The appellants, widowed pensioners, living in their own homes, agreed to guarantee a loan to their children to enable them to establish a business, and to mortgage their homes to support their guarantees. The business failed and the lender sued for possession under its mortgages. The appellants claimed that they had not properly understood the transactions and sought to set aside the mortgages in equity and under the Contracts Review Act. They did not allege fraud or undue influence by their children and had executed the security documents in the presence of an independent solicitor. The lender had no direct contact with the appellants at the time of the loan.

The trial Judge found that the solicitor had properly advised the appellants about the transactions and explained the risks to them. He upheld the mortgages and gave judgment for possession in favour of the lender. The mortgagors appealed.

: The transactions were not unconscionable in equity and the contracts were not unjust for the purposes of the Contracts Review Act.

ORDERS

Appeal dismissed with costs.

IN THE SUPREME COURT

40548/02
CLD 1141/01
HANDLEY JA
HODGSON JA
GROVE J



30 June 2003

BERYL MAY DAVEY & ANOR v CHALLENGER MANAGED INVESTMENTS & ANOR

Judgment

1 HANDLEY JA: In July 2000 the appellants, who were born in 1924 and 1930, and were widows and pensioners living in their own homes at 3 and 9 Hardy Avenue, Riverwood, agreed to guarantee a loan of $210,000 for three years from Challenger Managed Investments Ltd (the lender) to a company controlled by their children, Lynne Davey and Glen Crees (the children). They also agreed to mortgage their homes to Permanent Trustee Australia Ltd (the mortgagee) as security for the debt.

2 The appellants had no capacity to repay the debt from their own incomes. Moreover the children, who were embarking on a new business venture, and needed to borrow part of their initial capital, were in a similar position. They also guaranteed the loan, but would have little chance of repaying the debt if their company failed.