CITATION: Drury v Stone [2000] NSWCA 45 FILE NUMBER(S): CA 40942/98 HEARING DATE(S): 21/02/00 JUDGMENT DATE:
16 March 2000PARTIES :
Margaret Drury (Appellant)
Christopher Charles Stone (First Respondent)
Ross George Drury (Second Respondent)
Philip Henry Marks (Third Respondent)
Brian Cox (as Executor of the Estate of Esme Florence Mary Marks deceased) (Fourth Respondent)
State Bank of New South Wales (Fifth Respondent)JUDGMENT OF: Powell JA at 1; Beazley JA at 2; Fitzgerald JA at 3
LOWER COURT JURISDICTION : Supreme Court - Equity Division LOWER COURT
FILE NUMBER(S) :4780/94 LOWER COURT
JUDICIAL OFFICER :Bryson J
COUNSEL: R.A. Conti QC / A. Ogborne (Appellant)
A.S. Bell (1st Respondent)
W.G. Muddle (5th Respondent)SOLICITORS: Bruce & Stewart (Appellant)
Smyth King & Son (1st Respondent)
Ross George Drury (2nd Respondent)
Philip Henry Marks (3rd Respondent)
E Philips & Company (4th Respondent)
Minter Ellison (5th Respondent)CATCHWORDS: Whether mortgage unjust in the circumstances - Mortgage - orders sought under s 7(1)(b) of Contracts Review Act 1980 that mortgage was void - whether Bank should have advised on the viability of the business - whether Bank should have advised that there was a "real risk" that the appellant would lose her home and the legal effect of a mortgage. LEGISLATION CITED: Contracts Review Act 1980 DECISION: The appeal is dismissed with costs
THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL
CA 40942/98
ED 4780/94
POWELL JA
THURSDAY 16 MARCH 2000
BEAZLEY JA
FITZGERALD JA
DRURY v STONE
JUDGMENT
1 POWELL JA: I agree with Fitzgerald JA. 2 BEAZLEY JA: I agree with Fitzgerald JA. 3 FITZGERALD JA: On 31 August 1987, Mike Pawleys Indoor Cricket Centre Pty Ltd acquired an indoor cricket centre which was conducted in leasehold premises at Brookvale. The company, which had been acquired to purchase and conduct the cricket centre, was owned and controlled by three men, who were its only directors and shareholders. Each owned one $1.00 share. One of the directors, Ross George Drury, the second respondent, is the appellant’s son. The other two directors were the first respondent, Christopher Charles Stone, and the third respondent, Philip Henry Marks. 4 The fifth respondent, State Bank of New South Wales, lent the company the entire purchase price of the business, $205,000, which was repayable over six years by monthly instalments, together with $20,000 working capital by way of an overdraft which was subject to annual review. The company granted the bank a fixed and floating charge over its assets to secure its present and future indebtedness to the bank. Subsequently, the bank lent the company additional amounts for other purposes and there were other variations to their arrangements. 5 The cricket centre was conducted at Brookvale for about 3 years, then was closed for a period and subsequently re-established in different premises at Dee Why in 1991. The Dee Why premises were vacated in August 1993, and the company was deregistered under s 574 of the Corporations Law and dissolved. The company was then insolvent,…
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Details
- Case
- [2000] NSWCA 45
- Decision Date
CaseChat Overview and Summary
The appeal in *Drury v Stone* concerned a challenge to a mortgage brought by the appellant, Ms Drury, against the respondent bank. Ms Drury sought orders under section 7(1)(b) of the *Contracts Review Act 1980* (NSW) that the mortgage be declared void, alleging it was unjust in the circumstances.
The central legal issues before the Court of Appeal were whether the bank had a duty to advise Ms Drury on the viability of the business for which the mortgage was granted, and whether the bank should have warned her of the "real risk" that she might lose her home and the legal consequences of entering into a mortgage.
The Court of Appeal considered the nature of the relationship between the parties and the bank's obligations in providing finance. It was held that the bank's role was not to provide business advice or to assess the commercial viability of the appellant's venture. The bank's duty was limited to ensuring the appellant understood the nature and effect of the mortgage documents she was signing. The Court found no evidence to suggest the bank had acted unconscionably or that the mortgage itself was unjust within the meaning of the *Contracts Review Act*.
Consequently, the appeal was dismissed with costs.
The central legal issues before the Court of Appeal were whether the bank had a duty to advise Ms Drury on the viability of the business for which the mortgage was granted, and whether the bank should have warned her of the "real risk" that she might lose her home and the legal consequences of entering into a mortgage.
The Court of Appeal considered the nature of the relationship between the parties and the bank's obligations in providing finance. It was held that the bank's role was not to provide business advice or to assess the commercial viability of the appellant's venture. The bank's duty was limited to ensuring the appellant understood the nature and effect of the mortgage documents she was signing. The Court found no evidence to suggest the bank had acted unconscionably or that the mortgage itself was unjust within the meaning of the *Contracts Review Act*.
Consequently, the appeal was dismissed with costs.
Orders
Orders of the court
The appeal is dismissed with costs
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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