Gattellaro v Westpac Banking Corporation

The dispute in *Gattellaro v Westpac Banking Corporation* concerned whether a loan provided by Westpac to the Gattellaro individuals was unjust under the Contracts Review Act 1980 (NSW). The Gattellaros were directors of a company that was indebted to Westpac. A fresh loan was advanced to the Gattellaros personally, from which the company's debt was paid out. The Gattellaros argued that this new loan was unjust. The matter was heard in the Court of Appeal of New South Wales.

The central legal issue before the Court of Appeal was whether the Gattellaro individuals were personally liable for the company's debt to Westpac at the time the fresh loan was advanced. If they were already personally liable for the company's debt, then the new loan, which effectively discharged that debt, could not be considered unjust. The court had to determine if a guarantee had been provided by one of the Gattellaros, thereby establishing personal liability for the company's debt.

By majority, the Court of Appeal found that a guarantee had indeed been given by one of the Gattellaros, making him personally liable for the company's debt. The other Gattellaro was found to be personally liable for the guarantor's debt under an existing mortgage. Consequently, both individuals were already personally liable for the company's debt prior to the fresh loan. The court reasoned that because they were already personally liable for the debt that the new loan discharged, the fresh loan itself could not be considered unjust under the Contracts Review Act.

The appeal was dismissed by majority, with the Gattellaros ordered to pay Westpac's costs.