GE CAPITAL AUSTRALIA v DAVIS & ORS [2002] NSWSC 1146
CURRENT JURISDICTION:
EQUITY
FILE NUMBER(S):
SC 4683 of 2001
HEARING DATE(S):
17-21; 24 & 25/06/02
JUDGMENT DATE:
29 November 2002
PARTIES :
GE Capital Australia - Plaintiff Tana Ruth Davis - First Defendant Lessel George Davis - Second Defendant Veltex Pty Ltd - Third Defendant Zieta 63 Pty Ltd - Fourth Defendant
JUDGMENT OF:
Bryson J at 1
COUNSEL :
R.G. Forster SC & K. Williams - Plaintiff J. Svehla - Defendants
GUARANTEE - Mr and Mrs Davis and companies guaranteed $1m loan to companies they controlled - borrower companies gave security over industrial plant and equipment - numerous grounds of defence to claim by lender against guarantors after borrowers defaulted, went into liquidation and lender sold plant & equipment under power of sale - HELD - securities were not made ineffective by their being given in two separate registered charges by each of two borrowers which were in partnership - Consideration of meaning and operation of s.420A of Corporations Act and "market value" - on the facts, no breach of duty of mortgage or sale - consideration of remedies under Corporations Act s.423, s.1324, HELD no tort remedy against mortgagee exercising power of sale - Consideration of remedies available to guarantor where cross-claim or set-off available to principal debtor - consideration of effect of provisions of guarantee - giving primacy to remedies of mortgagee claim to relief under Contracts Review Act dismissed.
[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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AGLC
GE Capital Australia v Davis [2002] NSWSC 1146
Case
[2002] NSWSC 1146
Decision Date
CaseChat Overview and Summary
The case of GE Capital Australia v Davis involved a claim by the lender, GE Capital Australia, against the guarantors, Mr and Mrs Davis, and companies they controlled, for the amount of a loan that had been guaranteed. The borrowers, companies controlled by the Davises, had defaulted on the loan, which was secured by a charge over industrial plant and equipment. After the borrowers went into liquidation, GE Capital exercised its power of sale over the secured assets. The guarantors raised several defences to the lender's claim, including arguments that the securities were ineffective due to the structure of the charges, and that the sale of the assets was improper.
The court had to determine whether the securities were valid, whether there was any breach of duty by the lender in exercising the power of sale, and what remedies were available to the guarantors. In considering the securities, the court found that the securities were not invalidated by being given in two separate charges by the two borrower companies, which were in partnership. The court also considered the meaning and operation of section 420A of the Corporations Act, and determined that there was no breach of duty in the sale of the assets as they were sold for their market value. The court further considered the remedies available under the Corporations Act and dismissed the claim for tortious relief against the lender exercising the power of sale. Finally, the court considered the effect of the guarantee provisions and dismissed the claim for relief under the Contracts Review Act, finding that the guarantors' remedies lay in cross-claims or set-off against the principal debtor.
The court's decision was that the securities were valid and that there was no breach of duty by the lender in exercising the power of sale. The court found that the guarantors' remedies lay in cross-claims or set-off against the principal debtor, and that the claim for relief under the Contracts Review Act was dismissed. The final orders of the court were in favour of GE Capital Australia, with costs awarded to the lender.