GE Capital Australia v Davis

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.