Gear v Morahan

In *Gear v Morahan*, the New South Wales Court of Appeal considered a dispute between the appellant, Gear, and the respondent, Morahan. The case concerned the enforceability of a guarantee provided by Gear in favour of Morahan.

The primary legal issue before the Court of Appeal was whether Gear was entitled to rely on the defence of undue influence or unconscionable conduct in relation to the guarantee. Specifically, the Court had to determine if Morahan had exercised undue influence over Gear, or if the circumstances surrounding the execution of the guarantee were so unfair as to render it unconscionable.

The Court of Appeal found that the trial judge had erred in concluding that undue influence had been established. It held that while there was a relationship of trust and confidence between the parties, Gear had not been subjected to undue pressure or coercion. The Court emphasised that for undue influence to be made out, the will of the influencer must be substituted for the will of the person influenced. Furthermore, the Court found no evidence of unconscionable conduct on the part of Morahan, noting that Gear had received independent legal advice before signing the guarantee.

Consequently, the Court of Appeal allowed the appeal, set aside the orders of the trial judge, and entered judgment for the respondent, Morahan, in the sum of $100,000 together with interest and costs.