Joelco Pty Ltd v Balanced Securities Limited - [2009] QSC 236

SUPREME COURT OF QUEENSLAND

CITATION:

Joelco Pty Ltd v Balanced Securities Limited [2009] QSC 236

PARTIES:

JOELCO PTY LTD
ACN: 056 036 054
(plaintiff)
v
BALANCED SECURITIES LIMITED
ACN: 083 514 685
(defendant)

FILE NO/S:

BS No 10656 of 2008

DIVISION:

Trial Division

PROCEEDING:

Trial

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

26 August 2009

DELIVERED AT:

Brisbane

HEARING DATE:

13 August 2009

JUDGE:

Chief Justice

ORDERS:

1.   That the plaintiff’s claim is dismissed.

2.   That the plaintiff pay the defendant’s costs of and incidental to the proceeding, including any reserved costs, to be assessed on the standard basis.

3.   That liberty be reserved to the parties to make any additional submission in writing in relation to the issue of costs, within seven days, should it be submitted a different order should be made.

CATCHWORDS:

CORPORATIONS – FINANCIAL SERVICES AND MARKETS – MARKET MISCONDUCT AND OTHER PROHIBITED CONDUCT – financing agreement – whether interest rate penal in effect – whether various provisions unconscionable in the circumstances

Australian Securities and Investments Commission Act 2001 (Cth), ss 12CA, 12GF & 12GM
Corporations Act 2001 (Cth), s991A.

ACCC v Berbatis Holdings Pty Ltd (2003) 214 CLR 51, applied

ASIC v National Exchange Pty Ltd (2005) 148 FCR 132, cited
Beil v Mansell (No 2) (2006) 2 Qd R 499, cited

Canon Australia Pty Ltd v Patton [2007] NSWCA 246, cited

Cloud Top Pty Ltd v Toma Service Pty Ltd (2008) NSWSC 568, cited

Commonwealth Bank of Australia v Ridout Nominees Pty Ltd [2000] WASC 37, cited

GPG (Australian Trading) Pty Ltd v GIO Holdings Ltd (2001) 117 FCR 23, cited

Iannello v Sharpe (2007) 69 NSWLR 452, cited

Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656, considered

COUNSEL:

M Byrne for the plaintiff
P A Travis for the defendant

SOLICITORS:

Lawrence & Associates for the plaintiff
Elliott May Lawyers for the defendant

CHIEF JUSTICE:

Introduction

The plaintiff claims damages for breach of contract, unconscionable conduct, and/or under ss 12GF and 12GM of the Australian Securities and Investments Commission Act 2001 (Cth) for breach of s 12CA of that Act, and/or pursuant to the provisions of s 991A of the Corporations Act 2001 (Cth). The claim rises from the provisions of a “facility agreement’ between the parties (with Mr David Thomas, as guarantor), dated 22 December 2006.

Section 12CA(1) of the ASIC Act provides:

“(1)A person must not, in trade or commerce, engage in conduct in relation to financial services if the conduct is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories.”

That probably relates to the unconscionable dealings doctrine (GPG (Australian Trading) Pty Ltd v GIO Holdings Ltd (2001) 117 FCR 23). Consequent loss or damage may lead to an award of damages, under s 12GF(1).

Section 991A of the Corporations Act 2001 (Cth) proscribes unconscionable conduct by a financial services licensee, with a right to damages for consequent loss.…

Grounds of appeal

[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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Details

Case: [2009] QSC 236
Decision Date: 26 August 2009

CaseChat Overview and Summary

Joelco Pty Ltd sued Balanced Securities Limited, alleging that certain terms in a financing agreement were penal or unconscionable. The dispute was heard and determined by the Federal Court of Australia. The central issue before the court was whether certain clauses in the agreement were unfair penalties or unconscionable. Specifically, the plaintiff argued that the interest rate and other provisions were penal and rendered the agreement void or unenforceable. Additionally, the plaintiff claimed that certain clauses were unconscionable in the circumstances, making the agreement voidable.

The court found that the interest rate clause was not a penalty and that the other provisions were not unconscionable. The court examined the nature of the agreement and the context in which it was made, determining that the interest rate was a genuine pre-estimate of loss rather than a penalty. Furthermore, the court held that the other provisions were fair and reasonable, given the nature of the agreement and the bargaining positions of the parties. The court rejected the plaintiff's claims and dismissed the action. The court also ordered the plaintiff to pay the defendant's costs of the proceeding, with liberty reserved for the parties to make additional submissions on the issue of costs within seven days.

Orders

Orders of the court

1. That the plaintiff’s claim is dismissed.

2. That the plaintiff pay the defendant’s costs of and incidental to the proceeding, including any reserved costs, to be assessed on the standard basis.

3. That liberty be reserved to the parties to make any additional submission in writing in relation to the issue of costs, within seven days, should it be submitted a different order should be made.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Joelco Pty Ltd v Balanced Securities Limited [2009] QSC 236
PARTIES:	JOELCO PTY LTD ACN: 056 036 054 (plaintiff) v BALANCED SECURITIES LIMITED ACN: 083 514 685 (defendant)
FILE NO/S:	BS No 10656 of 2008
DIVISION:	Trial Division
PROCEEDING:	Trial
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	26 August 2009
DELIVERED AT:	Brisbane
HEARING DATE:	13 August 2009
JUDGE:	Chief Justice
ORDERS:	1. That the plaintiff’s claim is dismissed. 2. That the plaintiff pay the defendant’s costs of and incidental to the proceeding, including any reserved costs, to be assessed on the standard basis. 3. That liberty be reserved to the parties to make any additional submission in writing in relation to the issue of costs, within seven days, should it be submitted a different order should be made.
CATCHWORDS:	CORPORATIONS – FINANCIAL SERVICES AND MARKETS – MARKET MISCONDUCT AND OTHER PROHIBITED CONDUCT – financing agreement – whether interest rate penal in effect – whether various provisions unconscionable in the circumstances Australian Securities and Investments Commission Act 2001 (Cth), ss 12CA, 12GF & 12GM Corporations Act 2001 (Cth), s991A. ACCC v Berbatis Holdings Pty Ltd (2003) 214 CLR 51, applied ASIC v National Exchange Pty Ltd (2005) 148 FCR 132, cited Beil v Mansell (No 2) (2006) 2 Qd R 499, cited Canon Australia Pty Ltd v Patton [2007] NSWCA 246, cited Cloud Top Pty Ltd v Toma Service Pty Ltd (2008) NSWSC 568, cited Commonwealth Bank of Australia v Ridout Nominees Pty Ltd [2000] WASC 37, cited GPG (Australian Trading) Pty Ltd v GIO Holdings Ltd (2001) 117 FCR 23, cited Iannello v Sharpe (2007) 69 NSWLR 452, cited Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656, considered
COUNSEL:	M Byrne for the plaintiff P A Travis for the defendant
SOLICITORS:	Lawrence & Associates for the plaintiff Elliott May Lawyers for the defendant