Kowalczuk v Accom Finance Pty Ltd

The appeal concerned short-term loans provided by Accom Finance Pty Ltd to the appellants, Mr. Kowalczuk and Mr. Mars, which carried extremely high interest rates. These rates increased significantly upon default, and interest compounded monthly. The loan agreements also included provisions allowing for the recovery of all extra expenses incurred due to a default, which were drafted to circumvent the conventional understanding of penalty clauses. The dispute arose after the loans fell into default. The appellants sought to have the loan contracts declared unjust under the Contracts Review Act 1980 (NSW), and also raised issues concerning misleading or deceptive conduct under the Trade Practices Act 1974 (Cth) and the Fair Trading Act (NSW). Additionally, the appellants alleged a breach of duty of care by their solicitor, who had been engaged to provide independent advice on the security documents.

The court was required to determine several key legal issues. These included whether the loan contracts were unjust within the meaning of the Contracts Review Act 1980, considering factors such as the appellants' vulnerability, the lender's conduct, and the nature of "pure asset lending." The court also had to consider whether the provisions relating to the default interest rate were unjust. Furthermore, the court examined whether Accom Finance's conduct contravened sections 51AA and 51AC of the Trade Practices Act 1974, and whether the loans were "for the purpose of trade and commerce" under section 51AC. The appellants also alleged that their solicitor breached contractual obligations and duties of care, and whether any loss resulted from such breaches, particularly in relation to conduct within "trade or commerce" under section 42 of the Fair Trading Act.

The court found that while the appellants had supplied false information about their income, this did not necessarily negate their vulnerability. It was held that the lender's failure to observe its own lending guidelines was a relevant factor in assessing the justice of the contract. The court determined that the default interest provisions were unjust. Regarding the Trade Practices Act claims, the court found that the loans were not acquired for the purpose of trade or commerce, thus section 51AC was not engaged. However, the court found that the solicitor's conduct did not constitute misleading or deceptive conduct under section 42 of the Fair Trading Act, as the concept of causation operated differently in that context compared to negligence.

Ultimately, the court ordered that Accom Finance pay specific sums to Mr. Kowalczuk and Mr. Mars, representing a partial refund of amounts paid. Accom Finance was also ordered to pay two-thirds of the appellants' costs of the appeal in relation to the claims against Accom. The appeal against Dalla was dismissed with costs. The parties were to bear their own costs in the court below.