Krystyna Maria Hickey v Peter Hickey

KRYSTYNA MARIA HICKEY v PETER HICKEY and OTHERS
[2007] ACTSC 31 (3 May 2007)

EQUITY – Right to set aside transaction – unconscionability – mother gifts property to son – son uses property to secure loan from lender – no special disability – no unconscionable conduct by tender.

The Commercial Bank of Australia Limited v Amadio (1982-1983) 151 CLR 447

State Bank of New South Wales Ltd v Sullivan [1999] NSWSC 596

State Bank of New South Wales Ltd v Burke (unreported, NSW Court of Appeal, 4 April 1997, BC 9701007)

Begbie v State Bank of New South Wales Limited (1994) ATPR 41-288

NZI Capital Corporation Ltd v Fulton [1998] FCA 667

No. SC 846 of 2003

Judge:     Connolly J
Supreme Court of the ACT

Date:      3 May 2007

IN THE SUPREME COURT OF THE  )
  )  No. SC 846 of 2003
AUSTRALIAN CAPITAL TERRITORY  )

BETWEEN:KRYSTYNA MARIA HICKEY

Plaintiff

AND:PETER HICKEY

First Defendant

AND:HOMELOANS LTD and

PERPETUAL TRUSTEES

AUSTRALIA LIMITED

Second Defendant

AND:REGISTRAR-GENERAL OF THE

AUSTRALIAN CAPITAL

TERRITORY

Third Defendant

ORDER

Judge:  Connolly J
Date:  3 May 2007
Place:  Canberra

THE COURT ORDERS THAT:

1. The injunction granted on 23 December 2003 be discharged.

1. There be no order that the security taken by the second defendant be set aside.

1. The parties have leave to formulate orders to give effect to these reasons, and the matter be relisted to this effect.

1. Costs be dealt with at that time.

1. This is a case where the plaintiff seeks to invoke the equitable jurisdiction of this Court pursuant to the principles established by the High Court in The Commercial Bank of Australia Limited v Amadio (1982-1983) 151 CLR 447 to set aside certain transactions. The facts of the case are briefly that the plaintiff transferred title to her residential property in Weston in the Australian Capital Territory to her son (the first defendant). He used the property as security for certain real estate transactions. These transactions have not gone well and the lender (the second defendant) now seeks to exercise its security over the property. The plaintiff seeks orders to set aside the transfer and to set aside the mortgage. Because of a failure to pay stamp duty on the transfer, the transfer was not immediately registered, and an injunction was granted in the plaintiff’s favour to prevent the registration of the transfer until the substantive dispute is resolved. The Registrar-General (the third defendant) has agreed to abide by the outcome of the case, but took no active part in these proceedings.

1. The legal principle on which the plaintiff seeks to rely is now well established in Australian law.  Amadio was a case where a son, whose business affairs were in severe difficulties, as was well known to the bank, approached his elderly parents, who had limited English language skills, to execute a form of security over property they owned for a further loan to him.  The parents signed, believing the security to be limited to a guarantee limited…