Liu v Adamson - [2003] NSWSC 74

Reported Decision:
(2003) DFC 95-271
(2004) NSW ConvR 56-074

Supreme Court

CITATION: Liu v Adamson [2003] NSWSC 74

HEARING DATE(S): 29, 30 August and
4, 10, 11, 15 October 2002

JUDGMENT DATE:
21 February 2003

JURISDICTION:
3376/00

JUDGMENT OF: Master Macready at 1

DECISION: Paragraph 77

CATCHWORDS: Guarantee and Indemnity - action against Surety - de facto partners - costs agreement containing a guarantee and agreement for a mortgage on her home given by de facto wife - whether de facto wife entitled to the protection of special equity principle in Yerkey v Jones and Garcia v National Australia Bank Ltd. - Held de facto wife was entitled but as she was not a volunteer relief was refused. - Contracts Review Act 1980 (NSW), ss 6(2) and 9. - Held that guarantee and mortgage should be set aside.

PARTIES :
Adelene Liu v Christopher Michael Adamson

FILE NUMBER(S): SC 3376/2000

COUNSEL: Ms. T. Bartush-Peek for plaintiff
Mr R.D. Marshall for defendant on 10 and 11 Oct 2002

SOLICITORS: Cameron & Myers for plaintiff
Paclaw Solicitors for defendant

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Master Macready

Friday 21 February 2003

3376/2000 Adelene Mary Liu v Christopher Michael Adamson

JUDGMENT

1 Master: The plaintiff brings these proceedings to set aside a costs agreement and a mortgage that she entered into with the first defendant. One of the other parties to the costs agreement and mortgage was her de facto partner, Peter James Miller. The plaintiff's claim is based upon the principles in Garcia v National Australia Bank Ltd (1998) 194 CLR 395, the fiduciary arrangement between her and the defendant and also upon the Contracts Review Act (1980) NSW. She did not seek to pursue her claim in the statement of claim that the costs agreement was contrary to the Legal Profession Act 1987. The matter came before me when I was an Acting Judge and I have continued to deal with it under s 37(3A) of the Supreme Court Act.

Background history.

2 The plaintiff was born in Rabaul New Guinea. She worked as a bookkeeper for Hong Kong Island Shipping for some three years before she commenced a de facto relationship with her partner Mr Miller in 1984. That relationship has continued to the present day and they have five children aged between 7 and 15 years. For many years Mr Miller was employed in the information technology industry. In late 1997 or early 1998 he changed his occupation and became involved in a restaurant and nightclub business in Darlinghurst.

3 In the early part of 1998 Mr Miller changed his solicitor and engaged Mr Adamson the first defendant as his solicitor. Mr Adamson trades under the name of Paclaw Court Lawyers and that firm is named as the second defendant. In the first half of 1998 Mr Miller the plaintiff and a number of companies involved in the restaurant business entered into a costs agreement with the first defendant. That agreement…

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: [2003] NSWSC 74
Decision Date: 21 February 2003

CaseChat Overview and Summary

The parties involved in this case are Liu and Adamson. Liu brought an action against Adamson, who had provided a guarantee and indemnity for a debt owed by Liu's de facto partner. The nature of the dispute revolves around whether Liu's de facto wife, who had signed a guarantee and mortgage agreement, is entitled to the protection of the special equity principle. The case was heard in the Supreme Court of New South Wales.

The legal issues the court had to address include whether the de facto wife had the right to the special equity principle as established in Yerkey v Jones and Garcia v National Australia Bank Ltd. Furthermore, the court had to determine if the de facto wife, although entitled to the protection, was still eligible for relief as she was not considered a volunteer. Additionally, the court examined the Contracts Review Act 1980 (NSW) sections 6(2) and 9 to decide if the guarantee and mortgage should be set aside.

The court held that the de facto wife was indeed entitled to the protection of the special equity principle. However, since she was not a volunteer, the court refused to grant her relief. Consequently, the guarantee and mortgage were set aside based on the Contracts Review Act 1980 (NSW) sections 6(2) and 9. This decision was reached considering the unique circumstances of the case and the relevant legislation.

The final orders of the court were to set aside the guarantee and mortgage provided by Liu's de facto wife. This decision was made in accordance with the Contracts Review Act 1980 (NSW) sections 6(2) and 9, as well as the special equity principle as established in Yerkey v Jones and Garcia v National Australia Bank Ltd. The court determined that the de facto wife was entitled to the protection of the special equity principle, but relief was refused due to her not being a volunteer.

Orders