Appeal Outcome: Special leave dismissed with costs by the High Court, 12 February 2010 s233/2009
New South Wales
Court of Appeal
CITATION: Lopwell Pty Ltd v Clarke & Ors [2009] NSWCA 165 HEARING DATE(S): 22 June 2009
JUDGMENT DATE:
14 August 2009JUDGMENT OF: Ipp JA at 1; Campbell JA at 2; Macfarlan JA at 3 DECISION: The appeal is dismissed with costs. CATCHWORDS: EQUITY - unconscionable dealing - guarantors under a special disability by reason of dependence on advice of longstanding accountant - interest of accountant in transaction unknown to guarantors - disability of guarantors sufficiently evident to financier - exorbitant interest rate LEGISLATION CITED: Contracts Review Act 1980 CATEGORY: Principal judgment CASES CITED: Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2003] HCA 18; (2003) 214 CLR 51
Attorney General of New South Wales v World Best Holdings Ltd [2005] NSWCA 261; (2005) 63 NSWLR 557
Barnes v Addy (1874) LR 9 Ch App 244
Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362
Bridgewater v Leahy [1998] HCA 66; (1998) 194 CLR 457
Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447
Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89
Friend v Booker [2009] HCA 21; (2009) 83 ALJR 724
Garcia v National Australia Bank Ltd [1998] HCA 48; (1998) 194 CLR 395
Louth v Diprose [1992] HCA 61; (1992) 175 CLR 621
Lumbers v W Cook Builders Pty Ltd (in liquidation) [2008] HCA 27; (2008) 232 CLR 635
Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583
Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2003) 217 CLR 315
Visnic v Sywak [2009] NSWCA 173PARTIES: Lopwell Pty Ltd (Appellant)
Dallas James Clarke (First Respondent)
Juliet Jane Clarke (Second Respondent)
Milk Makers Dairy Heifers Pty Ltd (Third Respondent)
Glen Arthur Freeman (Fourth Respondent)FILE NUMBER(S): CA 40291/08 COUNSEL: P Kulevski (Appellant)
J M Ireland QC/R Marshall/A Crossland (1st, 2nd and 3rd Respondents)SOLICITORS: Robinson Legal (Appellant)
Patey & Murphy (1st , 2nd and 3rd Respondents)LOWER COURT JURISDICTION: Supreme Court - Equity Division LOWER COURT FILE NUMBER(S): SC 5637/04 LOWER COURT JUDICIAL OFFICER: Hamilton J LOWER COURT DATE OF DECISION: 18 June 2008 LOWER COURT MEDIUM NEUTRAL CITATION: Clarke v Lopwell Pty Ltd [2008] NSWSC 615
CA 40291/08
SC 5637/04FRIDAY 14 AUGUST 2009IPP JA
CAMPBELL JA
MACFARLAN JA
LOPWELL PTY LTD v CLARKE & ORS
Judgment
1 IPP JA: I agree with Macfarlan JA.
2 CAMPBELL JA: I agree with Macfarlan JA.
:
Nature of Case and Conclusions
4 In this case, a married couple who operated a dairy farm agreed to guarantee a substantial loan made by a financier to a third party. They did so in reliance on the advice of their long-standing and trusted accountant who introduced the transaction to them and who, unbeknown to them, had an interest…
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Details
- Case
- [2009] NSWCA 165
- Decision Date
CaseChat Overview and Summary
Lopwell Pty Ltd (the appellant) appealed a decision of the primary judge concerning a guarantee provided by Mr and Mrs Clarke (the respondents). The dispute centred on whether the respondents were under a special disability that rendered their guarantee unconscionable. The appeal was heard in the Court of Appeal of New South Wales.
The Court of Appeal was required to determine whether the primary judge erred in finding that the respondents were under a special disability due to their dependence on the advice of their longstanding accountant, Mr. Davies. A further issue was whether this disability was sufficiently evident to the appellant, the financier, such that it was unconscionable for the appellant to rely on the guarantee, particularly given the exorbitant interest rate charged.
The Court of Appeal upheld the primary judge's findings. It reasoned that the respondents' reliance on Mr. Davies, coupled with his undisclosed interest in the transaction, placed them under a special disability. This disability was evident to the appellant because the appellant was aware of the respondents' reliance on Mr. Davies for financial advice and the unusual nature of the transaction, including the high interest rate. The court applied the principles of unconscionable dealing, emphasizing that a party with superior bargaining power must not exploit the special disadvantage of another party where that disadvantage is known or ought to be known.
The appeal was dismissed with costs.
The Court of Appeal was required to determine whether the primary judge erred in finding that the respondents were under a special disability due to their dependence on the advice of their longstanding accountant, Mr. Davies. A further issue was whether this disability was sufficiently evident to the appellant, the financier, such that it was unconscionable for the appellant to rely on the guarantee, particularly given the exorbitant interest rate charged.
The Court of Appeal upheld the primary judge's findings. It reasoned that the respondents' reliance on Mr. Davies, coupled with his undisclosed interest in the transaction, placed them under a special disability. This disability was evident to the appellant because the appellant was aware of the respondents' reliance on Mr. Davies for financial advice and the unusual nature of the transaction, including the high interest rate. The court applied the principles of unconscionable dealing, emphasizing that a party with superior bargaining power must not exploit the special disadvantage of another party where that disadvantage is known or ought to be known.
The appeal was dismissed with costs.
Orders
Orders of the court
The appeal is dismissed with costs.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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