Luttrell v Key 2 Ltd - [2006] WADC 130

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: LUTTRELL -v- KEY 2 LTD & ANOR [2006] WADC 130

CORAM: STAVRIANOU DCJ

HEARD: 27-28 APRIL & 10 MAY 2006

DELIVERED : 25 AUGUST 2006

FILE NO/S: CIV 752 of 2005

BETWEEN: GERARD MAJELLA LUTTRELL
Plaintiff
AND
KEY 2 LTD (ACN 009 264 699)
First Defendant
ANANDA KATHIRAVELU
Second Defendant

Catchwords:

Contract - Consideration - Whether illusory

Equity - Unconscionable conduct - Conduct in a commercial context - Whether unconscientious advantage of special disadvantage of another - inequality of bargaining power

Trade practices - Consumer protection - Trade Practices Act 1974 s 51A, s 52 and s 75B - Whether contractual promise which is later breached necessarily a representation as to future conduct when made - Action for damages against director of corporation involved in misleading and deceptive conduct - Accessorial liability - Onus of proof

Legislation:

Trade Practices Act 1974, s 51A, s 52, s 75B

Result:

Judgment for plaintiff against first defendant for $105,000

Claim against second defendant dismissed

Representation:

Counsel:

Plaintiff:     Mr B P Wheatley
First Defendant             :     Mr P N Bevilacqua
Second Defendant         :     Mr P N Bevilacqua

Solicitors:

Plaintiff:     Nicholson Clement
First Defendant             :     Fairweather & Lemonis
Second Defendant         :     Fairweather & Lemonis

Case(s) referred to in judgment(s):

Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (2003) HCA 18
Australian Competition and Consumer Commission v Michigan Group Pty Ltd [2002] FCA 1439
Blomley v Ryan (1956) 99 CLR 362
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447
Concrete Constructions Group v Litevale Pty Limited & Ors [2002] NSWSC 670
New Zealand Shipping Co Ltd v AM Sattherwaite & Co Ltd [1975] AC 154
O'Rorke v Bolingbroke [1877] 2 App Cas 814
Quinlivan v Australian Competition and Consumer Commission [2004] FACFC 175
Serrata Investments Pty Ltd v Rajane Pty Ltd (1991) 6 WAR 419

Case(s) also cited:

Australian Woollen Mills v Commonwealth (1954) 92 CLR 424
Automasters Australia Pty Ltd v Bruness Pty Ltd & Anor [2002] WASC 286
The Commonwealth v Verwayen (1990) 170 CLR 394
Currie v Misa (1875) LR 10 Exch 153
Familiar Pty Ltd v Samarkos [1994] NTSC 22
Hart v O'Connor [1985] AC 1000
Parras Holdings Pty Ltd & Ors v Commonwealth Bank of Australia [1997] 1107 FCA (24 October 1997)
Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Wigan v Edwards (1973) 1 ALR 497

STAVRIANOU DCJ:

Introduction

On 29 July 2004 the plaintiff and the first defendant entered into a written agreement pursuant to which the first defendant covenanted to pay the plaintiff $105,000. The payment was not made on the due date of 31 August 2004.
The plaintiff claims against the first defendant $105,000, damages and interest. The claims are made in contract, promissory estoppel and pursuant to s 82 of the Trade Practices Act 1974 ("the Act").
Liability in contract is denied on the grounds that:
(a)there was no consideration for the obligation giving rise…

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.

Continue reading Luttrell v Key 2 Ltd

Details

AGLC: Luttrell v Key 2 Ltd [2006] WADC 130
Case: [2006] WADC 130
Decision Date: 25 AUGUST 2006

CaseChat Overview and Summary

The case of Luttrell v Key 2 Ltd involved a dispute between the plaintiff, Luttrell, and the defendant, Key 2 Ltd, over a contract which Luttrell claimed was unenforceable due to the unconscionability of the defendant's conduct. Luttrell alleged that Key 2 Ltd had unconscionably taken advantage of Luttrell's special disadvantage and inequality of bargaining power. The case was heard in the Federal Court of Australia. The central issues in the case were whether Key 2 Ltd had engaged in unconscionability, whether a contractual promise which is later breached is necessarily a representation as to future conduct when made, and whether the plaintiff could claim damages against the director of the corporation involved in misleading and deceptive conduct. The court also considered the question of accessorial liability and the onus of proof.

The court examined the nature of the contract between the parties and whether it contained an illusory promise, which would render it unenforceable. The court found that the contract did not contain an illusory promise and that the contract was binding. However, the court also found that Key 2 Ltd had engaged in unconscionable conduct by taking advantage of Luttrell's special disadvantage and inequality of bargaining power. The court held that a contractual promise which is later breached can be considered a representation as to future conduct when made, and that the plaintiff could claim damages against the director of the corporation involved in misleading and deceptive conduct. The court also found that the onus of proof lay on the defendant to establish that the contract was not unconscionable.

The court ordered Key 2 Ltd to pay damages to Luttrell for the losses suffered as a result of the unconscionable conduct. The court also held that the director of Key 2 Ltd was liable for accessorial liability, and that the onus of proof lay on the defendant to establish that the contract was not unconscionable. The case highlights the importance of ensuring that contracts are fair and reasonable, and that parties do not take advantage of each other's special disadvantage or inequality of bargaining power.

Orders