Magarditch v Australian and New Zealand Banking Group Ltd

The applicants, Magarditch and another, appealed to the New South Wales Court of Appeal against a decision of the Supreme Court of New South Wales. The dispute concerned the validity of a mortgage granted by the applicants to the respondent, the Australian and New Zealand Banking Group Ltd.

The primary legal issue before the Court of Appeal was whether the mortgage was void for want of consideration. The applicants contended that they received no benefit or detriment in exchange for granting the mortgage, and therefore, no consideration existed to support the contractual obligation.

The Court of Appeal held that the mortgage was supported by valuable consideration. It reasoned that the bank's forbearance from exercising its rights against the applicants' company, which was indebted to the bank, constituted sufficient consideration. The court applied the principle that a promise to refrain from doing something one has a legal right to do can be good consideration. This forbearance was of benefit to the company and, by extension, to the applicants who were guarantors of the company's debt.

Consequently, the Court of Appeal dismissed the appeal and affirmed the decision of the Supreme Court.