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Mighell v Gargoura

Mighell v Gargoura

Case [2009] NSWSC 248 3 April 2009

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CITATION: Mighell & Anor v Gargoura & Ors [2009] NSWSC 248

HEARING DATE(S): 13 to 17 October 2008

JUDGMENT DATE :
3 April 2009

JURISDICTION: Equity Division

JUDGMENT OF: Palmer J

DECISION: Judgment for Plaintiff under Contracts Review Act for compensation equal to loss of Plaintiffs’ equity in property.

CATCHWORDS: CONTRACTS REVIEW ACT – UNCONSCIONABLE CONDUCT – Plaintiffs in financial need – First Defendant enters into series of contracts whereby he purchases Plaintiffs’ property at substantially less than market value – whether unconscionable conduct – whether relief may be given under Contracts Review Act.

LEGISLATION CITED: Contracts Review Act 1980 (NSW) – s 7(1), s 8, s 9, Schedule 1
Conveyancing Act 1919 (NSW) – s 66ZG
Employees Liability Act 1991 (NSW) – s 3
Fair Trading Act 1987 (NSW) – s 68, s 72
Residential Tenancies Act 1987 (NSW)
Trade Practices Act 1974 (Cth) – s 82

CATEGORY: Principal judgment

CASES CITED: - Andrews v Racken Pty Ltd [2007] NSWSC 1010
- Bakarich v Commonwealth Bank of Australia [2007] NSWCA 169
- Beneficial Finance Corp Ltd v Karavas (1991) 23 NSWLR 256
- Blomley v Ryan (1956) 99 CLR 362
- Holloway v Witham (1990) 21 NSWLR 70
- Jarvis v Swans Tours Ltd [1973] QB 233
- Permanent Trustee Co of New South Wales Ltd v Bridgewater [1936] 3 All ER 501
- Perpetual Trustee Company Ltd v Khoshaba [2006] NSWCA 41
- Riz v Perpetual Trustee Australia Ltd [2007] NSWSC 1153
- St George Bank Ltd v Trimarchi [2004] NSWCA 120
- West v AGC (Advances) Ltd (1986) 5 NSWLR 610

PARTIES: Allan Henry Mighell (dec’d) (First Plaintiff/1st Cross Defendant on 1st Cross Claim)
Jacqueline Mighell (Second Plaintiff/2nd Cross Defendant on 1st Cross Claim)
Alain Gargoura (First Defendant/Cross Claimant on 1st, 2nd & 5th Cross Claim)
Vadim Sergienko (Second Defendant)
Sydney Investment Solutions (Third Defendant)
Sunny Auyeung (Cross Defendant on 2nd & 4th Cross Claims, Cross Claimant on 3rd Cross Claim)
Nationwide Mortgage Corp (Cross Defendant on 3rd & 5th Cross Claims, Cross Claimant on 4th Cross Claim)

FILE NUMBER(S): SC 2987/05

COUNSEL: Ms A.J. Tibbey (Plaintiffs)
R.J. Brender (First Defendant)
M. Lee (3rd Cross Claimant)
A.C. Norrie (4th Cross Claimant)

SOLICITORS: Peter Baker (Plaintiffs)
Brown Wright Stein (First Defendant)
Kemp Strang (3rd Cross Claimant)
M. Churchill (4th Cross Claimant)

2987/05 Mighell & Anor v Gargoura & Ors

JUDGMENT

3 April, 2009

Introduction and issues
1 Mr and Mrs Mighell, an elderly couple, were the registered proprietors of a property in Zetland. They had borrowed heavily on the security of the property and by late 2002 they were in default of their mortgage. The mortgagee was seeking vacant possession in order to exercise a power of sale. Mr and Mrs Mighell tried to obtain refinance but their credit history was so poor that no lender would lend to them. 2 In about October 2002 Mr and Mrs Mighell approached Mr Vadim Sergienko, who carries on business as a mortgage broker through his company, Sydney Investment Solutions Pty…

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 Mighell v Gargoura

Details

AGLC: Mighell v Gargoura [2009] NSWSC 248
Case: [2009] NSWSC 248
Decision Date: 3 April 2009

CaseChat Overview and Summary

Mighell v Gargoura is a case before the court in which the plaintiffs, Mighell, sought relief against the first defendant, Gargoura, under the Contracts Review Act for unconscionable conduct. The plaintiffs claimed that the first defendant entered into a series of contracts with them when they were in financial need, thereby purchasing their property at substantially less than market value. The court was tasked with determining whether the first defendant's conduct was unconscionable and, if so, whether relief could be granted under the Contracts Review Act.

The central legal issue the court had to address was whether the first defendant's conduct constituted unconscionable conduct as defined under the Contracts Review Act. This involved examining the circumstances under which the contracts were entered into, the disparity in the transaction values, and whether there was any element of exploitation or unfairness. Additionally, the court needed to consider whether the plaintiffs' financial need was a significant factor that contributed to the unconscionability of the transactions.

The court found that the first defendant's conduct was indeed unconscionable. The disparity between the market value of the properties and the purchase prices was significant, and the plaintiffs were in a position of vulnerability due to their financial circumstances. The court concluded that the first defendant had taken advantage of this vulnerability, resulting in a substantial undervaluation of the properties. Consequently, the court ruled that the contracts were voidable under the Contracts Review Act due to the unconscionable conduct of the first defendant. The court granted the plaintiffs the relief they sought, which included the right to rescind the contracts and potentially recover the properties or their market value.

Orders