Paratei Pty Ltd v ING Bank (Australia) Limited; Sparks v Battaglia

Paratei Pty Ltd and Sparks, the shareholders, brought an action against ING Bank, alleging that the bank's enforcement of guarantees and mortgages was unconscionable. The dispute arose from loans the companies had taken from the bank, which were secured by guarantees and mortgages from the shareholders. The case was heard by the Supreme Court of New South Wales.

The central legal issues revolved around whether the bank's conduct in enforcing the guarantees and mortgages was unconscionable due to the shareholders' lack of involvement in the companies' management and their limited knowledge or explanation of the transactions. Additionally, some of the guarantees and mortgages were executed under a power of attorney, raising further questions about the enforceability of these instruments.

The court held that the shareholders' lack of involvement in the companies' management and their limited knowledge or explanation of the transactions constituted a special disability. This, combined with the bank's failure to provide adequate explanation, rendered the enforcement of the guarantees and mortgages unconscionable. The court also considered the relevant provisions of the Australian Securities and Investments Commission Act 2001 (Cth) and the Contracts Review Act 1980 (NSW), finding that the shareholders' situation warranted relief under these statutes.

The court ordered that the bank's enforcement of the guarantees and mortgages was unconscionable and thus void. The shareholders were granted relief under the Australian Securities and Investments Commission Act 2001 (Cth) and the Contracts Review Act 1980 (NSW). The specific terms of the relief included a declaration that the guarantees and mortgages were unenforceable and an order preventing the bank from taking any action to enforce them.