Perpetual Trustee Co Ltd v Khoshaba

Link copied
Case Copied 63 min read

New South Wales


Court of Appeal


CITATION: Perpetual Trustee Company Limited v Albert and Rose Khoshaba [2006] NSWCA 41
HEARING DATE(S): 6 December 2005
 
JUDGMENT DATE: 

20 March 2006
JUDGMENT OF: Spigelman CJ at 1; Handley JA at 99; Basten JA at 105
DECISION: 1 Grant leave to appeal; 2 Direct the Appellant to file a Notice of Appeal within 14 days hereof; 3 Appeal dismissed; 4 The Appellant to pay the Respondents’ costs.
CATCHWORDS: CONTRACTS – Unjust contracts – Determination that a contract “unjust” – Appellate review – Nature of decision appealed from – Conclusion that “unjust” – Whether discretionary – Whether reviewable – Discussion – Contracts Review Act 1980, s7. - CONTRACTS – Unjust contracts – When contract “unjust” – Courts to apply contemporary standards of what is “unjust” – Court cannot be constrained by other decisions as if they were rules – Relevant circumstances – Where money borrowed for investment – Purpose of the loan– Lender’s indifference to purpose of loan– Lender’s failure to adhere to its own lending guidelines.
LEGISLATION CITED: Contracts Review Act 1980: ss 7, 9
Unfair Contract Terms Act 1977 (UK)
Unfair Terms in Contract Regulations 1999 (UK)
CASES CITED: Antonovic v Volker (1986) 7 NSWLR 151
Baltic Shipping Co v Dillon (1991) 22 NSWLR 1
Beneficial Finance Corp Limited v Karavas (1991) 23 NSWLR 256
Blackburn v Allianz Australia Insurance Ltd (2004) 61 NSWLR 632
Buck v Bavone (1976) 135 CLR 110
Buller v Black (2003) 56 NSWLR 425
Coal & Allied Operations Pty Ltd v AIRC (2000) 203 CLR 194
Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 447
Crowe v Commonwealth Bank of Australia [2005] NSWCA 41
CSR Ltd v Della Maddalena [2006] HCA 1
Dinsdale v The Queen (2000) 202 CLR 321
Director General of Fair Trading v First National Bank plc [2002] 1 AC 481
Elders Rural Finance Ltd v Smith (1996) 41 NSWLR 296
Elkofairi v Permanent Trustee Co Ltd (2003) 11 BPR 20,841
Esanda Finance Corp Ltd v Tong (1997) 41 NSWLR 482
Figliuzzi v Yonan [2005] NSWCA 290
Fleming v The Queen (1998) 197 CLR 250
Fox v Percy (2003) 214 CLR 118
George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 2 AC 803
House v The King (1936) 55 CLR 499
Karl Suleman Enterprizes Pty Ltd (in liq) v Babanour (2004) 49 ACSR 612
Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259
Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611
Mulligan v Coffs Harbour City Council (2006) 221 ALR 764
Murphy v Overton Investments Pty Ltd [2002] FCAFC 129
Nguyen v Taylor (1992) 27 NSWLR 48
Norbis v Norbis (1986) 161 CLR 513
Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd (2001) 50 NSWLR 679
Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd (2003) 214 CLR 514
Roy Morgan Research Centre Pty Ltd v State Revenue (Vict) (2001) 207 CLR 72
Russo v…
CaseChat AU logo

Keep reading for free

Create a free CaseChat account to read Perpetual Trustee Co Ltd v Khoshaba and more:

  • Read every judgment in full
  • Ask AI and get answers linked to paragraphs
  • See how each paragraph was cited in later cases
  • Download judgments as PDF or Word
Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details
Case
[2006] NSWCA 41
Decision Date

CaseChat Overview and Summary

Perpetual Trustee Co Ltd appealed to the Court of Appeal of New South Wales against a decision of the primary judge who had found a loan contract to be unjust under the *Contracts Review Act 1980* (NSW). The dispute concerned a loan made by Perpetual Trustee to Mr Khoshaba for investment purposes, where the lender allegedly failed to adhere to its own lending guidelines and was indifferent to the purpose of the loan.

The central legal issues before the Court of Appeal were whether the primary judge’s conclusion that the contract was unjust was a discretionary one, and if so, whether it was amenable to appellate review. The Court also considered the principles to be applied when determining whether a contract is unjust, particularly in the context of commercial lending and the need to apply contemporary standards.

The Court of Appeal held that the determination of injustice under section 7 of the *Contracts Review Act 1980* involves a question of law, not merely discretion, and is therefore reviewable on appeal. The Court emphasised that courts must apply contemporary standards of what is considered unjust and are not bound by previous decisions as if they were rigid rules. In this instance, the Court found that the primary judge had correctly considered the relevant circumstances, including the lender's failure to follow its own guidelines and its indifference to the purpose of the loan, in reaching the conclusion that the contract was unjust.

Leave to appeal was granted, but the appeal was ultimately dismissed. Perpetual Trustee Co Ltd was ordered to pay the respondents' costs.

Orders

Orders of the court

1 Grant leave to appeal; 2 Direct the Appellant to file a Notice of Appeal within 14 days hereof; 3 Appeal dismissed; 4 The Appellant to pay the Respondents’ costs.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.