Serventy v Commonwealth Bank of Australia [No 2]

Serventy Pty Ltd appealed to the Federal Court against a decision of the Federal Circuit Court which held that the Commonwealth Bank of Australia was entitled to enforce a mortgage against Serventy. The appeal was concerned with whether it was unconscionable for the bank to enforce the mortgage and whether an intermediary was an agent for the bank such that the intermediary's knowledge was imputed to the bank. The intermediary, who was acting as an asset lender, had knowledge of the unconscionability but the bank had not. The appeal was dismissed.
The appeal turned on whether the intermediary was an agent for the bank so that the bank could be imputed with the intermediary's knowledge. The court considered the relationship between the parties, the nature of the intermediary's role, and whether the bank had control over the intermediary. The court held that the intermediary was not an agent for the bank because the bank did not have control over the intermediary's actions. The court also held that it was not unconscionable for the bank to enforce the mortgage because the bank was not aware of the unconscionability. The court held that unconscionability was a question of fact and turned on the particular circumstances of each case. The court held that it was not enough for the borrower to show that the transaction was harsh or unfair; the borrower must also show that the lender was aware of the unconscionability at the time of enforcement. The court held that the bank was not aware of the unconscionability because the intermediary had not brought the matter to the bank's attention. The court held that the intermediary's knowledge was not imputed to the bank because the intermediary was not an agent for the bank. The court held that the appeal was without merit and dismissed the appeal.