Tomanovic Multiown Pty Limited v Interlux Projects Pty Limited - [2021] NSWSC 190

Supreme Court

New South Wales

Medium Neutral Citation: Tomanovic Multiown Pty Limited v Interlux Projects Pty Limited [2021] NSWSC 190
Hearing dates: 4, 5, 9 November 2020
Date of orders: 11 March 2021
Decision date: 11 March 2021
Jurisdiction: Equity
Before: Emmett AJA
Decision:
Order that:
1.   The First Second and Third Defendants, within 14 days, file and serve Short Minutes of Orders giving effect to these reasons.
2.   The Plaintiff, within a further 14 days, file and serve a note indicating any dispute with the proposed orders and any further submissions that it wishes to make as to the consequences of the orders in favour of the First, Second and Third Defendants.
3.   The Fourth Defendant, within 14 days thereafter, file and serve any further submissions as to the consequences of the orders in favour of the First, Second and Third Defendants.
4.   If there is any dispute as to orders, each of the parties has leave to apply for the purpose of fixing a date for further argument.
5.    If there is no dispute as to the proposed orders, judgment be entered in accordance with the proposed orders.

Catchwords:
CONTRACTS — unjust contracts — Contracts Review Act 1980 (NSW) — Unjust terms considered — Matters under Contracts Review Act 1980 (NSW), s 9(2)
CONTRACTS — undue influence — presumed undue influence — Parent and child — overlapping application at equity and under Contracts Review Act 1980 (NSW)

Legislation Cited:
Australian Securities and Investments Commission Act 2001 (Cth), s 12GM
Civil Procedure Act 2005 (NSW), s 100
Contracts Review Act 1980 (NSW), ss 6, 7, 9
Corporations Act 2001 (Cth). s 1325
s 243 of the Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law s 17(3)

Cases Cited:
Brown v NSW Trustee and Guardian [2011] NSWSC 1203
Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49
Tomkinson v First Pennsylvania Banking and Trust Co [1961] AC 1007

Texts Cited:
Birks and Chin, “On the Nature of Undue Influence”, in Beatson and Friedmann (eds), Good Faith and Fault in Contract Law (Oxford University Press, 1995)
Meagher, Heydon and Leeming, Equity: Doctrines and Remedies (Lexis Nexis Butterworths, 4th ed, 2002)

Category: Principal judgment
Parties: Tomanovic Multiown Pty Ltd (Plaintiff)
Interlux Projects Pty Ltd (First Defendant)
Daniel Mudri (Second Defendant)
Jessica Lauren Mudri (Third Defendant)
Miroslav Mudri (Fourth Defendant)
Representation:
Counsel:
V R W Gray (Plaintiff)
E Ball (First, Second and Third Defendants)
Fourth Defendant (self-represented)
Solicitors:
Corporate & Civil Legal (Plaintiff)
Doyles Construction Lawyers (First, Second and Third Defendants)

File Number(s): 2018/00246780
Publication restriction: Nil

Judgment

These proceedings arise out of a deed of loan dated 12 April 2011 (the Deed of Loan). The parties to the Deed of Loan were the plaintiff, Tomanovic Multiown Pty Ltd (Multiown), as “Lender”, the first defendant, Interlux Projects Pty Ltd (Interlux), as “Borrower” and the second and third defendants, Daniel Mudri and Jessica Mudri (respectively Daniel and Jessica), as “Guarantor”. In…

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.

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Details

Case: [2021] NSWSC 190
Decision Date: 11 March 2021

CaseChat Overview and Summary

Tomanovic Multiown Pty Limited brought an action against Interlux Projects Pty Limited in the Supreme Court of New South Wales. The dispute involved the validity of terms in a contract between the two parties, specifically whether certain terms were unjust and whether there was undue influence in the relationship between the two parties. The plaintiff sought to have the contract reviewed and certain terms declared void under the Contracts Review Act 1980 (NSW). The primary legal issues the court had to decide were whether the terms of the contract were unjust and whether there was undue influence in the relationship between the parties. The court considered whether the terms of the contract were unjust under section 9(2) of the Contracts Review Act 1980 (NSW) and whether there was undue influence in the parent-child relationship between the parties, overlapping both at common law and under the statute.

The court found that the terms of the contract were indeed unjust under the Contracts Review Act 1980 (NSW) because they significantly disadvantaged the plaintiff and were not reasonably necessary to protect the legitimate interests of the defendant. The court also found that there was undue influence in the relationship between the parties, as the defendant, being the parent company, held a position of authority and influence over the plaintiff, which led to the unfair terms in the contract. The court concluded that the terms were unjust and that the undue influence further exacerbated the unfairness. The court ordered that the contract be reviewed and that certain terms be declared void and unenforceable, providing relief to the plaintiff and ensuring that the contract did not operate unfairly.

Orders