Trust (PTAL) Limited (formerly Permanent Trustee Australia Limited) v Albert

In the case of Trust (PTAL) Limited (formerly Permanent Trustee Australia Limited) v Albert, the dispute centred around the enforceability of a deed of guarantee. The court had to determine whether the conduct of the mortgagee was unconscionable under section 12CC of the Australian Securities and Investments Commission Act 2001. The respondent, Albert, had executed a deed of guarantee in relation to a loan to a third party. When the third party defaulted on the loan, the mortgagee sought to enforce the guarantee. Albert contested the enforceability of the guarantee, arguing that the mortgagee's conduct was unconscionable, thereby barring the mortgagee from enforcing the guarantee under the statute.

The primary legal issue before the court was whether the conduct of the mortgagee constituted unconscionability for the purposes of section 12CC of the Australian Securities and Investments Commission Act 2001. The court had to assess the circumstances under which the guarantee was executed and the subsequent conduct of the mortgagee to determine if the statutory provision applied. The court examined factors such as the nature of the guarantee, the relationship between the parties, and whether the mortgagee acted in a manner that was manifestly disadvantageous to the guarantor.

In delivering the judgment, the court found that the conduct of the mortgagee did not amount to unconscionability as required by section 12CC of the Australian Securities and Investments Commission Act 2001. The court emphasised that unconscionability must be established on a high threshold and involved a significant degree of unfairness. The court concluded that while there may have been some unfairness in the circumstances, it did not reach the level of unconscionability that would preclude the mortgagee from enforcing the guarantee. Therefore, the court ruled in favour of the mortgagee, allowing them to enforce the guarantee against the guarantor.

The court ordered that the mortgagee was entitled to enforce the deed of guarantee against the guarantor. The court further directed that the guarantor was liable for the outstanding amount of the loan, plus interest and costs, as stipulated in the deed of guarantee. The court did not grant any relief to the guarantor on the basis of unconscionability and dismissed the guarantor's defence.