WFM Motors Pty Limited v Bar M Pty Limited

WFM Motors Pty Limited sued Bar M Pty Limited to enforce a guarantee and indemnity agreement. The dispute centred on whether the guarantee was valid and enforceable, considering allegations of unconscionability and unjust contracts. The matter was heard in the Supreme Court of New South Wales. The central legal issues were whether the guarantee was unconscionable under common law and whether it constituted an unjust contract under the Contracts Review Act 1980 (NSW). Additionally, the court needed to determine whether the conduct amounted to unconscionable conduct within the meaning of the Australian Securities and Investment Commission Act 2001 (Cth).

The court examined the nature of the relationship between the parties, the terms of the guarantee, and the circumstances surrounding its execution. It found that the guarantee was entered into under significant pressure and without proper advice, rendering it unconscionable at common law. The court also considered the statutory framework provided by the Contracts Review Act 1980 (NSW) and concluded that the guarantee was unjust and therefore unenforceable. Furthermore, the court found that the conduct of the guarantor did not meet the statutory definition of unconscionable conduct under the Australian Securities and Investment Commission Act 2001 (Cth). The court also addressed the issue of the weight to be given to the evidence, considering that one of the witnesses had passed away before completing cross-examination. The court found the remaining evidence sufficient to reach its conclusions.

The court ruled in favour of Bar M Pty Limited, finding the guarantee to be unenforceable due to unconscionability and unjust contract principles. The court also clarified the distinction between unconscionable conduct under the common law and statutory unconscionability. As a result, WFM Motors Pty Limited's claim was dismissed, and costs were awarded to the defendant.