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<== Previous message       Back to index       Next message ==>
Sender:
Simon Evans
Date:
Fri, 7 Aug 1998 19:16:03
Re:
Garcia v NAB

 

Vinodh S Coomaraswamy wrote:

An important decision on presumed undue influence has today been handed down by the High Court of Australia. The name of the case is Garcia v National Australia Bank Ltd [1998] HCA 48 and, pending the full report, the full text of the judgment is available at http://www.lawnet.com.au/ courts/hct/garcia.htm

The full text is also available at:

http://www.austlii.edu.au/au/cases/cth/high_ct/ 1998/48.html

I don't think the case can be described as one of presumed undue influence - the joint judgment (of Gaudron, McHugh, Gummow and Hayne JJ) eschews any such analysis. They decline to adopt (or modify) Barclays Bank plc v O'Brien and instead hold that it will be unconscionable for a lender to enforce a third party security (in the absence of undue influence or unconscionable conduct with the knowledge by the lender) if:

(a) in fact the surety did not understand the purport and effect of the transaction;

(b) the transaction was voluntary (in the sense that the surety obtained no gain from the contract the performance of which was guaranteed);

(c) the lender is to be taken to have understood that, as a wife, the surety may repose trust and confidence in her husband in matters of business and therefore to have understood that the husband may not fully and accurately explain the purport and effect of the transaction to his wife; and yet

(d) the lender did not itself take steps to explain the transaction to the wife or find out that a stranger had explained it to her.

The decision is very significant - and more than a little problematic.

Regards,

 

Simon Evans.


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