Goodridge v Macquarie Bank Limited [2010] FCA 67

FEDERAL COURT OF AUSTRALIA

Goodridge v Macquarie Bank Limited [2010] FCA 67

Citation: Goodridge v Macquarie Bank Limited (ABN 46 008 583 542) and Leveraged Equities Limited

Parties: ROSS IAN GOODRIDGE v MACQUARIE BANK LIMITED (ABN 46 008 583 542) and LEVERAGED EQUITIES LIMITED

File number: NSD 282 of 2009

Judge: RARES J

Catchwords: ASSIGNMENT – statutory assignment under s 12 of the Conveyancing Act 1919 (NSW) –assignment of debt or chose in action to third party under s 12 not effective until debtor or obligor has actual notice –constructive notice and service of notice under s 170 of the Conveyancing Act insufficient unless debtor or obligor actually receives it – proof of non-receipt of notice admissible to show no actual notice ASSIGNMENT – whether margin loans assignable where the obligations and benefits under the loan agreement are not severable – margin loan capable of being increased after assignment – not a static or unchanging liability – the power to exercise an existing legal right to claim payment of a debt that is inseverable from the power conditioning the obligation of assignor to lend further money on the terms of its loan agreement is not assignable – margin loan and loan agreement incapable of assignment because of the interconnection of the lender's obligations and rights under it

ASSIGNMENT – assignor remaining liable to make further advances to debtor after assignment – contractual criteria for further advances – assignor remaining liable to make future advances to debtor after assigning existing loan – contract providing that lender's obligation to lend and right to make margin call or enforce loan dependent on lender's power to apply same criteria for each – whether each of assignor and assignee can apply some criteria differently to affect rights and liabilities of debtor – powers in respect of such criteria incapable of passing to assignee while also remaining with assignor – assignment of loan not possible where lender remains liable to make further advances and criteria to be applied inseverable EQUITY – equitable assignments – absence of notice does not affect validity of the equitable assignment – equitable assignment is complete upon the expression by the assignor of an intention to make over to the assignee then and there the assignor's equitable interest in the property or right concerned BANKING AND FINANCIAL INSTITUTIONS – banker/customer relationship – right of banker to make margin call – right of banker to sell securities after default of customer in making margin call – sale of customer's securities supporting margin loan – sale of margin loans by one bank to another CONTRACT – privity – novation – construction of contracts – clause providing borrower agrees to banker assigning or novating contract –clause not identifying terms or new party as the subject of the novation – whether agreement to agree – whether effective consent to banker entering any agreement novating banker/customer contract without customer being a party - ability to novate any part of agreement to third party TRADE AND COMMERCE - whether unconscionable conduct within the meaning of s 12CA or s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) – relationship of banker and customer involved misuse of power of sale by banker by requiring customer to comply with conditions not reasonably necessary to protect interests – banker used power of sale unconscientiously without any right to do so – relationship of mortgagor and mortgagee not ordinarily capable of being characterised as fiduciary DAMAGES – mitigation – banker making invalid demand and selling securities in falling market – whether customer unreasonable in failing to buy back some or all securities as market rises with third party loan – banker continuing to claim customer in default and not providing access to loan facility while asserted default continues – customer not unreasonable – no failure to mitigate DAMAGES – ASSESSMENT - date for assessment of damages – breach by banker of loan agreement by not providing finance and selling security – assessment of damage not confined to difference in sale price and market value of securities sold – no inflexible rule for date of assessment of damages where loan also not available – damages or restitution ordered at time of judgment to provide customer with property wrongly sold and loss of benefit of that property – alternative remedy also available under s 12GM(2)(d) of the Australian Securities and Investments Commission Act 2001 (Cth)