Goodwin v National Bank of A/asia Ltd [1968] HCA 30

High Court of Australia Barwick C.J. McTiernan, Taylor, Menzies and Windeyer JJ. Goodwin v National Bank of A/asia Ltd [1968] HCA 30

ORDER Appeal dismissed with costs.

The following judgments were delivered:—

May 28 Barwick C.J.

This is an appeal from a judgment of the Full Court of the Supreme Court of Queensland allowing a demurrer to the appellant's statement of claim in a suit in the Supreme Court in which the appellant claims rescission of a registered bill of mortgage of land given by her to the respondent bank to secure the repayment to it of the indebtedness to it of the appellant's son and daughter-in-law. Alternative claims are for declarations that the bill of mortgage is void and that the appellant is entitled to be discharged and exonerated from all liability under the bill.

The statement of claim alleges that a week before the execution of the bill of mortgage the appellant's son had become surety to the respondent for the account of a person named Cavendish. Whilst it is not so alleged, we are asked to deal with the matter on the footing that the appellant at the time she executed the bill was in fact unaware of the suretyship obligations of her son to the respondent. The statement of claim further alleges that the bill was executed by the appellant at a branch of the respondent and that it was not read over to her by the respondent or any of its officers. Whilst it appears that the appellant was at the time eighty-two years of age, no facts are alleged which would vitiate her execution of the bill, but it is claimed by the appellant that the non-disclosure (which she asserts) by the respondent of the existing suretyship of her son amounted to a misrepresentation warranting the rescission of the bill of mortgage.

The transaction between the appellant and the respondent was not of a class calling for the fullest disclosure—it was not uberrimae fidei. But it is settled law that a bank in the position which the respondent occupied in relation to the appellant is only bound to disclose to the intending surety anything which has taken place between the bank and the principal debtor "which was not naturally to be expected", or as it was put by Pollock M.R., in Lloyd's Bank Ltd. v. Harrison [1] cited in Paget's Law of Banking, 7th ed. (1966), p. 583 "the necessity for disclosure only goes to the extent of requiring it where there are some unusual features in the particular case relating to the particular account which is to be guaranteed".