BOSNJAK v FARROW MORTGAGE SERVICES PTY LTD(IN LIQUIDATION) [1993] NSWCA 304

BOSNJAK v FARROW MORTGAGE SERVICES PTY LTD (IN LIQUIDATION)

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

Kirpy P, PRIESTLEY and Cripps JJA 23 and 24 February 1993, 29 June 1993 [1993] NSWCA 304

CONTRACTS — unjust contracts — guarantee — business venture for erection of home units for profit — financier provides funds for charges including a large establishment fee — belated approval of development by local authority — project delayed — financier demands repayment of moneys advanced — upon default, action against individual borrower based on guarantee — relief sought claiming contract is illegal under Building Societies Act 1986 and unjust pursuant to Contracts Review Act 1980 — held: (affirming decision of Giles J on this point): The contract of guarantee was not unjust in the circumstances in which it was made having regard, inter alia to (a) the business experience of the guarantor; (b) the availability to him of legal advice; (c) the commercial nature of the transaction; (d) the nature of the guarantee as securing his own commercial venture.

Antonovic v Volker and Anor (1986) 7 NSWLR 151 (CA); Beneficial Finance Corporation Ltd v Karavas and Ors (1991) 23 NSWLR 256 (CA) distinguished. CONTRACTS - unjust contracts - refusal of relief - appeal - nature of appeal - whether categorised as appeal against discretionary decision - held: Unnecessary to determine. SH Lock (Australia) Ltd v Kennedy (1988) 12 NSWLR 482.(CA) considered. ILLEGALITY - contract - loan by agent of building company - whether forbidden by Building Societies Act 1986 (Vic) - effect of such Act - whether it renders contracts in breach of Act illegal and unenforceable - whether such a result which penalises investors and depositors and provides unexpected gains to borrowers is a true result of the Act - held: Upon the assumption of the identity of the financier and a society governed by the Act, the provision of the Act did not prohibit the making of loans by a society and any such loan was not illegal or unenforceable in the circumstances. Yango Pastoral Co Pty Ltd and Ors v First Chicago Australia Ltd and Ors (1978) 139 CLR 410 applied; Edgar v Farrow Mortgage Services Pty Ltd (In Liq) (unreported, Federal Court of Australia, 26 August 1992) not followed. Contracts Review Act 1980, s6, s9(2)(i). Building Societies Act 1986 (Vic), s52, s57.