TEACHERS HEALTH INVESTMENTS PTY LTD v WYNNE; BURNSWOOD v WYNNE [1996] NSWCA 585

TEACHERS HEALTH INVESTMENTS PTY LID v WYNNE; BURNSWOOD v WYNNE

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

MAHONEY P, BEAZLEY JA and WADDELL AJA

30 April 1996, 16 July 1996

EQUITY — Yerkey v Jones presumption — whether applicable law in NSW — application of principles of Commercial Bank of Australia vy Amadio — unconscionable bargains

CONTRACTS — unjust contracts — Contracts Review Act 1980 (NSW) s7,s9

A mortgage was entered into by the respondent as mortgagor, and the appellant as mortgagee, as security for a loan granted by the appellant to the respondent's husband and his company. The mortgaged property was the respondent's matrimonial home. Although the property had been purchased in the joint names of both the respondent and her husband, shortly before the mortgage, the respondent became the sole registered proprietor.

The respondent and the principal debtor had a history of poor marital relations. The trial judge found that at the time of entering the mortgage, the respondent was in a vulnerable position, which the principal debtor took advantage of in contriving to secure the respondent's entry into the mortgage. In these circumstances, a clear equity arose between the respondent and the principal debtor.

Hunter J found that the loan application was made solely by the principal debtor. His Honour also found that the appellant dealt with the respondent through the solicitor for the principal debtor, rather than through her own solicitor. Hunter J held that the respondent was entitled to relief under the equitable presumption in Yerkey v Jones, which affords special protection to wives who act as sureties for their husband's debts against third parties who may be affected by any equity which, as between the wife and the husband. may arise from the husband's conduct.

The trial judge held that the appellant's conduct was not unconscionable in the circumstances, although his Honour did not consider the application of the principles enunciated in Commercial Bank of Australia v Amadio.