ZELL and ORS v COMMONWEALTH BANK OF AUSTRALIA [1997] NSWCA 359

ZELL and ORS vy COMMONWEALTH BANK OF AUSTRALIA

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

MASON P, HANDLEY and STEIN JJA 18 July 1997, 10 September 1997

[1997] NSWCA 359

Contracts Review Act 1980 (NSW) — unconscionable transactions — bank and farmers — whether contracts "unjust" — vulnerable position of wife — all moneys clauses

Between 1971 and 1985 the appellants, the Zell family and their family settlement, acquired five rural properties in the Gilgandra District assisted by borrowing from the bank. At various stages each of the properties were mortgaged to the respondent, the Commonwealth Bank. The appellants were unable to make repayments to the respondent and sought relief under the Contracts Review Act 1980 (NSW) or alternatively, for unconscionability. Sperling J was not satisfied that the loan contracts or mortgages were unjust. The appellants challenge was directed to:

1. the lending arrangements for the purchase of the property "Bundally";

2. the effectiveness of the all moneys clauses;

3. the refinancing in 1989 which resulted in the bank obtaining extra security;

4. Mrs Zell's special disability vis a vis the bank.

Held: Appeal dismissed:

1. The bank's assessment of the viability of the transactions was dependent on the information and budgets provided by Mr Zell. Elders Rural Finance Ltd v Smith (1996) 41 NSWLR 296 distinguished.

2. Mrs Zell was not subject to undue influence or improper or unfair pressure from either the bank or Mr Zell. Mrs Zell was aware of the nature of the contracts she was entering into and was content to leave the family's business affairs to Mr Zell.

3. There is nothing unjust or unconscionable in the bank relying upon an earlier all moneys clause to secure a later indebtedness where the lender discloses its intention in the later security to rely upon the clause in the earlier security.