BRADBURY v AUSTRALIAN GUARANTEE CORPORATION LTD and ORS SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MEAGHER, BEAZLEY and STEIN JJA 8 May 1997, 1 July 1997 [1997] NSWCA 47 Contracts Review Act, — assignment of shares — guarantee — unconscionable conduct — Beneficial Finance Corporation v Karavas (1991) 23 NSWLR 256 — Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84. FACTS Mrs Bradbury was the registered proprietor of two parcels of shares in The Astor Pty Ltd. Those shares entitled Mrs Bradbury to exclusive use and occupation of two units. Mrs Bradbury assigned and transferred the shares to AGC, by way of Deed of Mortgage, which was to secure all moneys owing or to become owing to AGC by Mr Bradbury according to an "all moneys" clause. Mrs Bradbury was guarantor for the liabilities of a company called International Rigging (Aust) Pty Ltd ("IRA"). IRA defaulted on instalments due under various loans and agreements and AGC made demand on Mrs Bradbury as guarantor. AGC was successful, before Dunford J, in having its security enforced. HELD 1. There was no unconscionable conduct. 2. AGC had no duty to provide Mrs Bradbury with commercial advice and that AGC did not, in fact, provide such advice means that they cannot have assumed any duty of care. 3. There is jurisdiction under the Contracts Review Act 1980, to make orders in favour of a party merely upon proof of a relevant disability irrespective of the knowledge of that disability on the part of the other contracting party, but the circumstances must be extraordinary for that jurisdiction to be exercised: Beneficial Finance Corporation v Karavas (1991) 23 NSWLR 256. No relevant disability existed and the circumstances of this case were not extraordinary. Meagher JA This is an appeal from the decision of Dunford J, of 9 August 1996, enforcing the security of the first respondent ("AGC") over two units ("the Units") in a block of flats in respect of the indebtedness of the appellant as guarantor for the liabilities of International Rigging (Aust) Pty Ltd ("IRA"). The appellant was the registered proprietor of two parcels of shares in The Astor Pty Ltd ("the Astor'), which owns a block of home units in Macquarie Street, Sydney. Those-two parcels of shares entitled Mrs Bradbury, subject -to the -Articles-of Association, to exclusive use and occupation of the Units. Mrs Bradbury, as mortgagor, assigned and transferred the shares to AGC, as mortgagee, by way of a Deed of Mortgage dated 1 November 1985 ('the Mortgage"). Cl11 of the Mortgage provided the following: In the event of default being made hereunder the mortgagor shall forthwith upon demand in writing being made by the Mortgagee deliver to the Mortgagee vacant possession of the Premises. The mortgage was to secure all moneys owing or to become owing to AGC by Mrs Bradbury whether alone or on a joint or partnership account and whether as principal debtor or pursuant to any guarantee or indemnity, according to an "all moneys" clause of a fairly usual kind. At about the same time, she executed and 2 UNREPORTED JUDGMENTS delivered to AGC signed, undated Transfers of Shares in blank and an undated Statutory Declaration acknowledging, inter alia, the shares were hers, fully paid and not subject to any charge and that she was aware AGC would rely upon the correctness of the declaration in providing accommodation to IRA on the security of a mortgage over the shares. She was a director and employee of IRA until sometime in 1985 and received regular income, but played no active role in its management. Prior to 1 November 1985, the appellant had executed a Master Lease Agreement by which she guaranteed the payment by IRA of all moneys which might become owing by IRA pursuant to any supplementary lease agreements. After | November 1985, the appellant executed various documents by which she guaranteed to AGC certain specific liabilities of IRA. IRA defaulted on instalments due under various loans and lease agreements in-June 1991. AGC made demand on the appellant and;other guarantors for payment of amounts owing by IRA. The demand was not complied with and AGC, by notice dated 13 February 1992, required the appellant to "deliver up vacant possession" of the relevant home units within 14 days. Mrs Bradbury failed to respond to this demand and AGC issued a summons on 16 March 1993. By 3 July 1995, the first day of the hearing before Dunford J, IRA owed AGC well over $8 million. In the original Summons, AGC claimed possession of the Units and leave to issue a writ of possession. However, because Mrs Bradbury was not possessed with any estate in the Units, she could not convey any estate to AGC. AGC conceded that it was not entitled to bring proceedings for possession under s79 of the Supreme Court Act 1970, and conceded that it was not a mortgagee under the provisions of the Real Property Act 1900 and so could not rely on s60(c) of that Act. The summons were amended to seek a declaration that AGC was entitled, as against Mrs Bradbury, to vacant possession of the Units and orders that Mrs Bradbury vacate the Units and deliver up to AGC the keys. Mrs Bradbury denied that AGC was entitled to relief, calling to her aid the doctrine of unconscionability and the provisions of the Contracts Review Act 1980. Mrs Bradbury also cross-claimed against her solicitor, claiming he was negligent in failing to give her certain advice in relation to the Mortgage and other documents. The cross-claim against the solicitor was unsuccessful and an appeal against this decision was abandoned at the commencement of the hearing of the appeal. His Honour found that the Mortgage, the blank Transfers of Shares, the Statutory Declaration, the Answers to Requisitions and the Authority to Complete were all signed by Mrs Bradbury at the solicitor's office, probably on 29 October 1985. His Honour found Mrs Bradbury to be a witness of very little credibility. Her husband,he found to be a witness of no credibility. He rejected Mrs Bradbury's evidence that she was not aware that she was signing a mortgage over her interest in the Units. His Honour also found that Mrs Bradbury knew that all the companies, her assets and her husband's assets, the Units and her husband's yacht had been put up as security for the debts of IRA. He found that she knew what a guarantee and a mortgage were. Mrs Bradbury's claim that the mortgage and other security documents were null and void or unenforceable were unsuccessful. His Honour correctly, in my view, found that there was no unconscionable conduct sufficient to deny the declaration and orders sought by AGC, or unconscionable conduct of any kind at all. Learned counsel for Mrs Bradbury, Mr Blackburn, relied upon the decision of Commercial Bank of Australia v Amadio (1983) 151 CLR 447. It is quite clear that the principles of that case have no application to the present: Mrs Bradbury URADBURY v AUSTRALIAN GUARANTEE CORPORATION LTD and ORS (Meagher JAB and her husband, his Honour found, treated their assets and income and those of IRA as common funds; she received some advice from her solicitor in relation to the Blank Transfer of Shares and knew what a mortgage was; the arrangement into which she entered was one which was entered, from her point of view, for profit; and, most importantly, it cannot be said that AGC brought any pressure upon her. It is clear that AGC had no duty to provide Mrs Bradbury with commercial advice and that AGC did not in fact provide such advice means that they cannot have assumed any duty of care: Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84. Mrs Bradbury's reliance on the provisions of the Contracts Review Act 1980 was also unsuccessful. His Honour found that she was not suffering any disability or difficulty on account of her physical or mental capacity which rendered her unable reasonably to protect her interests. Her educational background and literacy were sufficient to understand the general nature of the contracts she entered and the physical form of the documents must have indicated the nature of the documents she was signing. She received sufficient legal advice in relation to the transaction and no undue pressure or unfair tactics were exerted against her by AGC or anyone purporting to act on their behalf or to their knowledge. If there was any undue pressure it was exerted by Mrs Bradbury's husband, not by the solicitor. And it must be remembered that the solicitor was not AGC's solicitor. AGC had no idea what the solicitor did or did not say or do to Mrs Bradbury. Whilst there is jurisdiction under the Act to make orders in favour of a party merely upon proof of a relevant disability, irrespective of the knowledge of that disability on the part of the other contracting party, the circumstances must be extraordinary for that jurisdiction to be exercised: Beneficial Finance Corp v Karavas (1991) 23 NSWLR 256. In any event, his Honour found that no relevant disability existed; and even if it did there were no extraordinary circumstances which would justify any order against AGC. His Honour made an order that, as against Mrs Bradbury, AGC was entitled to vacant possession of the Units. He ordered that she vacate the Units and that she deliver up the keys to AGC. Mr Blackburn argued before his Honour and before this court that those orders could not be made because title in the Units rested with the Astor, which had not been joined as a party. The shares held by Mrs Bradbury entitled her to exclusive use and occupation of the Units. The Articles of Association of the Astor provide that a transferor is deemed to remain the holder of the shares until the transferee is entered in the shareholders' register and the directors of the Astor have a discretion to refuse to register a transfer of shares. But it is irrelevant that the Astor was not joined as party. The orders made by his Honour bind AGC and Mrs Bradbury; as between them, AGC has possession of the Units in the sense that it has the right to occupy them. The orders do not bind the Astor in any way. Mr Blackburn argued that his Honour erred in finding that there was no conflict of interest in Mrs Bradbury's solicitor acting for her, Mr Bradbury and IRA. His Honour found that the interests of those three were, in effect, the same. Mr Blackburn also argued that his Honour erred in finding that the solicitor's advice was adequate. Mrs Bradbury settled the dispute with her solicitors prior to the hearing before this court. That her solicitor may have been in some way at fault, the substance of which proposition I fail to see, is irrelevant to Mrs Bradbury's obligations to AGC and its relevance to the Contracts Review Act 1980 has been explained above. I propose the appeal be dismissed with costs. 4 UNREPORTED JUDGMENTS Beazley JA I agree with Meagher JA. Stein JA I agree with Meagher JA. 5 Appeal dismissed with costs.