FALINSKI v COMMONWEALTH BANK OF AUSTRALIA [1998] NSWCA 76

FALINSKI v COMMONWEALTH BANK OF AUSTRALIA

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

MASON P, SHELLER and COLE JJA 2, 5, 10 December 1997, 6 February 1998 [1998] NSWCA 76

Guarantee and Indemnity — contract of guarantee — whether unjust under Contracts Review Act 1980 or otherwise unconscionable — whether guarantee validly terminated

Estoppel — estoppel by convention — guarantee Appeal and New Trial — interference with trial Judge's findings of fact — credibility of witnesses

In 1990 Mrs Falinski (the appellant) signed a guarantee to secure to the Commonwealth Bank (CBA, the respondent) monies owing or payable to CBA by Nimari Pty Ltd. In 1992 she signed a letter of acknowledgment to CBA acknowledging that CBA had granted or might be granting accommodation to Nimari by its new name, Osborne Computers Australia Pty Ltd, and otherwise permitting Osborne to incur liabilities to CBA against the security of, inter alia, the guarantee.

When sued on the guarantee Mrs Falinski relied upon Contracts Review Act 1980 and alleged unconscionable conduct by CBA in order to be relieved from her obligations. A clause of the guarantee enabled the guarantor on written

notice to discontinue any further liability under the guarantee. Mrs Falinski claimed that a paragraph inserted by CBA in the letter of acknowledgment at the request of Mrs Falinski amounted to a notice under the clause. CBA claimed, inter alia, that if such a notice had been duly given, Mrs Falinski was estopped from relying on it by the terms of a further letter of acknowledgment she wrote to CBA in 1993.

The trial Judge rejected Mrs Falinski's claim for relief under the Act, as well as her claim of general unconscionability. He also rejected her contention that the letter of acknowledgment was a notice within the meaning of the clause of the guarantee, and gave judgment for CBA against Mrs Falinski.