FARROW MORTGAGE SERVICES PTY LTD (IN LIQUIDATION) v TORPEY AND ANOR [1998] NSWCA 78

FARROW MORTGAGE SERVICES PTY LTD (IN LIQUIDATION) v TORPEY

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL COMMERCIAL DIVISION

MASON P, PRIESTLEY and SHELLER JJA 19-20 March 1998, 22 April 1998

[1998] NSWCA 78 CONTRACTS REVIEW ACT — LIABILITY OF A GUARANTOR

CONTRACTS REVIEW ACT — LIABILITY OF A GUARANTOR — the first respondent, as secretary of a company, Donmint, whose business was entirely conducted by her husband was "required to sign some papers" regarding three mortgages, one of which contained a personal guarantee by her — her husband on her behalf had agreed with the lender (Farrow) that she was only guaranteeing one mortgage — but the documentation as signed exposed the first respondent, as a guarantor, to an unqualified liability for any default under all the mortgages — solicitor certificate issued confirming that the guarantors were aware of their obligations — first respondent received independent legal advice from a solicitor, the second respondent — Hunter J found there was no satisfactory explanation of the unlimited

guarantee by the second respondent — the second respondent did not have the complete documentation when advising the first respondent — the documents should be rectified to reflect the actual contract — contract unjust at time when made — relief granted pursuant to s7(1) of the Contracts Review Act — second respondent held not liable to first respondent.

A. On appeal by Farrow, the appellant confined the appeal to the assertion that the first respondent should have been held to her guarantee as rectified and submitted:

1. Hunter J erred in finding that the contract was unjust;

2. or, if unjust, no relief should have been granted under the Contracts Review Act as the contract, once rectified, was much less onerous;

3. Hunter J erred when he described the first respondent as being in a "vulnerable position" and that her husband had subjected her to relevant unreasonable "pressure";