State Bank of NSW v Kit Cheng Chia & Peng Tin Chia; Peng Tin Chia v Kenneth John Rennie & Anor [2000] NSWSC 552

Reported Decision : (2000) 50 NSWLR 587

New South Wales Supreme Court

CITATION : State Bank of NSW v Kit Cheng Chia & Peng Tin Chia; Peng Tin Chia v Kenneth John Rennie & Anor [2000] NSWSC 552 FILE NUMBER(S) : SC 50215/97; 50021/98 HEARING DATE(S) : 6, 7, 8, 9, 10, 13, 14, 15, 16, 17, 20, 21, 22, 23, 24, 27, 28, 29, 30, 31/3/00 JUDGMENT DATE : 29 June 2000

PARTIES : 50215/97 State Bank of New South Wales v Kit Chen Chia & Peng Tin Chia 50021/98 Peng Tin Chia v Kenneth John Rennie & Anor JUDGMENT OF : Einstein J

JC Campbell QC, JE Thomson (Plaintiff) COUNSEL : RW Evans (First Defendant) RD Wilson (Second Defendant) Minter Ellison (Plaintiff) SOLICITORS : McKell's Solicitors (First Defendant) LMG Solicitors & Attorneys (Second Defendant) CATCHWORDS : Equity - Husband and wife - Wife as guarantor for husband's debts - Claim to set aside guarantee - Equity in Garcia v National Australia Bank - Necessity for wife to gain adequate understanding of transaction - Misunderstanding of wife must be material to liability - Whether creditor must show that they had reasonable grounds for believing that wife did have adequate understanding - Knowledge of solicitor of creditor amounting to reasonable grounds is to be imputed to creditor. - Equity - Receivers - Whether privately appointed receiver is a fiduciary - Duties of privately appointed receivers - Whether receiver has a duty to disclose all matters to mortgagor - Whether receiver has a duty to pursue the best price - Whether receiver's sale may be upheld when there is a relationship between receiver, mortgagor and purchaser. - Equity - Mortgagees - Duties of mortgagees effecting a power of sale - Interference by mortgagee in performance of receiver's duties - Whether mortgagee is then subject to the same set of duties of receiver. - Equity - Receiver and mortgagee - Whether duties of receiver and mortgagee extend to guarantor of the mortgagor's debt. - Contract - Banker and Customer - Clause modelled on clause in Dobbs v National Bank of Australasia - Conclusive effect of 'Dobbs Clause' - Ability of Bank to rely on conclusive effect - Exception in the case of 'manifest error' - What constitutes a 'manifest error - Whether necessary for 'statement' or 'certificate' to be issued. - Trade Practices - Misleading and deceptive Conduct - Whether liability may attach to a representation to negotiate - Whether representation to negotiate is too vague or uncertain - Meaning of 'negotiation' - Whether a representation to negotiate inherently includes a representation to negotiate in good faith - Requirements of a negotiation in good faith. - Trade Practices - Misleading and deceptive conduct - When silence can be misleading - Whether acting inconsistently with an invitation not accepted or rejected is misleading and deceptive conduct. - Trade Practices - Unconscionable conduct within the meaning of the unwritten law - Whether breach by receiver is unconscionable conduct within the meaning of the unwritten law. - Practice and Procedure - Award of interest - Principles on which interest to be awarded prior to the date for judgment. - Practice and Procedure - Award of interest - Whether claim for interest merged in the judgment - Circumstances in which interest after the date of judgment may be awarded at rates other than the prescribed rate. - Commercial Arbitration Act 1984 Evidence Act 1995 LEGISLATION CITED : Fair Trading Act 1987 Real Property Act 1900 Supreme Court Act 1970 Trade Practices Act 1974 (Cth) Adamse v Broadway Credit Union Ltd (1999) NSW Conv R 55-976, Aiton v Transfield (unreported, 1 October 1999, Supreme Court of NSW, per Einstein J) Akins v National Australia Bank (1994) 34 NSWLR 155 American Express v Hurley [1985] 3 All ER Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 ANZ Banking Group Ltd v Carnegie (unreported, 16 June 1997, Supreme Court of Victoria, per Crockett J) Armstrong v Commonwealth Bank of Australia (unreported, 17 June 1999, New South Wales Supreme Court, per Hamilton J), Australia and New Zealand Banking Group Ltd v Bangadilly Pastoral Co Pty Ltd (1978) 139 CLR 195 Australian Apple and Pear Marketing Board v Tonking (1942) 66 CLR 77 Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (2000) 169 ALR 324 AWA Ltd v Exicom Australia Pty Ltd (1990) 19 NSWLR 705 B Johnson & Co (Builders) Ltd [1955] 1 Ch 634 Bank of Credit & Commerce v Aboody [1989] 1 QB 923 Bank of Victoria v Mueller [1925] VLR 642. Barclays Bank plc v Thomson (1996) 146 NLJ 1778 Barclays Bank v Boulter [1999] 1 WLR 1919 Barclays Bank v O'Brien [1994] 1 AC 180 Barns v Queensland National Bank Ltd (1906) 3 CLR 925 Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600 Boziuk v City of Edmonton [1977] 1 Alta LR (2d) 371 Brick and Pipe Industries Ltd v Occidental Life Nominees [1992] 2 VR 279 Brickenden v London Loan and Savings Co [1934] 3 DLR 465 Briginshaw v Briginshaw (1938) 60 CLR 336 Cape v Redarb Pty Ltd (1992) 8 ACSR 67 Coal Cliff Collieries v Sijehama Pty Ltd (1991) 24 NSWLR 1 Collier Constructions Pty Ltd v Foskett Pty Ltd (1990) 19 IPR 44 Commercial and General Acceptance Ltd v Nixon (1983) 152 CLR 491 Commercial Bank of Australia v Amadio (1982) 151 CLR 447 Commonwealth Bank of Australia v Khouri (Unreported, 4 November 1998, Supreme Court of Victoria, per Harper J) Commonwealth Bank of Australia v Milder Elfman Szmerling Krycer Pty Ltd (unreported, 18 February 1998, Supreme Court of Victoria, per Hansen J) Courtney & Fairburn Ltd v Tolaini Brothers (Hotels) Ltd [1975] 1 WLR 297 Cranfield Pty Ltd v Commonwealth Bank of Australia (unreported, 20 November 1998, Supreme Court of Victoria, per Mandie J). Cuckmere Brick Co v Mutual Finance Ltd [1971] 1 Ch 949 Davies v Australia and New Zealand Banking Group Ltd (unreported, 5 August 1999, Federal Court of Australia, Heerey J) Dobbs v The National Bank of Australasia Ltd (1935) 53 CLR 643 Downsview Ltd v First City Corporation Ltd [1993] AC 295 Duffy v Super Centre Development Corporation Ltd [1967] 1 NSWR 382 Dynamic Lifter Pty Ltd v Incitec Ltd (1994) 30 IPR 198 Economic Life Assurance Society v Usbourne [1902] AC 147 Elizabeth Bay Developments Pty Ltdv Boral Building Services Pty Ltd (1995) 36 NSWLR 709 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 Esanda Finance Corp Ltd v Tong (1997) 41 NSWLR 482 Eslea Holdings Ltd v Butts (1986) 6 NSWLR 175 European Asian of Australia Ltd v Kurland (1985) 8 NSWLR 192 Ex parte Fewings (1883) 25 Ch D 338 Expo International Pty Ltd v Chant [1979] 2 NSWLR 820 Farrow Mortgage Services Pty Ltd (in Liq) v Victor Tunevitsch Pty Ltd (1998) 8 Tas R 65 Foakes v Beer (1884) 9 App Cas 605 Forsyth v Blundell (1973) 129 CLR 477 G Scammell and Nephew Ltd v HC and JG Ouston [1941] AC 251 Garcia v National Australia Bank (1998) 194 CLR 395 Gaskell v Gosling [1886] 1 QB 669 General Credits (Finance) Pty Ltd v Brushford Pty Ltd [1975] 2 NSWLR 786 Gomba Holdings Ltd v Minorities Finance Ltd [1988] 1 WLR 1231 Gosling v Gaskell [1897] AC 575 Gould v Vagellas (1985) 157 CLR 215 Gould v Vaggelas (1985) 157 CLR 215 Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 Hawkesbury Valley Developments Pty Ltd v Custom Credit Corporation Ltd (1995) NSW Conv R 55-731 CASES CITED : Hide and Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 Hillas & Co Ltd v Arcos Ltd [1932] All ER 494 Hilton Hotels of Australia Pty Ltd v Sunrise Resources (Australia) Pty Ltd (Unreported 18 February 2000, NSWSC per Hodgson CJ in Eq) Hooper Bailey Associated Ltd v Natcon Group Pty Ltd (1992) 28 NSWLR 194 Hospitals Contribution Fund of Australia Pty Ltd v Switzerland Australia Health Fund (1987) 78 ALR 483 Jenkins v National Australia Bank (1999) ANZ ConvR 544 Jeogla v Australia New Zealand Banking Group Ltd (1999) 150 FLR 359 Johnson v Buttress (1936) 56 CLR 113 Kennedy v De Trafford [1897] AC 180 Kimberly NZI Finance Ltd v Torero Pty Ltd (1989) ATPR (Digest) 46-054 Knight v Lawrence [1993] BCLC 215 Lee v Ferno Holdings Pty Ltd (1993) 33 NSWLR 404 Lishman v Christie (1887) 19 QBD 333 LLMD of Michigan v Marine Midland Realty Credit 789 F Supp 657 (1992) Long Leys Co Pty Ltd v Silkdale Pty Ltd (1992) NSW ConvR 59, 476 at 5, 482 Sheller JA Macgowan, Macgowan v Murray [1891] 1 Ch 105 Magadi Soda Co Ltd (1925) 41 TLR 297 Maguire v Makaronis (1997) 188 CLR 449 McDonald v Scorbie [1980] Qd R 477 Medforth v Blake [1999] 3 WLR 922 Mercantile Credits Ltd v McDowell [1980] 2 NSWLR 101 Mercantile Credits Ltd v McDowell (1980) 2 NSWLR 101; National Australia Bank Pty Ltd v Sampson (unreported, 9 September 1991, Supreme Court of NSW) National Australia Bank v Garcia (1996) 39 NSWLR 577 Ostrander v Niagra Helicopters Ltd (1973) 20 DLR (3d) 161 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 Peat Marwick Ltd v Consumers Gas Co (1980) 29 OR (2d) 336 Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676 Peters v Commonwealth Bank of Australia (1992) NSW Conv R 55-629 at 59-580 per Brownie J Pinnel's Case (1602) 5 Co Rep 117A; 77 ER 237 Promenade Investments Pty Ltd v NSW (1992) 26 NSWLR 203 Qorum v Younger (1994) NSW ConvR 55738 RA Price Securities Ltd v Henderson [1989] 2 NZLR 257 Radin v Commonwealth Bank of Australia (Unreported, 23 October 1998, Federal Court of Australia, per Lindgren J). Rhone Poulec Agrochime v IUM Chemical Services Pty Ltd (1986) 68 ALR 77 Ridgway v Wharton (1857) 6 HLC 238; 10 ER 1287 Robinson Printing Company Ltd v Chic Ltd [1905] 2 Ch 123 Ruby v Marsh (1975) 132 CLR 642 Sargent v ASL Developments Ltd (1974) 131 CLR 634 Scott v Avery (1856) 5 HLC 811; 10 ER 1121 Shomat Pty Ltd v Rubinstein (1995) 124 FLR 284, Standard Chartered Bank Ltd v Walker [1982] 1 WLR 1410 State Bank of New South Wales v Vecchio (Unreported, 10 November 1998, New South Wales Supreme Court, per Kirby J) State Bank of NSW v Vincent (Unreported, 7 April 1995 per Giles J), Stoyanovich v National Westminster Finance (1984) 3 BPR 9310 Sutton v AJ Thompson Pty Ltd (1987) 72 ALR 223 Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 The Commonwealth v Verwayen (1990) 170 CLR 394 Trade Practices Commission v Lamova Publishing Corp Pty Ltd (1979) 28 ALR 416 Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd [1966] 2 NSWR 211 Visbord v Federal Commissioner of Taxation (1943) 68 CLR 354 Vision Telecommunications Pty Ltd v Australia and New Zealand Banking Group Ltd (Unreported, 17 May 1999, Supreme Court of Western Australia, per Master Bredmeyer) Walden Properties Ltd v Beaver Properties Ltd [1973] 2 NSWLR 815 Walford v Miles [1992] 2 AC 128 Walley v Western Australia (1996) 137 ALR 561 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Warbutron v Whiteley (1989) NSW ConvR 55-453 Westpac Banking Corporation v Kingsland (1991) 26 NSWLR 700 Westpac Banking Corporation v Kingsland (1991) 26 NSWLR 700 Wilkinson v ASB Bank Ltd [1998] NZLR 674 Yerkey v Jones (1939) 63 CLR 649 DECISION : Parties to bring in short minutes.