GE CAPITAL AUSTRALIA v DAVIS & ORS [2002] NSWSC 1146

New South Wales Supreme Court

CITATION : GE CAPITAL AUSTRALIA v DAVIS & ORS [2002] NSWSC 1146 CURRENT JURISDICTION: EQUITY FILE NUMBER(S) : SC 4683 of 2001 HEARING DATE(S) : 17-21; 24 & 25/06/02 JUDGMENT DATE : 29 November 2002

GE Capital Australia - Plaintiff Tana Ruth Davis - First Defendant PARTIES : Lessel George Davis - Second Defendant Veltex Pty Ltd - Third Defendant Zieta 63 Pty Ltd - Fourth Defendant JUDGMENT OF : Bryson J at 1

COUNSEL : R.G. Forster SC & K. Williams - Plaintiff J. Svehla - Defendants SOLICITORS : Kemp Strang - Plaintiff Hugh & Associates - Defendants CATCHWORDS : GUARANTEE - Mr and Mrs Davis and companies guaranteed $1m loan to companies they controlled - borrower companies gave security over industrial plant and equipment - numerous grounds of defence to claim by lender against guarantors after borrowers defaulted, went into liquidation and lender sold plant & equipment under power of sale - HELD - securities were not made ineffective by their being given in two separate registered charges by each of two borrowers which were in partnership - Consideration of meaning and operation of s.420A of Corporations Act and "market value" - on the facts, no breach of duty of mortgage or sale - consideration of remedies under Corporations Act s.423, s.1324, HELD no tort remedy against mortgagee exercising power of sale - Consideration of remedies available to guarantor where cross-claim or set-off available to principal debtor - consideration of effect of provisions of guarantee - giving primacy to remedies of mortgagee claim to relief under Contracts Review Act dismissed. Contracts Review Act 1980 Corporations Act 2001 Trade Practices Act 1974 LEGISLATION CITED : Fair Trading Act 1987 Bills of Sale Act 1898 (NSW) Property Law Act 1975 (Queensland) s.85 Supreme Court Act 1970. Canny Gabriel Castle Jackson Advertising Pty Ltd v. Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321 United Builders Pty Ltd v. Mutual Acceptance Ltd (1980) 144 CLR 673 Bailey v. Manos Breeder Farms Pty Ltd (1990) 3 ACSR 143 Higton Enterprises v. BFC Finance [1997] 1 QdR 168 O'Connor v. SP Bray Limited (1937) 56 CLR 464 Sovar v. Henry Lane Pty Ltd (1967) 116 CLR 397 Northern Territory of Australia v. Mengel (1996) 185 CLR 307 Byrne v. Australian Airlines Ltd (1995) 185 CLR 410 Bailey & Ors v. Manos Breeder Farms P/L & Ors 4 April 1991 (unreported) [1991] SASC 2799 Pendlebury v. Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676 Waterhouse v. Waterhouse (1999) 46 NSWLR 449 Artistic Builders Pty Ltd v. Elliot and Tuthill (Mortgages) Pty Ltd [2002] NSWSC 16 Commonwealth Bank of Australia v. Hadfield (2001) 53 NSWLR 614 Standard Chartered Bank Ltd v. Walker [1982] 1 WLR 1410 China and South Sea Bank Limited v. Tan [1990] 1 AC 536 Cuckmere Brick Co. Ltd v. Mutual Finance Limited [1971] Ch 949 Downsview Nominees Ltd v. First City Corporation Ltd [1993] AC 295 Medforth v. Blake [2000] Ch. 86 Westpac Banking Corporation v. Kingland & Ors (1991) 26 NSWLR 700 Hancock v. Williams (1942) SR (NSW) 252-255 (Jordan CJ) Bank of New South Wales v. Taylor (1881) 2 LR (NSW) 118 Williams v. Frayne [1937] 58 CLR 710 Cellulose Products Pty Ltd v. Truda (1970) 92 WN (NSW) 561 National Westminster Bank v. Skelton [1993] 1 WLR 72 Stehar Knitting Mills Pty Ltd v. Southern Textile Converters Pty Ltd [1980] 2 NSWLR 514 CASES CITED : Elkhoury & Anor v. Farrow Mortgage Services (1993) 114 ALR 541 AWA Ltd v. Exicom Australia Pty Ltd (1990) 19 NSWLR 705 Murphy v. Zaminex Pty Ltd (1993) 31 NSWLR 439 Langford Concrete Pty Ltd v. Finlay [1978] 1 NSWLR 14 Healy v. Cornish (1863) 3 SCR Eq 28 Bank of New South Wales v. Taylor (1881) 2 LR (NSW) 118 Taylor v. Bank of New South Wales (1886) 11 App.Cas 596 Pearl v. Deacon (1857) 24 Beavan 186 53 ER 328 1 De Gex & Jones 461 44 ER 802 (LJJ) Hancock v. Williams & Anor (1942) 42 SR (NSW) 252 Williams v. Frayne (1937) 58 CLR 710 Buckeridge v. Mercantile Credits Limited (1981) 147 CLR 654 Credit Lyonnais Australia Ltd v. Darling (1991) 5 ACSR 703 Dobbs v. National Australia Bank of Australasia Ltd (1935) 53 CLR 643 Polak v. Everett 1 QBD 669 Covino & Anor v. Bandag Manufacturing Pty Ltd (1983) 1 NSWLR 237 Wullf v. Jay 7 QB 756 Mutual Loan Fund Association v. Sudlow 5 CBNS 449 Scott v. Avery (1856) 5 HLC 811; 10ER 1121 Aries Tanker Corporation v. Total Transport Limited (1997) 1 WLR 185 Langford Concrete Pty Ltd v. Finlay [1978] 1 NSWLR 14 Gilbert-Ash Northern Ltd v. Modern Engineering (Bristol) Ltd [1974] AC689 Algons Engineering Pty Ltd v. Abigroup Contractors Pty Ltd (1997) 14 Building and Construction Law 215 Jeogla v. ANZ Banking Group 150 FLR 359 Skinner v. Jeogla Pty Ltd [2001] NSW CA 15, 19 ACLC 1163 Spencer v. The Commonwealth (1907) 5 CLR 418. National Transport Insurance v. Smith (2001) 40 ACSR 149 DECISION : Cross-claim dismissed. Judgment for Plaintiff.