Australia and New Zealand Banking Group Limited v Karam [2005] NSWCA 344

64 NSWLR 149 Reported Decision : (2006) ATPR 42-089 (2006) Aust Contract Reports 90-222

New South Wales Court of Appeal

Australia and New Zealand Banking Group Limited v Karam [2005] NSWCA 344 CITATION: This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 27-29 July 2005

JUDGMENT DATE: 10 October 2005

JUDGMENT OF: Beazley JA; Ipp JA; Basten JA

DECISION: 1. Appeal allowed and orders entered in the Equity Division on 6 February 2004 be set aside 2. Enter judgment for the Appellant against each of the Respondents in the amount of $3,729,049.89 together with interest from the date of judgment in the Equity Division 3. Order that the Respondents pay the Appellant's costs of the proceedings in the Equity Division 4. Cross-appeal dismissed 5. Order that the Respondents pay the Appellant's costs of the appeal 6. Order that the First-Fourth Respondents pay the Appellant's costs of the cross-appeal.

CATCHWORDS: UNCONSCIONABILITY - family owned and operated company in perilous financial condition - directors of company unaware of extent of existing liability to financier - financier concerned that existing securities unenforceable - whether financier acted unconscionably in shoring up security position when business requested further financial accommodation - ECONOMIC DURESS - whether 'illegitimate pressure' was exerted by financier on the business - whether a finding of economic duress should be available where conduct complained of was not unlawful or unconscionable

Contracts Review Act 1980 (NSW) LEGISLATION CITED: Trade Practices Act 1974 (Cth)

Australian Competition and Consumer Commission v C G. Berbatis Holdings Pty Ltd (2003) 214 CLR 51 Barton v Armstrong [1976] AC 104 Blomley v Ryan (1956) 99 CLR 362 Bridgewater v Leahy (1998) 194 CLR 457 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 Dimskal Shipping Co SA v International Transport Workers Federation [1992] 2 AC 152 Director of Public Prosecutions (NI) v Lynch [1975] AC 653 Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50 CASES CITED: Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298 Karam v ANZ Banking Group Limited [2001] NSWSC 709 Karam v ANZ Banking Group Limited [2003] NSWSC 866 Lloyds Bank Limited v Bundy [1975] QB 326 Pao On v Lau Yiu Long [1980] AC 614 Parras Holdings Pty Ltd v Commonwealth Bank of Australia [1997] FCA 1107 Parras Holdings Pty Ltd v Commonwealth Bank of Australia [1999] FCA 391 Universe Tankships Inc of Monrovia v International Transport Workers Federal ("The Universe Sentinel") [1983] AC 366 West v AGC (Advances) Ltd (1986) 5 NSWLR 610 Westpac Banking Corporation v Cockerill (1998) 152 ALR 267