Barry Albert Andrews & 4 Ors v Racken Pty Ltd & 7 Ors [2007] NSWSC 1010

New South Wales Supreme Court

CITATION : Barry Albert Andrews & 4 Ors v Racken Pty Ltd & 7 Ors [2007] NSWSC 1010

HEARING DATE(S) : 19-21/09/06; 14-16/11/06; 12-14/02/07

JUDGMENT DATE : 11 September 2007

JURISDICTION : Equity Division Corporations List

JUDGMENT OF : White J

DECISION : See paragraph 285 of judgment.

CATCHWORDS : PRINCIPAL AND AGENT – Authority of agent – Implied grant of authority to deal with execution page where page signed and delivered on its own by principal to fourth defendant. - CONTRACTS – Unconscionability – Unjust contracts – Borrower in position analogous to that of surety – Contract unjust where terms were not explained and borrower did not understand nature of obligations assumed – No steps taken by first defendant to ensure that contract explained to borrower – Relevance of principles of unconscionability at general law – Question of whether enforcement of contract unjust distinguished from question whether entry into contract unconscionable – Held that contract was unjust in circumstances in which it was made within meaning of Contracts Review Act 1980 (NSW) although other party did not act unconscionably – Purpose of remedy under Contracts Review Act to avoid unjust consequence or result – Held that just to hold borrower to substance of transaction as he understood it to be. - PRINCIPAL AND AGENT – Authority of agent – Scope of actual authority – Ostensible authority – Agent signed parents' names - Agent with actual authority to mortgage shares but not to enter into contract imposing personal obligations on principals – No ostensible authority where no express representation by principals as to scope of agent's authority and no usual actual authority of child permitted to negotiate and contract on parents' behalf in relation to shares owned by parents – Agent purported to enter into contract on behalf of parents granting mortgage over shares and imposing personal obligations upon them –Whether principals bound to extent that provisions within agent's authority – Where personal obligations not severable – Held that principals not bound by contract. - ESTOPPEL – By conduct – Where beneficial owner of shares represented that he had authority to deal with shares on behalf of bare trustee – Representation of authority induced first defendant to provide finance– Beneficial owner of shares estopped from denying that his signature effective to deal with shares – Held that bare trustee bound by representations of beneficial owner to extent that beneficial owner had actual authority to deal with shares and representation was within scope of authority as agent. - PRINCIPAL AND AGENT – Liability of agent to third persons – Execution of contract by son in name of parents constituting misleading and deceptive conduct –Fair Trading Act 1987 (NSW) s 42 – No requirement that representation constituting misleading and deceptive conduct be made to party claiming loss – Breach of warranty of authority – Measure of damages. - (NSW) Fair Trading Act 1987, ss 42 and 68 - (NSW) Contracts Review Act 1980, ss 7 and 9