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Unconscionable conduct

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ANZ Banking Group Limited v Tiricovski [2012] NSWSC 1304. Adams J.

63. The question is whether the fact that the bank, as I have held, was on notice that the 2008 guarantee required verification of the propriety of its execution, makes it unconscionable for it to enforce Vlado's guarantee of Frenmast's obligations created by it. As Mason J said, in Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 at 461 

 

"Historically, courts have exercised jurisdiction to set aside contracts and other dealings on a variety of equitable grounds ... [including] fraud, misrepresentation, breach of fiduciary duty, undue influence and unconscionable conduct.

In one sense they all constitute species of unconscionable conduct on the part of a party who stands to receive a benefit under a transaction which, in the eye of equity, cannot be enforced because to do so would be inconsistent with equity and good conscience.

But relief on the ground of "unconscionable conduct" is usually taken to refer to the class of case in which a party makes unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability or is placed in some special situation of disadvantage ..."

His Honour added - 

It goes almost without saying that it is impossible to describe definitively all the situations in which relief will be granted on the ground of unconscionable conduct ...

 

Citing the observations in Blomley v Ryan [1956] HCA 81(1956) 99 CLR 362 by Fullagar J at 405 to, inter alia, "lack of assistance or explanation where assistance or explanation is necessary" where the "common characteristic seems to be that they have the effect of placing one party at a serious disadvantage vis-à-vis the other" and Kitto J at 415 to "one party to a transaction ... [being] at a special disadvantage in dealing with the other party because ...ignorance ...or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands", Mason J went to explain - 

"... I qualify the word "disadvantage" by the adjective "special" in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party."

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