Business Law Of Garcia v National Australia Bank [1998] HCA 48

Question: Discuss about the Business Law Of Garcia v National Australia Bank [1998] HCA 48. Answer: Introduction Garcia v National Australia Bank[1] is a leading matter which was decided on August 06th, 1998 in the High Court of Australia[2]. Through this case, the situation in which the unconscionable conduct for a lender was decided upon regarding enforcing a transaction against a wife. Under the Australian Equity law, this is a prominent case, particularly due to this being spouse-surety cases[3]. Case Summary In this case, Jean Balharry Garcia in 1979, along with her husband of that time, Fabio Garcia had executed a mortgage on the jointly owned matrimonial house in National Australia Banks favour. During 1979-1987, Jean had signed different guarantees. The documents related to this were signed for securing a loan which was made for the use of company of Fabio, i.e., Citizens Gold Bullion Exchange Pty Limited. After the separation of the couple in 1988, the company of Fabio wound up the very next year. The key issue of this case revolved around whether or not there was the presence of undue influence in this case[4]. In the year subsequent to the companys winding up, judicial proceedings were initiated in the Supreme Court of New South Wales against Jean and she sought declaration that the different documents had no effect or force and were hence, void. Young J was the trial court judge, who applied the case of Yerkey v Jones[5] to the present case and granted the declaration regarding none of the guarantees which were given by the appellant were bound to her[6]. The reason for the trial court ruling in favour of Jean was that she knew what a guarantee was but she did not know that the guarantee had been secured by an earlier signed all moneys mortgage[7]. When the appeal was made to the New South Wales Court of Appeal, Sheller JJA, Mahoney P and Meagher stated that the rule given under Yerkey v Jones should not be applied in the nation as the same had been overruled through the case of Commercial Bank of Australia Ltd v Amadio[8]. And as a result of this, the leave to appeal before the High Cour t of Australia was granted to the appellant[9]. When the matter was presented before the High Court, McHugh, Callian, Hayne and Gaurdon JJ decided by a majority of five to one, that the approach adopted in Barclays Bank plc v OBrien[10] by Lord Browne-Wilkinson had to be declined and instead there was a need to hold the rule given under Yerkey v Jones, as the same was still applicable in the nation. However, a dissenting judgment was given by Kirby J who stated that the approach which had been taken under the case of Yerkey v Jones had to be rejected. Though, there was a unanimous overturning of the Court of Appeals decision by the High Court and reinstated the order of the trial judge. It was also held by the High Court that the unconscionability which had been covered under the case of Commercial Bank of Australia Ltd v Amadio failed to cover the rule which was covered under Yerkey v Jones. Instead, both of these cases were based on distinctive doctrines[11]. The reason for applying Yerkey v Jones was given in context of the women of the nation being marked with economic disparities particularly when in a relationship. It was held that Yerkey v Jones was based on confidence and trust which is ordinarily present between the partners in a marriage. This relationship was such where majority of times, the business judgement was left by the woman on their spouse. And this relationship had such business decisions made with consultation between the parties where the effect was not explained properly, and purported only in abbreviated manner. The only thing thus, which had to be considered was the knowledge of creditor regarding Jean being married to Fabio. And this can be established with ease as the bank knew that Jean was married to Fabio as they undertook no efforts for explaining the transaction to her, and were also aware of the fact that that Jean had no independent advice available or given to her. And due to these reasons, Jean had to be given the right to succeed in her claims[12]. Conclusion Thus, the case of Garcia v National Australia Bank is a leading example of undue influence, where in a husband wife relationship it was held that the position of wife was such that undue influence was indeed present. Bibliography Bryan M, Vann V and Thomas SB, Equity and Trusts in Australia (CamLawridge University Press, 2nd ed, 2017). Grossi R, Looking for Love in the Legal Discourse of Marriage (ANU Press, 2014). McKendrick E, and Liu Q, Contract Law: Australian Edition (Palgrave Macmillan, 2015). Barclays Bank plc v OBrien [1993] UKHL 6, [1994] AC 180 Commercial Bank of Australia Ltd v Amadio [1983] HCA 14, (1983) 151 CLR 447 Garcia v National Australia Bank [1998] HCA 48 Yerkey v Jones [1939] HCA 3, (1939) 63 CLR 649 Australian Contract Law, Garcia v National Australia Bank (2010) https://www.australiancontractlaw.com/cases/garcia.html Finlay A, Garcia v National Australia Bank HCA 48, 6 August 1998 (2017) https://www.austlii.edu.au/au/journals/NewcLawRw/1998/15.html