Week 9 readings - week 9 PDF

Preview

Summary

week 9...

Description

Week 9 readings Unconscionability: not right or reasonable/amoral

Summarising a case  Only the ratio is binding on a later court  To analyse a case = identify the ratio

1st step in analysing a case is to summarise its key features 1. 2. 3. 4. 5.

Note the name of the case and its citation Clarify the procedural history of the case Ascertain the material facts State the issues raised by the material facts and how the court answered it Identify reasoning and the ratio

Precedent in practice » In 19th century cases on unconscionability generally involved obtaining property in hasty circumstances at a considerable undervalue from those who were relatively poor and lacked independent advice, uneducated or sick » Nearly 100 years after Clark v Malpas – as case involving an old man with impaired faculties for an inadequate price was brought before the High Court » Fullagar Js’ judgement in Blomley v Ryan = mere drunkenness is a ground for equitable relief » Specific performance is an equitable remedy that compels a party to a contract to perform that which he or she has agreed to. In Blomley v Ryan, the purchaser wanted to obtain the property rather than to receive damages by way of compensation, although he did not seek damages in the alternative

TEST YOUR KNOWLEDGE – pg 211 1. Some of the precedents cited by Fullugar J in Blomley v Ryan were decisions of the House of Lords. Explain whether these decisions were binding on the High Court in that case 2. What circumstances are required to attract equitable relief in relation to unconscionability? In 19th century cases on unconscionability generally involved obtaining property in hasty circumstances at a considerable undervalue from those who were relatively poor and lacked independent advice, uneducated or sick. Nearly 100 years after Clark v Malpas – as case involving an old man with impaired faculties for an inadequate price was brought before the

High Court.Fullagar Js’ judgement in Blomley v Ryan = mere drunkenness is a ground for equitable relief. Specific performance is an equitable remedy that compels a party to a contract to perform that which he or she has agreed to. In Blomley v Ryan, the purchaser wanted to obtain the property rather than to receive damages by way of compensation, although he did not seek damages in the alternative

Practising case analysis:  Need to consider unconscionable conduct in more recent applications  Commercial Bank of Australia Ltd v Amadio (1983) = leading Australian authority on unconscionable conduct  In this ^ case, the transaction was a guarantee given to the bank by the Amadio’s in order to provide a benefit for their sons’ company – the guarantee was secured by a mortgage over a property owned by the Amadio’s. The parties to the transaction were the Amadio’s and the bank, the benefit received by the sons’ company meant that the inadequacy of consideration was not a factor in deciding the question of unconscionability.

DICUSS YOUR SUMMARY – pg 212 1. How did the case come before the High Court? (Commercial Bank)

2. Briefly state the material facts The legal issue of unconscionable dealing due to a lack of knowledge or education is examined and the implications as to the imbalance in bargaining power are considered

3. Explain each of the issues raised by the facts and how they were determined

4. What was the ratio of bank?

It is unconscionable for a bank to rely on a guarantee made by individuals who lack legal knowledge or understanding to willingly agree to the terms.

Deane J: It was ... evident to the bank that Mr. and Mrs. Amadio stood in need of advice as to the nature and effect of the transaction into which they were entering. It is apparent that any such advice would have included the importance to a guarantor of ascertaining from the bank the state of the customer's account which was being guaranteed and any unusual features of the account. If such information had been obtained by Mr. and Mrs. Amadio, they would not, on the evidence and in the light of the learned trial judge's finding, have entered into the guarantee/mortgage at all. The

whole transaction should properly be seen as flowing from the special disability which was evident to the bank and as being unfair, unjust and unreasonable

5.

6.

7.

Case summary structure 8. Case name and citation: 9. Procedural history: 10. Material facts: 11. Issue and result: 12. Reasoning: 13. Ratio:

Legitimacy and legal method  Tracing the equitable doctrine of unconscionable conduct through a series of cases illustrates how existing legal rules and principles are applied to new fact situations  Law evolves to take into account economic, social and technological change  Incremental nature of change, the continuity between past and present and the extensive use of precedent render judicial decisions as authoritative and bestow legitimacy on the courts’ law-making role  Cases comprise the authoritative legal materials that govern judicial development of the common law  Consistent with the rule of law = requires the resolution of disputes through the impartial application of general rules

 Choice is an inescapable factor of some judicial making (particularly at an appellate level)

The doctrine of unconscionable conduct applies where: 1. A party is under a special disability in dealing with another party to the same transaction with the result that there is no reasonable degree of equality between them 2. The disability it evident to the other party 3. The stronger party fails to discharge the onus of proving that the transaction was fair, just and reasonable These principles were invoked in Louth v Diprose (1992) -

-

Plaintiff (Dip) claimed to have a special disability in relation to the defendant (Louth) Diprose was a relatively young/healthy lawyer and did not fall into any instances of special disability Louth had little education, was dependent on welfare payments to support her children and had a history of emotional instability Cited Amadio + Blomley Diproses emotional attachment had been manipulated by Louth (observed by Deane J) Emotional dependence like intoxication can be brought up in relation to the current principle Realtionship between the respondent and applicant at the time of the proposed gift was concluded that the respondent was under a special disability in dealing with the applicant False atmosphere of crisis – the woman who he thought he was in love with was facing eviction from her home and suicide unless he provided the money for the purchase of the house She manipulated this to her advantage to influence the responder to make the gift of money Case was one in which the appellant deliberately used love and deceit to create a deliberate situation where she could manipulate the respondent to part with a large portion of his property The emphasis on Louth’s conduct is consistent with established equitable principles, as is the acknowledgement that the categories of special disability are not closed Failure to take into account the wider relationships between the parties = lack of any reasonable degree of equality

Culture and values:  Acknowledgement that authoritative legal materials do not always contain the correct answer to a dispute leaves open the question as to what extra-legal factors judges rely on in extra difficult cases  Judges may draw on long-established maxims and principles within the common law tradition, make reference to fundamental community values, acknowledge principles of international law and take into account questions of public policy – changed social conditions

 Not all judges are necessarily aware of the values and assumption on which their decisions are based  Useful to contemplate different ways of reading a case  Employing narrative as an analytical tool? Sarmas: “Whether it’s whore or victim, kindly gentlemen or romantic fool, these images not only fail to capture the complex nature of human subjectivity, but they also reinforce dominant stereotypes”  Selective transformation of complex human stories into abstract legal categories  Interpretive approach -> debate on judicial assumptions  Re-interpret out own beliefs on the operation of law + access to justice

CASE SUMMARY (1)

Case name and citation: Commercial Bank of Australia Ltd v Amadio (1983)

Procedural history: It was held by the High Court of Australia in 4-1 majority that, in all the circumstances, it was unconscionable for the bank to rely on the guarantee. Notable circumstances taken into the account by the court include: 1. The Amadios had a limited understanding of English. 2. The Amadios did not have the benefit of independent advice, and such advice was not provided or suggested by the bank. 3. When the mortgage was executed the bank was aware of the Amadios' son's financial situation and knew the Amadios were not so appraised. 4. The bank did not advise the Amadios that there was no limit on their liability under the guarantee - the Amadios believed the liability was limited to $50,000.

Material facts: The legal issue of unconscionable dealing due to a lack of knowledge or education is examined and the implications as to the imbalance in bargaining power are considered o Amadios’ son broke some equitable and moral principles: owned a building/construction company – took advantage of his parents (lack of english/understanding) o Connected to bank – business – honouring/dishonouring his cheques o In debt – company not doing well

o Contract: guarantor over mortgage o Mr and Mrs Amadio thought they were signing a limited guarantee – in fact it was unlimited in terms of both money and time – signed the contract at their home (kitchen), not solicitor present

Issue and result: It was unconscionable for the bank to rely on the guarantee.

Reasoning: The judgment of Deane J, was referred to by other judges. He said, "In the present case ... it was ... evident to the bank that Mr. and Mrs. Amadio stood in need of advice as to the nature and effect of the transaction into which they were entering. It is apparent that any such advice would have included the importance to a guarantor of ascertaining from the bank the state of the customer's account which was being guaranteed and any unusual features of the account. If such information had been obtained by Mr. and Mrs. Amadio, they would not, on the evidence and in the light of the learned trial judge's finding, have entered into the guarantee/mortgage at all. The whole transaction should properly be seen as flowing from the special disability which was evident to the bank and as being unfair, unjust and unreasonable." The customer's account stated here is that of their son who brought the bank guarantee documents to his parents. The bank knew of the poor state of the son's business accounts, and the bank and the son had a history of closely linked business relations with each other. Ratio: Where one party has a special disability while dealing with another party (inequality) and stronger party is aware of the disability (prima facie unfair to proceed), the onus is on the stronger party to show that the transaction was fair, just and reasonable. Disabilities:  Relative positions of the bank vs Amadios = disadvantages  Bank knew of sons’ business affairs  Apparent that Amadios were the weaker party to the transaction Bank takes next step  Was the disability clear for the bank to intervene  Mr Amadio asked if the contract was for 6 months – bank should of noticed they didn’t know what they were signing – they closed their eyes to vulnerability  Bank was required to intervene and inquire as to whether they understood the contract being signed  Open-ended guarantee for a company the bank KNEW was in trouble  Nature of guarantee itself was not fair,just or reasonable

CASE SUMMARY (2)

Case name and citation: Blomley v Ryan (1956) 99 CLR 362. Procedural history:

Material facts: The defendant (intellectually incapacitated by alcohol at the time) sold his grazing property to the plaintiff (at an apparent undervalue). Against the plaintiff's claim for specific performance of the agreement the defendant sought to have it set aside. Taylor J (at first instance) found for the defendant.

Issue and result:

Reasoning: On appeal to the full court: McTiernan J, in the circumstances of the case, noted (at p392, [30]) that "The respondent was clearly the weaker side. His weakness was of the kind spoken of by Lord Hardwicke in defining the fraud characterised as taking surreptitious advantage of the weakness, ignorance or necessity of another. The essence of such weakness is that the party is unable to judge for himself................There is a strong presumption upon these facts that they took advantage of their relatively superior strength and made undue use of it. And by such unconscientious behaviour procured the purchase of the property at a great undervalue..........."

Ratio:

CASE SUMMARY (3) Case name and citation: Clark v Malpas Procedural history: Material facts: The material facts of Clark v Malpas is that Josiah Gallimore (deceased) whom is old, illiterate and on his death bed entered into an agreement to sell his property for a lesser value to Malpas. That the deceased had inadequate representation when discussing the agreement? He was not in a condition to make such agreement and the agreement was completed quickly.

Issue and result: The legal issue is 'If an agreement entered into by a person who is on their death bed with nil legal advice, hastily conducted and dies shortly afterwards should be enforceable?'

Reasoning:

Ratio:

CASE SUMMARY (4)

Case name and citation: Louth v Diprose Procedural history: Court of appeal -- > High Court Material facts: This case considered the issue of unconscionable conduct relating to the transfer of property by a man (Diprose) to a woman (Louth) upon whom he was 'emotionally dependent'. Issue and result: Issue of unconscionable conduct

Reasoning:

Trial judge (Justice King) Diprose succeeded at trial. The trial judge held ‘the appellant manufactured an atmosphere of crisis with respect to the house where none really existed so as to influence the respondent to provide the money for the purchase of the house …’. (Diprose v. Louth (No.1) (1990) 54 SASR 438, at p 448)

King CJ described the appellant as follows (at p 444) 'I formed the impression that the (appellant) was a calculating witness who was prepared to tailor her evidence in order to advance her case. In particular I found her evidence as to the circumstances leading to the house transaction quite unimpressive." He described the weakness suffered by Diprose as follows (Diprose v. Louth (No.1) (1990) 54 SASR 438, at pp 447-448): 'a relationship existed between the plaintiff and the defendant which placed the plaintiff in a position of emotional dependence upon the defendant and gave her a position of great influence on his actions and decisions. From the time they first met he was utterly infatuated by her. He had had unhappy domestic experiences and was anxious to lavish love and devotion upon a woman. He fell completely in love with the defendant. ... The defendant, as her evidence confirms, was well aware that the plaintiff had a deep emotional attachment to her and desired only to have her love and to marry her. ... His willingness to devote himself to her and to lavish her with gifts, notwithstanding that she did not return his love, is quite pathetic. The degree of his emotional dependence upon her and his susceptibility to her wishes is obvious on the evidence and was obvious to her.'

Ratio:

CHOICES AND CONTRAINTS IN THIS CASE?

Constraints – had to use precedents -

Identifying a disability: blomley v ryan? – Deane considers and applies this case from 30 years ago Bargaining power: directly from Onus on bank: Fry and Lane Letting previous decisions stand

Choices – can approve, disapprove, distinguish -

Considering Blomley v Ryan Society evolved/ expectations _ values change – not bound to a 1970s case Losing legitimacy Not completely mechanical: quotes other people...