GEL CUSTODIANS PTY LTD -v- DEWAR [2014] WASC 177 (23 May 2014)

GEL CUSTODIANS PTY LTD -v- DEWAR [2014] WASC 177 (23 May 2014) - WASC 2014 case summary — Zoe

[36]

As such I contacted X Inc for advice and Sebastien Ollier made an appointment to see me at my rental of 441 Walcott Street, Coolbinia. I instructed Sebastien Ollier to negotiate on my behalf with Keystart Home Loans regarding taking further apportionment or even the 30% share they had, and to see if I was able to financially commit to the idea. I did not know what refinancing was until I met Sebastien and even with that I was still not really sure about it, only that it sounded good as it gave me more than I required.
Sebastien Ollier advised me that he could arrange $10,000 for renovations and that I was entitled to receive $54,000 equity from the property. He explained the equity was what the appreciation was from the time I purchased the property in 1995 and I was given the impression that it was in fact cash profit I earned in the 13 years.
Sebastien Ollier did not explain that the equity was in fact a loan. Only the $10,000 was mentioned as a loan, that's why I thought that equity was cash given to me as profit. However, I still expected him to go through Keystart as instructed to see the difference. I later found out from Keystart that he did not request any information in regard to taking further interest in the loan or how much it would be should I take further interest.
Sebastien Ollier advised that because I was working and not living in the mortgaged property that it was classed as an investment and that he would have [to] do this as an investment loan. I did not question this as I had no idea about investments or investment loans and relied on his professional knowledge.
When I first met Sebastien he stated that he was employed and earned a wage and did not receive any commission, I presumed that this was to reassure me that he had no ulterior motive in his recommendations and advice. However, only this year I found out that he was in fact the senior broker at X Inc Perth and that the business was not registered.
On the 20th November 2007 Sebastien Ollier came to my rental to request me to fill in a few lines on some documents. It was minimal and he advised the other documents would be filled by himself as he had all the information he received from me. I did not question this as on many occasions I have helped fill in forms for customers at RAC Insurance where I used to work many many years ago.
My friend Steve Pavy was subletting the main bedroom of the rental property 441 Walcott Street, Coolbinia and told me I should seek legal advice before I sign any more documents.
On the morning of 8th January, 2008 Sebastien Ollier telephoned around 8:00 a.m for me to sign the loan contract that day as it had to be sent back by 5:00 p.m. I advised as I was working I could only attend after 3:00 p.m and that this did not give me any time to make an appointment to seek legal advice and that I wanted to take the documents to a legal advisor.
Steve Pavy and I arrived at X Inc Perth, 101 Frobisher Street, Osborne Park just after 3:00 p.m and met Andrew Walker for the first time and was introduced as the representative of the lender who would witness the documents.
Upon perusing the loan document I was not sure of its contents, the meanings and especially the calculations which I did not understand. There was a lot I did not understand so I requested to take the documents away in order to seek legal advice. Both Andrew Walker and Sebastien Ollier refused to let me take the documents stating I would lose the offer as it had to be sent back by 5:00 pm.
I did not want to miss out on the offer as I required the $10,000 to help renovate the property and being eligible for $54,000 equity seemed too good to refuse. Although I felt under pressure I felt I had no choice but to sign as they refused to let me take the documents away. I had on several occasions whilst reading the document advised them I needed to seek legal advice as I could not relate to what was written. On all requests to take the documents away I was refused.
I remember asking Sebastien Ollier to reassure me that it was in my best interests and that he would not take advantage of my lack of knowledge to which he replied that he had no ulterior motives as he did not receive any commissions and that his recommendations were good for me.
I relied on his honesty and professional knowledge otherwise had I known, that I should have got a personal loan instead and that the investment loan was higher and did not protect me under some regulative authority, and that the equity was in fact a loan I would not have signed the document. I did not see any statement regarding a cooling off period and I did not know of that at all to even ask about it, I just felt bad to leave after he did so much work.
When I began having difficulty in repayments, I thought it was my fault for simply making the wrong decisions and because I had some injuries to my back, shoulder and knees. However, I walked past an article in The Australian and having read the problems that other people were having, realised that in fact I was just another victim and that the Lender would have received a huge profit in my default and to any repossession.

[87]

(a) an order declaring the whole or any part of a contract made between the person who suffered, or is likely to suffer, the loss or damage and the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, or of a collateral arrangement relating to such a contract, to be void and, if the Court thinks fit, to have been void ab initio or at all times on and after a date before the date on which the order is made;

(b) an order varying such a contract or arrangement in such manner as is specified in the order and, if the Court thinks fit, declaring the contract or arrangement to have had effect as so varied on and after a date before the date on which the order is made;

(c) an order refusing to enforce any or all of the provisions of such a contract;

(d) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to refund money or return property to the person who suffered the loss or damage;

(e) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damage;

(f) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, at his or her own expense, to supply specified services to the person who suffered, or is likely to suffer, the loss or damage;

(g) an order, in relation to an instrument creating or transferring an interest in land, directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to execute an instrument that:

(i) varies, or has the effect of varying, the first‑mentioned instrument; or

(ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the first‑mentioned instrument.

[106]

Equity's jurisdiction to set aside a transaction for unconscionable dealing is invoked where one party to the transaction is under a special disadvantage or disability in dealing with the other party, and that special disadvantage or disability was sufficiently evident to the other party to make it prima facie unfair or unconscionable for that other party to accept or retain the benefit of the transaction: Commercial Bank of Australia v Amadio; Louth v Diprose [1992] HCA 61; (1992) 175 CLR 621, 637.
The underlying equitable principle may be invoked 'whenever one party by reason of some condition or circumstance' is placed at a special disadvantage of which unfair and unconscientious advantage is taken by the other party: Commercial Bank of Australia v Amadio (462).
The special disadvantage will be sufficiently evident to the other party if the other party knows facts which would raise the possibility of the special disadvantage in the mind of a reasonable person: Commercial Bank of Australia v Amadio (467 ‑ 468, 479).
Where such circumstances are shown to exist, the onus is on the other party to establish that the transaction was fair, just and reasonable: Commercial Bank of Australia v Amadio (474).
The special disadvantage need not have been created by the party taking the benefit of the transaction: Louth v Diprose (629).
The special disadvantage alleged must be one 'which seriously affects the ability of the innocent party to make a judgment as to his own best interests'; mere difference in bargaining power is insufficient: Commercial Bank of Australia v Amadio (462). The 'essence of such weakness is that the party is unable to judge for himself': Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362, 392; or 'to conserve his own interests': Blomley v Ryan (415); ACCC v C G Berbatis Holdings [12], [46], [55].
In this regard care must be taken not to 'eviscerate unconscionability of its meaning': NZI Capital Corporation v Fulton [1998] FCA 667 Black CJ & Lehane J, quoting Mason CJ in Stern v McArthur [1988] HCA 51; (1988) 165 CLR 489, 503.
In ACCC v C G Berbatis Holdings, Gleeson CJ [14] said:

[145]

The critical feature of a fiduciary relationship is 'that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense': Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41, 96 ‑ 97; Pilmer v The Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165, 196 ‑ 197 [70] ‑ [71]. From this power or discretion comes the duty to exercise it in the interests of the person to whom it is owed: Hospital Products (97); John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2001) 241 CLR 1 [87].
The relationship between Mr Fletcher and St George Bank does not fall into one of the generally accepted fiduciary relationships: trustee-beneficiary, agent-principal, solicitor-client, employee‑employer, director-company, and partners inter se: see Hospital Products (96). The relationship between a banker and customer may be fiduciary in some circumstances. In particular, where a bank holds itself out as an adviser on matters of investment, and undertakes a particular financial advisory role, it may create in the customer 'the expectation that nevertheless it will advise in the customer's interests as to the wisdom of a proposed investment', and may become a fiduciary: Commonwealth Bank of Australia v Smith [1991] FCA 375; (1991) 42 FCR 390, 391. See also Daly v Sydney Stock Exchange Ltd [1986] HCA 25; (1986) 160 CLR 371; Aequitas Ltd v Sparad No 100 Pty Ltd (formerly Australian European Finance Corp Ltd) [2001] NSWSC 14; (2001) 19 ACLC 1006, 1026 - 1027. But absent some special feature, it is not part of the banker-customer relationship that the banker undertakes or agrees to act for or on behalf of or in the interests of its customer in the exercise of some power or discretion affecting the interests of the customer in a legal or practical sense: Golby v Commonwealth Bank of Australia [1996] FCA 1136; (1996) 72 FCR 134, 136; Finding v Commonwealth Bank of Australia [2001] 1 Qd R 168.

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