With the year now underway, it is useful to review and highlight a number of judgments in the retail banking sector delivered by Australian courts last year.
The 6 decisions we have selected involve a range of issues arising in banks’ engagement with their clients, contractual arrangements and the application of standard terms and conditions. The cases provide a number of cautions for banks seeking to navigate through various traps.
- In National Australia Bank v Rose, the Victorian Court of Appeal held that the Code of Banking Practice requires notice for guarantees to be ‘markedly noticeable’.
- In National Australia Bank v Dionys as Trustee for the Angel Family Trust, the Court restricted the bank’s ‘limiting’ clause (which required a customer to ‘promptly’ review her bank statements and inform the bank if she suspected unauthorised transactions, otherwise she could not make a claim against the bank) and held that the terms and conditions were not validly incorporated into the parties’ contract.
- In Australia and New Zealand Banking Group Limited v Manasseh, the Western Australian Court of Appeal dismissed the bank’s claim that it could enforce a guarantee over subsequent financial arrangements, in circumstances where the guarantor had not specifically consented to new arrangements to the existing guarantee.
- In Simic v NSW Land and Housing Corporation, the High Court resorted to the equitable remedy of rectification to find that a misdescription of the principal in two performance bonds was not fatal to fulfilment of the bonds.
- In Paccioco & Anor v Australia and New Zealand Banking Group Limited, the High Court held that provisions for various fees were not unenforceable as penalties.
- In Kojic v Commonwealth Bank of Australia, the Full Federal Court found that the bank had not engaged in unconscionable conduct in taking a security interest in property where its clients were involved as a third party to the deal. The Court overturned the finding that the knowledge of employees can be aggregated to determine a bank’s knowledge in the absence of improper conduct by the employees themselves.
This article is part of a series highlighting a six judgments in the retail banking sector delivered by Australian courts last year covering a range of issues arising in banks’ engagement with their clients, contractual arrangements and the application of standard terms and conditions. The cases provide a number of cautions for banks seeking to navigate through various traps. Click the links above to view full articles.
The contents of this publication, current at the date of publication set out above, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
© Herbert Smith Freehills 2020