The extent to which unconscionability at general law, the special equity in Garcia and Part IVA of the Trade Practices Act 1974 (CTA) are available to a debtor or guarantor when a finance provider seeks to enforce a security
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AIM AND FIELD OF RESEARCH Debtors and guarantors of loans by finance providers often endeavour to escape liability by relying on disentitling conduct on the part of their finance provider. Over the last twenty-six years, a body of jurisprudence has developed around s 52 of the Trade Practices Act 1974 (Cth). This has enabled debtors and guarantors of loans by finance providers to escape liability where there has been misleading or deceptive conduct by the finance provider. Recently the Australian Consumer Law has been enacted. Over time it is anticipated that debtors and guarantors of loans by finance providers will be able to escape liability by reason of conduct which contravenes this legislation. This thesis examines the circumstances in which guarantors and debtors are able to escape liability by relying on unconscionability under the general law, unconscionability under the Trade Practices Act 1974 (Cth) or by relying on the special equity considered in Garcia v National Australia Bank Limited (Garcia). The special equity in Garcia is sufficiently closely related to the doctrine of unconscionability to warrant its examination in this thesis. In addition to examining the circumstances under which guarantors and debtors are able to escape liability by relying on unconscionability under the general law and/or unconscionability under the Trade Practices Act 1974 (Cth) and/or by relying on the special equity considered in Garcia, this thesis also examines the future direction of this area of the law, together with its likely future impact on the provision of finance in Australia. The first area examined by this thesis is unconscionability claims in equity. The second area examined by this thesis is the special equity, which was identified by Dixon J in Yerkey v Jones, and reaffirmed and extended by the High Court of Australia in Garcia. The special equity in Garcia is seen to be a special extension to the doctrine of unconscionability. The third area examined by this thesis is unconscionability under Part IVA of the Trade Practices Act 1974 (Cth). Here it is recognised that Part IVA unconscionability allows courts to consider both the existing ‘unwritten law’ of what is unconscionability, as well as statutory unconscionability under ss 51AB and 51AC of the Trade Practices Act 1974 (Cth). This thesis spans the period up until 28 May 2010. The following questions are asked: 1. What is unconscionability under the general law? 2. Having regard to the High Court’s decision in Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (Berbatis), what legislative changes are needed in ss 51AB and 51AC in Part IVA of the Trade Practices Act 1974 (Cth) in order to extend the statutory definition of unconscionable conduct? 3. If there were changes made to ss 51AB and 51AC so as to extend the liability of parties who engage in unconscionable conduct, what would be the likely impact on financiers? 4. Post Garcia, has there been a willingness by courts to extend the types of relationships that will attract the special equitable relief in Garcia, beyond the confines of the wife-and-husband marital relationship?
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