Naegeli v Dalton and Schaeffer as Executors of the Estate of the late John Herman Schaeffer [2023] NSWSC 466

Naegeli v Dalton and Schaeffer as Executors of the Estate of the late John Herman Schaeffer [2023] NSWSC 466

The Guarantee executed by defendants had contractual effect; procuring the Guarantee did not amount to statutory unconscionable conduct under s 12CB of the ASIC Act; s 12BF did not apply as the Guarantee was not a standard form contract; however, under the Contracts Review Act 1980 (NSW), the Guarantee was unjust only to the extent it rendered the estate liable for $6.5 million immediately upon execution, and accordingly, the estate's liability is confined to repayment of the $500,000 advanced plus interest at 10% per annum. The corporate defendants are liable for the full sum under the Guarantee.

Parties
Plaintiff: Patrick Naegeli; First Defendant: Bettina Dalton and Joanne Alison Schaeffer as Executors of the Estate of the late John Herman Schaeffer; Second Defendant: Rasay Pty Limited; Third Defendant: The Footage Company Pty Ltd
Jurisdiction
Australia
Judgment Date
04 May 2023
Procedural Posture
Civil (equity Commercial List) / Principal Judgment After Trial
Outcome
Judgment for the plaintiff: plaintiff entitled to judgment as sought against the corporate defendants (Rasay Pty Ltd and The Footage Company Pty Ltd); judgment against the first defendants (executors of Mr Schaeffer's estate) confined to repayment of $500,000 plus interest at 10% per annum.
Legal Topics
Guarantee and Indemnity, Unconscionable Conduct, Unfair Contract Terms, Unjust Contracts, Standard Form Contracts, Authority of Unincorporated Associations
Contract Law Equity Commercial Law Guarantee and Indemnity Unconscionable Conduct Unfair Contract Terms Unjust Contracts Standard Form Contracts +1 more

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Parties

Patrick Naegeli

Plaintiff

Bettina Dalton and Joanne Alison Schaeffer as Executors of the Estate of the late John Herman Schaeffer

First Defendant

Rasay Pty Limited

Second Defendant

The Footage Company Pty Ltd

Third Defendant

Procedural Posture

Civil (equity Commercial List) / Principal Judgment After Trial

Legal Issues

  1. 1 Whether the Guarantee had contractual effect given execution by only some members of the unincorporated association
  2. 2 Whether procuring the Guarantee constituted unconscionable conduct under s 12CB of the ASIC Act
  3. 3 Whether a term of the Guarantee was unfair for the purposes of s 12BF of the ASIC Act

Ratio Decidendi

The Guarantee executed by defendants had contractual effect; procuring the Guarantee did not amount to statutory unconscionable conduct under s 12CB of the ASIC Act; s 12BF did not apply as the Guarantee was not a standard form contract; however, under the Contracts Review Act 1980 (NSW), the Guarantee was unjust only to the extent it rendered the estate liable for $6.5 million immediately upon execution, and accordingly, the estate's liability is confined to repayment of the $500,000 advanced plus interest at 10% per annum. The corporate defendants are liable for the full sum under the Guarantee.

Court Disposition

Judgment for the plaintiff: plaintiff entitled to judgment as sought against the corporate defendants (Rasay Pty Ltd and The Footage Company Pty Ltd); judgment against the first defendants (executors of Mr Schaeffer's estate) confined to repayment of $500,000 plus interest at 10% per annum.

Orders

  • Plaintiff entitled to judgment for $6.5 million plus interest against Rasay Pty Ltd and The Footage Company Pty Ltd.
  • Plaintiff entitled to judgment against the executors of Mr Schaeffer's estate for $500,000 plus interest at 10% per annum.