Australia and New Zealand Banking Group Ltd v Barry [1991] QSCFC 83 [1992] 2 Qd R 12

10 20 o, 30 f 40 50 60 IN THE SUPREME COURT OF QUEENSLAND FULL COURT REVISED COPIES ISSUED ' Court Reporting Bureau Date: (O j ^ / 9 / Appeal No. 96 of 1990 BEFORE: The Chief Justice (Mr. Justice Macrossan) Mr. Justice McPherson SPJ Mr. Justice Derrington BRISBANE, 7 AUGUST 1991 (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Chief Court Reporter , Court Reporting Bureau.) BETWEEN : AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (Plaintiff) Respondent -and- CALVIN BARRY ' (First Defendant) f'C q. <9, (o 'il 10 20 30 -and- ALLAN GEORGE BARRY and GLENNE MARGARET BARRY (Second Defendants) Appellants JUDGMENT MR. JUSTICE McPHERSON: The Chief Justice would allow this appeal and order that the application for summary judgment be dismissed and that the appellants be given leave to defend. His Honour would also order that the costs of the application below be costs in the cause and that the. respondent pay the appellants' costs of the appeal to be taxed. I publish the reasons of the Honourable the Chief Justice. I would, for my part, dismiss the appeal with costs. I publish my reasons. 40 50 60 M. Printer, Qld. [1991] QSCFC 83 -- 1 of 29 -- ] MR. JUSTICE DERRINGTON: I would agree with the judgment of the Chief Justice and with his reasons and-the orders proposed by him. I publish my reasons. MR. JUSTICE McPHERSON ; The order will be as proposed by the Chief Justice. 20 20 30 30 40 \ 40 f 50 50 60 t Printer, Qld. 60 2 -- 2 of 29 -- IN THE SUPREME COURT OF QUEENSLAND FULL COURT Appeal No. 96 of 1990 BETWEEN: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (Plaintiff) Respondent - and - CALVIN BARRY (First Defendant) ALLAN GEORGE BARRY and GLENNE MARGARET BARRY (Second Defendants) Appellants CHIEF JUSTICE MCPHERSON SPJ DERRINGTON J Reasons for judgment delivered by The Chief Justice, McPherson S.P.J. and Derrington J. on the 7th August, 1991. Derrington J agreeing with reasons of and the order proposed by the Chief Justice. McPherson S.P.J. dissenting. "APPEAL ALLOWED. ORDER THAT THE APPLICATION FOR SUMMARY JUDGMENT BE DISMISSED AND THE APPELLANTS BE GIVEN LEAVE TO DEFEND. FURTHER ORDER THAT THE COSTS OF THE APPLICATION BROUGHT BELOW BE COSTS IN THE CAUSE AND THE RESPONDENT PAY THE APPELLANTS' COSTS OF THE APPEAL TO BE TAXED." -- 3 of 29 -- IN THE SUPREME COURT OF QUEENSLAND Appeal No. 96 of 1990 BETWEEN: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (Plaintiff) Respondent - and - CALVIN BARRY (First Defendant) - and - ALLAN GEORGE BARRY and GLENNE MARGARET BARRY (Second Defendants) Appellants JUDGMENT - THE CHIEF JUSTICE Delivered the Seventh day of August, 1991 The appeal is brought against an order of the District Court giving the plaintiff bank leave to sign judgment against the second defendants. The position is that the facts of the case were not finally established at the hearing below since the decision was made that the matter should not go to trial. In giving leave to sign judgment the learned District Court judge unfortunately and contrary to accepted practice provided no reasons for his order. However, it may be taken that he thought the case was clear and accordingly that the plaintiff should be given leave. The judge should not have ordered as he did unless he was fully persuaded that there was no real question to be tried, that is that there were no facts shown such as would lead to the inference that at the trial of the action the second -- 4 of 29 -- 2 defendants might be able to establish a defence to the plaintiff's claim. A complete defence does not have to be shown by a defendant at the stage when summary judgment is sought: Cloverdell Lumber Co. Ptv. Ltd, v. Abbot (1924) 34 C.L.R. 122 at 133 per Issacs. J. In the present case I consider that the second defendants have shown facts which call for their having leave to defend. It is possible that the second defendants will be entitled to rely on the equitable defence which looks to the unconscionability of a plaintiff's conduct. The bare facts which the second defendants presently assert may not be able to be maintained at trial. On the other hand after the facts are more fully investigated it may appear that their situation is strengthened. Relief on the grounds of unconscionable conduct may be available when one party makes "unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability or is placed in some special situation of disadvantage" per Mason C.J. in Commercial Bank of Australia Ltd, v. Amadio (1983) 151 C.L.R. 447 at 461 and see also per Kitto J. in Blomley v. Ryan (1956) 99 C.L.R. 362 at 415. Here, on the face of things as they stand the second defendants may be able to show that they suffered a relevant disability viz-a-viz the plaintiff at the time they signed the instrument of guarantee and they may also be able to show that unfair or unconscientious use was made by the plaintiff of its position of advantage. -- 5 of 29 -- 3 The facts as they presently appear are sufficiently outlined in the reasons of Derrington J. Features which are of significance for our purposes include those now set out. The bank, so far as its own purposes and interests were involved in the transaction in question, utilised the first defendant as the sole agency for conveying to the second defendants an explanation of the matters in question. The first defendant gave to the second defendants an explanation which was false in that he intimated that their signatures were necessary for the sole purpose of showing their consent to his plan to utilise his own interest in a tenancy in common for the purpose of providing security for his own separate borrowings. The second defendants' separate interests in the property were not to be involved or disadvantaged. The second defendants were given no indication that they were to be called upon to act as sureties. If the second defendants' account of these matters is correct and, for present purposes, it is necessary to assume that possibility, then these various alternatives may be considered. The first defendant for his own purposes may knowingly have given a false account to the second defendants. Alternatively he may have misunderstood what had been intimated to him by the bank's officers and therefore wrongly described the bank's intentions in the matter of security. Further possibilities are that the bank may have given an inadequate or incorrect explanation of its intentions to the first defendant or at some subsequent time, although before -- 6 of 29 -- 4 signatures were appended, changed its mind about the security it would demand but did not arrange for its change of plan to be conveyed to the second defendants. Perhaps when the facts are known, the bank, for its part, may be shown to have acted perfectly properly in all the positive things which it did up to the time when the second defendants presented themselves at the branch premises but nevertheless the second defendants' account, if shown to be correct, may still demonstrate an inadequacy in the bank's conduct which might be judged unconscionable in the circumstances. Accepting that in any ordinary case when a bank is dealing with a customer representing his own interests there may be no obligation to proffer an explanation of the ramifications of a transaction under consideration between them, here the proposed sureties were not, as the bank would have been aware, proposing to enter into a transaction for their own direct advantage or one which they had negotiated or discussed with the bank. The bank had engaged in no preceding dealing with the second defendants from which the bank would have known that the basic nature of the transaction was appreciated by them. The bank must be regarded as responsible for the actions of its officers and so it may be said that it took the risk that a substantially accurate description of the nature of the security demanded had been given by the agency utilised for the purpose, namely, the principal debtor. It was to the debtor's direct advantage that the second defendants should provide security. -- 7 of 29 -- 5 When the second defendants presented themselves at the bank's premises it would have been aware that they had not been given an opportunity to peruse and consider the proposed security documents or take independent advice upon them. The second defendants were offered an opportunity to read the documents at the bank but they declined for the reason that they were not in a position to do so because they did not then have their glasses. The second defendants in the slight material so far available appear to claim a lack of expertise in business matters. From their manner this lack of sophistication may have been apparent to the bank officer who dealt with them. In judging whether that officer acted appropriately in terms of any standard necessary to be observed if suggestions of unconscionability are to have no possible chance of acceptance, certain things should be borne in mind. The bank's officer could easily have asked a few basic questions with a view to establishing that the second defendants appreciated they were being asked to make their property interests liable in certain eventualities to cover the loan arrangements of the first defendant and that advances had already been made and were proposed to be increased. It would have been a simple thing for the bank's officer to have asked such questions. It may have been necessary to do so if its conduct is to be judged appropriate to meet what was reasonably required in the circumstances. Although the bank may, itself, have done nothing wrong up to that point, it would have had no reason at all for -- 8 of 29 -- 6 confidence that a correct explanation of the security arrangements had been given to the second defendants . Apart from ascertaining by some limited questioning that the second defendants appreciated that they were being asked to offer their property to back the borrowings of the first defendant, the bank officer, depending upon the answers received, could have suggested to the second defendants that they place themselves in a position to ensure that the general nature of the documents conformed to their expectation. They may have needed to delay signing until they had their glasses. The second defendants having called at the bank may have felt under some degree of psychological pressure to sign then and there and the bank may have been aware of this . These aspects I regard as facts for investigation, that is if the second defendants desire to persist with their defence. It may be established that the second defendants were in a relevantly inferior bargaining position and that the bank made use of its superior position in all the circumstances in a way which should be regarded as unconscientious . It is not appropriate to make any firm assumption about the facts which will be established and this is not the time to endeavour to formulate in a precise statement applicable to those facts the limit of the principles investigated in Commercial Bank v. Amadio (supra). Times change and new situations arise for judgment as Mason C.J. observed in that case at 462. Lack of assistance or explanation when assistance or explanation is necessary can be relevant: Blomlev v. Ryan (supra) per Kitto J. at 405. -- 9 of 29 -- 7 Equitable relief can be available to sureties who have been misled by the creditor: Bank of Victoria Limited v. Mueller [1925] V.L.R. 642 and cf. Owen & Gutch v. Homan (1853) 10 E.R. 752 at 767. The limited duty of the principal to make disclosure does not mean that he has not been guilty, of unconscionable conduct: see per Mason C.J. in Commercial Bank v . Amadio (supra) at 463-464. I would allow the appeal and order that the application for summary judgment be dismissed and the appellants be given leave to defend. The costs of the application brought below should be costs in the cause and the respondent should pay the appellants' costs of the appeal to be taxed. -- 10 of 29 -- IN THE SUPREME COURT OF QUEENSLAND FULL COURT Appeal No. 96 of 1990 Before the Full Court The Hon. The Chief Justice Mr Justice McPherson S.P.J. Mr Justice Derrington BETWEEN: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (Plaintiff) Respondent - and - CALVIN BARRY (First Defendant) - and - ALLAN GEORGE BARRY and GLENNE MARGARET BARRY (Second Defendants) Appellants JUDGMENT - MCPHERSON S.P.J. Delivered the Seventh day of August 1991 Counsel: A.B. Crowe for the Appellants / G. Brittain for the Respondent Solicitors: Cannan & Peterson t/a for Tony Goodwin & Company, Gladstone, for the Appellants Lyons O'Shea & Co. for the Respondent Hearing Date: 15 and 16 April, 1991 -- 11 of 29 -- IN THE SUPREME COURT OF QUEENSLAND FULL COURT Appeal No. 96 of 1990 BETWEEN : AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (Plaintiff) Respondent - and - CALVIN BARRY (First Defendant) - and - ALLAN GEORGE BARRY and GLENNE MARGARET BARRY (Second Defendants) Appellants JUDGMENT - MCPHERSON S.P.J. Delivered the Seventh day of August 1991 Unless the innumerable contracts signed every day in Australia can be said to impose on both contracting parties a duty to ensure that the other has received independent legal advice, I cannot, with respect, see that the judgment in this action can legitimately be set aside. It is true that in this case a third person, here the defendants' stepson, may have stood to benefit directly from the transaction into which the defendants entered with the plaintiff. But that is characteristic of all guarantees, and of many other contracts besides. It does not justify a conclusion that the plaintiff here elected to "take the risk" that execution of the guarantee sued upon may have been induced on the defendants' side by misrepresentation or fraud on the part of that third person. To argue that in law it may render the contract vulnerable to -- 12 of 29 -- 2 challenge seems to me to run counter to Petelin v. Cullen (1975) 132 C.L.R. 355, 360, where the precise expression used is "reason to suspect" that execution of the contract was induced by some misapprehension as to. its character. The defendants' material in opposition to the application for judgment in this case falls well short of affording grounds for thinking that any such reason may emerge at a trial of the action. There is not the least basis for concluding that the defendants themselves suspected they were being deceived by their stepson. There is consequently even less reason for assuming that the plaintiff ought to have supposed that they had or might have been. It is true that the instrument executed by the defendants was a guarantee, and that in some respects a surety - it may be deservedly - is viewed by the courts with especial tenderness. But neither law nor equity imposes on a creditor dealing with a prospective surety a duty to disclose matters of which the creditor itself neither is nor ought to be aware. The circumstance that the person practising the deceit was the defendants ' stepson and a co-owner of a property to be mortgaged does not attract a different rule or lead to an opposite result. No doubt the defendants trusted him, as members of the same family commonly trust one another; but even that is not enough to fix the plaintiff with notice of the exercise of any undue influence on his part. If, as was held in Yerkev v. Jones (1938) 63 C.L.R. 649, the relation of husband and wife does not suffice to give rise to the presumption of undue influence, the relation (which is at least one step removed) of step-parent and stepson can scarcely be held to do so. Of actual or affirmative -- 13 of 29 -- 3 influence by the stepson, there is no evidence at all. Indeed, it is not so much as suggested in the material presented by the defendants at the hearing. On the contrary, what he is alleged to have said or done was, if accepted as true, graced by none of the subtleties of such means of achieving his purpose; what he is said to have done amounted to nothing more nor less than plain unvarnished fraud or deceit. What, then, is left to be determined at the trial? Nothing beyond the fact that the defendants executed the guarantee at the plaintiff's office, and did so without having their glasses with them. An officer of the plaintiff presented them with the documents to be signed, saying "Would you like to read these?". The female defendant said words to the effect "No, we don't have our glasses". The male defendant says he made no response. They made no move to leave without signing the documents. We are not told whether he or either of them could read much, or a little, or not at all, without glasses. We are told that they signed without knowing what the documents were. He says they were not familiar with "complicated financial transactions" and "have no experience of giving guarantees", although his affidavit shows that he is aware of what a guarantee is. They simply signed without knowing what the documents were that they were signing. Their command of English is not said to be defective; but they asked no questions of anyone at the plaintiff's office. They signed what was placed before them not because of anything the plaintiff's employees said or led them to believe; but because of what their stepson had dishonestly said they would be expected to sign, and because they believed and trusted him, -- 14 of 29 -- 4 not because they believed, or are said to have trusted, the plaintiff. There is, so far as I can see, no affirmative evidence that they had previously dealt with the plaintiff Bank or were long-standing customers. Even if there were such evidence, it would not signify. The relation between them and the plaintiff was not, on either side, fiduciary. In my respectful opinion there was nothing before the learned judge on which it could be said either that the defendants had a defence to the action; or that there was a question to be tried; or that there ought for any other reason to be a trial of the action. I would dismiss the appeal with costs. -- 15 of 29 -- IN THE SUPREME COURT OF QUEENSLAND FULL COURT Appeal No. 96 of 1990 Before the Full Court The Chief Justice Mr Justice McPherson S.P.J. Mr Justice Derrington BETWEEN: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (Plaintiff) Respondent AND: AND: CALVIN BARRY (First Defendant) ALLAN GEORGE BARRY and GLENNE MARGARET BARRY (Second Defendants) Appellants JUDGMENT - DERRINGTON J. Delivered the 7th day of August, 1991 Counsel: Mr Crowe for the appellants ' Mr Britton for the respondent Solicitors: Cannan and Peterson town agents for Tony Goodwin and Co. for the appellants Lyons 0' Shea and Co . for the respondent Hearing dates: 15th and 16th April, 1991 -- 16 of 29 -- IN THE SUPREME COURT OF QUEENSLAND Appeal No. 96 of 1990 BETWEEN: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (Plaintiff) Respondent AND: CALVIN BARRY (First Defendant) AND: ALLAN GEORGE BARRY and GLENNE MARGARET BARRY (Second Defendants) Appellants JUDGMENT - DERRINGTON J. Delivered the 7th day of August, 1991 This is an appeal from a decision of a District Court Judge on a summary application granting the plaintiff liberty to sign final judgment against the second defendants in the action for the sum of $71,288.38 plus interest. Judgment was also signed against the first defendant in the same amount but there is no appeal as to that. The appellants are the mother and stepfather of the first defendant who, having had the opportunity to open a music business at Gladstone, obtained a business loan from the respondent bank. They allege that he informed them that the respondent was prepared to advance him the loan if he provided security in the form of his half share in property owned by him and the appellants as tenants in common. He also allegedly informed the appellants that the respondent had told him that -- 17 of 29 -- 2 / // certain documentation had to be signed by the appellants to enable his own share in the property to be used as security in this way. They claim that he assured them that "nothing else would be involved apart from his share" in the property. He then arranged with them to attend at the respondent's office in order, to execute the appropriate documents. On or about 16 March, 1989 they attended at the bank and were directed into a room where an employee brought in some papers and said words to the effect of, "Would you like to read these?". The female appellant replied that they did not have their glasses. No explanation of the documents was proffered and the respondent's employee indicated where the documents were to be signed. The signed document is dated 10 March, 1989 and the male appellant swears that it could not have been signed on that date as he was on a fishing trip, but nothing really turns on this. The document was in fact a guarantee of the payment by the first defendant to the respondent of all or any loans, advances, credits or banking accommodation made, created or given by the respondent to, for or on account of or at the request of the first defendant together with interest. it was upon this guarantee that the judgment appealed from was given. The appellants' first ground of appeal relates to the onus of proof on a summary judgment application. The difficulty which v they encounter is that the learned District Court Judge did not give reasons for his decision. It was therefore submitted that his reasons were to be inferred from his comments made in the course of the hearing as deposed to by their solicitor who appeared on the application. It is said that he held that it was -- 18 of 29 -- 3 incumbent upon the appellants to satisfy him that judgment should not be given or why they should have leave to defend, but the evidence does not bear this out. However it is alternatively argued that the result indicates that he must have misapplied the principles, so it is necessary to consider the merits of the application. The principles emerge clearly in the decision of Cloverdell Lumber Co. Ptv Ltd v. Abbott (1924) 34 C.L.R. 122 per Isaacs J. at p. 133:- "All the defendant has to do is to establish a state of facts that displaces the prima facie effect of the mere belief of the deponent . . . that there is no defence in fact or law. Unless that statement ... as to belief remains unimpaired - and if the matter is left in doubt, it is impaired - the plaintiff has no right to the summary judgment under Order XIV. ... The Court, on an application under Order XIV., has no right to do more than ascertain whether, on the materials before it, it is clear the defendant has no defence whatever. With deep respect, I consider it reversing the true position on this 'peculiar proceeding' when the burden is thrown on the defendant of satisfying the Court that the defence he relies on is maintainable even prima facie-... If therefore the defendant shows such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff's claim he ought not be debarred of all power to defeat the demand upon him: by the very words of the Order the plaintiff is not to be allowed to sign judgment merely because the defendant's affidavit does not show a complete defence ." See also Jones v. Stone [1894] A.C. 122, 124; Samuel Allen & Sons Ltd v. McCloy' [1928] St. R. Qd. 296; Taylor v. Smallwood (1949) Q.W.N. 35. The respondent did not challenge the correctness of this, but in effect rather cast the obligation of the defendant on an application for summary judgment in terms of an evidentiary onus. Thus it was submitted that once the plaintiff has established a -- 19 of 29 -- 4 prima facie case such a defendant has the onus of showing that the plaintiff should not be at liberty to sign judgment by (a) satisfying the Judge that either he has a good or arguable defence on the merits; or (b) disclosing such facts as are sufficient to entitle him to defend ( Theseus Exploration NL v. Fovster (1972) 126 C.L.R. 507 at 513-4. It is obvious however that "the burden was on the plaintiff seeking summary judgment of persuading the tribunal that there is no real question to be tried" (per Samuels J.A. in Singh v. Varinder Kaur (1985) 61 A.L.R. 720) and only when evidence discharging that burden has been led does the evidentiary onus shift to the respondent, the overall burden of proof remaining on the plaintiff. There is no doubt that the respondent has established a prima facie case by proof of the debt of the first defendant and the execution of the guarantee of it by the appellants. The central issue of the appeal therefore is whether the learned Judge at first instance could be finally satisfied on the material before him that there was no serious question to be tried. The test which is to be applied in such cases was referred to by Barwick C.J. in General Steel Industries Inc, v. Commissioner for Railways (N.S.W.) (1964) 112 C.L.R. 125 at 129 when dealing with an application to stay an action on the grounds that it was frivolous, vexatious and an abuse of process. His Honour cited Dixon J. , as he then was, in Dev v. Victorian Railways Commissioners (1949) 78 C.L.R. 62 where he said at 91: — "A case must be very clear indeed to justify the summary intervention of the court . . . But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action ..." -- 20 of 29 -- 5 Similarly in Fancourt v. Mercantile Credits Ltd (1983) 48 A.L.R. 1 at 10 the High Court held that:- "The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried." Counsel for the appellants attempted to analyse the circumstances under various specific heads including undue influence and misrepresentation, unilateral mistake and non est factum. On the evidence before the Judge and this Court however it would be difficult for the defendant to make out a case sufficient to raise any of those defences. Rather it seems that it is only their claim of unconscionability in the enforcement of the guarantee which could be sufficient to raise a triable issue. In summary the factors which they rely on to support this claim are as follows . the long relationship of banker-customers between the parties which may have reduced the caution of the appellants in their dealings with it or persuaded them to put their trust in it unquestioningly; . the respondent 1 s knowledge that the only information available to the appellants was supplied by the first defendant (it's client/debtor); . its further knowledge that their action was to be for the benefit of that person, who might well have a motive for misleading them; its further knowledge that the appellants were not to receive any benefit from the transaction; the suggestion on the evidence that the type of security which the respondent initially told the first -- 21 of 29 -- 6 defendant it required was not that which it ultimately' sought from the appellants; the respondent's knowledge that prior to their attendance at the bank the appellants had not read the document as it had not been forwarded to them for perusal, and that when they did attend they had stated to its officer entrusted with obtaining their execution of it that they could not read it as they did not have their glasses; . the failure of that officer in those circumstances either to inform them of the true nature of the document or to advise them to make arrangements to read it or take independent advice. As against these, counsel for the respondent submitted that there was no suggestion of any facts which would mean that the respondent had breached any duty of disclosure. His submission went further to suggest that there was no such duty. That may be so, but it is not the issue here. In Commercial Bank of Australia Ltd v. Amadio (1982-1983) 1.51 C.L.R. 447 at 463-464 Mason J., as he then was, after re-asserting the proposition that a guarantee is not a contract uberrimae fidei, stated "It has been said that this duty to disclose does not require a bank to give information as to matters affecting the credit of the debtor or of any circumstances connected with the transaction in which he is about to engage which will render his position more hazardous ... But the fact that a bank's duty to make disclosure .to its intending surety, arising from the mere relationship between principal creditor and surety, is so limited has no bearing on the availability of equitable relief on the ground of unconscionable conduct. A bank, though not guilty of any breach of its limited duty to make disclosure to -- 22 of 29 -- 7 the intending surety, may none the less be considered to have engaged in unconscionable conduct in procuring the surety's entry into the contract of guarantee." Quite clearly, unless questions are put by the intended surety, the creditor taking the guarantee is not bound to make disclosure of material facts: Hamilton v. Watson (1845) 12 Cl. and F1 09 (8 E.R. 1339); Lloyds Bank v. Harrison (1925) Pagets Law of Banking 7 ed. p. 583; Goodwin v. National Bank of A'asia Ltd (1968) 117 C.L.R. 173, 175, except as to anything which might not naturally be expected of the transaction: Lee v. Jones (1864) 17 C.B.N.S. 482, 503-504, 506 (144 E.R. 194, 202-203, 204); London General Omnibus Co. Ltd v. Holloway f 19121 2 K.B. 72, 77, 79, 87-88; Union Bank of Australia Ltd v. Puddy [1949] V.L.R. 242, 247. So the bank need not disclose matters affecting the credit of its customer: Wythes v. Labouchere (1859) 3 De G. & J. 593, 609 (44 E.R. 1397, 1404) even for example when the customer is suspected of fraud: National Provincial Bank of England Ltd v. Glanusk [1913] 3 K.B. 335. Otherwise it is the duty of the surety to gain the information which he requires by questions and the like. Moreover the creditor will not be visited with the consequences of the debtor's misrepresentation to the surety unless it knew of or assented to the making of it: Stone v. Compton (1838) 5 Bing N.C. 142, 156-157 (132 E.R. 1059, 1 065); Spencer v. Handley (1842) 4 Man. & G. 414 (134 E.R. 169). But "the surety is a ' favoured debtor ' , and the courts look upon his interests with a jealous eye": Union Bank of Australia v. Puddv (supra) per Fullag : ar J. at p. 247. Further: "Without saying that in every case a creditor is bound to inquire under what circumstances his debtor has -- 23 of 29 -- 8 obtained the concurrence of a surety, it may safely be stated that if the dealings are such as fairly to lead a reasonable man to believe that fraud must have been used in order to obtain such concurrence, he is bound to make inquiry, and cannot shelter himself under the plea that he was not called on to ask, and did not ask, any questions on the subject. In some cases wilful ignorance is not to be distinguished in its equitable consequences from knowledge. If a person abstains from inquiry because he sees that the result of inquiry will probably be to show that a transaction in which he is engaging is tainted with fraud, his want of knowledge of the fraud will afford no excuse." Owen and Gutch v. Homan (1853) 4 H.L.C. 997 (10 E.R. 752) per Lord Cranworth at pp. 1034-1 035 (767) referred to by Fullagar J. in Puddv and McTiernan J. in Bank of New South Wales v. Rogers (1941) 65 C.L.R. 42, 60. This is a new direction that is quite distinct from the issue of disclosure generally, and it leads into the issue of unconscionability. Of this reference to "wilful ignorance" in the above citation from Owen and Gutch , Gibbs C.J. in Amadio at p. 459, describes it as referring not merely to a case where circumstances put the creditor on inquiry but to the case where the creditor does not inquire because he is afraid of what he may discover. That is not the case here, but there could be argued to exist an analogous condition of recklessness in the combined activities of the various bank officers in knowingly having the appellants sign the documents unaware and uninstructed as to the nature and contents of the documents except from the information given by a self-interested party, and unable to read them. And when unconscionability is the question, such recklessness as may be found may not differ in quality from wilful ignorance as discussed by Gibbs C.J. -- 24 of 29 -- 9 While it is not sufficient alone for equitable relief that the appellants and the respondent did not meet on equal terms because the appellants were seeking to support the first defendant's application for a loan from the respondent: Lloyds Bank v. Bundy [1975] Q.B. 326 per Denning J. at p. 336, however the relief is available :- "...'whenever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands': ...". Blomley v. Ryan (1956) 99 C.L.R. 362 per Kitto J. at p. 415. See also pp. 405-406 per Fullagar J. In Amadio at p. 461 Mason J. (as he then was) makes it clear that the remedy is available when unconscientious advantage is taken "of an innocent party who, though not deprived of an independent and voluntary will, is unable to make a worthwhile judgment as to what is in his best interest". After noting that it is impossible to describe definitively all the situations in which relief will be granted on the ground of unconscionable conduct, he further cited Fullagar J. in Blomley v. Ryan where he said at p. 405:- "The circumstances adversely affecting a party, which may induce a court of equity either to refuse its aid of to set a transaction aside, are of great variety and can hardly be satisfactorily classified. Among them are poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary. The common characteristic seems to be that they have the effect of placing one party at a serious disadvantage vis-a-vis the other." And Kitto J. where he said at p. 415:- -- 25 of 29 -- 10 . . applies whenever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands." In Amadio at p. 462 Mason J. himself went on to say:- " It is not to be thought that relief will be granted only in the particular situations mentioned by their Honours. It is made plain enough, especially by Fullagar J., that the situations mentioned are no more than particular exemplifications of an underlying general principle which may be invoked whenever one party by reason of some condition of circumstance is placed at a special disadvantage vis-a-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created. I qualify the word 'disadvantage' by the adjective 'special' in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party." Nowhere is it said that the offending party must deliberately take advantage of the weakness of the other, and the reference in the last passage to that weakness "when the other party knows or ought to know of the existence of that condition or circumstance and of its effect upon the innocent party" (underlining mine) implies the contrary. All that is necessary is the result of the taking of advantage, and that it is unconscionable to do so . It is therefore not confined to deliberate conduct and so may extend to circumstances where the creditor should have known of the danger and was reckless about it to the point of unconscionability. For example, in Amadio at p. 467, Mason J. said that whether it be correct or incorrect to attribute to the bank manager knowledge of the possibility that -- 26 of 29 -- the debtor had not adequately or accurately explained the intended transaction to the sureties, his parents, the facts as known to him were such as to raise in the mind of any reasonable person a very real question as to the sureties' ability to make a judgment as to what was in their own best interest. In Yerkev v. Jones (1938-1939) 63 C.L.R. 649 at 685-686 Dixon J., as he then was, referred to the case where a wife agreed to become surety at the instance of her husband though she did not understand the effect of the document or the nature of the transaction. His Honour stated that in such a situation, the wife's failure to comprehend the document could have been the result of her husband's actually misleading her but in any case it could hardly occur without some impropriety on his part even if that impropriety consisted only in his neglect to inform her of the exact nature of that to which she was willing blindly, ignorantly or mistakenly to assent. His Honour then discussed the position of the creditor as follows :- "But, where the substantial or only ground for impeaching the instrument is misunderstanding or want of understanding of its contents or effect, the amount of reliance placed by the creditor upon the husband for the purpose of informing his wife of what she was about must be of great importance. If the creditor takes adequate steps to inform her and reasonably supposes that she has an adequate comprehension of the obligations she is undertaking and an understanding of the effect of the transaction, the fact that she has failed to grasp some material part of the document, or, indeed, the significance of what she is doing, cannot, I think, in itself give her an equity to set it aside, notwithstanding that at an earlier stage the creditor relied upon her husband to obtain her consent to enter into the obligation of surety. The creditor may have done enough by superintending himself the execution of the document and by attempting to assure himself by means of questions or explanation that she knows to what she is committing herself. The sufficiency of this must -- 27 of 29 -- depend on circumstances, as, for example, the ramifications and complexities of the transaction, the amount of deception practised by the husband upon his wife and the intelligence and business understanding of the woman. But, if the wife has been in receipt of the advice of a stranger whom the creditor believes on reasonable grounds to be competent, independent and disinterested, then the circumstances would need to be very exceptional before the creditor could be held bound by any equity which otherwise might arise from the husband's conduct and his wife's actual failure to understand the transaction: ..." In the circumstances of the present case there is at this stage uncontradicted evidence that the respondent placed full reliance on the first defendant to inform his parents of the nature of the transaction. No steps were taken by the respondent to inform them of the nature of the instrument and knowing of their inability to read it the respondent could have no basis for supposing that the appellants understood its nature or contents. It simply made no enquiries whatsoever. That evidence may be disputed and even refuted in the course of time but in the present exercise it is enough that such evidence exists. Quite obviously it is not for this Court to determine its validity or whether the circumstances on which the appellants rely amount to unconscionable conduct on the part of the respondent. The evidence of the appellants must be tested with the caution appropriate to the case of claims of this nature, and an assessment must then be made on the proved facts as to whether the respondent would be acting unconscionably in relying upon the guarantee; but that is all for the trial court. All that it is necessary to determine here is whether the evidence led by the appellants ought to have raised a sufficient doubt in the mind of the Judge at first instance that the respondent was entitled to judgment. On the facts before him he should not have been -- 28 of 29 -- 13 satisfied that there was "clearly no real question to be tried" ( Fancourt v. Mercantile Credits Ltd (1983) 48 A.L.R. 1, 10). The appeal should therefore be upheld. The application for summary judgment should be dismissed and the appellants should be given leave to defend the costs of the application being costs in the cause. The respondent should pay the appellants' costs of and incidental to this appeal to be taxed. -- 29 of 29 --