Nikoloff v Perpetual Trustee Company Limited [No 2]

[2022] WASCA 16

Western Australia Court of Appeal

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For Australian Law.

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Interrogate

Catchwords

1. Banking and Finance
2. › Mortgages
3. › Mortgagee recovery action
4. › Summary judgment
5. › Variable interest rate provision
6. › Whether provision for interest rate variation void for uncertainty
7. › Whether unfettered discretion to vary rates
1. Contract
2. › Certainty of terms
3. › Variable interest rate clauses
4. › Whether interest rate provision referencing lender's published rate void for uncertainty
5. › Whether objective market standard satisfied
1. Contract
2. › Implied terms
3. › Business efficacy
4. › Whether term requiring interest rate changes to reflect RBA cash rate could be implied
5. › BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
1. Equity
2. › Unconscionable conduct
3. › Special disadvantage
4. › Whether inequality of bargaining power constitutes special disadvantage
5. › Whether borrower's mistaken belief about interest rate calculation constitutes special disadvantage

Quick Take

A variable interest rate provision referencing a lender's published rate applicable to all customers taking a loan of the same kind satisfies the requirement for an objective market standard and is not void for uncertainty. Inequality of bargaining power between a borrower and a commercial lender does not constitute a special disadvantage for the purposes of the equitable doctrine of unconscionable conduct. The question whether a truly unfettered interest rate discretion clause is void for uncertainty remains open.