Evans v Davantage Group Pty Ltd [2019] FCA 884

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  • This was a class action, with Evans representing the class of applicants.
  • Between 1 July 2013 and 28 May 2015, Davantage Group Pty Ltd (“Davantage“) issued financial products in the form of motor vehicle warranties.
  • On 23 August 2014, Evans purchased a vehicle for $17,295.00.  Evans entered into a warranty agreement with Advantage and paid $1,895.00. Approximately 26,000-28,000 other people purchased similar warranties for their respective motor vehicles.
  • Clause 11.1 of the warranty, self-described as a “discretionary risk product”, granted Davantage the absolute discretion as to whether it would pay any claim, in part or in whole or at all, or make a contribution to that claim. The only limitation was that the discretion had to be exercised in a “fair or just way”.
  • Evans brought a claim against Davantage, claiming that:
    • the warranty fails as an agreement for lack of consideration from Davantage;
    • Davantage engaged in unconscionable conduct under s 12CB of the ASIC Act due to cl 11.1; and
    •  Cl 11.1 is an unfair term within the meaning of s 12BF(1)(a) of the ASIC Act and inseverable such that the warranty is void.


  • Is a contractual promise in a  “discretionary risk product” illusory?


  • Beach J of the Federal Court held that the warranty was illusory.
  • The overriding discretion of cl 11.1 imposed no actual obligation on Davantage.  The words “fair or just” were determined to be vacuous – they did not have any real substantive effect on Davantage when considering a claim.
  • The general principle of an illusory promise, per Kitto J in Placer Development Pty Ltd v Commonwealth is “…It is that whenever words which by themselves constitute a promise are accompanied by words showing that the promisor is to have a discretion or option as to whether he carry out that which purports to be a promise, the result is that there is no contract on which an action can be brought at all…”
  • There were no circumstances under which Davantage would be legally obligated to pay the applicant for any claim – the terms of cl 11.1 were held to be completely unfettered which rendered the promise to pay by Davantage as illusory.


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