- In 1979, Jean Garcia and her then husband, Fabio Garcia, executed a mortgage over their jointly owned matrimonial home in favour of National Australia Bank Ltd (NAB).
- Between 1979 and 1987, Jean Balharry Garcia signed several guarantees.
- These guarantees were signed to secure a loan that was made to Fabio Garcia for use in his company, Citizens Gold Bullion Exchange Pty Limited (Citizens).
- The Garcias divorced in 1988 and Citizens was wound up.
- Mrs Garcia commenced proceedings in the NSW Supreme Court, seeking declarations that the guarantees were of no effect due to undue influence by Mr Garcia. Young J held that the guarantees were void, due to the spousal rule of undue influence found in Yerkey v Jones (Rule of Yerkey v Jones).
- NAB appealed and Mahoney P, Meagher and Sheller JJA held that the Rule of Yerkey v Jones had been superseded by Commonwealth Bank v Amadio.
- Mrs Garcia appealed to the High Court.
- The High Court majority upheld the Rule of Yerkey v Jones.
- The Rule of Yerkey v Jones is a seperate doctrine to that found in Commonwealth Bank v Amadio – it concerns the circumstances under which it is unconscionable for a lender to enforce a transaction against a wife, taking into account the specific nature of a husband/wife relationship.
The full text is available here: https://jade.io/summary/mnc/1998/HCA/48
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