The unconscionable corporation: reading the corporate mind
By the Hon Justice Peter Brereton
All commercial lawyers must be conscious of the statutory prohibition against conduct that is unconscionable. It is a challenging and sometimes confusing subject. But it is one that has become increasingly significant as the statutory law has broadened over the last 40 or so years. Depending on one’s perspective, the broadening of the statutory prohibition either spells uncertainty and inconsistency or means that finally there is a legal mechanism to combat corporate misbehaviour. There may be truth in both perspectives.
This paper considers some recent scholarship and judicial analysis concerning an important aspect of the subject, which is how we are to go about attributing a state of mind to a corporation in the context of unconscionability. In the recent High Court decision of Productivity Partners Pty Ltd (t/as Captain Cook College) v Australian Competition and Consumer Commission, the Court was confronted with a system that was put into place by a corporation that led many students unwittingly to incur significant liabilities to the Government to pay fees for tuition that they did not want or receive. Some members of the Court relied expressly on a model that has been called ‘Systems Intentionality’, which postulates that a corporation can think for itself. This model departs from traditional rules of attribution that generally involve the attribution of a human’s state of mind to a corporation.
Recurring problems with novation
By G J Tolhurst
In recent years academic commentary on novation has reflected on those issues that have arisen in the cases with the result that there has been a focus on the topics of partial novation, when novation can be inferred and the efficacy of contract provisions that give consent in advance to a novation.7 This paper does not touch upon these issues, rather it considers three further aspects of novation that often get discussed in practice but have not been the subject of much case law. The first is a drafting issue. A novation involves the discharge of one contract and the replacement of it with another contract. However, many novation agreements refer to the original contract remaining in place and the incoming party being treated as if they are a party to that contract. The second concerns the legal effect of a novation. The cases typically use the language of ‘extinction’ to describe this, that is the original contract is extinguished. What that means is the subject of different views. The third issue follows from the first issue and concerns the limits of contract variation. As noted, most novation agreements are entered into when a party is to be replaced and judicial explanations of the concept often use the replacement of parties not only as an example of a novation but as a situation requiring a novation. While recognising that the current legal position is that a replacement or addition of a party requires a novation, the paper considers what the legal impediments might be to recognising that parties may be replaced or added to by simple contract variation.
The rule in Shevill’s case
By J W Carter
Unless the contract provides otherwise, a promisee who exercises a common law right to terminate for breach of contract (or repudiation of obligation) by the promisor is entitled to recover loss of bargain damages, that is, the difference between the value of the unperformed obligations of the promisor and the contract price (or monetary equivalent). A troublesome1 rule of the common law is that no such right is enjoyed if the promisor’s breach merely activated a right to terminate that the contract conferred expressly. Since Shevill v Builders Licensing Board was the first decision of the High Court of Australia to apply it, an appropriate description of the rule is the ‘rule in Shevill’s case’ (the Rule). But it can of course be traced to older English authorities.3 This brief paper considers the impact of the Rule, including ways that have been devised to get around it, and problems with the Rule. Not the least of the problems is finding a satisfactory legal rationalisation.
Elimination of conditions precedent by repudiation
By the Hon Fabian Gleeson SC
In his famous speech in Mackay v Dick (1881) 6 App Cas 251, Lord Watson said that where a party wrongfully prevented the fulfilment of a condition precedent to a contractual obligation, the condition would be deemed fulfilled (at 270). This is often referred to as the ‘prevention’ principle. That principle is distinct from Lord Blackburn’s proposition in Mackay v Dick about implied terms of cooperation. Lord Blackburn said that as a general rule where parties to a contract agree that something should be done which cannot effectually be done unless both parties concur in doing it, the contract is to be construed as requiring each to do all that is necessary to be done on his part for the thing to be carried out (at 263).
Recently, the Court of Appeal of England and Wales held that the Mackay v Dick principle of Scottish law enunciated by Lord Watson is applicable in England, subject to some qualifications: King Crude Carriers SA v Ridgebury November LLC [2024] EWCA Civ 719 at [81], [85] (Popplewell LJ, Nugee LJ and Falk LJ agreeing).
The varieties of equitable estoppel
By the Hon Justice Elisabeth Peden and Jerry Leung
There are many different types of estoppel at general law. Some of those species, such as estoppel by deed and estoppel by convention, exist at common law. Others arise in equity, where a variety of terminology is used: equitable estoppel by encouragement, promissory estoppel, proprietary estoppel by acquiescence, proprietary estoppel by encouragement, and so on.
Attracted by the prospect of having ‘One Very Big idea’ of equitable estoppel, several members of the High Court have previously suggested the emergence of ‘one overarching doctrine of estoppel’ or a ‘unified doctrine’ of estoppel at law and in equity. However, that is not the course that the general law has taken, or at least not yet. The New South Wales Court of Appeal has continued to emphasise the distinction between proprietary and promissory estoppel, and also the distinction between the different varieties of proprietary estoppel.
May v Costaras [2025] NSWCA 178: assessing contributions in failed joint endeavour constructive trusts and the perils of Gen AI use
By Amy O’Reilly
On 8 August 2025, the New South Wales Court of Appeal delivered judgment in May v Costaras [2025] NSWCA 178. This decision is significant for two key reasons. First, their Honours impress a powerful warning to all litigants regarding the inherent dangers stemming from the unverified use of generative artificial intelligence (‘Gen AI’) in legal proceedings. This decision accentuates the heightened risks associated with self-represented litigants employing Gen AI in a manner that increases both the cost and complexity of legal proceedings, undermining the court process. The judgment of Bell CJ is particularly pertinent against the context of the recent introduction of Practice Note SC Gen 23. Second, the Court provides further clarity on the circumstances that give rise to failed joint endeavour constructive trusts, particularly concerning the role of a party’s non-financial contributions when determining proprietary rights. As recognised in NSW Trustee and Guardian v Togias, there have been limited cases which have considered non-financial contributions in this context, and even fewer where these contributions have been influential factors.
The scope of statutory unconscionability refined: AHG WA (2015) Pty Ltd v Mercedes-Benz Australia/Pacific Pty Ltd
By Oscar Clark
Section 21 of Schedule 2 to the Competition and Consumer Act 2010 (NSW) (ACL) proscribes unconscionable conduct in connection with the supply or acquisition of goods and services. Unlike its counterpart in the immediately preceding section, it is ‘shorn of the constraints of the unwritten law’. It is not tethered to the equitable paradigm of unconscionability, concerned as it is with special disadvantages and the exploitation thereof by a stronger party. Rather, the provision establishes its own statutory norm of conduct against which impugned behaviour is to be assessed. So understood, it may capture instances that involve a departure from the accepted norms of commercial behaviour where such a departure may not necessarily support a finding of unconscionability within the strictures of the unwritten law. However, the precise content of that normative standard has been the topic of considerable judicial confusion for quite some time. Whilst unconscionability is a value-laden concept of imprecise boundaries, the Full Court of the Federal Court of Australia in AHG WA (2015) Pty Ltd v Mercedes-Benz Australia/Pacific Pty Ltd [2025] FCAFC 86 (Mercedes-Benz) recently clarified the scope of the judicial inquiry into the statutory proscription. Specifically, the Full Court rejected the submission that it involves an assessment of conduct through the prism of community conscience in the abstract. In so doing, the Court reaffirmed the view established in Productivity Partners Pty Ltd (trading as Captain Cook College) v Australian Competition Consumer Commission (2024) 419 ALR 30; [2024] HCA 27 (Productivity Partners) that the task does not involve the search for accepted or acceptable community values, but rather that ss21 and 22 themselves recognise and embody particular norms which direct the assessment of impugned conduct.
The unconscionable corporation: reading the corporate mind
By The Hon Justice Peter Brereton
page
4
Recurring problems with novation
By G J Tolhurst
page
13
The rule in Shevill's case
By J W Carter
page
25
Elimination of conditions precedent by repudiation
By The Hon Fabian Gleeson SC
page
28
The varieties of equitable estoppel
By The Hon Justice Elisabeth Peden and Jerry Leung
page
35
May v Costaras [2025] NSWCA 178: assessing contributions in failed joint endeavour constructive trusts and the perils of Gen AI use
By Amy O'Reilly
page
44
The scope of statutory unconscionability refined: AHG WA (2015) Pty Ltd v Mercedes-Benz Australia/Pacific Pty Ltd
By Oscar Clark
page
49