From Mythical Equities to Substantive Doctrines — Yerkey in the Shadow of Notice and Unconscionability

Abstract

The extent to which a surety can impeach a security sought to be enforced by a creditor is an issue of no mean significance. In this context, three important doctrines have occupied a great many pages in law reports across the Commonwealth, particularly in recent years. These are, respectively, the so-called 'special equity' for wives as enunciated in the judgment of Dixon J in the Australian High Court decision of Yerkey v Jones; the doctrine of constructive notice as embodied in the House of Lords decision in Barclays Bank plc v O’Brien; and the even broader doctrine of unconscionability as set out in the seminal Australian High Court decision of Commercial Bank of Australia Ltd v Amadio. The linkages amongst these three doctrines are by no means clear and, as we shall see, some conflict has on occasion at least been perceived.

Keywords: Contract, Guarantee, Undue Influence, Unconscionability, Security, Constructive Notice