Fiona Burns

Mortgages, seniors and the common law contractual doctrine of mental incapacity in Australia

Seniors in Australia are being called upon to mortgage their most precious economic asset, the family home. They may be asked to guarantee the liabilities of other family members by providing a mortgage-based guarantee or they may decide to enter into a reverse mortgage to supplement financially their savings and pensions. As the family home is the single most valuable asset for most older Australians, the creation of any obligations in regard to it ought to be undertaken with care and vigilance. While seniors are free to create mortgage, they may lack the capacity to understand the legal ramifications of these complex transactions or be unable to protect their interests when entering into them. It is not suggested that older Australians necessarily suffer a lack of contractual capacity. Many seniors are more than able to take care of their interests and assets. However, some seniors do suffer cognitive impairment which adversely affects their capacity to act in their best interests and to navigate the complexities of contractual relations. In contract and mortgage law, this raises the issue of mental incapacity. For centuries, the common law has recognized not only that mentally incapacitated people exist, but that they may enter into contracts such as mortgage and may later wish to have the mortgage set aside. The present formulation of the contractual doctrine of mental incapacity is the product of 19th century jurisprudence in which the courts framed the doctrine to accommodate commercial dealing rather than the interests of persons who lacked the necessary mental capacity. Accordingly, the doctrine has been very difficult to rely on successfully when challenging mortgages made by persons lacking capacity. Therefore, Australian litigators and courts alike have sought to deal with mental incapacity issues in the contractual context by using and modifying other doctrines (such as non est factum, undue influence and unconscionable dealing) in which the issue of capacity may be incorporated, but where mental incapacity need not be the sole or primary focus. While this had led to greater success for mortgagors, this has been at the expense of the common law doctrine. The article concludes by offering some suggestions as to how the doctrine may be modernized and mental capacity dealt with in a way both to empower competent seniors and protect those vulnerable seniors suffering cognitive impairment.

Lord Westbury, Law Reform and Fusion

Lord Westbury was a dominant legal figure in his day, but scandal engulfed his political career. He was a zealous law reformer. However, it is not possible to appreciate his approach to law reform, including the fusion of law and equity, without understanding his diagnosis of the ills of the English legal system. Lord Westburys standpoint was a peculiar amalgam of nineteenth-century philosophical trends together with a respect for equitable principles and a strong predilection for the methodology of the civil law. It was always going to be difficult to convert common lawyers to equitable standards and the civilian approach to law. Not surprisingly, Lord Westbury did not succeed.

Legally regulating intergenerationally transmitted debt

This article considers the phenomenon of intergenerationally transmitted debt in Australia from the legal perspective. It will be argued that generally while confident and capable elders ought to be able to deal with their assets how they think fit, elders may suffer from vulnerabilities which prevent them from protecting their interests. The legal regulation of guarantees is presently a unco‐ordinated and complex amalgam of case law, statute and finance industry self‐regulatory codes which do not accord elders any special protection. This article suggests that it may be necessary to take some steps to protect vulnerable elders while still recognising their rights to exercise autonomy over assets.

Lord Cottenham and the Court of Chancery

Abstract Lord Cottenham was a significant legal figure in nineteenth-century Britain. He was a Lord Chancellor and Keeper of the Great Seal in both Lord Melbournes and Lord Russells administrations. Yet compared with his peers he has faded into obscurity, because his contribution to the reform of the Court of Chancery and the development of the law, particularly equity, has not been fully appreciated. It will be argued that Lord Cottenham was not as successful as his successors in reforming Chancery because his attempts to do so were flawed by the view that incremental reform would redress the problems which beset the Court. However, he made some highly significant contributions to equitable doctrine, sometimes taking a practical approach to judicial decision-making and laying the foundation for some modern doctrines.