(New South Wales) The security for payment of the price, for which a contract for the sale of shares had provided, was not only a guarantee but also mortgages which were statutorily illegal. The Privy Council indorsed a decision of the Supreme Court of New South Wales that the provision for mortgages could be severed and removed from the contract, with the result that the guarantee should be enforced.
Held: Lord Brightman, who delivered the judgment of the Board, observed that tests for determining severability in certain types of case were not always applied satisfactorily in others. But then, with hesitation, he suggested: ‘that, as a general rule, where parties enter into a lawful contract . . and there is an ancillary provision which is illegal but exists for the exclusive benefit of the plaintiff, the court may and probably will, if the justice of the case so requires, and there is no public policy objection, permit the plaintiff . . to enforce the contract without the illegal provision.’
Citations:
[1984] UKPC 43, [1985] AC 301, [1984] 3 WLR 1303, [1985] 1 All ER 438, (1984) 81 LSG 3500
Links:
Jurisdiction:
Australia
Cited by:
Cited – Tillman v Egon Zehnder Ltd SC 3-Jul-2019
The company appealed from rejection of its contention that its former employee should be restrained from employment by a competitor under a clause in her former employment contract. The court particularly considered the severability of a section . .
Lists of cited by and citing cases may be incomplete.
Commonwealth
Updated: 12 April 2022; Ref: scu.443738