Yerkey V Jones Case Study

In the case of Yerkey v Jones (Yerkey v Jones), the judgment of Dixon J established a principle that operates in certain circumstances where a married woman provides a guarantee for her husband. While the principle has come under a significant amount of criticism in more recent times, it was reapplied in the case of Garcia v National Australia Bank .

In the case of Yerkey v Jones, Estyn and Florence Jones (the defendants) entered an agreement to purchase a property located in Payncham from John and Mary

Yerkey (The plaintiffs). The Yerkeys, however, made it a condition that £1,000 of £3,300 should be secured by a second mortgage over Mrs Jones’ property at

Walkerville as a final payment – which was already subject to a mortgage of

£700. The

This produced a legal consequence as it affected the appellants with a conduct on the part of the husband in relation to his wife which raised equities in her favour against the indication of a mortgage. The husband exercised undue influence on Mrs Jones to procure her signature to the mortgage which consisted of no consideration. The plaintiff brought proceedings against the defendant upon a contract to pay interest and principal contained in the mortgage over the property at Walkerville owned by Mrs Jones. It was understood that Mrs Jones executed the mortgage without understanding the effect of the contract and presumed various false misrepresentations. She argued that the mortgage which she signed was for a different purpose from that which it was represented to her to

If the above matters are established, the court has discretion to set the guarantee aside. Dixon J suggests the principle is based on the relationship of husband and wife of the presumption of influence. Nevertheless the opportunities it gives are those that if the husband procures his wife to become surety for his debt, a creditor who consents her suretyship procured through her husband has been regarded as taking it conditional on any invalidating conduct on the part of her husband, although the creditor is not privy to such conduct.

The decision reached in Yerkey v Jones was considered in Garcia v National Australia Bank (Garcia). Garcia involved a similar set of factual circumstances as was present in Yerkey v Jones. In Garcia, Mrs Garcia and her husband at the time executed a mortgage with National Australia Bank to secure guarantees under the husband’s business. Mrs Garcia gave a guarantee in respect of debts to be incurred by her husband, however she did not understand the nature of the transaction. Ultimately, the court held that the guarantee should be set