In a recent judgment a plaintiff with an equitable charge gains the upper hand in a priority dispute. However, due to raising avoidable issues, the Court deducts the unnecessary legal fees.
Morris Finance Pty Ltd v Commonwealth Bank of Australia & Ors  VSC 260 (18 May 2017) highlights the need for a clear legal strategy. Due to not having one the plaintiff had its costs reduced by 25%.
How important is independent legal advice when a guarantee is provided?
Importance of lenders requiring borrowers and guarantors to obtain independent legal advice once again confirmed by the courts in National Australia Bank Limited v Wehbeh & Anor  VSC 431.
Guarantor relieved of obligation to pay because Bank failed to adhere to a voluntary industry code.
In the matter of National Australia Bank Limited v John Albert Rose  VSCA 169, the Victorian Supreme Court of Appeal held that a guarantor was not required to repay loans totalling more than $8 million because the bank failed to comply with the Code of Banking Practice.
Lenders are reminded to ensure all guarantors consent to any variation of the terms of a loan agreement.
The Supreme Court of Queensland has highlighted the need for lenders to obtain the consent of guarantors prior to amending the principal loan agreement in a way that will impact the guarantor’s obligations.
Charging clauses in loan agreements and guarantees entitling a lender to call for a mortgage on terms and conditions yet to be determined are not void for uncertainty.
In GE Commercial Corporation (Australia) Pty Ltd v Future Network (Albury) Pty Ltd  NSWSC 1228 the Supreme Court of New South Wales rejected a guarantor’s attempt to have a guarantee provision declared void because of uncertainty
Delays by the mortgagee in selling a security property may impact its rights against the borrower and guarantor.
Is a lender precluded from enforcing its rights against a guarantor if there is a period of inactivity after it takes possession of a security property? The Supreme Court of News South Wales was recently required to consider this issue in the matter of Commonwealth Bank of Australia v Thompson  NSWSC 149.
Misleading and deceptive conduct alleged against BankWest.
In Commonwealth Bank of Australia Ltd v Chamos  NSWSC 1345 the Supreme Court of New South Wales considered issues surrounding misleading and deceptive conduct alleged against a mortgagee.
Solicitor’s Certificates – Do these cure undue influence, and does the solicitor advising a guarantor need to be independent from the borrower?
These issues were dealt with by Justice Applegarth in McIvor v Westpac Banking Corporation  QSC 404. It affirms how vital it is for lenders to ensure that all borrowers and guarantors receive independent legal advice in relation to their rights and obligations under loan agreements and mortgages prior to funding. His Honour also confirmed that it is not necessary for the solicitor advising the guarantor to be independent of the borrower.
Supreme Court of Queensland reduces amount guaranteed by a volunteer wife even though she obtained independent legal advice.
In Dowdle v Pay Now For Business Pty Ltd & Anor  QSC 272 the Supreme Court of Queensland considered the issue of misleading and deceptive conduct where a wife sought to have a guarantee and mortgage set aside even though she had received legal advice prior to executing a mortgage and guarantee to secure monies advanced to her husband.
Guarantor liable for costs incurred by lender after full discharge of facility.
In the matter of Balanced Securities Limited v David Thomas  QDC 337, Elliott May was successful in obtaining judgment for its lender client against a guarantor for the costs incurred in defending proceedings brought by a borrower after the loan had been repaid in full.