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.
Can a lender do anything to protect itself from allegations of unconscionable conduct?
Too often commercial lenders have to contend with allegations made by defaulting borrowers that they are guilty of unconscionable conduct. An easy phrase to include in a letter or a pleading; but what does it really mean? And is there anything a lender can do to protect itself from these allegations?
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
Another lender fails to insist on its borrower obtaining independent legal advice.
In Paccar Financial Pty Ltd v Menzies NSWSC 772 the critical issue before the court was whether certain loan documents had been signed and/or sufficiently explained to the borrower by the lender. None of which would have been required had the lender insisted on independent legal advice.
Guarantees – is there a requirement for a lender to ensure that a guarantor receives some form of personal benefit from the transaction? And, does a mortgagee’s failure to sell a security property at full value give rise to a caveatable interest?
The Supreme Court of New South Wales confirms that there is nothing improper in lending to an elderly borrower even in circumstances where he obtained no personal benefit from the transaction. We also revisit a decision of the Supreme Court of South Australia which considered the ability of a mortgagor to lodge a caveat to prevent the mortgagee exercising its power of sale.
Queensland Supreme Court case involving former CEO of ABC Learning highlights the obligations imposed on mortgagees exercising power of sale.
In the recent matter of Westpac Banking Corporation v Helicopters Brisbane Pty Ltd & Ors  QSC 263 the Supreme Court of Queensland was asked by Eddy Groves, former CEO of ABC Learning, to dismiss an application for summary judgment. The court was required to consider the operation of s85 Property Law Act 1974 dealing with the obligations imposed on a mortgagee exercising power of sale over secured property.
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.