HAMMOND V. THE BANK OF ADELAIDE

( MRiGin (5 j

IN THE HIGH COURT OF AUSTRALIA

THE BANK OF ADELAIDE

REASONS FOR JUDGMENT

Judgment delivered at:...........PERTH.2.-..- WW. Mt, Housrox, Gove, Print., Melb, on... 20th. Tune,..196330.0...

©.1078/55

HAMMOND Ve

OF ADELAIDE

ORDER

Appeal dismissed with costs.

JUDGMENT

HAMMOND

Ve

THE BANK OF ADELAIDE

HAMMOND

Ve THE BANK OF ADELAIDE

In the action out of which this appeal arises the respondent bank sued the appellant to recover the sum of £5,497.17.10. which was alleged to be due and owing under a guarantee given by the appellant to the respondent on 15th July 1959 in consideration of advances made by it to a company known as J. H. Masters Pty. Ltd. on its No. 2 account with the bank. The guarantee was limited to the company's liability on that accounte The business of the company included trading in wool and at the time when the guarantee was given it was experiencing difficulty in obtaining adequate funds for this aspect of its business. However, one Pearce, a public accountant, introduced Masters, the Managing Director of the company, to the appellant and an arrangement was made, pursuant to which the guarantee was given, which had the effect of enabling the company to obtain accommodation from the respondent on an account known as the company's No. 2 account. Further reference will presently be made to the terms of this arrangement but for the moment it is enough to say that within a short time after it was made the company's difficulties were accentuated and on 10th September 1959 it, at the request of the respondent, appointed one Evans to supervise its operations and it agreed, inter alia, with Evans that it would not, during the continuance of his appointment, transact any business contrary to his advice and that it would not draw, accept or endorse any bills, notes or cheques unless countersigned by him. On the following day the company gave to the respondent a debenture over the whole of its assets which as