MAILMAN v CHALLENGE BANK LTD [1991] NSWCA 182

MAILMAN v CHALLENGE BANK LTD

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

GLEESON CJ, HANDLEY and SHELLER JJA 21-22 November 1991, 12 December 1991

[1991] NSWCA 182

GUARANTEE — Loan agreement with bank — Mortgage to bank Commercial property — Mortgagee in possession — Bank seeks to recover against guarantors — Alleged representation or promises by bank officers — Resort first to mortgaged property — Then principal debtor — Then guarantors — "Normally" — Estoppel Misleading or deceptive conduct — s52 Trade Practices Act 1974

HELD: Statements did not give rise to representation or promise alleged - No representation that bank would not claim against guarantors before selling property Duty of mortgagee to guarantors - No duty to sell property at request of guarantors - China and South Sea Bank Ltd v Tan Soon Gin (1990) 1AC 536 applied

Legione v Hateley (1983) 152 CLR 406 Halsbury's Laws of England 4th ed, vol 9 China and South Sea Bank Ltd v Tan Soon Gin (1990) 1 AC 536 In re Cleadon Trust Ltd (1939) Ch 286 O'Day v Commercial Bank of Australia Ltd (1933) 50 CLR 200 Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (1978) 141 CLR 335 Buckeridge v Mercantile Credits Ltd (1981) 147 CLR 654 Rowlatt on Principle and Surety 3rd ed (1936) at 205 (see now 4th ed (1982) at 145)

Gleeson CJ In this matter I have had the benefit of reading in draft form the reasons for judgment of Sheller JA. I agree that the appeal should be dismissed with costs for the reasons given by his Honour.

Handley JA I agree with Sheller JA.

Sheller JA Introduction This is an appeal from a judgment of Rogers CJ Comm D.The respondent Challenge Bank Ltd sues the appellants Mr and Mrs Mailman to recover $3,706,011.48 alleged to be due under the terms of an agreement of guarantee and indemnity ("the guarantee") dated 4 March 1988 as varied by agreement dated 13 November 1989 and interest thereon. By its terms the appellants (a) guaranteed to the respondent the performance by Prime Property Corporation Pty Ltd, ("Prime"), of its obligations to the respondent under a bill acceptance and discount agreement ("the loan agreement") also dated 4 March 1988 as varied by a variation agreement dated 13 November 1989 and under a first registered mortgage in favour of the respondent ("the mortgage") dated 29 June 1987 over land owned by Prime and known as 2 Help Street, Chatswood, on which was erected a substantial commercial property, ("the property"), and (b) indemnified the respondent against any loss suffered by it as a result of any failure by any person to pay in a due and punctual manner the Debt.