McNAMEE v R AND I BANK WESTERN AUSTRALIA LTD [1994] NSWCA 201

McNAMEE vy R AND I BANK WESTERN AUSTRALIA LTD

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

MAHONEY, MEAGHER and COLE JJA 4 November 1994, 7 December 1994

[1994] NSWCA 201

Guarantee — effect of Deed of Novation, Amendment and Assignment upon rights liabilities of guarantor — Notice under s12 Conveyancing Act, 1900.

FACTS:

The appellant guarantor sought to have liabilities arising under a mortgage debt set aside on grounds that the Deed of Novation, Amendment and Consent, not executed by the appellant, (a) in CL2.1, operated as a novation rather than an assignment and (b) that notice of assignment had not been given to the guarantor as required under s12 of the Conveyancing Act. The appellant also made an application to argue CL23.1 of the deed, which clause had not been argued at first instance.

HELD:

(by Meagher and Cole JJA)

(1) The effect of CL2.1 hinges on the words of assignment, not any distinction between novation and assignment.

(2) The giving of a copy document executed by the assignor evidencing assignment of the assignor's rights constitutes express notice to the guarantor for the purposes of s12 of the Conveyancing Act.

(3) Application to raise an argument upon a clause of the Deed not raised below should be refused.

(By Mahoney JA, dissenting)

(1) If the rights of the creditor against the principal debtor be varied, the guarantor is released as in this case where the effect of the Deed of Novation, Amendment and Consent was to vary the rights and obligations of the appellant/guarantor under the Deed of Loan and Guarantee.

(2) The construction of a guarantee document in context may infer that the extent of the guarantee was limited to the benefit of the person so named in the guarantee.

ORDERS:

(1) Appeal dismissed with costs.

Mahoney JA On 22 March 1994 R and I Bank of Western Australia Ltd ("the Bank" )issued a summons in the Commercial Division of the Court seeking judgment against Peter John McNamee ("PJM") for $3,589,475.68 plus interest. On 6 May 1994 the summons came before Giles J for hearing. On 20 May 1994 his Honour gave judgment for the Bank for $3,640,320.46.