DUGGAN and ORS v COMMONWEALTH BANK OF AUSTRALIA and ANOR [1997] NSWCA 97

DUGGAN and ORS v COMMONWEALTH BANK OF AUSTRALIA and ANOR

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL GLEESON CJ, HANDLEY and SHELLER JJA 24 September 1997, 18 December 1997

[1997] NSWCA 97

Mortgages — duty of care of mortgagee to mortgagor — estoppel Contracts contract of guarantee — construction and interpretation — privity

The appellants in this appeal were Duggan, Point Piper Marina Pty Ltd (PPM) and Raffindale Pty Ltd, Duggan being a director of the other two. PPM operated the marina on freehold land of which Raffindale was the registered proprietor, and adjoining leasehold land, of which Raffindale was the lessee from the Maritime Services Board.

On 9 October 1987 Raffindale mortgaged the freehold land to the Commonwealth Bank of Australia (the first mortgage), and PPM granted the bank an equitable mortgage over the whole of its business and property (the equitable mortgage). On 20 October 1988 an AGC Bailment Plan was entered into between AGC, AGC (Advances) and Point Piper Marina (Wholesale) Pty Ltd, as bailee. Under the Plan, Wholesale might take goods on bailment from AGC. For a fee which Wholesale agreed to pay by monthly instalments,

Advances guaranteed to AGC the due observance and performance by Wholesale of all its obligations and indemnities under the Bailment Plan. In consideration of the guarantee, Wholesale agreed to pay Advances on demand any amount paid by it under the guarantee. Raffindale gave a guarantee to AGC and Advances of the due performance by Wholesale as supplier of its obligations "under or arising out of each and every Supplier's Agreement". PPM and Duggan gave guarantees to AGC and Advances in the same terms. Raffindale gave AGC a second mortgage over the freehold land, to secure to AGC the payment of the principle sum and interest thereon, and a mortgage of its interest in the leasehold land.