ANZ v Manasseh [2015] WASC 34

A wife guaranteed her husband’s loan. The loan was later re-written by the bank but the wife’s guarantee was not updated to reflect the new loan, nor did the wife consent. 

When the new loan went into default the wife argued that her guarantee did not cover it. The bank counter-argued that under clause 8 of the guarantee the guarantee continued to apply to “changes or replacements”. The court said:

“The bank’s confidence in the magical abilities of clause 8 was misplaced”.

Under the Ankar principle a guarantee can only be stretched to apply to variations not to replacements of loans.

Under the Ankar or variation principle, where the underlying liability guaranteed is altered or varied without consent, the guarantor is discharged from the guarantee unless the change is unsubstantial and unprejudicial or the guarantee expressly permitted the variation.

The court found that the loan in question was a new agreement, not an insubstantial variation of the original facility. Accordingly, the wife’s consent was required to make her liable. As she did not give consent she was not liable.

Accordingly, the guarantee could not be enforced against the wife. 

Click here to read the full judgment.

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