The borrowers defaulted on its development loans, in relation to which guarantees had been provided to the lender. The lender appointed receivers and managers to each of the borrower companies and sued the guarantors for the debt owed. The guarantors defended the claim on the basis that the lender breached various duties to sell the mortgaged properties at some earlier time, thereby reducing the liability of the guarantors.
The court held that the defences were not made out, noting that:
- Duties do not form part of the principal/surety relationship;
- Duties are inconsistent with the terms of the guarantee; and
- There is no evidence to support the allegations of fact that underpin the defences.
The court gave judgment for the lender and awarded the lender his costs on a solicitor client basis, in accordance with the terms of the guarantees.