CBA v Anand [2011] NSWSC 613

The CBA loaned a company $1.4 M to buy and fitout two “Oporto” franchises. The bank took a guarantee from the sole director and shareholder and a mortgage over his two properties. Things went badly and the company went into liquidation.

The fixed and floating charge the CBA took over the company was found to be void because it was registered 3 months after its creation (not within 45 days as required by s263 of the Corporations Act). As a result the CBA missed out on the proceeds from the sale of the fitouts of the two shops, $120,000, which instead were assets of the liquidation.

The guarantor, whose two properties were now to be sold, wanted his liability under the guarantee reduced by $120,000. The bank pointed to a clause in their mortgage which stated

“Our rights and your liabilities under this guarantee are not affected by any failure to act by us or by anything else that might otherwise affect your liabilities under law relating to guarantees, including the fact that we lose the benefit of or do not obtain any SECURITY, or the fact that we do not register any SECURITY which could be registered”

The Judge held:

The terms of this clause are unequivocal, and are a complete answer to Mr Anand’s defence. The CBA is entitled to recover the full amount of its debt under the mortgages.

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