Gattellaro v Spencer [2010] NSWSC 1122

In 1989 when Westpac begun possession proceedings the amount owing under the mortgage was $197,000. The borrowers (a husband and wife) raised various defenses (including set-off, Contracts Review Act and Trade Practices Act) and fought tooth and nail all the way to the High Court in 2001. The bank won and the final indebtedness (including legal fees and interest) was in excess of $1 million causing the borrowers to lose their home.

The wife then, in this case, sued her solicitor for negligence and lost. The claim was based, in part, on a failure to plead, on behalf of the wife, the Marston Defence. In Marston v Charles H Griffith & Co (1982) 3 NSWLR 294 at 300 it was held that if a guarantee is drawn up for two guarantors and only one signs, then the signatory is not bound, because the only promise he made was to join with the other to guarantee, and if the other does not join, then he is not bound (absent a clause in the guarantee to the contrary ). The judge found that even if it had been pleaded the outcome would not have changed.

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