A half owner of a businesses sold his shareholding to the co-owner and agreed at a meeting with the bank to cancel the facilities in relation to which he had provided a guarantee and payments were made to this end.
Letters of instructions to this effect were left with the bank employee. The bank alleged that the instructions were to be put on hold but no note to this effect appeared in the bank’s file.
The Appeal Court found that the lower court erred in believing the bank noting:
The evidence of the payments made to the overdraft accounts, coupled with the terms of the written instructions which were left with [the bank], provided compelling proof that the co−owners had made up their minds to cancel the facilities.
Accordingly the Appeal Court found the guarantee should have been discharged.
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