The Lender loaned $5 million on a mortgage advance also secured by guarantees. The lender placed a caveat over the guarantor’s properties claiming, as the nature of interest, an “equitable mortgage”. The guarantors sought to lapse the caveats which brought about this hearing before the duty judge.
There was nothing in the guarantee that would have given rise to the interest claimed. A standard guarantee drafted by Bransgroves Lawyers would have had a charging clause. However, this document was not so competently drafted. Instead, the lender claimed that a document perfection clause somehow gave it the right to claim a mortgage from the guarantor. This weak argument failed and should have never of been made, given that the same argument had been rejected in Perpetual Nominees v Springfield Retail Pty Ltd  NSWSC 188. This case was reported in the Bransgroves March newsletter. The lender escaped with only having to pay the guarantors party/party costs.