Victorian Securities Corporation v Icehot [2010] NSWSC 1413

The lender obtained judgment against a guarantor. The guarantor sought to stay bankruptcy proceedings on the grounds that he had needed time to prosecute a set-off against the lender in another set of proceedings (arising from the loan).

The Judge refused to stay of the judgement because a clause in the guarantee stated:

Until the guaranteed liabilities have been paid, discharged or performed in full, the guarantor must not, raise a defence available to the guarantor or any other person against the lender, or exercise any right of set-off or make a counter-claim against the lender, in reduction of his liability under this deed.

Even had this clause not existed the court found four other reasons not to grant the stay. These included: 

  1. The guarantor was guilty of inordinate delay in pursuing the proceedings in the other jurisdiction.
  2. The guarantor was guilty of substantial delay in bringing the application for a stay of the judgement. He only did so after failing to have bankruptcy notices set aside.
  3. There was a risk the lender would be prejudiced if a stay is granted because the assets of the guarantor might be dissipated. On his own admission they would be used to prosecute the other proceedings.
  4. There was no evidence the prospects of the claim in the other jurisdiction were strong.

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