Westpac Banking Corporation v Helicopters Brisbane [2012] QSC 263

The owner of ABC Learning guaranteed the repayment of a bank loan for a expensive camera for his helicopter. A bill of sale was granted over the camera. The loan went into default and the bank took possession of the camera and sold it at auction and sued the guarantor for the residual debt. The loan contained a clause prohibiting  set off (the guarantor to pay in full without exercising any right of set off).

The shareholder raised a number of defences namely that the bank breached its duties under section 85 of the Property Law Act 1974 by selling the camera at a significant undervalue and that the guarantee was unenforceable because Westpac had engaged in misleading and deceptive conduct by failing to explain the guarantee.

The law

A set off clause prevents a guarantor from raising a defence as to the exercise of the mortgagee’s rights under the guarantee but not a defence that the guarantee is unenforceable.

The decision

The court found that the conversation between the bank and the guarantor, which was not disputed by the bank, was capable of giving rise to relief under the TPA and refused to give summary judgment for the bank.

Click here to read the full judgment.

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