Bank of Adelaide v Lorden [1970] HCA 59

Bank of Adelaide v Lorden [1970] HCA 59

The guarantee expressly preserved the Bank’s right to proceed against the sureties, even if the principal debtor’s debt had been discharged by composition; thus, the appellant Bank could recover under the guarantee. The sum recoverable was the agreed monetary limit after deduction of other secured amounts, together with interest as stipulated in the guarantee.

Jurisdiction
Australia
Procedural Posture
Appeal / High Court Appeal From the Supreme Court of Western Australia – Judgment on Counterclaim After Initial Proceedings and First Instance Orders
Outcome
Appeal allowed (on counterclaim issue).
Legal Topics
['guarantees and Sureties' 'composition With Creditors' 'construction of Guarantees' 'limitation of Actions']
['contract Law' 'banking and Finance Law'] ['guarantees and Sureties' 'composition With Creditors' 'construction of Guarantees' 'limitation of Actions']

Case Brief

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Procedural Posture

Appeal / High Court Appeal From the Supreme Court of Western Australia – Judgment on Counterclaim After Initial Proceedings and First Instance Orders

Legal Issues

  1. 1 ['Whether the respondents (guarantors) remained liable under the guarantee after the Bank (creditor) entered a composition with the principal debtor company, discharging the company from further obligation.' 'Whether the instrument of guarantee allowed the Bank to recover from the sureties after compounding with the principal debtor.' 'How the limit of liability and calculation of interest under the guarantee should be construed.']

Ratio Decidendi

The guarantee expressly preserved the Bank’s right to proceed against the sureties, even if the principal debtor’s debt had been discharged by composition; thus, the appellant Bank could recover under the guarantee. The sum recoverable was the agreed monetary limit after deduction of other secured amounts, together with interest as stipulated in the guarantee.

Court Disposition

Appeal allowed (on counterclaim issue).

Orders

  • ["Order of Supreme Court of Western Australia (Nevile J.), so far as it dismissed the appellant's counterclaim, set aside." 'Judgment entered for the defendant (Bank of Adelaide) upon the counterclaim for the sum of $4,921.29 with costs of the counterclaim at the scale appropriate to a claim for $4,921.29 with a...