Kwan, E. v. Hastings Deering (Soloman Islands) Ltd [1987] FCA 465

Kwan, E. v. Hastings Deering (Soloman Islands) Ltd [1987] FCA 465

The creditor's failure to register the bill of sale meant the security was lost. There was sufficient evidence that the value of assets under the bill of sale exceeded the amount claimed, so the liability under the guarantee was extinguished in truth and reality. Further, there was an implied condition in the guarantee that the creditor would take all reasonable steps to perfect security. The failure to perform this condition resulted in a complete discharge of the guarantor's obligation.

Parties
Judgment Debtor: Edward Kwan; Creditor: Hastings Deering (Solomon Islands) Limited
Jurisdiction
Australia
Judgment Date
21 August 1987
Procedural Posture
Bankruptcy Application / Application to Set Aside Bankruptcy Notice
Outcome
Bankruptcy notice set aside
Legal Topics
Setting Aside Bankruptcy Notice, Liability of Guarantor, Effect of Unregistered Security, Implied Conditions in Guarantees
Bankruptcy Guarantee and Indemnity Commercial Law Setting Aside Bankruptcy Notice Liability of Guarantor Effect of Unregistered Security Implied Conditions in Guarantees

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Parties

Edward Kwan

Judgment Debtor

Hastings Deering (Solomon Islands) Limited

Creditor

Procedural Posture

Bankruptcy Application / Application to Set Aside Bankruptcy Notice

Legal Issues

  1. 1 Whether the judgment debt should be gone behind due to failure to register security by creditor
  2. 2 Whether failure to register bill of sale discharges guarantor
  3. 3 Whether there is an implied condition for the creditor to perfect security

Ratio Decidendi

The creditor's failure to register the bill of sale meant the security was lost. There was sufficient evidence that the value of assets under the bill of sale exceeded the amount claimed, so the liability under the guarantee was extinguished in truth and reality. Further, there was an implied condition in the guarantee that the creditor would take all reasonable steps to perfect security. The failure to perform this condition resulted in a complete discharge of the guarantor's obligation.

Court Disposition

Bankruptcy notice set aside

Orders

  • The bankruptcy notice dated 2 June 1987 be set aside.