Ostabridge Pty. Ltd. (In Liquidation)(Receiver & Manager Appointed) v. Stafford & Ors. [2001] NSWCA 335

Ostabridge Pty. Ltd. (In Liquidation)(Receiver & Manager Appointed) v. Stafford & Ors. [2001] NSWCA 335

On the proper construction of the deed of release in its context, Westpac's covenant not to take further steps to enforce the guarantees, mortgages or further securities took effect in conjunction with the assignment to Ostabridge. If the covenant operated only after assignment it would be surplusage, because Westpac would no longer hold the rights to enforce. The assigned rights therefore remained useful against principal debtors and non-party guarantors but were subject to the equity created by the covenant in favour of the Staffords, so Ostabridge could not enforce the guarantees against them. Further, the deed of release and consent orders did not confirm the full debt for limitation...

Jurisdiction
Australia
Judgment Date
25 September 2001
Procedural Posture
Appeal / Appeal From the Judgment of Rolfe J Dismissing Proceedings Brought by Ostabridge Against the Staffords
Outcome
Appeal dismissed with costs
Legal Topics
['settlement Deed' 'assignment of Debt and Securities' 'guarantees' 'covenant Not to Enforce' 'assignee Subject to Equities' 'confirmation of Cause of Action' 'acknowledgement']
['contract' 'limitation of Actions'] ['settlement Deed' 'assignment of Debt and Securities' 'guarantees' 'covenant Not to Enforce' 'assignee Subject to Equities' 'confirmation of Cause of Action' 'acknowledgement']

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Procedural Posture

Appeal / Appeal From the Judgment of Rolfe J Dismissing Proceedings Brought by Ostabridge Against the Staffords

Legal Issues

  1. 1 ["Whether Ostabridge, as assignee of Westpac's debts and securities, took subject to Westpac's covenant in cl.5.1.3 of the deed of release not to take further steps to enforce the guarantees, mortgages or further securities." "Whether the deed of release and consent orders constituted a confirmation or acknowledgement of the Staffords' indebtedness for the purposes of s.54 of the Limitation Act 1969." 'Whether the consent orders and settlement arrangements acknowledged liability for the full amount claimed or only the liabilities provided for and performed under the compromise agreement.']

Ratio Decidendi

On the proper construction of the deed of release in its context, Westpac's covenant not to take further steps to enforce the guarantees, mortgages or further securities took effect in conjunction with the assignment to Ostabridge. If the covenant operated only after assignment it would be surplusage, because Westpac would no longer hold the rights to enforce. The assigned rights therefore remained useful against principal debtors and non-party guarantors but were subject to the equity created by the covenant in favour of the Staffords, so Ostabridge could not enforce the guarantees against them. Further, the deed of release and consent orders did not confirm the full debt for limitation...

Court Disposition

Appeal dismissed with costs

Orders

  • ['Appeal dismissed with costs']