Andrew O’Brien (led by J Bell KC) appeared for the plaintiff, represented by Ashurst Australia.
The proceeding concerned the recovery of outstanding loan monies made by the plaintiff to the third defendant to finance a business jet. The defendants were participants in a joint venture. The plaintiff claimed that, on the proper construction of the loan agreement, the first (‘Resources’), second (‘Metals’), and fourth (‘QN’) defendants were jointly and severally liable for the debt, as QN entered into the guarantee and indemnity as agent for Resources and Metals. The defendants counterclaimed, alleging the plaintiff breached its duty to obtain ‘the best obtainable’ price for the aircraft’s sale, which they argued would have extinguished the whole debt.
Burns J held the defendants were jointly and severally liable for the outstanding loan amount. On the agreement’s true construction, all defendants were liable as guarantors, with the terms clearly allowing liability to attach to QN as agent and to Resources and Metals as principals. His Honour dismissed the counterclaim, holding the plaintiff had not exercised its power of sale but merely consented to the liquidators’ sale, and therefore owed no such duty. In any event, the defendants misconceived the duty as a mortgagee is not required to secure the best possible price but only act in good faith.
The judgment can be read by clicking here
