Sunday , 25, October 2015 Leave a comment

The case: Alceon Group Pty Ltd v Rose [2015] NSWSC 868

The issue : The Quality of advice provided to a guarantor and enforceability of a guarantee.

Since the government toughened consumer protections in the Australian Consumer Laws, the banks have had to get a third party guarantor to get independent legal advice.

HELD : The third party guarantor must have “quality” legal advice, not just any legal advice otherwise it is not enforceable on the guarantor.

In this case the lender tried to be sneaky and get their own lawyers to talk to the guarantor for a few seconds and that that should qualify as legal advice.

And the Court said : No No No No! Slapped them around a bit and said you can not do that! It’s got to be quality legal advice!

Mrs Rose was found not to be liable for the guarantee based on the equitable doctrine of undue influence applying Garcia. As a side note, the principle of undue influence has been around since Yerkey v Jones (1939)

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