Australia and New Zealand Banking Group Ltd v Manasseh - [2016] WASCA 41

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD -v- MANASSEH [2016] WASCA 41

CORAM: McLURE P
BUSS JA
MURPHY JA

HEARD: 1 DECEMBER 2015

DELIVERED : 10 MARCH 2016

FILE NO/S: CACV 36 of 2015

BETWEEN: AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD
Appellant
AND
JULIE MANASSEH
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :McKECHNIE J
Citation  :AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD -v- MANASSEH [2015] WASC 34
File No  :CIV 1254 of 2012

Catchwords:

Contract - Guarantee - Proper construction of guarantee - Whether guarantee applied to subsequent credit contract not consented to by guarantor - Whether subsequent credit contract was a 'replacement' contract or a variation - Whether subsequent credit contract rescinded earlier credit contract - 'Ankar' principle in relation to variations to credit contract

Legislation:

Nil

Result:

Appeal dismissed

Category: B

Representation:

Counsel:

Appellant: Mr K J Mony de Kerloy
Respondent: Mr P G Clifford & Mr A P Rumsley

Solicitors:

Appellant: Herbert Smith Freehills
Respondent: Alan Rumsley

Case(s) referred to in judgment(s):

Adisan Ltd v Irwin [2015] NSWCA 217
Ankar Pty Ltd v National Westminster Finance (Australia) Ltd [1987] HCA 15; (1987) 162 CLR 549
Australia and New Zealand Banking Group Ltd v Manasseh [2015] WASC 34
Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99
Brighton v Australia and New Zealand Banking Group Ltd [2011] NSWCA 152
Chapmans Ltd v Australian Stock Exchange Ltd (1996) 67 FCR 402
Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 75 ALJR 312
Dan v Barclays Australia Ltd (1983) 57 ALJR 442
Federal Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35; (2000) 201 CLR 520
International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151
Martech International Pty Ltd v Energy World Corporation Ltd [2006] FCA 1004
Marubeni Hong Kong v Mongolian Government [2004] EWHC 472
McMahon v National Foods Milk Ltd [2009] VSCA 153
Petty v Cooke (1871) LR 6 QB 790
Pritchard v DJZ Constructions Pty Ltd [2012] NSWCA 196
Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355
Re Darwen and Pearce [1927] 1 Ch 176
Refrigerated Express Lines (Australasia) Pty Ltd v Australian Meat and Livestock Corporation (1980) 29 ALR 333
Sigiriya Capital Pty Ltd v Scanlon [2013] NSWCA 401; (2003) 97 ACSR 183
Swire v Redman and Holt (1876) 1 QBD 536
Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd [1957] HCA 10; (1957) 98 CLR 93
Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2014] WASCA 164
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
Triodos Bank NV v Dobbs [2005] EWCA Civ 630
Valstar v Silversmith [2009] NSWCA 80
Ward v The National Bank of New Zealand Ltd (1883) 8 App Cas 755
William Sindall plc v Cambridgeshire County Council [1994] 1 WLR 1016

Table of contents

McLure P's reasons
Ground 1
Ground 2
Ground 3

Conclusion
Buss JA's reasons
The relevant facts and circumstances
The 25 October 2006 letter agreement
The 2 November 2007 letter agreement
The offers from ANZ to Vivaldi between 28 February 2008 and 23 September 2009
The 16 November 2009 letter agreement
The relevant provisions of the Guarantee
The primary judge's reasons
The grounds of appeal
The notice of contention
The characterisation of the 25 October 2006 letter agreement read with the 2 November 2007 letter agreement
The merits of ground 1 of the appeal
The merits of ground 2 of the appeal
The merits of ground 3 of the appeal
The merits of the notice of contention

Conclusion
Murphy JA's reasons

Introduction
The letter of offer dated 25 October 2006

The General Conditions
Guarantor acknowledgment

Acceptance of the 25 October 2006 letter of offer
The respondent's individual guarantee and indemnity dated 31 October 2006
2 November 2007 letter of offer
28 February 2008 to 23 September 2009
The 16 November 2009 letter of offer
ANZ correspondence referring to 16 November 2009 letter of offer
Drawings and the operation of the facility
The primary proceedings commenced by ANZ
The primary judge's reasons
The 'Ankar' principle
The appeal

The grounds of appeal
The notice of contention

Disposition

Introduction
Clause 8 structure
Clause 8 - 'new', 'replacement' and 'changed' arrangements
The construction of cl 8 contended for by ANZ and the discussion of that contention
Conclusion on ground 2
Ground 3
The notice of contention

Conclusion

McLURE P: This is an appeal from the decision of McKechnie J dismissing the appellant's claim under a written contract of guarantee between the appellant (ANZ) and the respondent dated 31 October 2006 (the Guarantee).
The facts are detailed by Murphy JA. Adopting his definitions and abbreviations, they can be summarised as follows.
The respondent guaranteed Vivaldi's obligations as borrower under a finance facility agreement with ANZ, referred to as the '25 October 2006 letter agreement'. Maldwyn Lindley and Janice Lindley also separately guaranteed Vivaldi's obligations thereunder and all three signed a document headed 'Guarantor Acknowledgement'.
Under the 25 October 2006 letter agreement, ANZ agreed to provide a progress draw facility (facility) with a limit of $10,120,000 for the purpose of assisting Vivaldi with the acquisition of a development site in Mandurah and preliminary development costs. Vivaldi was to make interest only payments during the term of the facility. No date is specified for the repayment of the facility. The facility limit comprised internal limit components for, inter alia, the land funding component and a capitalised interest provision. The interest rate was the Bank Bill Swap Reference (BBSR) Rate plus a margin of 2% per annum and was payable monthly in arrears from the capitalised interest provision of the facility. All interest obligations over and above that provision had to be met from Vivaldi's own resources.
Under the General Conditions (Fourth Edition 2003) that formed part of the 25 October 2006 letter agreement, ANZ agreed to provide the facility for the 'agreed period' which is defined to mean, relevantly, 'at least the period until the specific termination date' (GC2). The specific termination date was 30 July 2007.
A default rate of interest (the applicable rate of interest plus a margin of 4%) was payable on amounts not paid when due (GC8).
On 31 October 2006 Vivaldi drew down approximately $9.5 million of the facility.
The 25 October 2006 letter agreement was varied by an agreement between ANZ and Vivaldi the terms of which are contained in the 2 November 2007 letter agreement. The facility limit was increased to $11,121,000 and the termination date was changed to 28 February 2008. The respondent signed a Guarantor Acknowledgement consenting to the variations to the 25 October 2006 letter agreement made by the 2 November 2007 letter agreement (the 25 October 2006 letter agreement as varied).
A letter of offer dated 9 June 2008 to further vary the existing agreement was not accepted. Between 18 August 2008 and 16 November 2009 inclusive, ANZ made seven further offers in writing to Vivaldi. On each occasion, a covering letter to Vivaldi enclosed a Letter of Offer and other contractual documents, including an extended version of ANZ's Guarantor Acknowledgement. The extended version states that it provides important information that ANZ is required, in accordance with its obligations under the Code of Banking Practice, to tell the person before they sign a guarantee. On each occasion, the covering letter to Vivaldi contained a paragraph in the following terms:
As there have been a number of variations to your arrangements with us since we last provided details of our terms and conditions in full, we take this opportunity to restate all existing arrangements in addition to the current changes. As a result this letter, once accepted, wholly replaces previous Letters of Offer and Variation Letters that we have issued to you.
Only one of the seven offers was accepted. On 30 November 2009 Vivaldi accepted the 16 November 2009 Letter of Offer (thereby becoming the 16 November 2009 letter agreement). At all material times up to and including 30 November 2009 interest had been debited to Vivaldi's account at the interest rate payable under the agreements, not at the default rate. Moreover, Vivaldi had not made any payments of interest (or principal) under any of the agreements. It is apparent that the capitalised interest provision was exhausted by 18 August 2008 (GB 108).
There are a number of differences between the 16 November 2009 letter agreement and the 25 October 2006 letter agreement as varied. First, the facility limit was increased to $11,487,000 from $11,121,000. However, the increase did not reflect new funds available to Vivaldi but was to accommodate accrued but unpaid interest. Second, the termination date was 30 August 2010. Third, the interest rate was the BBSR Rate without any margin. Fourth, a line fee was charged for the first time, being 3.5% per annum on the highest facility limit and payable quarterly in arrears. Fifth, under the heading 'Loan Approval Fee' it is stated that a Loan Extension Fee of $30,000 would be debited to Vivaldi's account on receipt of acceptance of the 16 November 2009 Letter of Offer. Sixth, all interest obligations had to be met from Vivaldi's own resources. Seventh, an updated version of the General Conditions (Fifth Edition 2009) were incorporated. Eighth, full repayment of the facility was (for the first time) stated to be due by the termination date. Finally, there were changes to the security schedule. In particular, certain securities connected with the Lindleys were to be released and they were to provide new individual guarantees with a maximum dollar limit and a second registered mortgage to secure their obligations under the guarantee.
The trial judge concluded that the 16 November 2009 letter agreement was a 'new contract' to which the respondent had not consented and that even if it was a variation to the 25 October 2006 letter agreement as varied, it increased the respondent's potential liability under the Guarantee with the consequence that the Guarantee was discharged under the Ankar principle (Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549). Either way, the Guarantee was discharged.
ANZ claims that: the 16 November 2009 letter agreement was not a new contract but rather changed the 25 October 2006 letter agreement as varied (ground 1); the changes made by the 16 November 2009 letter agreement did not increase the respondent's liability and the Ankar principle did not apply (ground 2); if the Ankar principle applied, the trial judge should have held that the changes were unsubstantial and not prejudicial and thus the Guarantee continued to be enforceable (ground 3).

Ground 1

Ground 1 raises the proper construction of cl 8 of the Guarantee which relevantly provides:
ANZ and the Customer [Vivaldi] can enter into new arrangements with one another or change or replace the existing Guaranteed Arrangements at any time. They may do whatever business they wish with each other. Except as stated below, they do not have to get my consent to do these things.
This Guarantee applies to any new or replacement arrangements that I agree are to be Guaranteed Arrangements and covered by this Guarantee.
This Guarantee also applies to any Guaranteed Arrangements that are changed. My consent to a change is only required if:
(a)ANZ changes the Guaranteed Arrangements in a way which increases my liability; and
(b)the law or any relevant code of conduct says I will not be liable for the increased liability unless I consent to the increase.
In all other cases, ANZ does not need to get my consent.
Where I give my consent, or where any of the Guaranteed Arrangements are changed but my consent is not required, then this Guarantee will automatically apply to those changed Guaranteed Arrangements.
The 'Guaranteed Arrangements' specified in the Guarantee is the 25 October 2006 letter agreement. By virtue of cl 8 and the respondent's consent to the 2 November 2007 letter agreement, the Guarantee applies to the 25 October 2006 letter agreement as varied.
The respondent refused her consent to the 16 November 2009 letter agreement. Accordingly, the Guarantee will not apply to the 16 November 2009 letter agreement if it is a new agreement, a replacement agreement or if it changed the 25 October 2006 letter agreement as varied in a way which increased the respondent's liability and, relevantly, the law says she would not be liable for the increased liability unless she consented to the increase.
It matters not whether the 16 November 2009 letter agreement is a 'new' or 'replacement' arrangement. The result is the same: the Guarantee does not apply. Accordingly, the substance of ground 1 is the positive case that the 16 November 2009 letter agreement 'changed' the 25 October 2006 letter agreement as varied within the meaning of that term in cl 8.
It is necessary to avoid terminological confusion. The scope of the Guarantee is confined to all money owing to ANZ under the Guaranteed Arrangement (cl 2.1). It was common cause that Vivaldi's acceptance of the 16 November 2009 letter of offer gave rise to an agreement which in one sense is 'new'. However, the question of construction is whether it is a new (or replacement) 'Guaranteed Arrangement'. Reliance on outcomes in cases construing different contractual language (including Triodos Bank NV v Dobbs [2005] EWCA Civ 630) is of no assistance.
The scope of each of a 'new' arrangement, 'replacement' arrangement and a 'changed' Guaranteed Arrangement is controlled by their context in cl 8. They are intended to have different fields of operation. The meaning of 'replacement arrangement' is clear. It is an arrangement that is in substitution for an existing specified Guaranteed Arrangement. A new arrangement is therefore separate and additional to any existing and continuing Guaranteed Arrangement. The context mandates the conclusion that the expression 'any Guaranteed Arrangements that are changed' can only mean (in this case) changes to the 25 October 2006 letter agreement as varied that leaves the 25 October 2006 letter agreement as varied in existence.
The 16 November 2009 letter agreement is not a new arrangement. It can only be a variation to the 25 October 2006 letter agreement as varied which remains on foot or a replacement arrangement. In my view, it is a replacement arrangement because it had the effect of terminating and replacing the 25 October 2006 letter agreement as varied.
A binding and enforceable agreement to vary an existing agreement can alter the existing agreement without affecting its existence or, alternatively, it can terminate and replace the existing contract. Whether or not a variation involves the termination and replacement of the existing contract depends on the objectively determined intention of the parties: Federal Commissioner of Taxation v Sara Lee Household and Body Care (Australia) Ltd [2000] HCA 35; (2000) 201 CLR 520; Dan v Barclays Australia Ltd (1983) 57 ALJR 442, 448 ‑ 449.
For the purpose of objectively determining that intention, regard can be had to, inter alia, the 25 October 2006 letter agreement, the 2 November 2007 letter agreement and the correspondence between 9 June 2008 and 30 November 2009 inclusive: Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2014] WASCA 164 [45]. The parties conducted the trial and the appeal on that basis.
The 16 November 2009 letter agreement comprises the following contractual documents (as they are described in the agreement):
(a)letter of offer dated 16 November 2009;
(b)facilities schedule to the letter of offer dated 16 November 2009;
(c)security schedule to the letter of offer dated 16 November 2009;
(d)financial requirements and other conditions schedule to the letter of offer dated 16 November 2009;
(e)general and specific conditions schedule to the letter of offer dated 16 November 2009;
(f)the General Conditions, Fifth Edition 2009.
The 16 November 2009 letter agreement is, and is intended to be, an exhaustive statement of all the terms and conditions governing the facility. That is in stark contrast to the 2 November 2007 letter agreement which, in its terms and effect, requires the continuing existence of the 25 October 2006 letter agreement. The textual differences between the terms of the 16 November 2009 letter of offer and the 2 November 2007 letter of offer confirm the conclusion that the former is intended to replace the existing agreements and the latter is to continue the existing agreements. In particular, the 2 November 2007 letter of offer repeatedly identifies what are described as 'variations' to the existing facility and expressly provides that '[t]he existing financial requirements and other conditions continue to remain in full force'. All of the schedules expressly identify the 2 November 2007 letter of offer as the 'Annual Review and Variation Letter'. There are no equivalent references in the 16 November 2009 letter of offer and related contractual documents.
The intention that the 16 November 2009 letter agreement replace the 25 October 2006 letter agreement as varied is also supported by the surrounding circumstances, including the terms of ANZ's covering letter of 16 November 2009. It was no part of ANZ's case at trial or in the appeal that the documents comprising the 16 November 2009 letter agreement were not sent to the respondent under cover of ANZ's covering letter of 16 November 2009. The evidence of ANZ's witness, Ellen Moore, only refers to the date on which the documents in question were sent to Vivaldi (par 37). Further, the terms of that letter are relevantly consistent with all ANZ's covering letters to Vivaldi from 18 August 2008 to 16 November 2009.
There is nothing uncommercial or unexpected in ANZ replacing earlier agreements with a substitute agreement intended to capture all the relevant contractual terms and conditions in one document. That it is standard banking practice is reflected in cl 8 of the Guarantee. ANZ protected its position in relation to existing guarantees by making any replacement agreement subject to a condition precedent that ANZ receive 'the security described in the letter of offer, properly completed and executed and legally enforceable … as well as all other documents needed to perfect the security' (General Conditions, Fifth Edition 2009, cl 8). Included with the 16 November 2009 letter of offer sent to Vivaldi was a Customer Information Sheet and the Guarantor Acknowledgement that the respondent refused to sign. The Customer Information Sheet expressly stated that to accept the ANZ offer required, inter alia, return of the signed Guarantor Acknowledgement which was pages 15 ‑ 17 of the 16 November 2009 letter of offer. The only reasonable inference is that ANZ waived that condition precedent.
I would dismiss ground 1 and the appeal. I would dismiss the Notice of Contention for the reasons given by Murphy JA. Although it is not strictly necessary to determine grounds 2 and 3, I will address them on the assumption that the 16 November 2009 letter agreement did not replace the 25 October 2006 letter agreement as varied.

Ground 2

The common law Ankar principle is, in broad terms, that a guarantor will be released from a specific guarantee of the due performance of the principal debtor's obligations under a particular contract if the parties vary that contract in a way that is not insubstantial or incapable of prejudicing the guarantor.

The application of the Ankar principle can be excluded or modified by agreement. The combined effect of cl 4 and cl 8 of the Guarantee is to modify the application of the Ankar principle. I agree with Murphy JA that cl 4 is subject to cl 8. In relation to variations, cl 8 is intended to cover the field.
A variation will not be a Guaranteed Arrangement if (a) the variation increases 'my [the guarantor's] liability' and (b) the law [including the common law Ankar principle] or any relevant code of conduct is that the guarantor will not be liable for the increased liability unless the guarantor consents to the increase. The respondent's liability under the Guarantee was limited to the value of a City Beach property she had mortgaged to secure her obligations under the Guarantee. It was accepted for the purposes of trial that it had a value of between $1.5 million and $2.2 million. I agree with Murphy JA for the reasons he gives that the words 'my liability' in par (a) is not a reference to the maximum amount recoverable under cl 2.2(b) of the Guarantee. I would dismiss ground 2.

Ground 3

In order to succeed on this ground, ANZ must establish either that it did not change the 25 October 2006 letter agreement as varied in a way which increased the respondent's liability or, if it did, ANZ would not be liable for the increased liability under the Ankar principle.
There are three points of principle that require express recognition. First, the 'increased liability' requires an increase in the guarantor's actual net financial liability. Second, regard can be had to the surrounding circumstances in determining whether there was an actual net increase in financial liability. Third, any increase in the respondent's liability must result from the variations. If the same result would flow from the 25 October 2006 letter agreement as varied, the causal element would not be established. Thus, there was no relevant variation to Vivaldi's obligation to fund its interest payments from its own resources after the capitalised internal provision of the facility had been exhausted. Moreover, there is a live issue as to whether there had been a relevant variation of termination date that resulted in an increase in liability.
In my view, Vivaldi was not in default when the nominated termination dates came and went because of the definition of 'agreed period', which states a minimum period not a maximum. That construction is consistent with the fact that, prior to the 16 November 2009 letter agreement, was there no express obligation to repay the facility on the termination date. Accordingly, there was no relevant increase in the facility limit; the increases reflected interest and other expenses for which Vivaldi was already contractually liable.
However, the respondent's liability was increased by the obligation to pay the loan extension fee of $30,000 and the line fee of 3.5% per annum, against which the 2% interest rate reduction should be set off. ANZ relies on the fact that, but for the 16 November 2009 letter agreement, it would have exercised its right to call in the facility and claimed interest at the substantially higher default rate (an additional 4%) until payment of the full amount owing. The unchallenged evidence was that Vivaldi had requested the extension of the facility to 30 August 2010 because of a soft property market. As is well known, the global financial crisis began in 2008.
In my assessment, there is force in ANZ's submission that the relevant increase in liabilities (the line fee and the extension fee) was more than offset by the 2% reduction in interest which was payable quarterly not monthly, and ANZ agreeing not to call in the facility in November 2009 which would have triggered the default rate of interest. I infer from ANZ's restraint that its assessment was it could not achieve a better or more timely result in selling the development site than Vivaldi. Further, Vivaldi's indebtedness was, in November 2009, more than five times the maximum amount of the respondent's liability under the Guarantee. What little evidence there is supports an inference that, in practical terms, the respondent's right of indemnity against Vivaldi could not be prejudiced by the variations. If it had been necessary for the determination of the appeal, I would have upheld ground 3.

Conclusion

For these reasons, I would dismiss the appeal and the Notice of Contention

BUSS JA: The appellant (ANZ) appeals to this court from McKechnie J's decision after trial to dismiss ANZ's claim against the respondent under a written contract of guarantee dated 31 October 2006 (the Guarantee).
The ultimate issue at trial was whether the respondent was liable to ANZ under the Guarantee for amounts due and payable by Vivaldi Investments Pty Ltd (Vivaldi) to ANZ pursuant to the agreement (the 16 November 2009 letter agreement) formed upon Vivaldi's acceptance on 30 November 2009 of an offer in ANZ's letter dated 16 November 2009.
The primary judge held that the respondent was not liable under the Guarantee for the relevant amounts due and payable by Vivaldi to ANZ.
I would dismiss the appeal. My reasons are as follows.

The relevant facts and circumstances

The relevant facts and circumstances are set out in the reasons of Murphy JA. I will not repeat them except to the extent necessary to explain my reasons.

The 25 October 2006 letter agreement

On 30 October 2006, Vivaldi accepted an offer from ANZ for the provision of a credit facility on the terms set out in ANZ's letter dated 25 October 2006. Like McLure P and Murphy JA, I will refer to the agreement formed upon Vivaldi's acceptance of ANZ's offer as the 25 October 2006 letter agreement.
It was a term of the 25 October 2006 letter agreement that the respondent would execute the Guarantee and, on 31 October 2006, the respondent executed it.
By the 25 October 2006 letter agreement, ANZ agreed to provide Vivaldi with a credit facility for the purpose of assisting Vivaldi in acquiring land in Mandurah for development and with the payment of preliminary costs. The facility limit was $10,120,000.
On 31 October 2006, ANZ advanced about $9.5 million to Vivaldi under the 25 October 2006 letter agreement.
The 'termination date' specified in the 25 October 2006 letter agreement was 30 July 2007. The 25 October 2006 letter agreement incorporated the 'General Conditions (Fourth Edition 2003)' (the 2003 General Conditions). By cl 2 of the 2003 General Conditions, ANZ agreed, relevantly and in effect, to provide the credit facility for the 'agreed period', unless Vivaldi defaulted and ANZ exercised its option to terminate the facility. In cl 2, the term 'agreed period' was defined to mean, relevantly, at least the period until the specific termination date in ANZ's letter of offer (that is, at least until 30 July 2007).

The 2 November 2007 letter agreement

On 18 December 2007, Vivaldi accepted an offer from ANZ in relation to the credit facility made available pursuant to the 25 October 2006 letter agreement. The terms of the offer were set out in ANZ's letter dated 2 November 2007. Like McLure P and Murphy JA, I will refer to the agreement formed upon Vivaldi's acceptance of ANZ's offer as the 2 November 2007 letter agreement.
The facility limit was increased from $10,120,000 to $11,121,000. The 'termination date' was extended from 30 July 2007 to 28 February 2008.
The respondent consented to the offer in ANZ's letter dated 2 November 2007, and on 18 December 2007 she signed a document, described as a Guarantor Acknowledgement, which, amongst other things, evidenced her consent to the offer and Vivaldi's acceptance of it and her acknowledgement that 'the Guarantee will cover as Guaranteed Arrangements (as defined in the Guarantee) all facilities from ANZ to [Vivaldi] as noted in [ANZ's letter dated 2 November 2007]'.

The offers from ANZ to Vivaldi between 28 February 2008 and 23 September 2009

ANZ made seven offers to Vivaldi between 28 February 2008 and 23 September 2009 in relation to the credit facility made available pursuant to the 25 October 2006 letter agreement read with the 2 November 2007 letter agreement.
None of the offers was accepted by Vivaldi.

The 16 November 2009 letter agreement

On 30 November 2009, Vivaldi accepted an offer from ANZ in relation to the credit facility made available pursuant to the 25 October 2006 letter agreement read with the 2 November 2007 letter agreement. The terms of the offer were contained in ANZ's letter dated 16 November 2009. Like McLure P and Murphy JA, I will refer to the agreement formed upon Vivaldi's acceptance of ANZ's offer as the 16 November 2009 letter agreement.
The respondent refused to agree or consent to the 16 November 2009 letter agreement.
There are numerous differences between the 25 October 2006 letter agreement read with the 2 November 2007 letter agreement, on the one hand, and the 16 November 2009 letter agreement, on the other. In particular:
(a)The facility limit was increased from $11,121,000 to $11,487,000. This increase related to accrued but unpaid interest. No new principal amount was made available by ANZ to Vivaldi.
(b)The 'termination date' was extended from 28 February 2008 to 30 August 2010.
(c)The ordinary rate of interest payable by Vivaldi on amounts owing under the facility was decreased from the Bank Bill Swap Reference (BBSR) rate plus a margin of 2% per annum to the BBSR rate without any margin. However, the rate of interest payable by Vivaldi if it defaulted continued to be the ordinary rate of interest applicable to the facility plus a margin of 4% per annum.
(d)A line fee was charged under the 16 November 2009 letter agreement, namely 3.5% per annum on the highest facility limit, payable quarterly in arrears. No line fee was payable previously.
(e)A 'Loan Approval Fee' of $30,000 was payable by Vivaldi under the 16 November 2009 letter agreement. A 'Loan Approval Fee' of $52,000 was payable by Vivaldi under the 25 October 2006 letter agreement, but a fee of this kind was not payable under the 2 November 2007 letter agreement.
(f)All interest payable by Vivaldi under the 16 November 2009 letter agreement had to be met from Vivaldi's 'own resources'; that is, unlike the 25 October 2006 letter agreement read with the 2 November 2007 letter agreement, there was no provision within the facility limit for the capitalisation of interest.
(g)The 'General Conditions (Fifth Edition 2009)' (the 2009 General Conditions) applied to the 16 November 2009 letter agreement instead of the 2003 General Conditions.
(h)Unlike the 25 October 2006 letter agreement read with the 2 November 2007 letter agreement, the 16 November 2009 letter agreement expressly stated that 'full repayment' of the amount drawn under the credit facility was 'due by the termination date'.
(i)The security required by ANZ was amended; in particular, securities previously given by Maldwyn Lindley and Janice Lindley in respect of the credit facility were released, new individual guarantees with a maximum limit were provided by them, and a second registered mortgage over certain property owned by them was taken to secure their obligations under the new individual guarantees.

The relevant provisions of the Guarantee

Clause 1.1(a) of the Guarantee states that, by signing the Guarantee, the respondent guarantees that Vivaldi will, on time, pay to ANZ all the 'Guaranteed Money' and perform the 'Guaranteed Arrangements'.
In cl 2.1, the term 'Guaranteed Money' is defined to mean, relevantly, 'all money owing to ANZ for any reason under the Guaranteed Arrangements' by Vivaldi 'now or in the future … actually or contingently'.
The term 'Guaranteed Arrangements' is defined in the 'Details Pages' of the Guarantee as follows:
Under the GUARANTEED ARRANGEMENTS, being:
(a)each credit contract referred to below (if any); and
(b)any other credit contract that I agree in writing is to be covered by this Guarantee,
as changed or replaced.
Guaranteed Arrangement
Being a credit contract* dated 25 October 2006 and accepted by the Customer [Vivaldi].
Regulated Arrangement: No.
*For details of the specific loan or facility see the credit contract.
Clause 2.2, read with the text under the heading 'Liability' in the 'Details Pages', provides, relevantly and in effect, that despite cl 2.1 'the maximum amount recoverable from [the respondent] under [the] Guarantee will not exceed':
(i)the total amount available to ANZ as a result of the sale or disposal of the Secured Property in accordance with the security described on the Details Page (after payment of enforcement expenses and any other money which must or may be paid by ANZ before applying the proceeds against the Guaranteed Money); or
(ii)if ANZ consents to a sale or disposal of the Secured Property, the total proceeds of that sale or disposal after deduction of any expenses approved by ANZ.
The term 'Secured Property' refers to a second registered mortgage granted by the respondent to ANZ over the property at 33 Aruma Way, City Beach (the Aruma Way property). The text under the heading 'Security' in the 'Details Pages' states that the Guarantee is 'secured by', relevantly, the second registered mortgage over the Aruma Way property.
In the 'Details Pages' there are notes and advice as follows:
Note 1: As the information statement 'Things you should know about guarantees' referred to below only applies to guarantees regulated by Consumer Credit Law, you will only receive that statement if this Guarantee secures a Regulated Arrangement.
Note 2: Despite the last section under 'Things you must know', in some circumstances your liability under this Guarantee may be increased even if you do not agree and without you being informed (see clause 8) but this is subject to any applicable limit in the Guarantee.

IMPORTANT

BEFORE YOU SIGN

THINGS YOU MUST KNOW

* READ THIS GUARANTEE    DOCUMENT AND THE    CREDIT CONTRACT    DOCUMENT.

*   Understand that, by signing this      guarantee, you may become personally      responsible instead of, or as well as, the      debtor to pay the amounts which the      debtor owes and the reasonable expenses      of the credit provider in enforcing the      guarantee.

*You should also read the    Information statement:

   'THINGS YOU SHOULD    KNOW ABOUT    GUARANTEES.'

*   If the debtor does not pay you must pay.      This could mean you lose everything you      own including your home.

*You should obtain    independent legal advice.

*   You may be able to withdraw from this      guarantee or limit your liability. Ask      your legal adviser about this before you      sign this guarantee.

*You should also consider    obtaining Independent    financial advice.

*You should make your own    Inquiries about the credit    Worthiness, financial    position and honesty of the    debtor.

*   You are not bound by a change to the      credit contract, or by a new credit      contract, that increases your liabilities      under the guarantee unless you have      agreed in writing and have been given      written particulars of the change or a copy      of the new credit contract document.

The 'Guaranteed Arrangements' under the Guarantee were not a 'Regulated Arrangement'.
Clause 4 provides, relevantly:
My obligations under this Guarantee are unconditional. They are not affected by anything which might have released me from all or part of my obligations, or limited them, if I had not agreed to this clause.
Clause 4 then gives examples of circumstances where the guarantor (that is, the respondent) will continue to be liable. By cl 20.2(a)(ii), examples do not limit general wording.
Clause 5 enables the guarantor, in specified circumstances, to arrange for his or her obligations under the Guarantee to be 'stopped' in relation to a Guaranteed Arrangement.
Clause 7 provides, relevantly:
My obligations under this Guarantee are continuing. They continue after my death or Administration and after ANZ learns of it.
Even though ANZ receives payments from, or makes arrangements with, anyone, I am still liable for the Guaranteed Money and the Guaranteed Arrangements now and in the future (subject to the limit set out in clause 2.2, or any other agreed limit).
Clause 8 provides, relevantly:
ANZ and the Customer [Vivaldi] can enter into new arrangements with one another or change or replace the existing Guaranteed Arrangements at any time. They may do whatever business they wish with each other. Except as stated below, they do not have to get my consent to do these things.
This Guarantee applies to any new or replacement arrangements that I agree are to be Guaranteed Arrangements and covered by this Guarantee.
This Guarantee also applies to any Guaranteed Arrangements that are changed. My consent to a change is only required if:
(a)ANZ changes the Guaranteed Arrangements in a way which increases my liability; and
(b)the law or any relevant code of conduct says I will not be liable for the increased liability unless I consent to the increase.
In all other cases, ANZ does not need to get my consent.
Where I give my consent, or where any of the Guaranteed Arrangements are changed but my consent is not required, then this Guarantee will automatically apply to those changed Guaranteed Arrangements.

The primary judge's reasons

The primary judge held that the 16 November 2009 letter agreement was 'clear and unambiguous' [150]. It was a 'new contract' and 'under the Guaranteed Arrangements ANZ required [the respondent's] consent' [151]. The respondent did not give her consent. ANZ's claim against the respondent must fail 'because [the 16 November 2009 letter agreement] was a new or replaced agreement', and ANZ did not obtain her consent as required under cl 8 of the Guarantee [152].
Further, his Honour held that the respondent's consent to the 16 November 2009 letter agreement was required, not only under cl 8 of the Guarantee, but also under the Ankar principle: Ankar Pty Ltd v National Westminster Finance (Australia) Ltd [1987] HCA 15; (1987) 162 CLR 549. His Honour said that the 16 November 2009 letter agreement had increased the respondent's 'potential liability' under the Guarantee [153]. ANZ had failed to discharge its onus of showing that the 16 November 2009 letter agreement effected 'an insubstantial change without detrimentally affecting [the respondent's] liability under [the Guarantee]' [162].
The respondent pleaded in her defence that ANZ had engaged in misleading or deceptive conduct in trade or commerce in relation to the Guarantee. She asserted that in the 25 October 2006 letter agreement and, also, in the 2 November 2007 letter agreement ANZ had represented that any security she provided, including the Guarantee, 'would be limited in time to expire 31 July 2007 and 28 February 2008, respectively'. See [163] of the primary judge's reasons. His Honour held that ANZ did not engage in misleading or deceptive conduct as alleged and that this aspect of the respondent's defence failed.
His Honour ordered, relevantly and in effect, that ANZ's claim be dismissed and that ANZ provide the respondent with an executed, registrable discharge of its mortgage over the Aruma Way property.

The grounds of appeal

ANZ relies on three grounds of appeal.
The grounds read:
1.The trial judge erred in law and in fact in holding that the contract entered into between [ANZ] and [Vivaldi] in late 2009 … was a 'new contract' with the consequence that it was not covered by the guarantee given by the respondent …
2.The learned trial judge also erred in law and fact in holding that even if the existing contractual arrangements were varied (i.e. changed), nevertheless the variation increased [the respondent's] potential liability under her guarantee, with the consequence that the guarantee (and the mortgage which secured it) was discharged under the Ankar principle …
3.Even if the learned trial judge was correct that the Ankar principle applied, which is denied, he erred in holding that ANZ had not discharged the onus of showing that the changes to the existing contractual arrangements effected an insubstantial change without detrimentally affecting [the respondent's] liability under her guarantee.

The notice of contention

The respondent filed a notice of contention. She alleges, relevantly and in essence, that the primary judge should have found that her defence, based on ANZ's alleged misleading or deceptive conduct in trade or commerce, had been established at the trial.

The characterisation of the 25 October 2006 letter agreement read with the 2 November 2007 letter agreement

It is unnecessary to decide whether the 2 November 2007 letter agreement was a 'new', a 'replacement' or a 'changed' arrangement, within cl 8 of the Guarantee. It is unnecessary because the respondent consented to the 2 November 2007 letter agreement and acknowledged, in effect, that the Guarantee would cover, as Guaranteed Arrangements, all facilities made available by ANZ to Vivaldi as noted in the 2 November 2007 letter agreement. It is convenient, in the balance of these reasons, to refer to the 25 October 2006 letter agreement read with the 2 November 2007 letter agreement as the 25 October 2006 letter agreement/2 November 2007 letter agreement.

The merits of ground 1 of the appeal

Ground 1 alleges, in effect, that the primary judge erred in deciding that the 16 November 2009 letter agreement was a 'new' arrangement, within cl 8 of the Guarantee, with the consequence that it was not covered by the Guarantee.
The construction of a written agreement involves ascertaining what a reasonable person would have understood the parties to the agreement to mean. Consideration should ordinarily be given not only to the language of the agreement, but also to the apparent purpose and object of any transaction created by or evidenced in the agreement. See Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 [40] (Gleeson CJ, Gummow, Hayne, Callinan & Heydon JJ); International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151 [8] (Gleeson CJ), [53] (Gummow, Hayne, Heydon, Crennan & Kiefel JJ).
The words of a clause in a written agreement are to be given the most appropriate meaning which they can legitimately bear. A court must have regard to all of the provisions of the agreement with a view to achieving harmony among them. See Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109 ‑ 110 (Gibbs J). These propositions are applicable to instruments generally, subject to any particular rules of construction which have been developed in relation to a particular kind of provision or instrument.
The relevant principles to be applied in determining whether an agreement made by the parties to an existing contract varies the existing contract or terminates and replaces the existing contract are well established.
In Federal Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35; (2000) 201 CLR 520, Gleeson CJ, Gaudron, McHugh and Hayne JJ said:
When the parties to an existing contract enter into a further contract by which they vary the original contract, then, by hypothesis, they have made two contracts. For one reason or another, it may be material to determine whether the effect of the second contract is to bring an end to the first contract and replace it with the second, or whether the effect is to leave the first contract standing, subject to the alteration. For example, something may turn upon the place, or the time, or the form, of the contract, and it may therefore be necessary to decide whether the original contract subsists [22].
See also Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 75 ALJR 312 [19] (Gleeson CJ, Gaudron & Gummow JJ).
In Sara Lee and Concut reference was made to Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd [1957] HCA 10; (1957) 98 CLR 93.
In Tallerman, Taylor J accepted that where the parties to an existing contract enter into another contract:
(a)the earlier contract might be rescinded altogether, the determining factor being the intention of the parties disclosed by the later agreement;
(b)partial rescission is a variation, not the destruction, of the contractual relationship between the parties; and
(c)the earlier contract may be varied by way of:
(i)partial rescission with or without the substitution of new terms for those rescinded; and
(ii)the addition of new terms with or without any partial rescission at all (144).
See also Concut [19].
In Tallerman, Kitto J accepted in essence the propositions set out at [81] (a) and (b), and added that while, 'in strict logic' a variation may be a new contract, 'the discharge of an old contract is a matter of intention' (135). See also Concut [19].
The term 'Guaranteed Arrangements' is defined in the 'Details Pages' of the Guarantee to mean, relevantly and in effect, the 25 October 2006 letter agreement 'as changed or replaced'.
The advice in the 'Details Pages' includes the statement that the guarantor is not bound by 'a change to the credit contract [that is, relevantly, the 25 October 2006 letter agreement], or by a new credit contract, that increases [the guarantor's] liabilities under the guarantee unless [the guarantor has] agreed in writing and [has] been given written particulars of the change or a copy of the new credit contract document'. However, note 1 in the 'Details Pages' states that the advice (including that statement) 'only applies … if [the Guarantee] secures a Regulated Arrangement'. As I have mentioned, the 'Guaranteed Arrangements' under the Guarantee were not a 'Regulated Arrangement'.
The critical concepts in cl 8 of the Guarantee, for the purposes of ground 1, are a 'new' arrangement, a 'replacement' arrangement and a 'changed' arrangement.
Clause 8 states that:
(a)ANZ and Vivaldi can enter into 'new arrangements with one another' or 'change or replace the existing Guaranteed Arrangements' at any time;
(b)the Guarantee applies to 'any new or replacement arrangements' that the respondent agrees are to be 'Guaranteed Arrangements' and covered by the Guarantee;
(c)the Guarantee also applies to any Guaranteed Arrangements that are 'changed';
(d)the respondent's consent to a 'change' is only required in the circumstances specified in cl 8; and
(e)where the respondent gives her consent, or where any of the Guaranteed Arrangements are 'changed' but her consent is not required, then the Guarantee will automatically apply to those 'changed Guaranteed Arrangements'.
In my opinion, on a proper construction of the term 'Guaranteed Arrangements' (as defined in the 'Details Pages'), in the context of cl 8 and the Guarantee as a whole, the reference in the definition to 'Guaranteed Arrangements' meaning, relevantly and in effect, the 25 October 2006 letter agreement 'as changed or replaced', is subject to cl 8. In other words, the Guarantee will not secure an arrangement which 'changes' or 'replaces' the 25 October 2006 letter agreement unless the 'change' or 'replacement' is covered by the Guarantee by virtue of cl 8. Counsel for ANZ did not make a submission, either at the trial or in the appeal, to the effect that 'Guaranteed Arrangements' (as defined in the 'Details Pages') should bear a different construction.
So:
(a)a 'new' arrangement, within cl 8, between ANZ and Vivaldi will not be secured by the Guarantee unless the respondent has agreed that the 'new' arrangement is to be within the 'Guaranteed Arrangements' and covered by the Guarantee;
(b)a 'replacement' arrangement, within cl 8, between ANZ and Vivaldi will not be secured by the Guarantee unless the respondent has agreed that the 'replacement' arrangement is to be within the 'Guaranteed Arrangements' and covered by the Guarantee; and
(c)any 'Guaranteed Arrangements' which are 'changed' will be secured by the Guarantee, without the respondent having agreed or consented to the 'change', if:
(i)the 'change' does not increase the respondent's 'liability'; and
(ii)the law or any relevant code of conduct does not state that the respondent will not be liable for the 'increased liability' unless the respondent consents to the increase,
but otherwise, the 'change' to the Guaranteed Arrangement will not be secured by the Guarantee unless the respondent has consented to the 'change'.
It is apparent, on a fair reading of cl 8 in the context of the Guarantee as a whole, that each of the critical concepts of a 'new' arrangement, a 'replacement' arrangement and a 'changed' arrangement in cl 8 describes an arrangement that is different from the others. The words 'new', 'replacement' and 'changed' in relation to an arrangement are not, in cl 8, synonyms. They are descriptive of different kinds of arrangement.
The first paragraph of cl 8 introduces the concept of a 'new' arrangement without reference to the existing Guaranteed Arrangements. By contrast, that paragraph introduces the concepts of a 'replacement' arrangement and a 'changed' arrangement by reference to the existing Guaranteed Arrangements. The relevant passage reads: 'ANZ and [Vivaldi] can enter into new arrangements with one another or change or replace the existing Guaranteed Arrangements at any time'. This indicates that a 'new' arrangement is unrelated to the credit facility or other obligations secured by the existing Guaranteed Arrangements while a 'replacement' arrangement and a 'changed' arrangement are related to the credit facility or other obligations secured by the existing Guaranteed Arrangements.
The word 'new' in its ordinary and natural meaning connotes, in the context of a 'new' arrangement between ANZ and Vivaldi within cl 8, the creation or making of an arrangement between those parties which did not previously exist and which is separate and distinct from, and unrelated to, any existing arrangements between them (that is, the existing Guaranteed Arrangements). So, for example, any credit facility provided under a 'new' arrangement between ANZ and Vivaldi, within cl 8, will be separate and distinct from, and unrelated to, the credit facility provided under the existing Guaranteed Arrangements.
The word 'replacement' in its ordinary and natural meaning connotes, in the context of a 'replacement' arrangement between ANZ and Vivaldi within cl 8, the creation or making of an arrangement between those parties which takes the place of or is substituted for an existing arrangement between them (that is, the existing Guaranteed Arrangements), with the existing arrangement being wholly rescinded or terminated. It is not an essential feature of a 'replacement' arrangement that the arrangement involve or include the provision of an additional or extended credit facility.
The word 'changed' in its ordinary and natural meaning connotes, in the context of a 'changed' arrangement between ANZ and Vivaldi within cl 8, the creation or making of alterations to an existing arrangement between them (that is, the existing Guaranteed Arrangements), without the existing arrangement being wholly rescinded or terminated.
The characterisation of an arrangement between ANZ and Vivaldi as a 'new', a 'replacement' or a 'changed' arrangement, within cl 8, depends upon the intention of the parties. Their intention is to be ascertained, objectively, upon a proper construction of that arrangement in the context of the existing Guaranteed Arrangements.
The 25 October 2006 letter agreement/2 November 2007 letter agreement comprised:
(a)The letter of offer dated 25 October 2006 and the schedules attached to or referred to in that letter; in particular, the facilities schedule, the security schedule, the financial requirements and other conditions schedule, and the general and specific conditions schedule.
(b)The letter of offer dated 2 November 2007 and the schedules attached to or referred to in that letter, which are of the same nature and description as the schedules attached to or referred to in the letter of offer dated 25 October 2006.
(c)The 2003 General Conditions.
The 16 November 2009 letter agreement comprised:
(a)The letter of offer dated 16 November 2009 and the schedules attached to or referred to in that letter, which are of the same nature and description as the schedules attached to or referred to in the letter of offer dated 25 October 2006 and the letter of offer dated 2 November 2007.
(b)The 2009 General Conditions.
ANZ sent the letter of offer dated 16 November 2009 to Vivaldi under the cover of another letter dated 16 November 2009 (the other letter), which elaborated upon and explained aspects of the proposed arrangement embodied in the letter of offer dated 16 November 2009 and the schedules attached to or referred to in that letter. In the other letter, ANZ stated, relevantly:
We are pleased to enclose for you our offer, which details the arrangements we have recently discussed.
As there have been a number of variations to your arrangements with us since we last provided details of our terms and conditions in full, we take this opportunity to restate all existing arrangements in addition to the current changes. As a result this letter, once accepted, wholly replaces previous Letters of Offer and Variation Letters that we have issued to you.
...
To accept this offer please sign the copy of the Letter of Offer and return it to me.
It was a term of ANZ's letter of offer dated 16 November 2009 that the acceptance of the offer by Vivaldi required, amongst other things, the respondent to sign a Guarantor Acknowledgement (which was attached to the letter of offer) and the signed Guarantor Acknowledgement to be returned to ANZ. See the document described as the Customer Information Sheet. That term was not, of course, satisfied. However, the proper inference, objectively determined on the basis of the facts and circumstances which occurred after ANZ sent the letter of offer to Vivaldi, is that ANZ waived compliance with the term.
In my opinion, the 16 November 2009 letter agreement was not a 'new' arrangement, within cl 8. It is apparent, on an examination of the terms of the agreement, that it was not separate and distinct from, and unrelated to, the existing Guaranteed Arrangements. Indeed, the agreement related to the credit facility provided under the existing Guaranteed Arrangements.
In my opinion, the 16 November 2009 letter agreement was a 'replacement' arrangement and not a 'changed' arrangement, within cl 8. In particular:
(a)The 16 November 2009 letter agreement did not refer to the 26 October 2006 letter agreement or the 2 November 2007 letter agreement, apart from a statement in ANZ's letter of offer dated 16 November 2009 to the effect that until Vivaldi accepted the offer (and complied with 'all conditions precedent'), 'the current arrangements for the facilities that we are making available to you, including the conditions on which those facilities are being made available, continue'. The schedules attached to or referred to in ANZ's letter of offer dated 16 November 2009 (including the Guarantor Acknowledgement) mentioned the letter of offer dated 16 November 2009, but did not mention the 26 October 2006 letter agreement, the 2 November 2007 letter agreement or any earlier letters of offer.
(b)The 16 November 2009 letter agreement included numerous provisions that were identical to provisions in the 25 October 2006 letter agreement/2 November 2007 letter agreement, but the 16 November 2009 letter agreement also included numerous provisions that were materially different from provisions in the 25 October 2006 letter agreement/2 November 2007 letter agreement. However, none of the terms of the 25 October 2006 letter agreement/2 November 2007 letter agreement was incorporated by reference in the 16 November 2009 letter agreement.
(c)The 16 November 2009 letter agreement referred to various existing securities that secured the existing Guaranteed Arrangements, but also referred to new securities to be taken by ANZ and to various existing securities that were to be released.
(d)The 16 November 2009 letter agreement did not include provision for an additional (as distinct from an extended) credit facility to be provided by ANZ to Vivaldi but, as I have mentioned, that is not an essential feature of a 'replacement' arrangement within cl 8.
(e)The status and purpose of the credit facility under the 16 November 2009 letter agreement was materially different from the status and purpose of the credit facility under the 25 October 2006 letter agreement/2 November 2007 letter agreement. When the 16 November 2009 letter agreement was made the new facility limit had been fully drawn. The principal purposes of the 16 November 2009 letter agreement were, in substance, to increase the facility limit by capitalising unpaid interest and to extend the time for repayment of the amount owing by Vivaldi to ANZ under the credit facility.
(f)The rights and obligations of ANZ and Vivaldi respectively under the 16 November 2009 letter agreement were to be ascertained, asserted or enforced, as the case may be, wholly by reference to the terms of that agreement and without regard to the terms of the 25 October 2006 letter agreement/2 November 2007 letter agreement.
In the circumstances, the proper inference is that, objectively, upon a proper construction of the 16 November 2009 letter agreement in the context of the existing Guaranteed Arrangements, ANZ and Vivaldi intended that, on 'all conditions precedent' being complied with or waived, the 16 November 2009 letter agreement should take the place of and be substituted for the 25 October 2006 letter agreement/2 November 2007 letter agreement, with the earlier agreements being wholly rescinded or terminated.
The primary judge characterised the 16 November 2009 letter agreement as a 'new contract' [151], but his Honour then stated that the 16 November 2009 letter agreement was 'a new or replaced agreement' and ANZ did not obtain the respondent's consent as required under cl 8 [152].
His Honour did not distinguish correctly between a 'new' arrangement, on the one hand, and a 'replacement' arrangement, on the other, within cl 8. However, this error was not material to the outcome because, as I have explained, the 16 November 2009 letter agreement was a 'replacement' arrangement, within cl 8. A 'replacement' arrangement, like a 'new' arrangement, was not secured by the Guarantee unless the respondent agreed that the 'replacement' arrangement was to be within the 'Guaranteed Arrangements' and covered by the Guarantee. The respondent refused to agree or consent to the 16 November 2009 letter agreement.
So, although ground 1 of the appeal has been made out, success on that ground does not, in the circumstances, materially advance ANZ's case in the appeal.
My conclusion that the 16 November 2009 letter agreement was a 'replacement' arrangement, within cl 8, is sufficient, in the circumstances, to require that the appeal be dismissed.
It is strictly unnecessary to deal with grounds 2 and 3. However, those grounds were fully argued at the hearing. I will consider them on the basis that, contrary to my opinion, the 16 November 2009 letter agreement was a 'changed' arrangement (and not a 'replacement' arrangement), within cl 8.

The merits of ground 2 of the appeal

Ground 2 alleges, in effect, that the primary judge erred in deciding that, even if the 16 November 2009 letter agreement was a 'changed' arrangement, within cl 8, the changes increased the respondent's potential liability under the Guarantee with the consequence that the Guarantee (and the mortgage over the Aruma Way property which secured it) was discharged under the Ankar principle.

I agree with McLure P and Murphy JA, for the reasons they give, that ground 2 of the appeal fails.

The merits of ground 3 of the appeal

Ground 3 alleges, in effect, that, even if the primary judge was correct in deciding that the Ankar principle applied, his Honour erred in holding that ANZ had not discharged the onus of establishing that the changes to the Guaranteed Arrangements effected insubstantial changes and did not detrimentally affect the respondent's liability under the Guarantee.

I agree with Murphy JA, generally for the reasons he gives, in relation to ground 3 of the appeal.

The merits of the notice of contention

The notice of contention alleges, relevantly and in essence, that the primary judge should have found that the respondent's defence, based on ANZ's alleged misleading or deceptive conduct in trade or commerce, had been established at the trial.
I agree with Murphy JA, for the reasons he gives, that the notice of contention fails.

Conclusion

The appeal should be dismissed.
MURPHY JA:

Introduction

This appeal concerns the question of whether the respondent is liable to the appellant under a guarantee dated 31 October 2006.
The respondent is the wife of Mr Christou. In or around May 2006, Mr Christou sought to borrow money on behalf of Vivaldi Investments Pty Ltd (Vivaldi) from the appellant (ANZ) to finance a property development near Mandurah. On 25 May 2006, ANZ wrote to Mr Christou outlining the effect of certain preliminary discussions concerning the possible development and the financing for it. An initial feasibility study was undertaken.
By 25 October 2006, negotiations had reached the point where ANZ made an offer of finance to Vivaldi. Amongst other things, ANZ required

a guarantee from the respondent limited to the value of certain property in City Beach of which the respondent was the registered proprietor (City Beach property).

Vivaldi accepted the letter of offer dated 25 October 2006 and the respondent provided the required guarantee dated 31 October 2006.
In a letter dated 2 November 2007, ANZ, in effect, offered to vary the facility limit and extend the term of the facility. Vivaldi accepted the offer and the respondent also executed an acknowledgement under which she acknowledged that the guarantee applied to the credit agreement resulting from the acceptance of the 2 November 2007 letter, in addition to the 25 October 2006 letter.
The contract resulting from the acceptance of the 2 November 2007 letter required repayment of the facility by 28 February 2008. Vivaldi did not repay the debt. In the course of 2008 and 2009, ANZ made further offers to Vivaldi dealing with, amongst other things, an extension of the termination date of the facility, but these offers were not accepted.
By letter dated 16 November 2009, ANZ again made an offer, on certain terms, including extending the termination date of the facility, this time to 30 August 2010. Vivaldi accepted this offer. The respondent, however, did not consent to the guarantee applying to the agreement resulting from the execution of the 16 November 2009 letter of offer.
The essential issue at trial was whether the respondent was liable under the guarantee dated 31 October 2006 in respect of Vivaldi's liability to ANZ arising from the executed letter of offer dated 16 November 2009. It was accepted for the purposes of the trial that the City Beach property had a value of between $1.5 million to $2.2 million.
The primary judge found that the respondent was not liable under the guarantee in that regard: Australian and New Zealand Banking Group Ltd v Manasseh.[1] ANZ appeals from that decision.
[1] Australia and New Zealand Banking Group Ltd v Manasseh [2015] WASC 34 (primary reasons).
For the reasons which follow, the appeal should be dismissed.

The letter of offer dated 25 October 2006

By letter dated 25 October 2006, ANZ made an offer of finance to Vivaldi. It included a 'Facilities Schedule', a 'Securities Schedule', a 'Financial Requirements and other Conditions Schedule' and a 'General and Specific Conditions Schedule'. The letter of offer described the facility as a 'progress draw facility' with a limit of $10.12 million. It provided that the facility would be subject to an annual review; the next date for review would be 30 July 2007; and that if a review were not undertaken then, ANZ could carry out a review at any time after the next review date.
The Facilities Schedule showed the facility limit of $10.12 million as comprising the following 'internal limit components':
(a)$8,143,000 Land funding component;
(b)$502,000 Preliminary Costs;
(c)$52,000 Professional Fees;
(d)$111,000 Bank Fees and Charges; and
(e)$612,000 Capitalised interest provision.
The Facility Schedule also provided that:
(a)the termination date was 30 July 2007;
(b)the purpose of the facility was to assist with the acquisition of the development site and the financing of the preliminary costs;
(c)interest only was payable during the term of the facility;
(d)interest was payable at a variable rate based on the Bank Bill Swap Reference Rate (Swap Rate) plus a margin of 2% per annum; and
(e)interest was payable from the capitalised interest provision, but all interest obligations 'over and above' that provision were to be met from the borrower's own resources.
'The Financial Requirements and Other Conditions Schedule' (Financial Requirements Schedule) provided that certain specified events to occur by certain dates were 'milestones':
1.Planning/development approval to be held by 30 January 2006.
2.Complete design drawings by 28 February 2007.
3.Lodge application for Building Licence with local council by 30 June 2007.
4.Request building tenders by 30 June 2007.
5.Lodge application for approval of development finance by 30 June 2007.
6.Approval of building licence by 30 September 2007.
7.Award building tenders by 30 September 2007.
8.Selected builder to commence on‑site by 30 September 2007.
The Financial Requirements Schedule also provided that:
(a)if the borrower fails to achieve the Milestones such failure is a Review Event;
(b)the borrower must on demand explain to the bank the reasons for the failure and submit detailed strategies to demonstrate how it plans to ensure compliance with those obligations within a specified period of time;
(c)if the bank is not reasonably satisfied with any aspect of the borrower's submissions, or the borrower fails to comply with the submitted strategies, then the bank is entitled to treat the failure as an event of default and exercise any rights it has under cl 11 of the General Conditions.
Curiously, perhaps, the milestones extended beyond the termination date. Also, the first milestone preceded by approximately 10 months the date of the 25 October 2006 letter of offer. The Financial Requirements Schedule also provided that although the security property involved the intended development of a residential building, there was no commitment on ANZ's part to finance any construction on the proposed lots.
The Security Schedule included provision for an individual guarantee and indemnity, to be given by the respondent, limited to the value of the City Beach property and secured by a second registered mortgage.
The General and Specific Conditions Schedule provided that the 'General Conditions (Fourth Edition 2003)' (General Conditions) applied to the Facilities. It also provided for an excess fee of $150, and, in effect, that for the purposes of cl 8 of the General Conditions dealing with amounts overdrawn and amounts due but unpaid, there would be a default rate of interest at the rate applicable to the facility, plus a margin of 4% per annum.
The letter of offer also provided for a 'Guarantor Acknowledgment' to be executed by each guarantor, the terms of which are set out later in these reasons.

The General Conditions

The General Conditions provided, in effect, that the agreement between the ANZ and the borrower would comprise the letter of offer, the General Conditions and any specific conditions referred to in the letter of offer.
By cl 2, ANZ agreed, relevantly, to provide each facility for the 'agreed period' unless the customer defaults and ANZ exercises its option to terminate the facility. The 'agreed period' is defined to mean, relevantly, at least the period until the specific termination date in the letter of offer.
By cl 3, the customer is required to pay ANZ the 'outstanding money' (which is defined to mean (in cl 23) the amount actually or contingently owing under the facility, including interest and costs) on the termination date.
Clause 8 provides, in effect, that interest is payable at the rate specified in the letter of offer on amounts which are in excess of the facility limit or which are not paid when due. As noted earlier, the 25 October 2006 letter of offer referred to a margin of 4% per annum in this regard.
Clause 9 refers to '[r]eview of the facilities'. Clause 9(1) provides that ANZ has the right to review the facilities in accordance with cl 9. Clause 9(2) provides that if following a credit reassessment, ANZ determines that there has been a change in credit, ANZ may give written notice to the customer stating an intention either to change the conditions of the facility, or terminate the facility where the letter of offer says the facility is provided until at least the review date. If the former, any changes only take effect when the customer accepts the changes: cl 9(3)(a). If, however, the customer does not accept the changes before the notice period expires, all facilities become payable on demand by ANZ: cl 9(3)(b).
Clause 10 provides, inter alia, that the customer will be in default if the customer fails to pay on time an amount due and payable under a transaction document.
Clause 11 provides, inter alia:
(1)If you are in default, we may waive the rights that we have.
…
(2)If you are in default, we may do any one or more of the following:
(a)terminate immediately some or all of our obligations under this agreement;
(b)change immediately some or all of the conditions on which one or more of the facilities are made available …;
(c)make some or all of the money that is or may become owing to us in respect of one or more of the facilities immediately due and payable …
…
(3)We will give you written notice after acting under sub‑clause (2)(a) or (b).
(4)We will give you written notice before acting under sub‑clauses (2)(c) and (d). The notice is effective immediately we give it.
…
(6)You agree that an event of default under this agreement is an event of default or an acceleration event under all other agreements that you have with us.
Clause 12(4) provides:
We may, at any time, change when, how often and how you will pay us interest under any of the facilities.
Note: If we make a change of this kind, we will give you notice of the change before it happens. We will do this by giving you written notice no later than 30 days before the change takes effect. (original emphasis)

Guarantor acknowledgment

The 25 October 2006 letter of offer also contained a document headed 'Guarantor Acknowledgment' to be completed by each guarantor of the facility. The 'Letter of Offer' is defined in the Guarantor Acknowledgment to mean the letter of offer dated 25 October 2006.
It was in the following terms:
1.Each of the following guarantors acknowledges that the Guarantee will cover as Guaranteed Arrangements (as defined in the Guarantee) all facilities from ANZ to the Borrower as noted in the Letter of Offer and any securities given or to be given, secure all present and future obligations of the Borrower to ANZ with respect to the facilities as noted in the Letter of Offer.
2.ANZ's right to enforce the Guarantee or any security is subject to the conditions of the Guarantee and any security. The guarantor's liability under the Guarantee will be limited in accordance with the Guarantee by the amount or by reference to the value of the secured property as noted in the Guarantee, subject to any additional amounts in respect of costs and interest as noted in the Guarantee.
3.The guarantors may agree to vary or extend the Guarantee in the future.
4.This Acknowledgment is subject to the Bank providing the guarantors with any information they may be required to provide guarantors under the Code of Banking Practice.
5.By providing this guarantor Acknowledgment to the facility, each guarantor acknowledges that the provisions contained at Clause 22 'Privacy' of the General Conditions apply to them (emphasis added).

Acceptance of the 25 October 2006 letter of offer

On 30 October 2006, Vivaldi accepted the 25 October 2006 letter of offer. The respondent also executed and returned the 'Guarantor Acknowledgment'.
The contract constituted by the acceptance of the 25 October 2006 letter of offer will be referred to as the '25 October 2006 letter agreement'.

The respondent's individual guarantee and indemnity dated 31 October 2006

The 'Details' pages of the guarantee provides that the guarantee is given by the respondent in respect of money owed to ANZ by Vivaldi, under the 'Guaranteed Arrangements'. The Guaranteed Arrangements are defined, in effect, as:
(a)the credit contract resulting from the acceptance of the letter of offer dated 25 October 2006; and
(b)any other credit contract that the Guarantor agrees in writing is to be covered by the guarantee,
as changed or replaced.
The 'Details' pages also contain a provision headed 'Liability'. That provision, in effect, provides that the guarantor's 'liability under this guarantee is limited' by reference to the value of the City Beach property, as set out in cl 2.2(b) together with any amounts referred to in cl 2.2(a). The provision headed 'Security' provides that the guarantee is secured by a registered second mortgage over the City Beach property.
The 'Details' pages of the guarantee also include, in a box containing the headings 'Important' and 'Things you must know', the statement that:
You are not bound by a change to the credit contract, or by a new credit contract, that increases your liabilities under the guarantee unless you have agreed in writing and have been given written particulars of the change or a copy of the new credit contract document.
That statement is the last section under 'Things you must know'.
The notes above the box provide:
Note 1: As the information statement 'Things you should know about guarantees' referred to below only applies to guarantees regulated by Consumer Credit Law, you will only receive that statement if this Guarantee secures a Regulated Arrangement.
Note 2: Despite the last section under 'Things you must know', in some circumstances your liability under this Guarantee may be increased even if you do not agree and without you being informed (see clause 8) but this is subject to any applicable limit in the Guarantee. (emphasis added)
The 'Details' pages also provide that the 'Guarantee Arrangements' do not constitute a 'Regulated Arrangement'.
The guarantee also contains clauses numbered 1 to 20.
By cl 1, the guarantor guarantees that the customer will, on time, pay to the ANZ all the 'Guaranteed Money' and perform the 'Guaranteed Arrangements'.
The term 'Guaranteed Money' is relevantly defined in cl 2.1 to mean all money owing to ANZ for any reason under the Guaranteed Arrangements by the customer, now or in the future, actually or contingently.
Clause 2.2, however, qualifies cl 2.1 if the 'Details' pages provide that the guarantee is limited by a dollar limit, or if ANZ's recourse is limited to a security property. Clause 2.2(a) applies if the 'Details' pages specify a 'dollar limit'. It has no application in this case. However, cl 2.2(b) is relevant.
Clause 2.2(b) provides:
(b)If ANZ's recourse is limited to a security property
The following applies if the Details Page says so.
Despite clause 2.1 but subject to what follows, the maximum amount recoverable from me under this Guarantee will not exceed:
(i)the total amount available to ANZ as a result of the sale or disposal of the Secured Property in accordance with the security described on the Details Page (after payment of enforcement expenses and any other money which must or may be paid by ANZ before applying the proceeds against the Guaranteed Money); or
(ii)if ANZ consents to a sale or disposal of the Secured Property, the total proceeds of that sale or disposal after deduction of any expenses approved by ANZ.
ANZ may disregard this restriction when making demands and enforcing the security, but ultimately ANZ can still only recover from the proceeds of realisation of the security.
For the purpose of this clause, Secured Property means any property described under the heading 'Security' on the Details page.
Clause 4 of the guarantee provides that:
[The guarantor's] obligations under this Guarantee are unconditional. They are not affected by anything which might have released me from all or part of my obligations, or limited them, if I had not agreed to this clause.
For example, I continue to be liable if any of the following occur:
·ANZ does not, or is slow to, exercise any of its rights against the Customer or anyone else.
·ANZ gives anyone, or anyone becomes entitled to, a full or partial discharge or release, time to pay or any other concession.
·ANZ makes any arrangement, transaction or compromise with anyone including one which varies, takes away or limits its security or rights, or its freedom to exercise them.
·There is a change in the nature or constitution of anyone including its members.
·This Guarantee or any other document or security is not valid against, or is not signed or binding on, any other person.
·Anyone dies, become insolvent or incapacitated or goes into some form of Administration.
·Anyone has a claim against ANZ.
By cl 20.2(a)(ii), examples do not limit general wording in the interpretation of the guarantee.
Clause 5 is a provision under which the guarantor may, in certain circumstances, arrange for its obligations under the guarantee to be stopped in relation to a Guaranteed Arrangement.
Clause 7 is titled 'Continuing Guarantee' and provides relevantly:
My obligations under this Guarantee are continuing. They continue after my death or Administration and after ANZ learns of it.
Even though ANZ receives payment from, or makes arrangements with, anyone, I am still liable for the Guaranteed Money and the Guaranteed Arrangements now and in the future (subject to the limit set out in clause 2.2, or any other agreed limit).
Clause 8 of the guarantee provides:
8. Variation of Guaranteed Arrangements
ANZ and the Customer can enter into new arrangements with one another or change or replace the existing Guaranteed Arrangements at any time. They may do whatever business they wish with each other. Except as stated below, they do not have to get my consent to do these things.
This Guarantee applies to any new or replacement arrangements that I agree are to be Guaranteed Arrangements and covered by this Guarantee.
This Guarantee also applies to any Guaranteed Arrangements that are changed. My consent to a change is only required if:
(a)ANZ changes the Guaranteed Arrangements in a way which increases my liability; and
(b)the law or any relevant code of conduct says I will not be liable for the increased liability unless I consent to the increase.
In all other cases, ANZ does not need to get my consent.
Where I give my consent, or where any of the Guaranteed Arrangements are changed but my consent is not required, then this Guarantee will automatically apply to those changed Guaranteed Arrangements.
If:
(a)my obligations are limited under clause 2.2(a);
(b)I agree that a new or replacement arrangement is to be a Guaranteed Arrangement, or to a change to any existing Guaranteed Arrangement that increases my liability; and
(c)I also agree a new dollar amount for the purpose of clause 2.2(a),
then this Guarantee (and in particular clause 2.2) will be read as if that new dollar amount were inserted on the Details Page. (emphasis added)

Secondly, ANZ contended that the words 'change' and 'changed' referred, relevantly, to contractual variations to the credit contract comprising the Guaranteed Arrangements. In other words, ANZ's case was that the words 'change' and 'changed' in cl 8 apply to a variation to an existing agreement. ANZ did not contend that references to 'change' or 'changed' in the third paragraph of cl 8 referred only to unilateral changes to the credit contract forming the Guaranteed Arrangements, effected by ANZ pursuant to a power conferred on it under the relevant credit contract.
Thirdly, 'Note 1' to the statements in the box headed 'Important' and 'Things you Must Know' indicates that the 'Information Statement' referred to in the box only applies if the guarantee secures a 'Regulated Arrangement'. Clause 20.1 provides that a 'Regulated Arrangement' means a Guaranteed Arrangement regulated by 'Consumer Credit Law', and that if ANZ is treating the Guaranteed Arrangement as a 'Regulated Arrangement', it will say so on the Details page. The Details page says that the Guaranteed Arrangement is not a 'Regulated Arrangement'. Neither party to this appeal suggested that it was.[24]
[24] The Consumer Credit (Western Australia) Code (Code) only applied to credit contracts where the credit was provided or intended to be provided wholly or predominantly for personal, domestic or household purposes: Code, s 6(1)(b).
Fourthly, the respondent, by the terms of the Guarantor Acknowledgment dated 18 December 2007, agreed that the Guaranteed Arrangements thereupon comprised:
(a)the 25 October 2006 letter agreement;
(b)any 'subsequent Variation Letters'; and
(c)the 2 November 2007 letter agreement.
In its context, the term 'subsequent Variation Letters' appears to be a reference to any variation letters between 25 October 2006 and 2 November 2007. ANZ does not contend that the 16 November 2009 letter agreement is a 'subsequent Variation Letter' within the meaning of the respondent's Guarantor Acknowledgement of 18 December 2007.
Fifthly, by the respondent's Guarantor Acknowledgement of 18 December 2007, she agreed that the 'Guaranteed Arrangements' were the credit contacts comprising the 25 October 2006 letter agreement and the 2 November 2007 letter agreement. Accordingly, on ANZ's case, the question of whether the 16 November 2009 letter agreement was, relevantly, a changed or replaced credit contract, is to be determined by whether it 'changed' or 'replaced' the 25 October 2006 letter agreement as varied by the 2 November 2007 letter agreement.

Clause 8 structure

Clause 8 contains six paragraphs and in what follows, the paragraphs in cl 8 are referred to as if they were consecutively numbered.
Paragraph 2 of cl 8 provides, in effect, that any 'new' or 'replacement' arrangements will be covered by the guarantee if the guarantor agrees that they are to be Guaranteed Arrangements covered by the guarantee.
Paragraphs 3, 4 and 5 of cl 8 deal with 'changes' to Guaranteed Arrangements. Paragraph 3 provides that the guarantor's consent to a 'change' is only required if:
(a)ANZ changes the Guaranteed Arrangement in a way which increases the guarantor's liability; and
(b)the law or any relevant code of conduct provides that the guarantor will not be liable for the increased liability unless the guarantor consents to the increase.
Paragraph 4 of cl 8 provides that in all other circumstances, ANZ need not obtain the guarantor's agreement. That is consistent with the third sentence of par 1.
Paragraph 5 of cl 8 also provides that where consent to a change is required and is given, and where consent is not required, then the guarantee will automatically apply to those changed Guaranteed Arrangements.
Paragraph 6 of cl 8 addresses a situation where the limit of liability on the Details page refers to a particular dollar amount in accordance with cl 2.2(a). It provides that if there is such a limit, and the guarantor agrees a new or replacement arrangement is to be a Guaranteed Arrangement, or agrees to a change to an existing arrangement that increases the guarantor's liability, and the guarantor 'also' agrees to a new dollar amount for the purposes of cl 2.2(a), then the guarantee is to be read as if the new dollar amount were inserted on the Details page.

Clause 8 - 'new', 'replacement' and 'changed' arrangements

Ground 1 of the appeal deals with the question of whether the 16 November 2009 letter agreement was a 'replacement' or a 'change' within the meaning of cl 8.
Clause 8 refers to 'new' Guaranteed Arrangements, 'replacement' Guaranteed Arrangements, and 'changed' Guaranteed Arrangements. As noted earlier, ANZ submits that the word 'change' refers to a variation of the Guaranteed Arrangements.
In point of law, a contract which brings to an end an earlier one and replaces it, and a variation to a contract, are both new contracts. In Federal Commissioner of Taxation of the Commonwealth of Australia v Sara Lee Household & Body Care (Australia) Pty Ltd,[25] Gleeson CJ, Gaudron, McHugh and Hayne JJ said:
When the parties to an existing contract enter into a further contract by which they vary the original contract, then, by hypothesis, they have made two contracts. For one reason or another, it may be material to determine whether the effect of the second contract is to bring an end to the first contract and replace it with the second, or whether the effect is to leave the first contract standing, subject to the alteration. For example, something may turn upon the place, or the time, or the form, of the contract, and it may therefore be necessary to decide whether the original contract subsists …
In Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd[26] Taylor J said:
'It is firmly established by a long line of cases ... that the parties to an agreement may vary some of its terms by a subsequent agreement. They may, of course, rescind the earlier agreement altogether, and this may be done either expressly or by implication, but the determining factor must always be the intention of the parties as disclosed by the later agreement.'
[25] Federal Commissioner of Taxation of the Commonwealth of Australia v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35; (2000) 201 CLR 520 [22] - [23].
[26] Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd [1957] HCA 10; (1957) 98 CLR 93.
In Concut Pty Ltd v Worrell, the plurality referred to these principles, and in that case, had regard to the later agreement and the surrounding circumstances.[27]
[27] Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 75 ALJR 312 [19] - [20].
In Martech International Pty Ltd v Energy World Corporation Ltd, French J (as his Honour then was) noted that there may be cases in which what is expressed to be a variation of an earlier agreement, cannot as a matter of construction be so regarded.[28]
[28] Martech International Pty Ltd v Energy World Corporation Ltd [2006] FCA 1004 [158].
Whilst the general law provides the legal background against which the terms in cl 8 are to be construed, and to that extent may inform their construction, ultimately, the real question is one as to the proper construction of cl 8. The importance of construing the guarantee itself was confirmed by Mason, Brennan & Deane JJ in Dan v Barclays Australia Ltd[29] in a context not broadly dissimilar to this. In that case, there was a difference between the majority (Mason, Brennan & Deane JJ) and the minority (Wilson & Dawson JJ) as to the proper construction of the relevant term in the guarantee, with the minority drawing in aid of their construction[30] the distinction between rescission and variation as discussed in cases such as Tallerman.
[29] Dan v Barclays Australia Ltd (1983) 46 ALR 437, 442.
[30] Dan (448).
In the context of cl 8, the word 'replacement' is evidently used in contradistinction to 'new', and 'changed'. On ANZ's case, a 'changed' contract is a variation. A 'new' contract would appear to refer to a new contract for entirely new lending for a different purpose.
The word 'replacement', on the other hand, appears to be more apt to signify either a further agreement which rescinds and is in substitution for an earlier credit contract where funding for a particular purpose had been agreed but not advanced, or a further agreement which rescinds and is in substitution for an earlier credit contract where funding for a purpose had been advanced, but not repaid in accordance with the terms of that earlier contract. It might also be arguable that the word 'replacement', properly construed in its context, also requires the further credit contract to be in terms not previously assented to by the guarantor, or at least on terms materially different from those previously assented to by the guarantor. It would be difficult to see the commercial sense of cl 8 if a variation agreement only required consent if there were an increase in liability for the purposes of par 3 of cl 8, but a subsequent agreement involving no, or at least no material, changes to the operative terms of the credit contract previously assented to by the guarantor nevertheless required consent merely because, properly construed, it brought the earlier agreement to an end and was in substitution for it. On the facts of this case, that particular question would be moot because the 16 November 2009 letter agreement contained materially different terms from those previously assented to by the respondent.
Nevertheless, most relevantly for present purposes, the word 'replacement' does in the context of cl 8, in my view, at least signify an agreement involving the rescission or abrogation of the earlier credit contract constituting the Guaranteed Arrangements. For the reasons set out below, the 16 November 2009 letter agreement effected a variation rather than a rescission.
The surrounding circumstances included that the facility had already been established by the 25 October 2006 letter agreement as amended by the 2 November 2007 letter agreement, and that by cl 3 of the General Conditions, Vivaldi had been obliged to pay the money owing under the facility by the varied termination date of 28 February 2008. Vivaldi had not done so, and was thereby in default: cl 10 of the General Conditions. Although by cl 11(2)(a) of the General Conditions ANZ had the power to terminate the facility agreement by reason of the default, it had not done so. Instead, it had made a series of offers to extend the termination date.
In this context, ANZ sent Vivaldi the 16 November 2009 letter of offer.
The 16 November 2009 letter of offer was sent under cover of ANZ's letter of 17 November 2009. Reading the two together, ANZ offered not to terminate the facility and require payment of the money due under it, in consideration for Vivaldi executing the 16 November 2009 letter of offer. Vivaldi accepted the offer by executing and returning the 16 November 2009 letter of offer. The resulting contract was evidenced by the terms of ANZ's covering letter of 17 November 2009 and the 16 November 2009 letter of offer. The preceding letter of 16 November 2009 (referred to in [189] above) was not a contractual document. In any event, whilst it may have reflected ANZ's view as to the legal effect of the 16 November 2009 letter of offer upon acceptance, it has no bearing upon the proper construction of the resulting contract.
The substantive effects of the 16 November 2009 letter agreement were to increase the facility limit by capitalising unpaid interest and to extend the time for repayment; to increase Vivaldi's net costs of continuing to borrow the money previously advanced through changes to the interest rate and the imposition of an annual line fee; and to require certain payments to be made, effectively in advance, to cover interest and line fee obligations. In its detail, it stated again many of the terms which had appeared in the earlier agreements. It is open to infer that the restatement was for the convenience of having all those terms collected within one document, and is not necessarily an indication that the parties intended a rescission of the earlier agreement. Although the general conditions referred to in the 16 November 2009 letter of offer were the 5th edition rather than the 4th edition, the 5th edition contained in large measure a restatement of all the terms in the 4th edition, albeit with some changes and some changes to the numbering of clauses.
The fee payable on execution of the 16 November 2009 letter of offer was described as a 'Loan Extension Fee'. The 16 November 2009 letter agreement did not in terms provide for the termination of the existing agreement, or for the advance of any new funds.
The above matters indicate that the 16 November 2009 letter agreement did not expressly or impliedly 'rescind the earlier agreement altogether'[31] or 'bring [the earlier agreement] to an end'.[32] Rather, it effected a variation. That conclusion is confirmed by the 'no other variation' provision in the 16 November 2009 letter agreement which provides that except as 'indicated above', it is not proposed to 'vary' any of the 'other conditions of the Facilities', the implication being that the changes being made were in the nature of a variation.
[31] Tallerman (144).
[32] Sara Lee [22].
Accordingly, I would uphold ground 1.
However, for ANZ, ground 1 is essentially only a stepping stone to ground 2 and, ultimately, ground 3. For the reasons indicated below, the appeal should not succeed on either grounds 2 or 3.

The construction of cl 8 contended for by ANZ and the discussion of that contention

ANZ's submissions centred upon par 3 of cl 8. ANZ contends that the words 'my liability' in the phrase 'increases my liability' are to be read as a reference to the 'Liability' provision on the Details page, which provides, '[m]y liability under this Guarantee is limited' to (in effect) the value of the City Beach property as set out in cl 2.2(b). As noted earlier, cl 2.2(b) provides, in effect, that 'despite' cl 2.1, the 'maximum amount recoverable' from the guarantor under the guarantee will not exceed (in effect) the sale proceeds of the City Beach property.
Accordingly, on ANZ's construction, as the 16 November 2009 letter agreement did not affect the maximum amount recoverable from the respondent under cl 2.2(b) of the Guarantee, the 16 November 2009 letter agreement was a variation which did not increase the respondent's liability within the meaning of cl 8 of the Guarantee.
A number of observations may be made about this contended construction. First, the second part of cl 8 refers to changes to the 'Guaranteed Arrangements in a way which increases the [guarantor's] liability'. The focus, accordingly, is on the 'Guaranteed Arrangements' being changed. On ANZ's construction, there could never be a change to the Guaranteed Arrangements in a way which increased the guarantor's liability because whatever changes might be made to the Guaranteed Arrangements, the maximum amount would remain fixed under cl 2.2(b) of the Guarantee. Such a construction would ordinarily not be the preferred construction given that generally an instrument is to be construed so that no clause is rendered nugatory or superfluous.[33]
[33] Chapmans Ltd v Australian Stock Exchange Ltd (1996) 67 FCR 402, 411; Sigiriya Capital Pty Ltd v Scanlon [2013] NSWCA 401; (2013) 97 ACSR 183 [30]; see also Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 [71] in the statutory context.
Secondly, the words 'the increased liability' in par 3(b) appear to refer to the increased liability the subject of par 3(a). Paragraph 3(b) of cl 8 refers to the 'increased liability' which 'the law … says [the guarantor] will not be liable for'. As ANZ acknowledged,[34] this appears to be intended to refer to the statutory and general law, including in the latter case the equitable principle referred to in Ankar,[35] set out in [200] above.
[34] Appeal ts 28 - 29.
[35] Ankar (559 - 560).
Strictly speaking, where that principle applies, the guarantor is discharged from any obligation under the guarantee, and not just to the extent of the increased liability. However, the practical effect will generally be the same - the guarantee has no application to the varied credit contract.[36] If par 3(b) has in contemplation variations to the underlying credit contract to which the Ankar principle may apply, it tends to undermine the proposition that the words 'my liability' in par 3(a) refer to the guaranteed maximum amount recoverable under cl 2.2(b), and not to changes to the underlying credit contract.
[36] cfAdisan Ltd v Irwin [2015] NSWCA 217 [43] ‑ [44] read in the context of [18], [21].
Thirdly, par 6 of cl 8 contemplates that a guarantor may agree both to a change to any existing Guaranteed Arrangement that increases the guarantor's liability and, in addition (by par 6(c)), to an increase in the dollar amount which fixes the maximum amount recoverable under the Guarantee pursuant to cl 2(a). This indicates that at least in relation to a specified dollar amount being set as the maximum amount recoverable, the guarantor may agree to increase the guarantor's liability within the meaning of par 3 of cl 8, without increasing the dollar amount which fixes the total amount recoverable. Although par 6 of cl 8 makes no specific reference to cl 2.2(b), there is no reason to suppose that, objectively, the parties intended that the position would be different where the guarantor has limited the amount of its liability pursuant to cl 2.2(b).
Subject to one further matter mentioned in [243] below, the foregoing considerations indicate that the words 'my liability' in par 3(a) of cl 8 are not, properly construed, a reference to the maximum amount recoverable under cl 2.2(b) of the Guarantee.
It is unnecessary to attempt to state exhaustively the scope of par 3 of cl 8 for present purposes. The words 'changes the Guaranteed Arrangements in a way which increases my liability' appear, at least, to refer to variations increasing the extent of the customer's obligations to ANZ beyond those in the Guaranteed Arrangements accepted by the guarantor as establishing the scope of the guarantor's liability. Accordingly, read as a whole, par 3 of cl 8 refers, at least, to changes to the Guaranteed Arrangements which by their nature and without factual inquiry into their effect, increase the extent of the customer's obligations to ANZ, in respect of which the law under the Ankar principle says the guarantor would only be liable under the Guarantee, albeit subject to the maximum amount recoverable under cl 2.2(b), if the guarantor consented to the change.
The other matter is this. Counsel for ANZ orally advanced an argument at the hearing which did not feature in the written submissions. The contention was to the effect that cl 8 is to be construed with, and subject to, cl 4. It is contended that cl 4, by its chapeau and second dot point, meant that the guarantor agreed to remain bound despite anything which, under the general law, might otherwise discharge the guarantee, including the principle referred to in Ankar. Reference was made in particular to Brighton v Australia and New Zealand Banking Group Ltd.[37]
[37] Brighton v Australia and New Zealand Banking Group Ltd [2011] NSWCA 152.
Although in Brighton the guarantee had a clause (it was cl 4 in that guarantee too) in the same terms as cl 4 in this case, the decision in Brighton does not assist ANZ. The court in Brighton was not dealing with the proper construction of a clause in terms of cl 8 in this case.
In Brighton, the guarantors' principal argument was that the guarantees contained an obligation of confidentiality which was a condition of the contract of the guarantee; the obligation was breached; and the guarantee was therefore terminable at the instance of the guarantors.[38] Alternatively, based on the principle discussed in Ankar, the guarantors alleged that there was an implied term in the guarantee that the bank would 'not engage in any conduct whereby "it prejudices the rights of the guarantor by conduct which at law, as a matter of principle, gives rise to the guarantor's rights to be discharged from the guarantee"'.[39] On this alternative construction, the breach of confidentiality was a breach of the alleged implied term.
[38] Brighton [40].
[39] Brighton [89].

The principal judgment in Brighton was delivered by Campbell JA, with whom Giles and Hodgson JJA agreed. Campbell JA found that, under the guarantee, the alleged obligation of confidentiality was a term affecting two guarantors, but not two other guarantors.[40] Insofar as the obligation of confidentiality was breached, it was, properly construed, of a nature that its breach would have entitled the affected guarantors to terminate the guarantee, but for the operation of cl 4.[41] His Honour found that the effect of cl 4 was that it expressly negatived a consequence which would otherwise follow if the obligation of confidentiality was a condition of the contract of guarantee, and that accordingly any such obligation could not be construed as a condition.[42] His Honour also found that there was no implied term of the kind alleged, because it would be inconsistent with the express term in cl 4.[43]
[40] Brighton [41].
[41] Brighton [84].
[42] Brighton [102].
[43] Brighton [110].
The essential difference between this case and Brighton is that Brighton concerned the effect of cl 4 upon what would otherwise have been the operation of the guarantee under the general law. That is not this case. This case concerns the proper construction of cl 8 and not the extent to which cl 4 might affect the operation of the guarantee if cl 8 were not a contractual term of the guarantee.
It is correct to say that the instrument of guarantee must be read as a whole, and that cl 8 must be read with cl 4.[44] However, cl 4 is a provision of general application and cl 8 is a separate clause addressing, specifically, the liability of the guarantor in circumstances where there are 'new' 'Guaranteed Arrangements', and where existing 'Guaranteed Arrangements' are 'replaced' or 'changed'. On ANZ's case, 'changed' means varied pursuant to a variation, and ANZ accepts that par 3(b) of cl 8 directs attention to the general law, including the Ankar principle.
[44] Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109.
There is nothing in the terms of cl 8 to suggest that it is subservient to cl 4 or in the terms of cl 4 that indicates that it has paramountcy over cl 8. Ordinarily, the latter, specific, provision would be construed as applying to the circumstances encompassed within its specific field of operation in the event of any inconsistency between it and the general provision.[45] On ANZ's case, cl 8 applies only to binding agreements to vary the principal contract. The rule in Ankar is not (at least arguably) confined to cases where there is a binding variation to the underlying credit contract.[46] Accordingly, cl 4 may well apply to negative the effect of the Ankar principle in relation to arrangements between the creditor and debtor which do not constitute binding variations. However, insofar as the question is whether the Guarantee applies to binding contractual variations, ordinarily the generality in cl 4 would yield to the particular operation of cl 8. (As noted in [262] below, there may however be one possible area where cl 4 might shade the intended scope of operation of cl 8, but it is not material to the disposition of this appeal.)
[45] Dan (441); Chapmans Ltd v Australian Stock Exchange Ltd (1996) 67 FCR 402, 411; Sigiriya Capital [30]; William Sindall plc v Cambridgeshire County Council [1994] 1 WLR 1016, 1024; see also Refrigerated Express Lines (Australasia) Pty Ltd v Australian Meat and Livestock Corporation (1980) 29 ALR 333, 347 in the statutory context.
[46] See Re Darwen and Pearce [1927] 1 Ch 176, 183; O'Donovan and Phillips, 'Modern Contract of Guarantee', loose leaf edition [7.300].
For these reasons, ANZ's construction of cl 8 should not be accepted. Paragraph 3(a) of cl 8 is not, properly construed, referring to the limitation on the guarantor's liability under cl 2.2(b). That conclusion is confirmed by, but not dependent upon, the rule of construction that the liability of the surety is strictissimi juris and that the contractual provisions in the Guarantee should be construed in favour of the surety.[47]

Conclusion on ground 2

[47] Ankar (561).

ANZ contended that ground 2 of the appeal turned upon its suggested construction of the Guarantee.[48] Accordingly, ground 2 should be dismissed.
[48] ANZ's written submissions, pars 47 ‑ 61.
Having said that, I should add the following observation. The judge appears not only to have rejected ANZ's construction,[49] but appears also to have found that the Ankar principle, as an independent principle of law, itself applied to discharge the respondent's liability under the guarantee.[50] I would respectfully disagree with that conclusion.
[49] Primary reasons [156].
[50] Primary reasons [162].
The Ankar principle is of relevance as part of the general legal background against which the instrument of guarantee may be construed,[51] and insofar as cl 8 properly construed is taken as referring to the general law including the Ankar principle. However, its assistance in construing cl 8 does not result in the Ankar principle operating as a principle of law to discharge the guarantee. Rather, the question was whether the 16 November 2009 letter agreement changed the Guaranteed Arrangements in a way which required the guarantor's consent pursuant to par 3 of cl 8 of the Guarantee. The application of cl 8, properly construed, is considered further under ground 3.

Ground 3

[51] See the authorities collected in Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2014] WASCA 164 [153].

Ground 3 of the appeal challenges the primary judge's finding[52] that ANZ had not discharged the onus for showing that the changes effected by the 16 November 2009 letter agreement were insubstantial and did not detrimentally affect the respondent's liability under the Guarantee.
[52] Primary reasons [162].
ANZ's substantive contention was that the 16 November 2009 letter agreement was, in effect, beneficial to the respondent. The submission was that the new facility limit was merely the same amount as the debt, including capitalised interest, for which the respondent was otherwise liable arising out of the operation of the 25 October 2006 letter agreement as amended by the 2 November 2007 letter agreement, and that the new termination date (30 August 2010) merely gave Vivaldi the opportunity to take advantage of any possible firming of the property market that might eventuate by 30 August 2010.
ANZ's submissions proceeded on the basis that in the period from the termination date under the 2 November 2007 letter agreement (28 February 2008) to 16 November 2009, ANZ had merely failed to exercise its rights, which it was entitled to do without impairing its security under the Guarantee, by virtue of cl 4 and in particular the first dot point.[53] Even assuming that to be correct, the 16 November 2009 letter agreement changed the Guaranteed Arrangements (constituted by the 25 October 2006 and 2 November 2007 letter agreements) by extending the term and increasing the facility limit from $11,121,000 to $11,487,000 and adding provisions requiring:
(a)the payment of a loan extension fee of $30,000;
(b)the payment of interest at the Swap Rate plus a line fee of 3.5% per annum as opposed to interest at the Swap Rate plus a margin of 2% per annum, ie, a net additional funding cost of 1.5% per annum; and
(c)quarterly payments of a minimum of $210,000, broadly speaking in advance, to cover the line fee and the servicing of interest.
[53] Appeal ts 19.
At the very least, the terms in (a), (b) and (c) above were provisions which by their nature and without factual inquiry into their effect increased Vivaldi's obligations to ANZ beyond those previously agreed by the respondent, and could not be regarded as beneficial in nature to the respondent.
Nor in any event (if it be relevant), did ANZ prove that in fact the changes effected by the 16 November 2009 letter agreement were overall beneficial to the respondent. If looked at prospectively from the time of the acceptance of the 16 November 2009 letter of offer, the respondent avoided the chance that she would be called upon to pay the whole of the amount then outstanding, but there is no basis for inferring that the respondent would have recovered less under her right of indemnity against Vivaldi at that point in time than she would have recovered if there had been a default during the currency of the 16 November 2009 letter agreement for which she then became liable under the Guarantee. If looked at with the benefit of hindsight, the avoidance of that chance had no value because Vivaldi, effectively immediately, defaulted once the 16 November 2009 letter agreement had been executed, and ANZ relied on that default amongst others to claim under the Guarantee.
Underlying ANZ's submissions appeared to be the concern that on the one hand, the respondent had no valid commercial reason not to execute the Guarantor's Acknowledgement in respect of the 16 November 2009 letter agreement, and on the other hand, that if ANZ were to lose the benefit of the respondent's guarantee, the loss would ultimately not be outweighed by any benefits derived from the additional obligations undertaken by the borrower under the 16 November 2009 letter agreement as secured by the remaining securities. Neither consideration has any bearing on the proper construction of the Guarantee or the disposition of the appeal.
Accordingly, although the judge's finding is vulnerable because the Ankar principle had no independent application beyond its assistance in the question of the construction of cl 8, the substantive contention underlying ground 3 could not, in any event, be established.
For these reasons, the appeal should be dismissed.
By way of post‑script, I would add the following. There might be a question as to whether par 3(a) of cl 8, properly construed, applies to variations involving merely an extension of time. In Ankar,[54] the plurality referred to 'variations' and 'varying' the principal contract, as well as to 'extensions of time' and 'extending' time. It is unnecessary to reach a concluded view as to whether the plurality regarded an extension of time variation as wholly assimilated or subsumed within the one principle, the content of which applied to all kinds of variations without discrimination. It is sufficient to observe at this point that the discharge of the surety as a result of a contract extending time for repayment has been said to rest upon the proposition that the extension interferes with the rights of the surety to sue the principal debtor in the name of the creditor, and the question of any prejudice to the surety is irrelevant.[55] A question might be whether a variation which effected no changes other than merely extending time for payment, and on that account interfered with the surety's rights to sue the principal debtor, would be covered by the phrase 'increases my liability' in par 3(a) of cl 8. On that particular point, perhaps the express provision in the second dot point of cl 4 might assume some significance. This appeal may be disposed of for the reasons given earlier, without regard to whether, had there been no other changes, the contractual extension of time given under the 16 November 2009 letter agreement would in and of itself be a variation which increased the guarantor's liability within the meaning of par 3(a) of cl 8.

The notice of contention

[54] Ankar (558 - 560).

[55] Swire v Redman and Holt (1876) 1 QBD 536, 541; Petty v Cooke (1871) LR 6 QB 790, 794 - 795; Ward v The National Bank of New Zealand Ltd (1883) 8 App Cas 755, 763; Marubeni [214] - [216].

In relation to its notice of contention, the respondent contends:[56]
The misleading or deceptive conduct here is the representation made in the 25 October 2006 facility schedule, that there was a termination date, of 30 July 2007, subsequently extended in the 2 November 2007 facility schedule, that there was a termination date of 28 February 2008. Where the ANZ position in this appeal is that there was no 'termination date'.
[56] Respondent's written submissions, par 45, BB 45.
Whilst it is not strictly necessary to deal with the notice of contention, in my view it has no merit. Insofar as the facility schedules stated a termination date for the facility, the statements were accurate. It is entirely another question as to whether, on the proper construction of the Guarantee, the respondent was liable under the Guarantee in the events which subsequently happened.

Conclusion

The appeal should be dismissed.

IMPORTANT
BEFORE YOU SIGN	THINGS YOU MUST KNOW
* READ THIS GUARANTEE DOCUMENT AND THE CREDIT CONTRACT DOCUMENT.	* Understand that, by signing this guarantee, you may become personally responsible instead of, or as well as, the debtor to pay the amounts which the debtor owes and the reasonable expenses of the credit provider in enforcing the guarantee.
*You should also read the Information statement: 'THINGS YOU SHOULD KNOW ABOUT GUARANTEES.'	* If the debtor does not pay you must pay. This could mean you lose everything you own including your home.
*You should obtain independent legal advice.	* You may be able to withdraw from this guarantee or limit your liability. Ask your legal adviser about this before you sign this guarantee.
You should also consider obtaining Independent financial advice. You should make your own Inquiries about the credit Worthiness, financial position and honesty of the debtor.	* You are not bound by a change to the credit contract, or by a new credit contract, that increases your liabilities under the guarantee unless you have agreed in writing and have been given written particulars of the change or a copy of the new credit contract document.