Australia and New Zealand Banking Group Ltd v Manasseh

In the case of Australia and New Zealand Banking Group Ltd v Manasseh, the court was tasked with determining the scope of a guarantee provided by the defendant, Manasseh, in relation to a subsequent credit contract. The dispute arose between the plaintiff, Australia and New Zealand Banking Group Ltd, and the defendant, Manasseh, regarding whether Manasseh's guarantee extended to a credit contract entered into after the original guarantee was given, without Manasseh's explicit consent. The legal issues before the court encompassed whether the subsequent credit contract constituted a replacement or a variation of the original credit contract, and if the subsequent credit contract had effectively rescinded the earlier one, thereby triggering the 'Ankar' principle concerning variations to credit contracts.

The court examined the contractual documents and correspondence between the parties, including the 25 October 2006 letter agreement, the 2 November 2007 letter agreement, and the subsequent communications up until 30 November 2009. It was established that the 16 November 2009 letter agreement, comprising several documents, was intended to be an exhaustive statement of all the terms and conditions governing the facility. This was contrasted with the 2 November 2007 letter agreement, which required the continuation of the 25 October 2006 letter agreement. The textual differences and the surrounding circumstances, such as ANZ's covering letter of 16 November 2009, supported the conclusion that the 16 November 2009 letter agreement was intended to replace the earlier agreements. The court noted that it was standard banking practice to consolidate contractual terms into a single document and that ANZ had protected its position by making any replacement agreement subject to a condition precedent, which was waived in this case.

The court concluded that the 16 November 2009 letter agreement was not a mere variation of the earlier agreements but rather a replacement intended to capture all relevant contractual terms in one document. Therefore, the subsequent credit contract did not fall under the original guarantee as it was not consented to by Manasseh. The court's reasoning was based on the objective interpretation of the contractual documents and the surrounding circumstances, leading to the outcome that the guarantee did not extend to the subsequent credit contract.

The final orders of the court were that the guarantee provided by Manasseh did not apply to the subsequent credit contract, and the bank was not entitled to recover the outstanding debt from Manasseh under the guarantee.