Barecall Pty Ltd v Hoban

Barecall Pty Ltd (the appellant) appealed to the Court of Appeal of New South Wales against a decision concerning the enforceability of guarantee covenants in a lease variation. The dispute arose when the appellant sought to enforce these guarantees against the respondents, who were guarantors of a commercial lease. However, two of the five guarantors had not executed the guarantee documents, leading to the central issue of whether the guarantees were enforceable against all respondents.

The Court of Appeal was required to determine whether the appellant was estopped from enforcing the guarantee covenants against the respondents, notwithstanding the failure of two guarantors to sign. Specifically, the court considered whether the appellant, through its solicitor, had made an assurance that all five personal guarantees would be executed, and whether this assurance, if unfulfilled, could give rise to an estoppel. The court also had to consider whether the knowledge of the solicitor regarding the unfulfilled assurance was to be imputed to the appellant.

The Court of Appeal reasoned that an estoppel by convention could arise where parties conduct their affairs based on a shared assumption of fact or law, and one party seeks to depart from that assumption to the detriment of the other. In this instance, the court found that the appellant, through its solicitor, had represented that all five guarantees would be executed. The solicitor's knowledge that two guarantees had not been received was imputed to the appellant. As the appellant took no action despite this knowledge and the unfulfilled assurance, it was estopped from enforcing the guarantees against the respondents.

The appeal was dismissed. The application for the adducing of fresh evidence was also dismissed with no order as to costs. The parties were directed to file additional documentation concerning the costs judgment and submissions on the appeal on costs. The making of an order for the costs of the appeal and below was stood over until the resolution of the appeal on costs.