Citicorp v Charlotte Rose and Kris Rose

The dispute before the Supreme Court of New South Wales, Commercial List, involved Citicorp Australia Limited (the plaintiff) and Charlotte Rose and Kris Rose (the defendants). The plaintiff sought to recover possession of a property and to enforce a guarantee provided by the defendants in relation to a loan facility. The defendants sought to resist the claim, alleging that the plaintiff had breached its duty of care owed to them as guarantors.

The central legal issue for determination by the Court was whether the plaintiff had breached its duty of care to the defendants by failing to exercise reasonable care in the conduct of its dealings with the mortgagor, thereby causing loss to the defendants as guarantors. Specifically, the Court had to consider the scope of the duty of care owed by a lender to a guarantor and whether the lender's actions in managing the loan facility fell below the standard of reasonable care.

In its reasoning, the Court applied the principles established in cases concerning the duty of care owed by a creditor to a guarantor. The Court found that while a lender owes a duty of care to a guarantor, this duty is generally limited to ensuring that the security is not impaired by the lender's wilful or negligent acts. The Court concluded that the plaintiff had not breached this duty, as its actions in managing the loan facility were not negligent and did not cause the impairment of the security. The Court found that the loss suffered by the defendants was a consequence of the mortgagor's own default and the inherent risks associated with the loan facility, rather than any breach of duty by the plaintiff.

The Court ordered that judgment be entered for the plaintiff, with possession of the property granted and the guarantee enforced.