Commercial and General Acceptance Ltd v Nixon

Commercial and General Acceptance Ltd (CGA) appealed to the High Court of Australia against a decision of the Supreme Court of South Australia, which had found in favour of the respondent, Nixon. The dispute concerned the enforceability of a guarantee provided by Nixon to CGA, a finance company, in relation to a loan made to a company called A.J. Nixon Pty Ltd. CGA sought to recover the outstanding debt from Nixon personally under the terms of the guarantee.

The High Court was required to determine whether the guarantee was void for uncertainty or for failure to comply with the requirements of the *Companies Act 1962* (SA) (the Act). Specifically, the court considered whether the guarantee, which referred to "all moneys which now are or which hereafter may become owing or payable by the Borrower to the Company," was sufficiently certain in its terms to be legally binding. Furthermore, the court examined whether the guarantee, by its nature, constituted a "charge on book debts" within the meaning of s 100 of the Act, and if so, whether it had been properly registered.

The High Court, in a joint judgment, held that the guarantee was not void for uncertainty. Their Honours reasoned that the phrase "all moneys" was sufficiently defined by the context of the guarantee and the relationship between the parties, encompassing present and future debts. Regarding the registration requirements, the court found that the guarantee did not create a charge on book debts in the sense contemplated by s 100 of the Act. Instead, it was a personal covenant by Nixon to pay the debt, not a security interest over the company's assets. Therefore, registration under s 100 was not required.

The appeal was allowed, and the judgment of the Supreme Court of South Australia was set aside. The High Court ordered that judgment be entered for Commercial and General Acceptance Ltd against Nixon for the amount of the outstanding debt, together with interest and costs.