Deane v The City Bank of Sydney

Deane brought an action against The City Bank of Sydney seeking to recover money paid by him as surety under a guarantee. The dispute concerned whether Deane was discharged from his obligations as surety due to the bank granting an extension of time to the principal debtor without his consent. The case was heard by the High Court of Australia, comprising Griffith CJ, Barton and O'Connor JJ.

The central legal issues before the High Court were whether the agreement between the bank and the principal debtor constituted a giving of time to the debtor, and if so, whether this giving of time discharged Deane from his liability as surety. The court also considered whether the contract of guarantee was partly oral and partly in writing, and if this was a question of fact for the jury.

The High Court held that the extension of the limit of the overdraft for a specified period did not amount to a giving of time that would discharge the surety. Griffith CJ reasoned that the agreement was not a binding contract to give time, but rather a permission to overdraw for a limited period, which did not preclude the bank from calling up the debt at any time. Barton and O'Connor JJ concurred, finding that the arrangement did not prevent the bank from enforcing the guarantee. The court also determined that the construction of a partly oral and partly written contract was a question of fact for the jury, and that a new trial was warranted on this basis.

The High Court ordered a new trial of the action.