Delany Advertising & Media Pty Ltd (ACN 003 390 396) v Upper Hunter Solar Pty Limited (ACN 616 233 268)

[2025] NSWSC 1321

Supreme Court

New South Wales

Medium Neutral Citation:

Delany Advertising & Media Pty Ltd (ACN 003 390 396) v Upper Hunter Solar Pty Limited (ACN 616 233 268) [2025] NSWSC 1321

Hearing dates:

16 October 2025

Date of orders:

7 November 2025

Decision date:

07 November 2025

Jurisdiction:

Equity

Before:

Hmelnitsky J

Decision:

On or before Thursday, 13 November 2025, the plaintiff is to bring in short minutes of order specifying the amount of the judgment including interest calculated up to that date

Catchwords:

GUARANTEE AND INDEMNITY — Scope of liability of guarantor — Construction — Collateral agreement — Where plaintiff lent moneys to first defendant — Where second and fourth defendants each entered into a contract of guarantee and indemnity in respect of the loaned moneys — Where second defendant alleges an oral collateral agreement with the plaintiff whereby the plaintiff stated it would enforce guarantees given by the other guarantors first — Whether such an agreement was made — Whether the agreement would be inconsistent with the terms of the contract of guarantee and indemnity

GUARANTEE AND INDEMNITY — Contract of guarantee — Construction — Whether contract of guarantee and indemnity correctly refers to the principal deed of loan

GUARANTEE AND INDEMNITY — Rights of guarantor against creditor — Right to notice of default or demand — Where contract of guarantee and indemnity provides for liability under the indemnity ‘on demand’ and liability under the guarantee when guarantor receives a ‘default notice’ — Whether liability arises under guarantee or indemnity — Whether a default notice is a condition precedent — Whether purported demand complied with the requirements of the default notice

GUARANTEE AND INDEMNITY — Actions to enforce guarantee — Guarantors liability — Whether plaintiff postponed enforcement of guarantee

Legislation Cited:

National Consumer Credit Protection Act 2009 (Cth) Sch 1, ss 88, 90, 94 and 95

Cases Cited:

Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424; [2004] HCA 28

Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549; [1987] HCA 15

Annandale Street Holdings Pty Ltd v Luux Pty Limited [2023] NSWSC 177

Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; [2009] HCA 44

Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133; [1919] HCA 64

Morton v Kim [2019] NSWCA 273

Tanevski v Trenwick International Limited [2003] NSWCA 374

Tricontinental Corporation Ltd v HDFI Ltd (1990) 21 NSWLR 689

Texts Cited:

James O’Donovan, Lawbook Co, Modern Contract of Guarantee (online at 4 November 2025)

Perry Herzfeld and Thomas Prince, Interpretation, (3rd ed, 2024, Lawbook Co) 

Category:

Principal judgment

Parties:

Delany Advertising & Media Pty Ltd (ACN 003 390 396) (Plaintiff)
Upper Hunter Solar Pty Limited (ACN 616 233 268) (First Defendant)
Gary Alexander Williams (Second Defendant)
Munich Partners Pte Ltd (Fourth Defendant)

Representation:

Counsel:
B May (Plaintiff)
B Haines (Second Defendant)

Solicitors:
Dempseys Law Firm (Plaintiff)
de Mestre and Company Solicitors (Second Defendant)

File Number(s):

2024/355027

Publication restriction:

Nil

JUDGMENT

1. In 2018, the plaintiff lent $3,000,000 to the first defendant, a company of which the second defendant, Mr Williams, was a director. The borrower’s obligations under the loan agreement were secured by (among other things) a mortgage over some land which was acquired using the borrowed funds. At the time the loan agreement was entered into, Mr Williams and two other directors of the borrower also executed a document entitled ‘Guarantee and Indemnity’ whereby they agreed to guarantee certain obligations and indemnify the plaintiff against certain losses in connection with the ‘Loan Contract’.

2. The borrower defaulted on the loan. The plaintiff obtained default judgment against the borrower (who is the first defendant in these proceedings) and has recovered some of its loss by selling the mortgaged land. The plaintiff now seeks to recover the balance of its loss from Mr Williams under the Guarantee and Indemnity. It seeks judgment for the balance of the amount owing plus contractual interest, together with costs.

3. Mr Williams resists judgment on several grounds. His principal contention is that he agreed to provide a guarantee only on the understanding that the plaintiff would first exhaust its claims against other guarantors. He says that a binding collateral agreement to this effect was reached during a meeting held on the Gold Coast prior to any documents being signed.

4. He also contends that on a proper construction of the Guarantee and Indemnity, he has no liability. He contends that the ‘Loan Contract’ to which the Guarantee and Indemnity refers is not the ‘Deed of Loan’ under which the plaintiff advanced funds to the borrower.

5. He further contends that no ‘default notice’ within the meaning of the Guarantee and Indemnity has ever been served on him. He points out that the notice on which the plaintiff relies was one that required payment within 21 days whereas the Guarantee and Indemnity contemplates that any such notice would give him 30 days to pay.

6. Finally, Mr Williams advances an argument that the plaintiff’s delay between issuing the default notice and commencing proceedings constitutes the ‘postponement’ of proceedings such that he is not liable to pay the ‘Guaranteed Moneys’. He points out that his liability only arises when both he and the borrower fail to remedy the default notice and when the plaintiff does ‘not postpone or waive enforcement proceedings.’

Facts

7. The plaintiff plans and buys media for TV networks, radio networks, outdoor companies and digital advertisers. Its sole director and majority shareholder is Mr Rohan Delany. From time to time, the plaintiff also engages in business lending.

8. Mr Michael Delany is Mr Rohan Delany’s brother. For convenience, and without intending any disrespect, I will mostly refer to the Delany brothers by their first names. Michael has a mortgage brokering business. Between February 2016 and August 2019, he was also a director and 50% shareholder of a company that carried on a finance brokering business under the name Forte Lending. The other director and shareholder was Mr Jonathan Cattana. From time to time, Michael would bring lending opportunities to Rohan who, if interested, would cause the plaintiff to enter into lending arrangements.

9. Mr Williams has known Michael and Mr Cattana since about 2017. The businesses with which Michael and Mr Cattana were associated had arranged finance facilities for businesses associated with Mr Williams’ wife from time to time. One such facility had been provided by the plaintiff. Mr Williams had given a personal guarantee in relation to that arrangement.

10. Mr Williams has a long background in businesses associated with mining and agriculture, particularly in the Hunter Valley region. In September 2017, he was approached by Mr Frederick Suhren of Munich Partners Pte Ltd (Munich Partners) about developing a potential solar farm site in the Hunter Valley. Mr Suhren introduced Mr Williams to two of his colleagues, Mr James Walker and Mr Jeffrey Beaumont. Mr Walker was the CFO of Munich Partners.

11. Mr Suhren told Mr Williams that Munich Partners was interested in land in the Hunter Valley owned by Vinegold Projects Pty Ltd (Vinegold). Vinegold was a company of which Mr Williams and his wife were, at various points, directors and shareholders.

12. The company which Munich Partners came to use for the purpose of the solar farm venture was the first defendant, Upper Hunter Solar Pty Ltd (Upper Hunter), of which Mr Williams was a director. Mr Williams explained that in order for Upper Hunter to participate in the project, it would first need to acquire the land from Vinegold and that it could only do so using vendor finance of $626,000.

13. It is not at all clear to me why Munich Partners chose Upper Hunter for the purpose of its solar farm project. I can readily infer that it wanted to undertake the project through a local company, but there was no evidence as to why it chose an existing company of which Mr Williams was a director. Upper Hunter did not own the land in which Mr Suhren and his colleagues were interested. At the time, Upper Hunter was wholly owned by Zap Energy Pty Ltd which had been incorporated for a coal renewable project in Queensland that had not proceeded.

14. It appears that Munich Partners acquired Upper Hunter for the purpose of undertaking the transaction, but there was no evidence about the terms on which it did so. The only aspects of the arrangement between the interests associated with Munich Partners, on the one hand, and the interests associated with Mr Williams, on the other, that were explained in the evidence were (a) that Upper Hunter would acquire the land for the solar project from Vinegold with vendor finance and (b) that Mr Williams expected to remain as a director of Upper Hunter only to ensure that it repaid the vendor finance, after which he intended to resign.

15. Mr Williams suggested that Mr Suhren contact Michael and Mr Cattana about obtaining finance for their project. On 7 October 2018, Mr Williams himself called Mr Cattana to discuss the proposal. He also sent an email in which he outlined the broad plan to develop a solar farm. He added:

“MP have a balance sheet certified DBO Singapore at over $500mUS

As this is very small project and any borrowings less than $10mUS they look at private funding and I mentioned you guys when met [sic] in Hamburg last week.

Need to look at $2-3m max secured by freehold land and backed by MP balance sheet. Will prepay interest at 10-12% pa.”

16. The reference to the value of the Munich Partners’ ‘balance sheet’ was to its only asset of any significance, being 292kg of copper powder of 99.9999% purity.

17. There was then some correspondence between Mr Cattana and Michael, on the one hand, and Mr Walker and others on behalf of Munich Partners, on the other. Mr Williams was copied into this correspondence. There was also some correspondence between Mr Williams, Michael and Mr Cattana, including about the value of the land.

18. At least at the outset, only Munich Partners was prepared to offer a guarantee. However, on 12 November 2018 a ‘Risk Overview’ prepared by Forte Lending noted that Mr Williams would give a personal guarantee. The document noted that he and his wife had assets totalling $37,950,000 and liabilities totalling $6,360,000.

19. The parties seem to have agreed on – or at least corresponded about – a term sheet at about this time, but it was not in evidence. An email from Mr Walker to the solicitor for the plaintiff on 13 November 2018 included the following:

“Very early on, I confirmed with Forte that there would be no personal guarantees provided and as such that is why it is not included in the term sheet signed today.”

20. Nevertheless, by 15 November the parties were in discussions about Mr Williams providing a personal guarantee. On that day, Mr Walker wrote to the solicitor for the plaintiff in response to various queries. He said that some of the queries had already been discussed with Mr Williams and Mr Cattana and, for completeness, included them in his email. The email included the following:

“4. Gary Williams personal guarantees: Please advise how many other PG’s has Gary given at the moment and to what amount?

JDW: Forte have Gary’s personal balance sheet so all assets and liabilities are already known.

Gary: No other with Delaney (Jonathan and Michael have details)

5. Please advise if the Munich Partner director currently in Australia will give a personal guarantee?

JDW: No. We believe we have offered more than enough security already – refer below.”

21. Mr Walker added:

“In summary, I think Mike and Jonathan have structured this loan well in that there is more than enough security being offered. Your client has a registered security over the land, a personal guarantee from Gary (who has significant assets, a good name and [a long] history with Forte) and a fixed charge over a US$10m asset.”

22. Mr Wiliams was copied on this email.

The Gold Coast meeting

23. The parties met at the Sheraton Mirage in the Gold Coast on 21 November. The Delany brothers were holidaying there at the time. The attendees were the Delany brothers, Mr Williams and Mr Walker.

24. According to Mr Williams, he and Rohan had the following discussion:

“Rohan: Would you be involved in the project?

[Mr Williams]: Only as vendor of the Land and providing vendor finance. To that end I would be a Director of [Upper Hunter] if my vendor funding was in place, to ensure it was repaid, but I would take no active role otherwise.

Rohan: So any security you give would be subordinate to the security provided by Munich Partners.

[Mr Williams]: So you would not pursue me until you had pursued Munich Partners?

Rohan: That is correct. Munich Partners would be our main focus.”

25. He says that there was then this discussion:

“Rohan: Well, Michael, what do you think?

Michael: I believe it is good to do as a good project and Munich Partners have the balance sheet to support the guarantees for any loan by you. Further, Gary will sit behind with his vendor finance. Given Gary’s past performance [as] a borrower which had always met funding commitments and repayments you should have comfort in Gary’s involvement.

Rohan: I am very interested in the copper powder and this will provide strong security as well for our funding. We will be looking to Munich Partners for security ahead of the land and not Gary’s guarantee.

[Mr Williams]: That has to be the case as I do not want to be guaranteeing a Munich Partners assets, project or debt.

[Rohan:] We will be looking first and foremost to Munich Partners. James, are you onboard with that?

[Mr Walker]: Absolutely, we do not expect Gary to vendor fund and then guarantee another loan in which he has no interest in. Munich Partners will sit in front and be there for all security and guarantees as required.

Rohan: The underlying security is the Munich Partners copper assets.”

26. Both Rohan and Michael deny that these discussions took place. Both were cross-examined about their denials. Rohan, it is fair to say, had a less distinct recollection of what was said at the meeting but he remained certain that the discussion as recounted by Mr Williams had not taken place. Michael was adamant that it had not taken place and pointed out that it would be highly unusual to rely on a guarantee that was subject to the kinds of conditions suggested by Mr Williams.

27. I will resolve the question of what was said at the Gold Coast meeting later in these reasons.

28. Following the meeting, the solicitor for the plaintiff forwarded a detailed letter of offer. The letter was addressed to the directors of Upper Hunter. It was sent to Mr Walker but copied to various others, including Mr Williams. It stated:

“We have been instructed by the intending mortgagee to make a loan offer of $3,000,000 to you.

The term of the loan as agreed is twelve (12) months at an interest rate of 20.00% pa reducing to 12.5% pa if paid on the due date. Interest payments are in advance and are to be paid by direct deposit to the lender’s nominated account.

The security offered is:

1. A registered first mortgage over property located in the Hunter Valley being Lots 9, 68, 73, 75, 101, 102, 111 in DP 750969 and Lot 891 in DP 590976.

2. A fixed charge, registered in Singapore, over one bottle of copper powder being Bottle 11 in Lot Number 0000312-d held by IGAS Research, Goslar, Germany owned by the parent company Munich Partners Pte Ltd (a company registered in Singapore) and parent of the wholly owned subsidiary Upper Hunter Solar Pty Ltd.

3. Corporate Guarantee – Munich Partners Pte Ltd

4. Personal Guarantees by Gary Alexander Williams, Frederik Suhren and Jeffrey Kevin Beaumont.”

29. The letter set out a total of 17 matters that were required on settlement, including ‘directors’ personal guarantees and indemnities’. It also recommended that the directors seek independent legal advice about the offer.

30. The letter of offer was duly accepted by Mr Walker, whose email enclosing the signed acceptance was copied to Mr Williams.

Loan documentation

31. The solicitor for the plaintiff then proceeded to document the arrangement. On 29 November 2018, the plaintiff as mortgagee and Upper Hunter as mortgagor entered into a deed entitled ‘Deed of Loan’. It contained the following recitals:

“A. The Borrower has requested the Lender to lend to the Borrower the maximum sum of $3,000,000.00 for the purpose of financing the development of land known as 700 Yarraman Road, Wybong, NSW Folio Identifier: Lots 9, 68, 73, 75, 101, 102, 111 in DP 750969 and Lot 891 in DP 590976 in the State of New South Wales (the Land).

B. The Lender has agreed to advance to the Borrower the maximum sum of $3,000,000.00 (Principal Sum) upon having the repayment of the Principal Sum with interest in the following manner.

C. The Mortgagee has agreed to provide security for the loan by way of a first mortgage over the Land.”

32. The deed contained a schedule entitled ‘Epitome of Mortgage’ which included the following:

“1 Epitome of Mortgage

1.1 Mortgagee

(a) Name: DELANY ADVERTISING & MEDIA PTY LIMITED ACN003 390 396

(b) Address: 11 Carrington Avenue, Mosman, NSW 2088

1.2 Mortgagor

(a) Name: UPPER HUNTER SOLAR PTY LIMITED ACN616 233 268

(b) Address: Suite 7, 2-4 Northumberland Road, Carringbah, NSW 2229

1.3 Guarantors

(a) Name: Federik [sic] Suhren

Address: 56 Goodwood Way, Canning Vale, WA 6155

(b) Name: Jeffrey Kevin Beaumount [sic]

Address: Suite 1, 88 Cumberland Street, The Rocks NSW 2000

(c) Name: Gary Alexander Williams

Address: 44 North Avoca Parade, North Avoca NSW 2260

1.4 Date of loan

(a) Date: 29 November 2018

1.5 Principal

(a) $3,000,000.00

1.6 Term

(a) Years n/a

(b) Months 12

1.7 Date of repayment

(a) Date 28 November 2019

…

1.12 Higher rate of interest

(a) 20% per annum

1.13 Lower rate of interest

(a) 12.5% per annum

…

1.19 Collateral Agreements

(a) Mortgage & Memorandum of Common Provisions AG685415S

(b) Deed of Charge

(c) Corporate Guarantee Munich Partners Pte Ltd

(d) Personal Guarantee by Gary Alexander Williams, Frederik Suhren and Jeffrey Kevin Beaumont.”

33. Also on 29 November:

1. Upper Hunter executed a Mortgage of the land in favour of the plaintiff.

2. Munich Partners executed a Deed of Charge and Assignment in relation to the security provided by it to the plaintiff.

34. Munich Partners executed a ‘Deed of Guarantee and Indemnity’. Mr Suhren, Mr Beaumont and Mr Williams executed a document entitled ‘Guarantee and Indemnity’ in counterparts. The Guarantee and Indemnity contained some details on the first page entitled ‘Details of Guarantee’. In the case of the document executed by Mr Williams, the ‘Details of Guarantee’ were as follows:

“THE LENDER IS:

DELANY ADVERTISING & MEDIA PTY LIMITED (ACN 003 390 396) of 11 Carrington Avenue, Mosman, NSW 208

THE GUARANTOR Joint and severally is:

(a) Name: Frederik Suhren

Address: 56 Goodwood Way, Canning Vale, WA 6155

(b) Name: Gary Alexander Williams

Address: 44 North Avoca Parade, North Avoca NSW 2260

(c) Name: Jeffrey Kevin Beaumont

Address:

THE LOAN CONTRACT IS:

The Deed of Loan and Mortgage dated 2018 between the Lender as the lender and Mortgagee and UPPER HUNTER SOLAR PTY LIMITED (ACN 616 233 268) of Level 5, 56 Pitt Street, Sydney, NSW, 2000 as the Borrower and Mortgagor.”

35. Clause 2 was headed ‘What are you guaranteeing?’. It provided:

“You guarantee to us:

(a) the payment of the Guaranteed Moneys; and

(b) the performance of the Borrower’s obligations under the Loan Contract and any Future Loan Contract; and

(c) the performance of the Borrower’s obligations under any mortgage or insurance policy that we require from the Borrower”.

36. The expression ‘Guaranteed Moneys’ was defined in clause 2.2. The definition included ‘the unpaid balance of the Loan Contract and any Future Loan Contract’. It also included various other obligations of the borrower under or in connection with the ‘Loan Contract’. The expression ‘Loan Contract’ was defined in the Details of Guarantee set out at paragraph [34] above.

36. Clause 4 was headed ‘When do you become liable to pay us the guaranteed money?’. It relevantly provided as follows:

“4.1 When Do You Become Liable to Pay Us the Guaranteed Money?

You become liable to pay us the Guaranteed Money when both you and the Borrower fail to remedy a default notice we send you and we do not postpone or waive enforcement proceedings.

4.2 When can we send you a default notice?

If you are in default under this Guarantee, we may send you a default notice. The notice will tell you:

(a) what the default is;

(b) what you have to do to remedy the default; and

(c) that you have to remedy the default within 30 days from the date of the notice.

4.3 When are you in default?

You are in default under this Guarantee if:

(a) the Borrower does not make a repayment in full by the due date under the Loan Contract or any Future Loan Contract;

(b) the Borrower does not repay any of the Guaranteed Moneys to us when due;

(c) the Borrower is in default under the Loan Contract, any Future Loan Contract or mortgage;

(d) you breach any term of this Guarantee, any mortgage or any insurance policy that we require;

(e) this Guarantee or any mortgage that we require is unenforceable according to its terms;

(f) the insurer terminates any insurance policy we require;

(g) you fail to renew on terms that satisfy us any mortgaged property insurance that we require;

(h) you apply to become a bankrupt or a creditor applies to make you a bankrupt; or

(l) you seek to make an arrangement with your creditors under a law dealing with bankruptcy.

4.4 We may perform your obligations at your cost

If you fail to do anything that this Guarantee or any mortgage or any insurance policy requires you to do, we may:

(a) do the thing as required;

(b) do it in your name; and

(c) do it at your expense and add the expense to the balance of the Guaranteed Moneys.”

38. Clause 7 contained an indemnity. It provided as follows:

“7. THE INDEMNITY YOU ALSO GIVE US

7.1 When do you indemnify us

You indemnify us against any claim, action, damage, loss, liability, cost, expense or payment that we pay, suffer or incur in respect of any of the following:

(a) The Borrower’s failure to pay to us any of the Guaranteed Moneys when due.

(b) The Borrower’s failure to comply with the Loan Contract, any Future Loan Contract, any mortgage or any insurance policy we require.

(c) Your failure to comply with this Guarantee, any mortgage or any insurance policy that we require.

(d) Our exercising or not exercising any rights, powers, authorities, remedies and discretions under the Loan Contract, any Future Loan Contract, this Guarantee, any mortgage or any insurance policy that we require.

7.2 Indemnity for irrecoverable Guaranteed Moneys

If we cannot recover any of the Guaranteed Moneys (or any moneys that would be Guaranteed Moneys if they are recoverable):

(a) from the Borrower; or

(b) from you as Guaranteed Moneys,

you indemnify us against any claim, action, damage, loss, liability, cost, expense or payment that we pay, suffer or incur arising out of the non-payment of those moneys.

7.3 Indemnity payable on demand

You must pay us all amounts that we state you owe us under any indemnity in this clause 7 immediately on demand.”

39. Although Mr Williams said in his affidavit that he obtained no independent advice about the Guarantee and Indemnity, the plaintiff tendered a certificate of independent legal advice executed by Mr Williams and a solicitor, Mr Wall. Mr Wall was the solicitor who witnessed Mr Williams’ execution of the Guarantee and Indemnity. The certificate was dated 28 November 2018. It stated that the effect of the Guarantee and Indemnity had been explained to Mr Williams.

40. It is not in dispute that Upper Hunter defaulted on the loan. There were some repayments but they became sporadic and then ceased.

41. The plaintiff alleges that on 6 February 2020, it wrote to Mr Williams enclosing a default notice dated 5 February 2020. This notice was not in evidence.

42. The plaintiff’s solicitor sent a letter of demand to Mr Williams on 10 September 2020 (the 10 September 2020 letter). It relies on this letter as constituting a default notice within the meaning of clause 4 of the Guarantee and Indemnity. The letter referred to the earlier default notice (which, as already mentioned, was not in evidence) and stated that as both the borrower and Mr Williams had failed to comply with default notices, both were ‘now liable to pay [the plaintiff] the Guaranteed Moneys’. It stated:

“The Lender demands full payment of AU$3,879,295.48 plus interest and legal recover [sic] costs (which shall continue to accrue), from you within 21 days from the date of this.” (emphasis in original)

43. The plaintiff commenced these proceedings by statement of claim filed on 25 September 2024. The delay between the 10 September 2020 letter of demand and the commencement of proceedings was not explained, but there is no defence under the Limitation Act 1969 (NSW).

44. Default judgment was obtained against the first defendant on 19 March 2025. The plaintiff obtained possession of the land as mortgagee. The land was sold for a price of $2,024,500 in late October 2022. I was informed that there were attempts to serve Munich Partners but that, in the end, the claim was discontinued against that party.

45. I was also informed that the other individual guarantors are now bankrupt.

Was there a collateral agreement?

46. I am not at all persuaded that either Michael or Rohan said the things attributed to them at the Gold Coast meeting. My reasons for reaching that conclusion are threefold.

47. First, the documentary evidence surrounding the 21 November meeting is completely inconsistent with any such representations or promises having been made. By 21 November, the plaintiff was seeking personal guarantees. By 23 November, it was clear that Mr Williams and others had agreed to provide personal guarantees. There was no mention in any contemporaneous correspondence, either before or after their Gold Coast meeting, of Mr Williams’ guarantee being subordinated to any other guarantee or security. To the contrary, Mr Williams was copied into correspondence (including the letter of offer and its signed acceptance) which made it very clear that he would provide a personal guarantee of the borrowing. If Mr Williams believed that he was only doing so on some contingent or deferred basis and if he believed that the Delany brothers had agreed to such a course, he would surely have raised the issue. He was an experienced company director with a long history in business. However, he did not raise the issue.

48. Secondly, there is force in Michael’s evidence that it would be most unusual for a borrower to make representations of the kind which Mr Williams alleges. Such a promise would create serious uncertainty about when and to what extent the guarantee could be called upon.

49. Thirdly, it is relevant to note that Mr Williams’ affidavit evidence was shown to be unreliable on the question of whether he received independent legal advice before executing the guarantee. When this matter is taken together with the other matters to which I have referred, it tends to cast doubt on his evidence that Michael and Rohan agreed that his guarantee would be deferred.

50. I am therefore not persuaded that the discussion at the Gold Coast meeting took place in the terms described by Mr Williams.

51. Even if I am wrong about what was said at the Gold Coast meeting, the collateral agreement for which Mr Williams contends would not avail him.

52. The Guarantee and Indemnity provided for a joint and several guarantee by each individual guarantor of Upper Hunter’s obligations under the ‘Loan Contract’. Clause 13.2 provided that each guarantee and each indemnity was an additional, separate and independent obligation and that no guarantee or indemnity limited any other guarantee or indemnity. Clause 13.3 provided that the plaintiff was entitled to enforce the guarantee ‘without first enforcing any other guarantee or mortgage’.

53. The Guarantee and Indemnity also provided in clause 5.3 that any action taken to enforce the guarantee ‘does not have the effect of releasing [each Guarantor] from this Guarantee or terminating this Guarantee without our final release…’. Clause 11.2 contained an acknowledgement that ‘[each Guarantor has] not entered into the Guarantee in reliance on any representation or warranty from us.’

54. The collateral agreement for which Mr Williams contends would be entirely inconsistent with the Guarantee and Indemnity. It is impossible to reconcile the terms of the Guarantee and Indemnity with the terms of the collateral agreement which Mr Williams alleges.

55. In Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133; [1919] HCA 64, Isaacs J (with Rich J agreeing) said at 145-146:

“The main contract here, when utilized to form the consideration for the collateral contract, must be taken exactly as it is. Its provisions do not change according as it is considered as an independent contract or as a consideration for the collateral contract. A principle that must govern the bargain of a contractual promise made in consideration of entering into the main contract is that the parties shall have and be subject to all (not some only) of the respective benefits and burdens of the main contract. When the collateral promise is truly consistent with the main contract, that principle has full play. The main contract is not then interfered with. The collateral contract alters, as every contract must, the contractual relations of the parties; but it does not alter, and from the simple statement of the bargain is not intended to alter, the contractual relations which are established by the main contract. When both are worked out, it may be that in the final outcome the parties are in the same position as if those contractual relations had been varied. But the practical result cannot affect the independence and legal effect of each contract; and that is what we are here concerned with.”

56. This principle precludes Mr Williams from relying on the collateral agreement which he alleges, even if he is otherwise correct about what was said at the Gold Coast meeting on 21 November 2018.

The ‘Loan Contract’ issue

57. Mr Williams’ contention is that the ‘Loan Contract’ described in the Details of Guarantee, which I have set out at paragraph [34] above, is not the Deed of Loan entered into by the plaintiff and Upper Hunter. He points out that the expression ‘Loan Contract’ was defined as the ‘Deed of Loan and Mortgage’, whereas the borrowing agreement between the plaintiff and Upper Hunter was entitled ‘Deed of Loan’. He also points out that counterpart of the Guarantee and Indemnity signed by him did not include the date of the ‘Deed of Loan and Mortgage’.

58. Mr Williams relies on the principle that in the case of contracts of guarantee, ambiguity should be resolved in favour of the surety. For this he cites Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549; [1987] HCA 15 at 561 (Mason ACJ, Wilson, Brennan and Dawson JJ) which provides as follows:

“At law, as in equity, the traditional view is that the liability of the surety is strictissimi juris and that ambiguous contractual provisions should be construed in favour of the surety. The doctrine of strictissimi juris provides a counterpoise to the law's preference for a construction that reads a provision otherwise than as a condition. A doubt as to the status of a provision in a guarantee should therefore be resolved in favour of the surety and so the provision should be interpreted as a condition, or perhaps as an innominate term, instead of a mere warranty.”

59. More recent authorities which have discussed this principle include: Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424; [2004] HCA 28 at [20]-[23], Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; [2009] HCA 44 (Bofinger) at [53]; and Morton v Kim [2019] NSWCA 273 at [13] (Basten and Payne JJA).

60. However, as the authors of Interpretation (3^rd ed, 2024, Lawbook Co) make clear at [29.290], the correct view according to the High Court in Bofinger is as follows:

“The guarantee or indemnity should first be construed according to the ordinary principles of construction. Where the application of those principles leaves the court with a doubt as the document’s construction, the doubt should be resolved in favour of the surety or indemnifier.” (footnotes omitted, emphasis added)

61. I do not consider that there is any serious doubt that the ‘Loan Contract’ to which the Guarantee and Indemnity referred was the Deed of Loan entered by the plaintiff and Upper Hunter on 29 November 2018. That agreement very comfortably meets the description contained in the Details of Guarantee. It is a Deed of Loan and Mortgage in that it is a deed of loan entered into by parties as mortgagee and mortgagor and which contained an epitome of mortgage. The Details of Guarantee accurately described the parties and the capacities in which they entered into the loan agreement. The failure to state the date and month of execution does not create any serious doubt as to what was being referred to.

62. In my view, the ‘Loan Contract’ to which the Guarantee and Indemnity refers is the Deed of Loan between the plaintiff and Upper Hunter dated 29 November 2018. I do not consider there to be any relevant ambiguity about this matter.

The ‘default notice’ issue

63. The plaintiff seeks judgment both in relation to the guarantee in clause 2 and the indemnity in clause 7 of the Guarantee and Indemnity. It is sufficient for it to demonstrate Mr Williams’ liability on either basis. In the light of my conclusions as to the identification of the ‘Loan Contract’ referred to in clause 2, there is no dispute that the plaintiff has suffered a loss within the meaning of clause 7.1 of the Guarantee and Indemnity. There is also no dispute that the plaintiff cannot recover its loss from Upper Hunter: clause 7.2.

64. Clause 7.3 provides that Mr Williams must pay to the plaintiff all amounts that the plaintiff states he owes it ‘under any indemnity in this clause 7 immediately on demand’. The clause specifies no formal requirements in relation to the ‘demand’ to which it refers. In my view, the 10 September 2020 letter was a demand within the meaning of clause 7.3.

65. The consequence is that the plaintiff is entitled to judgment against Mr Williams pursuant to the indemnity in clause 7 of the Guarantee and Indemnity. As such, it is unnecessary to determine whether the 10 September 2020 letter was also a ‘default notice’ within the meaning of clause 4. However, because it was argued, I will indicate my conclusions in relation to that issue.

66. Where a guarantee requires a creditor to make a demand before enforcing a guarantee, the making of the demand is essential. The position was summarised by the authors of Modern Contract of Guarantee at [10.1710] as follows:

“Whether it is necessary for the creditor to make a demand on a guarantor before enforcing the guarantee depends on the nature of the contract and the construction of its terms. The obligation under a guarantee, and therefore the cause of action against the guarantor, arise upon default by the principal debtor, unless the guarantee contains a condition precedent to liability, such as the making of a demand upon the guarantor. There is no requirement to make a demand on the guarantor unless the guarantee expressly or impliedly makes the giving of a demand a condition precedent to the guarantor’s liability.” (footnotes omitted)

67. Where a condition precedent specifies the formal requirements of a notice of demand, the creditor must comply with those requirements. It has been held that the formal requirements of such a condition must be complied with literally: Tricontinental Corporation Ltd v HDFI Ltd (1990) 21 NSWLR 689 at 705-706 (Samuels JA) and 718 (Waddell AJA).

68. A question can arise as to whether a particular requirement is to be construed as a condition precedent to the guarantor’s liability or as a promissory condition requiring there only to be substantial performance: see the discussion in Modern Contract of Guarantee at [8.120]. Adapted to the language of the Guarantee and Indemnity in this case, the question is whether the reference in clause 4.2(c) to a notice specifying a period of 30 days is to be construed as a condition precedent to the guarantor’s liability. If it is, the failure of the 10 September 2020 letter to allow a period of 30 days to remedy the default has the consequence that the letter was not a ‘default notice’ within the meaning of clause 4. If that is so, Mr Williams’ liability under clause 4 has not arisen.

69. In my view, clause 4.2 should be construed as a condition precedent to the guarantor’s liability. The three matters referred to in that clause are formal requirements that must be met in order for the guarantor’s liability to arise. Several features of clause 4 support this conclusion. First and foremost, clause 4 draws a distinction between the guarantor being in default and the failure to remedy a default notice. Clause 4.1 makes clear that the guarantor’s liability only arises when the conditions in that clause are met, including the failure to comply with a ‘default notice’ served by the creditor.

70. Clause 4.2 provides that the ‘notice will tell you’ three things, including ‘that you have to remedy the default within 30 days’. The other things that the ‘notice will tell you’ are matters that only make sense as a description of the formal content of the notice.

71. The notice on which the plaintiff relies did not tell Mr Williams that he was required to remedy the default within 30 days. Nor did it tell Mr Williams what he had to do to remedy the default; instead, it stated that he was ‘now liable to pay … the Guaranteed Moneys’. It was not, in my view, a default notice within the meaning of the Guarantee and Indemnity.

The ‘postponement’ issue

72. In circumstances where I have concluded that no default notice under clause 4.1 was actually issued, it is strictly unnecessary to deal with Mr Williams’ further submission that the plaintiff ‘postponed … enforcement proceedings’ within the meaning of clause 4.1 by delaying their commencement until about four years after notice was sent, with the consequence that no amount is now payable. However, given the matter was argued, I will indicate my conclusions on this issue.

73. It is necessary to determine what is meant by the word ‘postpone’ in clause 4.1. The expression ‘postpone’ is not defined in the Guarantee and Indemnity. However, clause 1 provides that:

“(c) words and phrases have the same meaning as in the Details of the Guarantee;

(d) words and phrases have the same meaning as in the Consumer Credit Code;

…

(h) other parts of speech and grammatical forms of a word or phrase defined in this Guarantee have a corresponding meaning”.

74. Clause 15.6 also provides that:

“If any part of this Guarantee is invalid, unenforceable or in breach of the Consumer Credit Code, it is not included in this Guarantee. The remainder of this Guarantee continue[s] in full force and effect.”

75. The expression ‘postpone’ is not defined in the Details of the Guarantee. Nor is it defined in Schedule 1 to the National Consumer Credit Protection Act 2009 (Cth) (the National Credit Code). However, the National Credit Code defines the expression ‘postponement request’ in connection with guarantees in s 94(1). That section is as follows:

(1) A debtor, mortgagor or guarantor who has been given a default notice under section 88 or a demand for payment under section 90 may, at any time before the end of the period specified in the notice or demand, request (a postponement request), orally or in writing, that the credit provider negotiate a postponement of:

(a) the enforcement proceedings …

76. The effect of a negotiated postponement is set out in s 95(1), being that a default notice under s 88 of the National Credit Code (or a demand for payment under s 90) is taken to not have been given or made.

76. These provisions of the National Credit Code suggest that any postponement of enforcement proceedings is a deferral of proceedings which both parties have consented to, not mere delay by the creditor to commence proceedings. The National Credit Code does not use the word ‘postponement’ or ‘postpone’ to refer to a creditor’s mere inaction or delay in pursuing enforcement proceedings.

77. In these circumstances, I am unable to accept the submission that the expression ‘postpone’ in the Guarantee and Indemnity means mere ‘delay’ by the creditor, as Mr Williams submits. This is especially so in the light of clause 14, which relevantly provides:

“Your obligations under this Guarantee and any mortgage that you give us are not released, discharged or otherwise affected by any of the following:

(a) the grant of any time, waiver, covenant not to sue or any other indulgence;

…

(k) any delay by us enforcing the Loan Contract, any Future Loan Contract, any mortgage or this Guarantee…”

79. Had it been necessary to determine the question, I would have found that the plaintiff had not ‘postponed’ enforcement proceedings within the meaning of clause 4.1.

Orders

80. The plaintiff is entitled to judgment on the indemnity in clause 7 of the Guarantee and Indemnity, together with interest and costs. Where costs are covered under an indemnity, an order for indemnity costs will ordinarily follow: Annandale Street Holdings Pty Ltd v Luux Pty Limited [2023] NSWSC 177 at [42] per Chen J, citing Tanevski v Trenwick International Limited [2003] NSWCA 374 at [14]-[15].

81. Interest will need to be calculated. I will direct the plaintiff to do so, whereupon I will make orders for judgment with interest and costs.

82. I therefore make the following direction:

1. On or before Thursday, 13 November 2025, the plaintiff is to bring in short minutes of order specifying the amount of the judgment including interest calculated up to that date.

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Decision last updated: 07 November 2025