Di Bello v De Costi Seafoods (Holdings) Pty Ltd

The Court of Appeal of New South Wales heard an appeal concerning a guarantee. The dispute involved Di Bello (the claimant) and De Costi Seafoods (Holdings) Pty Ltd and others (the defendants). The claimant sought to enforce a guarantee against the defendants.

The central legal issues before the court were whether a valid guarantee existed, and whether one of the defendants, Mr. De Costi, had the ostensible authority to bind the other defendants, particularly his fellow director, to the guarantee. The court also considered principles of estoppel by conduct in relation to implied or ostensible authority.

The Court of Appeal found that a contract of guarantee requires a relationship between three parties: the creditor, the principal debtor, and the surety. It distinguished between the ostensible authority of a director to bind a company and the ostensible authority of a director to bind a fellow director. The court concluded that the evidence did not establish that Mr. De Costi had the ostensible authority to bind the other defendants to the guarantee. Consequently, the appeal was allowed, the judgment of the District Court was set aside, and judgment was entered for the defendants with costs.