Gunnersens P/L v Harding

The matter of Gunnersens P/L v Harding was before the court to determine the existence of an equitable interest in property and the enforceability of a commercial credit guarantee. The plaintiff, Gunnersens P/L, sought to establish an equitable interest in a property owned by the second defendant, arguing that an oral express trust existed, as well as an equitable charge under a commercial credit guarantee. The second defendant contested the existence of both the trust and the charge, arguing that the commercial credit guarantee was not properly executed and therefore not binding.

The primary legal issues before the court were whether an oral express trust could be established, whether an equitable charge over property existed under the commercial credit guarantee, and whether the guarantee itself was valid and enforceable. The court had to consider the principles of equity, the construction of the documents, and the requirements for the formation of a contract of guarantee. Specifically, the court needed to determine if the signature of both the debtor and the guarantor was necessary for the guarantee to be binding, and whether an incomplete form could still give rise to a binding agreement.

The court found that the plaintiff's claim for an equitable interest based on an oral express trust was not substantiated. The court held that the second defendant's informally created trust was enforceable based on estoppel principles. Regarding the commercial credit guarantee, the court held that the guarantee was not binding as it was incomplete and did not meet the necessary formalities. The court concluded that the signature of both the debtor and the guarantor was required for the formation of a contract of guarantee and that the incomplete form did not satisfy this requirement. As a result, the plaintiff's claim for an equitable charge under the guarantee was dismissed.

The court ordered that the equitable trust created by the second defendant was enforceable, but no equitable charge existed under the commercial credit guarantee. The plaintiff's claim for an equitable interest in the property was dismissed. The second defendant's trust was recognised and enforceable against the plaintiff.