Helou v Mulligan Pty Limited

The appeal concerned a personal guarantee provided by Mr Helou to Mulligan Pty Limited (the company) for monies that were "due and payable". The company subsequently entered into a Deed of Administration, which imposed a moratorium on enforcement proceedings against the company. The central dispute revolved around whether the debt remained "due and payable" for the purposes of the guarantee, and consequently, whether the guarantee remained operative during the administration. The matter was heard in the Court of Appeal of New South Wales.

The primary legal issue before the Court of Appeal was to determine the effect of the moratorium imposed by the Deed of Administration on the personal guarantee. Specifically, the court had to consider whether the phrase "due and payable" in the guarantee encompassed debts that were subject to a statutory stay on enforcement proceedings, or if the moratorium effectively suspended the operation of the guarantee itself.

The Court of Appeal reasoned that the Deed of Administration did not extinguish the debt, but rather suspended the company's liability to pay and the creditors' right to enforce that liability. The court held that the debt remained "due and payable" in a legal sense, even though its immediate enforcement was prohibited. Therefore, the personal guarantee, which was triggered by the debt being "due and payable", remained operative. The court applied the principle that a moratorium on enforcement does not alter the underlying contractual obligations or the existence of a debt.

The appeal was dismissed.