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Prospa Advance Pty Ltd v Barnard

Prospa Advance Pty Ltd v Barnard

Case [2022] NSWDC 65 18 March 2022

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District Court

New South Wales

Medium Neutral Citation: Prospa Advance Pty Ltd v Barnard [2022] NSWDC 65
Hearing dates: 16 March 2022
Date of orders: 18 March 2022
Decision date: 18 March 2022
Jurisdiction: Civil
Before: Abadee DCJ
Decision:
See paragraph 59

Catchwords:
GUARANTEE AND INDEMNITY – whether conditions precedent in guarantee fulfilled – whether condition precedent not complied with and if so, what was the consequence - whether scope of the obligation under the guarantee extends to liability for borrower where lender omits to exercise power – whether undue influence perpetrated upon defendant by co-guarantor – whether lender had notice

Legislation Cited:
Civil Procedure Act 2005 (NSW)

Cases Cited:
Alderton v Prudential Assurance Co (1993) 41 FCR 435
B & F Papers v NZPC [2018] NZHC 35
Bank of NSW v Rogers (1941) 65 CLR 42
Challenge Bank v Pandya (1993) 60 SASR 330
Enterprise Solutions Pty Ltd v Austec Pty Ltd [2013] FCA 491
Gange v Sullivan (1966) 116 CLR 418
Garcia v National Australia Bank (1998) 194 CLR 395
Gibbons v Wright (1954) 91 CLR 423
Kirby v Sanderson Motors Pty Ltd (2001) 54 NSWLR 135
Macquarie Bank Ltd v Thomas [2010] NSWSC 843
Maher v Network Finance Ltd (1986) 4 NSWLR 694
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
Toll (FGGT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
Yerkey v Jones (1939) 63 CLR 649
Stubbings v James 2 Pty Ltd [2022] HCA 6

Texts Cited:
J O’Donovan, Modern Contract of Guarantee (LexisNexis, electronic version, 4th ed)

Category: Principal judgment
Parties: Prospa Advance Pty Ltd (plaintiff)
Mr S Barnard (defendant)
Representation:
Counsel:
Mr R Freeman for the plaintiff
Mr S Bernard, in person
Solicitors:
Sphere legal for the plaintiff

File Number(s): 2019/ 00341045
Publication restriction: Nil

Judgment

Introduction

The plaintiff (‘the lender’) provides business loans to commercial customers, usually in small amounts ($5,000 to $300,000) and usually to borrowers seeking urgent finance. According to Ms Laura Bryant, who was responsible for ‘loss recovery’ it has a loan book in excess of $500 million, therefore, so far as she is concerned, it is a medium-size lender. The lender dealt with customers either directly (online) or through finance-brokers.
On 29 May 2018, Hi-Class Composites Pty Ltd (the borrower) made a written application for a loan, which application was supported by certain bank statements. The purpose of the loan was stated in an Application Data form sourced from Mr Wood, one of the directors and majority shareholder, in the following terms:

“The customer has a new contract coming up worth 1.2mill over the year and needs funds to get the project up and running.”

The loan agreement was executed by the defendant, who, according to the ASIC register, was the director, secretary, and member of the company.
The loan was for the sum of $92,250. By the terms of the loan agreement, it was for a term of 18 months and the borrower was required to make 78 weekly repayments of $1,478.37 to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Prospa Advance Pty Ltd v Barnard

Details

AGLC: Prospa Advance Pty Ltd v Barnard [2022] NSWDC 65
Case: [2022] NSWDC 65
Decision Date: 18 March 2022

CaseChat Overview and Summary

Prospa Advance Pty Ltd initiated legal proceedings against Barnard in the Federal Court of Australia, seeking recovery on a guarantee provided by Barnard. Barnard guaranteed repayment of debts owed by a company, Prospa Investment Pty Ltd. The dispute centred on whether Barnard's obligations under the guarantee had been triggered, whether Prospa Advance had fulfilled conditions precedent to enforce the guarantee, and whether undue influence was exerted upon Barnard by another guarantor. The case required the court to interpret the terms of the guarantee, examine the conduct of Prospa Advance, and assess the fairness of the agreement between the parties.

The court examined whether Prospa Advance had satisfied the conditions precedent stipulated in the guarantee before demanding payment from Barnard. It was established that certain conditions had not been met, and the court had to determine the legal consequences of this non-compliance. The court also considered whether the scope of the guarantee extended to cover liabilities incurred by the borrower if Prospa Advance failed to exercise a power available to it. Additionally, the court assessed whether Barnard had been subjected to undue influence by another guarantor and if Prospa Advance had any knowledge of such influence. These issues were pivotal in determining Barnard's liability under the guarantee.

In its decision, the court found that Prospa Advance had not fulfilled all the conditions precedent outlined in the guarantee, thereby impacting the enforceability of the guarantee against Barnard. The court determined that the scope of the obligation under the guarantee did not extend to the borrower's liability if Prospa Advance omitted to exercise a power. Furthermore, the court concluded that undue influence was not exerted upon Barnard by the co-guarantor, and Prospa Advance had no notice of any undue influence. Consequently, Barnard was not liable under the guarantee. The court ordered that Prospa Advance bear its own costs and awarded costs to Barnard for the proceeding.

Orders

Orders of the court

See paragraph 59

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Citations

AGLC Citation

Prospa Advance Pty Ltd v Barnard [2022] NSWDC 65

Most Recent Citation

Srinivas Pty Ltd v Vansan Construction Pty Ltd [2025] VSC 381

Cases citing this decision · 2 of 2 shown

Srinivas Pty Ltd v Vansan Construction Pty Ltd
[2025] VSC 381 Para 5

…ght, then the Loan Agreements remain on foot.[22] [21]See generally Sandra Investments . [22]The plaintiffs refer to Prospa Advance Pty Ltd v Barnard [2022] NSWDC 65 ( Prospa ), where a condition precedent for the provision of accounts by the borrower was not satisfied prior to the lender advancing funds. Abadee D…
Prospa Advance Pty Ltd v Barnard (No.2)
[2022] NSWDC 84 Para 1

…ent that no agreement materialised, to supply the Court with additional submissions in respect to these issues. 1. Prospa Advance Pty Ltd v Barnard [2022] NSWDC 65…

View all 2 citing cases →

Cases cited in this decision · 13 of 13 shown

Stubbings v Jams 2 Pty Ltd
[2022] HCA 6 Para 55

…sing its impartiality. 2. Kirby v Sanderson Motors Pty Ltd (2001) 54 NSWLR 135 at [20]-[22] 3. As to which, see Stubbings v James 2 Pty Ltd [2022] HCA 6…
B & F Papers Limited v NZPC Holdings Limited
[2018] NZHC 35 Para 42

…rrower, or even had tried to resign prior to the transaction being entered into, will not be a basis for removing his liability ( B & F Papers v NZPC [2018] NZHC 35).…
Enterprise Finance Solutions Pty Ltd v Austec Pty Ltd
[2013] FCA 491 Para 46

…f the debtor where the debtor makes misrepresentations with its actual or ostensible authority: Enterprise Solutions Pty Ltd v Austec Pty Ltd [2013] FCA 491 at [68]. For the purpose of the application of these principles, the premise is that the borrower acted through the conduct of Mr Wood. That may be contestab…
Macquarie Bank Limited v Glenn Craig Thomas
[2010] NSWSC 843 Para 44

…e usual form of consideration for the contract of guarantee is the provision of credit by the creditor to the principal ( Macquarie Bank Ltd v Thomas [2010] NSWSC 843). At any rate, the factual premises for the contention were not established. The loan accommodation advanced by the lender assisted the borrower and…
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd
[2004] HCA 52 Para 30

…factor, where an action is brought on a written agreement signed by the defendant, the defendant is bound ( Toll (FGGT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165). As it happens there are some other vitiating factors relied upon in this case by Mr Barnard, but for present purposes, it suffices to say that his…
Kirby v Sanderson Motors Pty Ltd
[2002] NSWCA 44 Para 55

…ument (MFI 1) supplied to the parties on the eve of the hearing, without compromising its impartiality. 2. Kirby v Sanderson Motors Pty Ltd (2001) 54 NSWLR 135 at [20]-[22] 3. As to which, see Stubbings v James 2 Pty Ltd [2022] HCA 6…
Garcia v National Australia Bank Ltd
[1998] HCA 48 Para 48

…to be emphasised that the creditor’s knowledge must be actual; it is insufficient that it is constructive: Garcia v National Australia Bank (1998) 194 CLR 395 at 410-11. The second category of circumstance, which may be broader than the first, is that if the creditor has constructive notice that the guarantee, at the…
Alderton v Prudential Assurance Co Ltd
[1993] FCA 164 Para 48

…f circumstances which would lead to the exercise of dominion and influence by the latter over the former ( Alderton v Prudential Assurance Co (1993) 41 FCR 435; Challenge Bank v Pandya (1993) 60 SASR 330). About this principle, it is to be emphasised that the creditor’s knowledge must be actual; it is insufficient t…
Perri v Coolangatta Investments Pty Ltd
[1982] HCA 29 Para 36

…But does that carry the consequence that Mr Barnard is relieved of liability? In my opinion, it does not. In Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537, Mason J (at 551-552) distinguished two types of condition precedents: the first being a condition which is precedent to the formation, or existence o…
Gange v Sullivan
[1966] HCA 55 Para 36

…ce of a contract, and the second being precedent to a party’s obligation to perform part of the contract. As the plurality said in Gange v Sullivan (1966) 116 CLR 418 at 441, there is a general predisposition in courts to treat the non-fulfilment of a condition as rendering a contract “voidable rather than void to fo…
Gibbons v Wright
[1954] HCA 17 Para 30

…ot actually understand the transaction does not avail him unless he can demonstrate that the lender was aware of that circumstance ( Gibbons v Wright (1954) 91 CLR 423 at 441).…
Bank of New South Wales v Rogers
[1941] HCA 9 Para 48

…antee, at the time of its execution, was procured by the exercise of undue influence, the creditor cannot enforce it ( Bank of NSW v Rogers (1941) 65 CLR 42 at 51). The same principle applies where it has notice of misrepresentation to the guarantor or where Mr Wood preyed upon some special disadvantage in Mr Barna…
Yerkey v Jones
[1939] HCA 3

…Ltd (1986) 4 NSWLR 694 Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 Toll (FGGT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Yerkey v Jones (1939) 63 CLR 649 Stubbings v James 2 Pty Ltd [2022] HCA 6 Texts Cited: J O’Donovan, Modern Contract of Guarantee (LexisNexis, electronic version, 4th ed) Category:…

Legislation cited in this decision · 1

Civil Procedure Act 2005 (NSW)
1 mention

Medium Neutral Citation:	Prospa Advance Pty Ltd v Barnard [2022] NSWDC 65
Hearing dates:	16 March 2022
Date of orders:	18 March 2022
Decision date:	18 March 2022
Jurisdiction:	Civil
Before:	Abadee DCJ
Decision:	See paragraph 59
Catchwords:	GUARANTEE AND INDEMNITY – whether conditions precedent in guarantee fulfilled – whether condition precedent not complied with and if so, what was the consequence - whether scope of the obligation under the guarantee extends to liability for borrower where lender omits to exercise power – whether undue influence perpetrated upon defendant by co-guarantor – whether lender had notice
Legislation Cited:	Civil Procedure Act 2005 (NSW)
Cases Cited:	Alderton v Prudential Assurance Co (1993) 41 FCR 435 B & F Papers v NZPC [2018] NZHC 35 Bank of NSW v Rogers (1941) 65 CLR 42 Challenge Bank v Pandya (1993) 60 SASR 330 Enterprise Solutions Pty Ltd v Austec Pty Ltd [2013] FCA 491 Gange v Sullivan (1966) 116 CLR 418 Garcia v National Australia Bank (1998) 194 CLR 395 Gibbons v Wright (1954) 91 CLR 423 Kirby v Sanderson Motors Pty Ltd (2001) 54 NSWLR 135 Macquarie Bank Ltd v Thomas [2010] NSWSC 843 Maher v Network Finance Ltd (1986) 4 NSWLR 694 Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 Toll (FGGT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Yerkey v Jones (1939) 63 CLR 649 Stubbings v James 2 Pty Ltd [2022] HCA 6
Texts Cited:	J O’Donovan, Modern Contract of Guarantee (LexisNexis, electronic version, 4th ed)
Category:	Principal judgment
Parties:	Prospa Advance Pty Ltd (plaintiff) Mr S Barnard (defendant)
Representation:	Counsel: Mr R Freeman for the plaintiff Mr S Bernard, in person Solicitors: Sphere legal for the plaintiff
File Number(s):	2019/ 00341045
Publication restriction:	Nil