Regency (Showerscreens & Wardrobes) Pty Ltd v Nadinic

The Full Court of the Federal Court of Australia was asked to consider the scope of a guarantee provided by Regency (Showerscreens & Wardrobes) Pty Ltd for a contract with Nadinic. The primary issue was whether the guarantee applied to a subsequent building contract entered into by Nadinic and a third party. The court was also required to determine if the Ankar principle could be applied to relieve the guarantor of its obligations under the guarantee.

The court held that the guarantee did indeed apply to the subsequent building contract as it was sufficiently connected to the original contract. The court emphasised that the guarantee was broad enough to cover any indebtedness that Nadinic incurred in relation to the original project, which included the subsequent contract. The Ankar principle, which allows a guarantor to be relieved of liability if the principal debtor is discharged due to circumstances outside the guarantor's control, was not applicable in this case. The court found that there were no such circumstances that could absolve Regency of its obligations under the guarantee.

The court ultimately determined that Regency (Showerscreens & Wardrobes) Pty Ltd remained liable under the guarantee for the amounts owed by Nadinic under the subsequent building contract. The appeal was dismissed, and the decision of the primary judge was upheld. The court found that the guarantee was valid and enforceable, and that the Ankar principle did not apply to relieve Regency of its obligations.