Rhodes Bay Apartments Pty Ltd v Gay

Rhodes Bay Apartments Pty Ltd sought to enforce a guarantee against Gay, who had guaranteed an advance to a third party. The dispute arose in the Supreme Court of Victoria. The primary issue before the court was whether an advance had been made at all and, if so, whether it was made to the person named in the guarantee. Additionally, the court had to determine whether the lender's costs concerning the guarantor's lapsing notice in relation to the lender's caveat were costs "relating to and in connection with...any variation or discharge" of a security, as defined in the loan agreement.

The court found that the guarantee was triggered only if an advance was made to the named borrower. The court examined the evidence and concluded that no advance had been made to the borrower. Consequently, the guarantee did not apply. Furthermore, the court held that the lender's costs related to the lapsing notice were not costs "relating to and in connection with...any variation or discharge" of a security. Therefore, they were not recoverable under the terms of the loan agreement.

The Supreme Court of Victoria ruled in favour of Gay, finding that no advance was made to the borrower and that the lender's costs were not recoverable. The court's decision effectively absolved Gay of any liability under the guarantee.