The Co-operative Building Society of South Australia v Andrew Kephala, Peter John Cowley and Edcom Real Estate Pty Ltd No. SCGRG 302 of 1991 Judgment No. 3632 Number of Pages 4 Guarantee and Indemnity

The Co-operative Building Society of South Australia sued Andrew Kephala, Peter John Cowley, and Edcom Real Estate Pty Ltd. The building society lent $1.232 million and $286,700 to Bervale Pty. Ltd., which failed to repay the loans. The defendants guaranteed the repayments. The building society sold the properties used as security and sought to recover the outstanding amounts from the defendants. The building society relied on certificates from its officers to establish the amounts owed, as per the terms of the guarantee agreements. The first defendant, Kephala, contested the calculations, arguing that the building society had not followed the correct procedures in realizing the security and applying the proceeds. The court determined that the certificates provided prima facie evidence of the amounts owed, and that the terms of the guarantee agreements did not permit the first defendant to challenge the calculations. The court found in favor of the building society and ordered the first defendant to pay the amounts certified.

The court's decision hinged on the interpretation of the guarantee agreements and the certificates provided by the building society's officers. The court found that the terms of the guarantee agreements allowed the building society to use the certificates as evidence of the amounts owed, and that the first defendant was not permitted to challenge the calculations. The court also found that the building society had correctly applied the proceeds of the security sales to the loans, and that any errors in the calculations were in favor of the defendants. The court ordered the first defendant to pay the amounts certified, plus interest and costs. The second and third defendants were in default, and judgments were entered against them.