Legal Research
Cases
United Builders Pty Ltd v Mutual Acceptance Ltd

United Builders Pty Ltd v Mutual Acceptance Ltd

Link copied

Case Copied 7 November 1980 25 min read

Contents

On this page

HIGH COURT OF AUSTRALIA

Barwick C.J., Gibbs, Stephen, Mason and Wilson JJ.

UNITED BUILDERS PTY. LTD. v. MUTUAL ACCEPTANCE LTD.

(1980) 144 CLR 673

7 November 1980

Company

Company—Mortgage—Interest in partnership between two companies—Floating charge given by one company to the other over interest in partnership—Whether void against liquidator and other creditors for non-registration—Priority—Registration of charges—The Companies Act, 1961 (Q.), s. 100.

Decisions

November 7.
The following written judgments were delivered: -
BARWICK C.J. In this appeal from a judgment of a Full Court of the Supreme Court of Queensland, I have had the advantage of reading the reasons for judgment prepared by my brother Mason. I am in complete agreement with what he has written and find no occasion to add anything on my own behalf. (at p677)

2. I agree that, for the reasons expressed by my brother Mason, this appeal should be dismissed. (at p677)

GIBBS J. I have had the advantage of reading the reasons for judgment prepared by my brother Mason. I agree that the charge given by the appellant United Builders Pty. Ltd. ("United") on "all its right title and interest in the partnership" was not a charge on the beneficial interest of United in the various assets of the partnership, but a charge on a particular asset of United, namely the equitable chose in action constituted by its interest in the partnership, and that it was a specific and not a floating charge. I could not usefully add to the reasons given by my brother Mason for reaching this conclusion. (at p677)

2. However, although the appeal should be dismissed, it was not disputed before us that it is necessary to vary the order of the Full Court. The respondent, by a cross appeal, raised two questions. First, it was claimed, and not disputed, that the declaration made by the learned trial judge that the value of the share of United in the partnership at 25th September 1974 was $500,000 does not correctly express the apparent intention of the learned trial judge; the declaration should refer to the unencumbered value of the share. Secondly, the respondent sought to appeal against the dismissal of its counterclaim against United for $951,263.93. Before us, counsel for the respondent did not persist in that appeal but sought leave to withdraw the counterclaim and counsel for the appellants did not object to that course. (at p677)

3. I would dismiss the appeal, but would allow the cross appeal in part and vary the order of the Supreme Court accordingly. (at p677)

STEPHEN J. The issue for decision on this appeal is whether or not an unregistered charge granted by United Builders Pty. Ltd., now in liquidation, to Mutual Acceptance Ltd. over the former's interest in a partnership is "a floating charge on the undertaking or property of the company": The Companies Act of 1961 (Q.), s. 100(3)(d). If it is, the charge will, as against the liquidator and the creditors of United Builders, be void for non-registration; this…

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.

Keep reading for free

Create a free CaseChat account to read United Builders Pty Ltd v Mutual Acceptance Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [1980] HCA 43
Decision Date: 7 November 1980

CaseChat Overview and Summary

United Builders Pty Ltd (the appellant) appealed to the High Court of Australia from a decision of the Supreme Court of New South Wales. The dispute concerned the validity of a guarantee provided by the appellant to Mutual Acceptance Ltd (the respondent) in respect of a loan made by the respondent to a third party, a company known as "The Builders". The appellant argued that the guarantee was void for want of consideration.

The central legal issue before the High Court was whether the respondent had provided sufficient consideration to support the guarantee. Specifically, the court had to determine if the respondent's forbearance from exercising its rights against The Builders, in reliance on the guarantee, constituted good consideration. The appellant contended that the respondent's existing rights against The Builders were not extinguished by the guarantee, and therefore, there was no fresh consideration moving from the respondent to the appellant.

The High Court, by majority, dismissed the appeal. The majority held that the respondent's forbearance from exercising its legal rights against The Builders, which it was entitled to do at the time the guarantee was given, constituted good consideration. This forbearance was a detriment to the respondent and a benefit to the appellant, as it allowed The Builders to continue its business. The court applied the established principle that a promise to forbear from exercising a legal right, if made in good faith, is sufficient consideration for a promise. The fact that the respondent may have had other motives or that the forbearance did not ultimately benefit the appellant was irrelevant to the question of consideration.

Orders