In ING Bank (Australia) Ltd v Leagrove Pty Ltd & Anor; ING Bank (Australia) Ltd v Stafford & Ors [2011] QCA 131 the Queensland Court of Appeal rejected a claim by a guarantor that the guarantee was ineffective as the guarantor both borrowed the $8.25 million from ING Bank and guaranteed that loan.

ING Bank contended that Leagrove as trustee could guarantee the debts of Leagrove in its own right to ING Bank. ING argued that Leagrove as trustee as guarantor was acting in a different capacity to Leagrove in its own right as debtor. There was no reason to consider that Leagrove as trustee in acting as guarantor and mortgagor was acting outside the terms of the trust.

Judge McMurdo decided that whilst Leagrove, acting in its own right, and Leagrove as trustee were not different entities, Leagrove entered into the loan in one capacity and guaranteed the loan and gave a mortgage over trust land in another capacity. Leagrove as trustee held legal title to the assets of the trust and owed a fiduciary duty to the beneficiaries of the trust. The fact that Leagrove as debtor and Leagrove as trustee were acting in such different capacities as debtor and trustee meant that Leagrove as trustee was not prohibited from guaranteeing Leagrove’s debt, at least whilst acting within the terms of the trust and consistent with its fiduciary duty.

Judge McMurdo concluded that:

The terms of the trust deed authorised Leagrove as trustee to enter into a guarantee. The agreement to extend Leagrove’s loan facility appeared to be for the benefit of the trust. There was no evidence to the contrary. Nor was there evidence that, in entering into the guarantee and in mortgaging trust land, Leagrove was breaching the terms of its trust or compromising its fiduciary duty as trustee. In the absence of such evidence, the only rational inference in the circumstances of this case was that Leagrove as trustee was acting for the benefit of and within the terms of the trust in entering into the guarantee and mortgage. I am satisfied it was entitled as trustee to guarantee Leagrove’s debt to ING Bank and to mortgage trust property.

Some clients have recently asked us about the debt collection and mortgage enforcement services provided, direct to clients, by Langes+.

Langes+ provides debt collection and mortgage enforcement legal services nationally. Our clients include financial institutions which operate in all States and Territories as well as one of Australia’s leading insurers. Our services include:

• Provision of default notice templates and other notice templates.
• Issuing default notices on behalf of clients
• Debt collection
• Goods mortgage enforcement
• Real estate mortgage enforcement

A number of our lawyers and other staff members have been engaged in this type of work for decades, and are experts in relation to all of the applicable laws.

We provide our clients with access to an online system, known as CliNet, which allows them to easily provide instructions and track the progress of their matters. We can readily customise this system, in-house, to meet the needs of particular clients.

To discuss the debt collection and mortgage services Langes+ can provide, or to arrange a no-obligation meeting and demonstration, please call Shannon Adams on 08 8168 9601 or Joshua Annese on 08 8168 9604.

Langes+ foundation partner Richard Farago retired from the firm on 30 June. For more than 30 years Richard has been a tenacious litigation lawyer with a strong client commitment.

We wish Richard all the best for his future plans.