Foreword

As part of the research for this seminar we researched all New Zealand guarantee cases since 2000 by putting the search term “guarant*” into LINX.  It came up with over 600 hits.  The telling feature of this was that the number of hits of cases in the last three years was over 250.  This demonstrates yet again that when times get tough, guarantors inevitably are called upon.  This is likely to continue for at least the next year or longer.   

It has been over eight years since the last guarantees seminar was held.  In that time there have been some significant developments.  There has been the Court of Appeal decision in Hogan v Commercial Factors Ltd [2006] 3 NZLR 618 in which the Court of Appeal considered undue influence and the House of Lords decision in Royal Bank of Scotland v Etridge (No 2) [2002] 2 AC 773.  

There have also been two important Court of Appeal decisions on the issue of the capacity in which a director of a company signs a guarantee which have clarified the law from the previous position.

Last, but certainly not least, is the Court of Appeal decision in Bartle v GE Custodians Ltd (2010) 9 NZBLC 102,946.  Even though the case mainly concerned oppression under the Credit Contracts and Consumer Finance Act 2003, it is still of significant relevance to guarantors.  This decision is under appeal to the Supreme Court.

On the legislative front, the Property Law Act 2007 has been enacted.  This repealed the Contracts Enforcement Act 1956 and contains the formal requirements for a contract of guarantee.  This seminar is therefore timely as there have been a number of developments over the past eight years that the profession needs to be aware of.

Bruce Stewart QC

Michael Lenihan