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ARTICLE · 26 APRIL 2022

Lenders beware: Independent advice certificates not a substitute for proper due diligence

Holding Redlich
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Overview of the role independent advice certificates play in lending transactions and key takeaways from the Stubbings case.

AustraliaFinance and Banking
William Kontaxis
William Kontaxis
Amy Pun
Amy Pun
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In the recent case of Stubbings v Jams 2 Pty Ltd [2022] HCA 6 (Stubbings), the High Court of Australia provided a helpful reminder that independent advice certificates are not a tool for lenders to bypass proper due diligence. It is crucial for lenders to remain vigilant when assessing potential borrowers and guarantors, especially where those borrowers and guarantors are not well-versed financially.

In this article, we provide an overview of the role independent advice certificates play in lending transactions and key takeaways from the Stubbings case.

Purpose of independent advice certificates

It is common practice for lenders to request borrowers and guarantors to seek independent legal and financial advice before signing a loan or security agreement and to provide a signed solicitor's certificate of independent legal advice and/or a financial advice certificate to the lender.

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This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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