What is the Collateral damage in a security agreement?

This week's TGIF considers Credit Suisse AG, Sydney Branch v Springsure Property Holdings Pty Ltd (in liquidation) (receivers and managers appointed) [2017] QSC 142, in which the court considered whether real property acquired by the guarantor after the execution of the agreement with the lender formed part of the collateral.

BACKGROUND

In 2012, the plaintiff granted a finance facility to a coal mining services company (borrower) pursuant to a Guarantees Facility Agreement (Facility Agreement).

In February 2014, the parties:

• amended the Facility Agreement to join the defendant as a guarantor of the borrower's obligations to the plaintiff; and
• entered into a General Security Agreement (Security Agreement), where certain property of the defendant was charged as security for its obligations as guarantor.