ARTICLE · 31 JANUARY 2024

A Cautionary Tale – Last Minutes Amendments To Loan Documents With Guarantees

Vincent Young

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In Lee v ATL (Australia) Pty Ltd [2023] NSWCA 327, the NSW Supreme Court considered whether a guarantor was liable under a loan deed that was amended by a side letter between the borrower...

AustraliaLitigation, Mediation & Arbitration

David Greenberg

Victoria Caldwell

In Lee v ATL (Australia) Pty Ltd [2023] NSWCA 327, the NSW Supreme Court considered whether a guarantor was liable under a loan deed that was amended by a side letter between the borrower and the lender (but not the guarantor). The Court decided that as a matter of contractual construction, the guarantor was not liable to the lender at all.

This case is a cautionary tale for all lenders. Always ensure that a guarantor signs off on changes to the underlying facility documents (including all last minute changes) to avoid losing the benefit of a guarantee.

Facts

On 13 March 2017, Mr Lee and three others signed a loan deed as guarantors for the borrower. Under the loan deed, interest accrued from when the lender advanced funds to the borrower.

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