A guarantor under a debt restructure for two luxury boats has won the first stage of her fight against Suncorp who claim the whole of the $700k balance debt against the $38k write-down balance she claims only to have been owing.

Kylie Wharington signed a personal guarantee covenanting to pay the agreed write-down to 58% of the original $1.23 million Suncorp debt in respect of her companies’ vessels Wild Thing and Finesse.

The settlement deed dated November 2011 specified that if the agreed amount was paid by 25 May 2012, the balance of the boat debt and the guarantors’ liability for it would be extinguished.

When that date arrived all but about $40k had paid into Suncorp’s coffers.

On 29 May 2012, Suncorp issued a demand for payment of all of the original debt barring what it had received, namely $740k.

However since then, further sums totalling about $45k were paid to Suncorp albeit from different sources but in respect of the same loan.

Suncorp refused to release its security over the vessels. In October 2012 it sued Wharington and in June 2013 filed an application for summary judgement.

Because there was no ‘time of the essence’ provision in the settlement deed, Wharington argued it was open for her to make the final payment any time up until either party had elected to terminate it.

This argument found favour with the court which noted “it is not a settlement deed of the type incorporating an acknowledgement of debt and the mechanism for entering judgement for the full amount on default being made “.

Having found against the bank that its customer had an arguable case, Suncorp’s summary judgement application was dismissed leaving the borrower with the opportunity to defend the matter at a forthcoming trial and also to air her further defence that the provision requiring payment of the whole of the balance of the original debt constituted an illegal penalty.

Suncorp Metway Advances Corporation Pty Ltd v Wharington [2013] QSC 201 Brisbane Mullins J 6/08/2013