A court ruled in December that Bank of Queensland could recover possession of two mortgaged Sunshine Coast properties supporting a personal guarantee given in favour of a family trust by owner Kym Schultz .
As someone with no direct involvement with the principal transaction, she swore being unaware she could be liable for more than the sum secured, namely for interest and costs associated with any mortgagee sale. Neither did she know, she claimed, that she could be made bankrupt if the debt was not paid in full.
An appeal was filed against the trial judge’s ruling to seek further consideration of these arguments.
To pause the bank action pending hearing of the appeal, she made an application to the Court of Appeal for a “stay”.
That contest was brought on before appeal judge Justice Robert Gotterson on an urgent basis. He agreed with Schultz that the bank’s lending officer’s explanations at the time she signed the securities supported her contentions.
He ruled there was a “significant issue on which the applicant may advance a serious argument” in connection with her state of knowledge as a “volunteer” guarantor.
Whether or not he should grant the stay depended though, on competing considerations of disadvantage that each party would suffer as a result.
In the end he decided that the costs of the sale, the triggering of potential capital gain tax liability and the facility for the bank to get an early hearing of the appeal all favoured the granting of the repossession reprieve that Ms Schultz sought.
The substantial appeal will be heard at the end of April.
Schultz v Bank of Queensland Ltd [2015] QCA 019 Gotterson JA 24/02/2015
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