Mr Gary Williams was the director of a company that intended to set up a solar farm in the Hunter Valley in NSW. In 2018, he guaranteed a loan of $3mil taken out by the company. The company defaulted, and the lender sued for recovery of the money owing after the sale of the land that secured the loan. Mr Williams was one of the defendants and unsuccessfully denied liability (Delaney Advertising & Media Pty Ltd v Upper Hunter Solar Pty Ltd [2025] NSWSC 1321).

Mr Williams denied liability on a number of bases. The first was that there was a collateral agreement that he would only be liable as a guarantor after the guarantees given by the other guarantors had been exhausted. He filed an affidavit in the proceedings that set out the conversation that was the basis of the collateral agreement. The conversation took place at a meeting at a hotel on the Gold Coast. His Honour did not accept that the conversation took place as described by Mr Williams for the following reasons:

1. The documentary evidence entered into at around the time of the 21 November meeting was inconsistent with the making of the collateral agreement claimed by Mr Williams.
2. His Honour accepted the argument of the other side that it would be most usual for such promises to be made because of the uncertainty about when and in what circumstances the guarantee could be called on.
3. Mr Williams was an unreliable witness in that he claimed in his affidavit that he did not receive independent legal advice despite the fact that a certificate of advice was produced to the court.

Secondly, Mr Williams argued that he had no liability under the guarantee because, on a reading of the documents, the Loan Contract to which the Guarantee and Indemnity refers is not the Deed of Loan under which the lender advanced the money. Mr Williams relied on good law that holds that if there is ambiguity between a loan document and a guarantee it should be decided in favour of the guarantor. His Honour relied on High Court authority to hold that he did not consider that there was any serious doubt that the Loan Contract to which the Guarantee and Indemnity referred was the Deed of Loan entered by the lender and the borrower. The authority relied on by His Honour was that:

“The guarantee or indemnity should first be construed according to the ordinary principles of construction” (Bofinger v Kingsway Group Ltd (2009) 239 CLR 269).

The final argument if Mr Williams related to the notice of demand. The claim was that the demand was defective because it required payment in 21 days rather than the 30 days referred to in the agreement. His Honour agreed that the notice was defective, but that did not assist Mr Williams because it was sufficient for the plaintiff to establish that it suffered loss and damage because of the default, and it had done this.

The lesson from the decision is the importance of understanding transactions being entered into to avoid the risk and burden of litigation.