New South Wales Consolidated Acts

MORATORIUM ACT 1932 - SECT 41

41 Rights and remedies of person entitled to benefit of guarantee

(1) Notwithstanding anything in this Act or in the Moratorium Act 1930 , or any Act amending the same contained, where any person has before the commencement of this Act guaranteed the payment of any money or the performance or observance of any obligation, and such payment, performance, or observance, or such guarantee was or is secured by a mortgage of land, the person entitled to the benefit of the guarantee may give to the guarantor not less than three calendar months’ notice of his intention to exercise all or any of his rights, powers, and remedies against the guarantor or against any property mortgaged by the guarantor to secure the guarantee, and after the expiration of the said period of notice the person entitled to the benefit of the guarantee may, subject to the provisions of this section, exercise such of the said rights, powers, and remedies against the guarantor and against any property mortgaged by the guarantor to secure the performance of the guarantee as he would have been entitled to exercise if this Act, and the said Act as amended, had not been passed.

(1A) Money payable by a purchaser to a vendor under a contract for the sale of land for or on account of the purchase price thereof and interest thereon shall for the purposes of this section be and be deemed always to have been money the payment whereof is secured by a mortgage of land.

(2) Any guarantor who has been given any such notice may within the time limited by the notice apply to the Supreme Court for an order under this section.
Notice of the application shall be given in the manner prescribed by rules of court to the person entitled to the benefit of the guarantee, to any co-guarantor, and to the principal debtor or person the performance or observance of whose obligation the guarantor has guaranteed.

(3) The provisions of section thirty of this Act relating to the exercise of the jurisdiction shall so far as applicable extend to any proceeding under this section.

(4) On any such application the court, if satisfied that the exercise by the person entitled to the benefit of the guarantee of such rights, powers, or remedies, or any of them, would inflict great hardship on the guarantor by reason of the operation of this Act or of any Act by this Act repealed upon his property or investments, or upon the realisation thereof, or by reason of the operation of the Farmers’ Relief Act 1932 , on any remedy of the guarantor against the principal debtor or by reason of the conduct of the mortgagee or any receiver appointed by him in or about the realisation of the mortgaged property, or by reason of any other cause whatsoever which such court in the circumstances of the case deems sufficient, may in its discretion, if in all the circumstances it thinks it desirable so to do, order that the exercise of such rights, powers, and remedies, or any of them, be deferred for such time and upon such conditions as such court shall determine or order that such conditions as such court thinks fit be imposed on the exercise of such rights, powers, or remedies, or any of them.
In determining the time for which the exercise of such rights, powers, or remedies shall be deferred the court shall (inter alia) take into consideration any depreciation in value, since the date of the guarantee, of any security given by the mortgagor or the guarantor to the mortgagee, and the prospect of recovery in whole or in part of the value of such security.

(5) The court may impose upon any party terms relating to the enforcement of rights of reimbursement or of contribution and may extend the benefit of Part 2 of this Act or of any provision thereof to the mortgagor, guarantor or any co-guarantor, and may on the hearing of the application or at any time thereafter order that any right of any party arising out of the transaction may be exercised or enforced in such manner and subject to such conditions, or that any such exercise or enforcement be deferred for such time and subject to such conditions as to it seems just having regard to all the circumstances.

(6) On any such application the court may order such notice as it deems sufficient to be given to the principal debtor or person, the performance or observance of whose obligation the guarantor has guaranteed or where satisfied that such principal debtor or person cannot conveniently be served may dispense with service thereof and proceed to hear and determine the matter.

(7) In this section the term guarantor includes any person in whom the estate of a guarantor shall have become vested under or by virtue of any sequestration order or any deed of assignment or arrangement under the provisions of any bankruptcy law for the time being in force and the personal representatives of a deceased guarantor.

(8) Where a guarantee has been given for the payment of money, upon default being made in the payment thereof upon demand or notice, nothing contained in this Act, or in any Act hereby repealed, shall prevent a demand or notice for payment from being at any time made or given so that as between the guarantor and the person entitled to the benefit of the guarantee, such demand or notice shall have the same effect as regards default as if this Act and the Acts hereby repealed had not been passed.

(9) Where a person entitled to the benefit of a guarantee can exercise any of his rights, powers, or remedies against the guarantor without obtaining the leave of the court pursuant to the provisions of section nine of this Act, this section shall not be deemed to impose on such person the obligation of giving to the guarantor the notice specified in subsection one of this section.

(10) Nothing in this Act contained shall in any of the following cases impose on a person who immediately prior to the date of commencement of the Moratorium and Interest Reduction (Amendment) Act 1931 , was liable under a contract whereby the payment of a debt secured by a mortgage of land was guaranteed, any liability to which he would not have been subject if this Act had not been passed:

(a) in any case where the mortgaged property or more than one-half in value thereof at the commencement of this Act has been sold by the mortgagee between the eleventh day of December, one thousand nine hundred and thirty-one, and the said commencement,

(b) in any case where the guarantor under a contract of guarantee is the husband or wife of the mortgagor and the mortgaged property was for a period of at least three months at any time between the commencement of the Moratorium Act 1930 , and the commencement of this Act the matrimonial home of the mortgagor and the guarantor and the principal sum owing under the mortgage at the commencement of this Act does not exceed the sum of four thousand dollars,

(c) in any case where land is vested in a person in trust for two or more persons (whether including himself or not) as joint-tenants, tenants-in-common or co-partners, and the person in whom the land is so vested mortgaged it to secure the payment of money advanced for the benefit of the persons beneficially entitled, and one or more of the persons so beneficially entitled has guaranteed the payment of such moneys whether by a covenant or stipulation in or endorsed on the deed or instrument of mortgage or by a separate instrument.

(11) Nothing in this Act or the Moratorium Act 1930-1931 , as amended by subsequent Acts, shall be construed to impair the right of a guarantor to reimbursement by a mortgagor or to contribution from any co-guarantor.

(12) This section shall apply only in respect of contracts of guarantee made prior to the commencement of this Act which were affected by the provisions of Part 4 of the Moratorium Act 1930-1931 , as amended by subsequent Acts.