Lender not liable for borrower's business failure

When a lender sought summary judgment pursuant to a personal guarantee, the guarantor counter-claimed against the lender for breach of "fiduciary duties" owed to him.

In this case¹, the guarantor alleged that the lender breached its fiduciary duty to him in four ways:

• under the Fair Trading Act;
• by breach of trust and fiduciary duty;
• through knowing assistance; and
• by deceit.

Awarding summary judgment to the creditor, the court held that, when making an advance to a borrower to purchase a business, a creditor could not reasonably be expected to provide an assessment or warranty regarding the performance of that business in the future.

The guarantor's counterclaim was struck out.

¹ ANZ National Bank Limited v Pillay HC-Auckland CIV 2009-404-001220

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