Tegel sought summary judgment against Mr and Mrs Arnensen as guarantors of the obligations of Coastal Cuisine NZ Limited (In Receivership). The Arnensen's argued (in reliance on the equitable doctrine of marshalling) that Tegel ought not to be allowed to pursue the guarantees until the receivership of Coastal Cuisine had run its course.
The Court rejected the Arnensen's arguments and allowed Tegel to proceed ahead of the completion of the receivership. The Court found that marshalling (an exception to the normal rule that allows creditors to have their choice of remedies in the order in which they choose) could not apply given that there was only one creditor (the Arnensens made no claim to the security that Tegel held over the accounts receivable of Coastal Cuisine). In any event, the guarantees were drafted to leave Tegel with the full range of remedies available to it, effectively excluding the doctrine of marshalling from operation.
Additionally, the Court pointed out that the fact of some future prospect of recovery from a receivership will not be enough to prevent a Court giving judgment. Short of cogent evidence of an impending payment from the receivers that would clear the debt in full, the Court would not be prepared to exercise its discretion in such a way as to restrict a creditor's choice of remedies.
See court decision here.