A surety is not discharged from liability if an agreement to extend time is made by an agent (including the principal debtor) whose authority is subsequently ratified by the surety through conduct, such as silence and acceptance of the agreement's benefits.

Lord Blanesburgh:-

The action out of which this appeal arises was in 1927 commenced in the Supreme Court of New Zealand by the appellant as plaintiff against the respondent and his brother, George Henry Lysnar, as defendants. Its purpose was to enforce so far as then unperformed the obligations of the defendants under a deed of security and joint and several covenant dated 21st December 1923, and made by them in favour of one Charles John Dunlop Bennett, to whose rights thereunder the appellant had succeeded by a deed of transfer duly registered on 7th August 1924. The defendant George Henry Lysnar at the trial submitted at last to judgment, and he has disappeared from the subsequent proceedings. The respondent's main defence was that he was no more than a surety for his co-defendant in respect of their joint and several covenants contained in the deed, and that he had been discharged from all liability thereunder by reason of a certain arrangement for giving time alleged to have been come to between the appellant and the principal debtor without the respondent's "approval or consent," a somewhat ambiguous phrase.

The Courts of the Dominion, perhaps accepting the allegation at its face value, assumed, as it would appear, without any definite inquiry into the circumstances, that the arrangement alluded to was one for which George Henry Lysnar was solely responsible, and they did not concern themselves to ascertain how far, in fact, the respondent was cognisant of and had become bound by its terms. In consequence they occupied themselves chiefly with the question - in their eyes the most important - Whether notice of the position of the respondent as a surety only could properly at the date of the arrangement be imputed to the appellant. And in the result these Courts were in difference as to the proper answer. The learned trial Judge held that such notice could not be so imputed and decreed the action against the respondent. The Court of Appeal, on the other hand, being of opinion that the appellant must at the critical date be fixed with notice of the respondent's position as between his brother and himself, adjudged the respondent to be discharged by the arrangement referred to from all further liability under the deed, and by an order of the 18th October 1927, dismissed him from the action with costs. Hence the present appeal.

In the course of the arguments before the Board, not only this question on which the Dominion courts were divided, but many others of interest in connexion with the law of suretyship, were fully canvassed. A review of the whole case has served, however, to make it clear to the Board that such questions may not survive for determination by them if an, affirmative answer is, on investigation, given to the fundamental inquiry not so far judicially pronounced upon, viz., whether the respondent must not be held to be as completely committed to and bound by the arrangement referred to as was his co-defendant who concluded it.

In the review of the facts to which their Lordships now proceed they will not stop until they have examined those upon which the answer to this preliminary and, it may be, decisive inquiry must depend.

The debt secured by the deed of the 21st December 1923, originated in a promissory note for £5,215 1s. 10d., dated the 24th May 1922, made by George Henry Lysnar, and endorsed by the respondent, in favour of a firm of Bennett and Sherratt. The note was for the price of goods supplied to George Henry Lysnar. On the subsequent dissolution of the firm of Bennett and Sherratt the abovenamed Charles John Dunlop Bennett became its holder in due course. Default was made, and on 26th October 1923, Mr. Bennett, having failed to obtain payment, commenced an action against both of the Lysnars for the amount of the note.

No defence was put in by the defendants, and the plaintiff being thus in a position to enter judgment for the amount claimed, intimated to each defendant by identical letters of his solici