Guarantor's Acceptance of Security Interest Does Not Constitute Novation

A party, having guaranteed the payment of a debt by a debtor in exchange for a fee and having accepted a security interest in the debtor's property, sought to enforce the guarantee against the principal debtor after the latter defaulted, but the lower court dismissed the claim, finding that the guarantor's acceptance of the security interest constituted a novation of the original obligation, extinguishing the guarantee. The high court rejected this finding, reasoning that the acceptance of a separate security interest by the guarantor from the principal debtor, even in exchange for remuneration, does not automatically constitute a novation of the underlying obligation that would discharge the guarantor unless there was a clear and unequivocal intention by the parties to extinguish the original debt and replace it with a new one.