Consolidated Trust Company Limited v Naylor [1936] HCA 33

Consolidated Trust Company Limited v Naylor [1936] HCA 33

The indorsed transfer of the mortgage under the general law was effective as an assignment by writing of the benefit of the defendant’s guarantee, satisfying the requirements of sec. 12 of the Conveyancing Act 1919-1932 (N.S.W.), given sufficient express notice. However, under the Real Property Act 1900-1928 (N.S.W.), the statutory transfer provisions do not confer the right to sue a guarantor on the transferee.

Parties
Plaintiff/appellant: Consolidated Trust Company Limited; Defendant/respondent: Rufus Theodore Naylor; Mortgagor: King William Mansions Ltd.; Original Mortgagee: Charles Clarence Gale
Jurisdiction
Australia
Procedural Posture
Appeal / On Appeal From Supreme Court of New South Wales (full Court) After Judgment for Defendant on Demurrer
Outcome
Appeal allowed (majority); Judgment of Supreme Court on second count set aside and demurrer to that count overruled; costs awarded to appellant
Legal Topics
Assignment of Guarantees, Mortgages, Transfer of Debt, Notice to Surety
Property Law Contracts Equity Assignment of Guarantees Mortgages Transfer of Debt Notice to Surety

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Parties

Consolidated Trust Company Limited

Plaintiff/appellant

Rufus Theodore Naylor

Defendant/respondent

King William Mansions Ltd.

Mortgagor

Charles Clarence Gale

Original Mortgagee

Procedural Posture

Appeal / On Appeal From Supreme Court of New South Wales (full Court) After Judgment for Defendant on Demurrer

Legal Issues

  1. 1 Whether the transferee of a mortgage can sue a guarantor upon a covenant of guarantee contained in the instrument of mortgage under the Real Property Act 1900-1928 (N.S.W.) or Conveyancing Act 1919-1932 (N.S.W.)
  2. 2 Whether the assignment of a mortgage by indorsement includes assignment of a surety's covenant so as to satisfy the requirements of sec. 12 of the Conveyancing Act 1919-1932 (N.S.W.)

Ratio Decidendi

The indorsed transfer of the mortgage under the general law was effective as an assignment by writing of the benefit of the defendant’s guarantee, satisfying the requirements of sec. 12 of the Conveyancing Act 1919-1932 (N.S.W.), given sufficient express notice. However, under the Real Property Act 1900-1928 (N.S.W.), the statutory transfer provisions do not confer the right to sue a guarantor on the transferee.

Court Disposition

Appeal allowed (majority); Judgment of Supreme Court on second count set aside and demurrer to that count overruled; costs awarded to appellant

Orders

  • Judgment of Supreme Court of New South Wales in demurrer on second count of the declaration set aside
  • Demurrer to second count overruled