Lavin v Toppi [2014] NSWCA 160

Lavin v Toppi [2014] NSWCA 160

A co-surety who settles with the creditor for less than the full amount and secures a covenant not to sue remains liable in equity to contribute to another co-surety who discharges more than her share of the common liability; such a settlement does not negate coordinate liability nor preclude the benefit to the settling surety conferred by subsequent full payment by the other co-surety. Terms of the guarantee and the Deed did not exclude or qualify equitable contribution. There was no disentitling conduct shown.

Jurisdiction
Australia
Judgment Date
23 May 2014
Procedural Posture
Appeal / Court of Appeal Decision
Outcome
Appeal dismissed, with costs.
Legal Topics
['contribution Between Co Sureties' 'co Ordinate Liability' 'effect of Covenant Not to Sue' 'entitlement to Equitable Contribution']
['equity'] ['contribution Between Co Sureties' 'co Ordinate Liability' 'effect of Covenant Not to Sue' 'entitlement to Equitable Contribution']

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Procedural Posture

Appeal / Court of Appeal Decision

Legal Issues

  1. 1 ['Whether a co-surety who has paid less than another and obtained a covenant not to sue remains liable for contribution to a co-surety who subsequently discharged the balance of the debt' "Whether the liability of co-sureties remains 'co-ordinate' after a covenant not to sue is granted to one by the creditor" 'Whether payment by one co-surety confers a benefit on the other for the purposes of contribution' 'Whether the dismissal of proceedings against one co-surety affects the right to contribution of another' 'Whether the prior decision Carr v Thomas [2009] NSWCA 208 was correctly decided' 'Whether there was any disentitling conduct by the co-surety seeking contribution']

Ratio Decidendi

A co-surety who settles with the creditor for less than the full amount and secures a covenant not to sue remains liable in equity to contribute to another co-surety who discharges more than her share of the common liability; such a settlement does not negate coordinate liability nor preclude the benefit to the settling surety conferred by subsequent full payment by the other co-surety. Terms of the guarantee and the Deed did not exclude or qualify equitable contribution. There was no disentitling conduct shown.

Court Disposition

Appeal dismissed, with costs.

Orders

  • ['Appeal dismissed.' "Appellants to pay respondents' costs."]