McLean v Discount and Finance Limited [1939] HCA 38

McLean v Discount and Finance Limited [1939] HCA 38

The appellant and the respondent were co-sureties for the same principal debt. The appellant, by the sale and application of proceeds of his deposited bonds, paid more than his proper share. Payment occurred, either on credit to the suspense account (per Rich and McTiernan JJ.) or on appropriation to the debt (per Starke and Evatt JJ.). The Moratorium Acts did not preclude the right to contribution following such payment. The respondent failed to prove a substitution of indemnity for guarantee or a reduction in the liability. The right to contribution is proportionate to the respective amounts secured and the excess paid by the appellant.

Parties
Appellant; Plaintiff: William McLean; Respondent; Defendant; Co Surety: Discount and Finance Limited; Principal Debtors; Defendants: George Wall (Firm: Walter George Melbourne Wall, Eric Vernon Wall, and William Rothwell)
Jurisdiction
Australia
Procedural Posture
Appeal; Civil Action in Equity / On Appeal From Decree of Supreme Court of New South Wales
Outcome
Appeal allowed; cross-appeal dismissed.
Legal Topics
Contribution Between Co Sureties, Rights of Surety, Effect of Moratorium Statutes, Payment by Surety, Appropriation of Proceeds From Security
Equity Banking Law Suretyship Contribution Between Co Sureties Rights of Surety Effect of Moratorium Statutes Payment by Surety Appropriation of Proceeds From Security

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 4 Authorities cited 23 Party arguments 2 Amounts and remedies 6
Sign in to unlock

Parties

William McLean

Appellant; Plaintiff

Discount and Finance Limited

Respondent; Defendant; Co Surety

George Wall (Firm: Walter George Melbourne Wall, Eric Vernon Wall, and William Rothwell)

Principal Debtors; Defendants

Procedural Posture

Appeal; Civil Action in Equity / On Appeal From Decree of Supreme Court of New South Wales

Legal Issues

  1. 1 Whether the appellant and the respondent company were co-sureties for the same principal debt;
  2. 2 Whether payment by the appellant (McLean) by sale of bonds and application of proceeds constituted a 'payment' for contribution purposes;
  3. 3 Whether the right of contribution was affected or postponed by the operation of the New South Wales Moratorium Acts;

Ratio Decidendi

The appellant and the respondent were co-sureties for the same principal debt. The appellant, by the sale and application of proceeds of his deposited bonds, paid more than his proper share. Payment occurred, either on credit to the suspense account (per Rich and McTiernan JJ.) or on appropriation to the debt (per Starke and Evatt JJ.). The Moratorium Acts did not preclude the right to contribution following such payment. The respondent failed to prove a substitution of indemnity for guarantee or a reduction in the liability. The right to contribution is proportionate to the respective amounts secured and the excess paid by the appellant.

Court Disposition

Appeal allowed; cross-appeal dismissed.

Orders

  • Decree of Supreme Court of New South Wales set aside.
  • Declaration: Appellant (McLean) and respondent (Discount and Finance Ltd.) are liable to contribute in the proportions of three-thirteenths and ten-thirteenths respectively of the sum of £7,772 18s. 3d. paid or provided by them on or before 23 February 1937.