Toppi & Anor v Lavin [2013] NSWSC 1931

Procedural Posture

Equity Division Summons Seeking Declaratory Relief Concerning Subrogation to Discharged Mortgages and Caveats / Principal Judgment After Hearing

Legal Issues

1. 1 ["Whether co-sureties who paid more than their share of a guaranteed debt were entitled to be subrogated to the creditor's mortgages over the defendant co-surety's properties after those mortgages had already been discharged and registered as discharged." "Whether s 3 of the Law Reform (Miscellaneous Provisions) Act 1965 preserved or revived for the plaintiffs' benefit security that the creditor no longer held when the plaintiffs paid the debt." 'Whether any asserted right of subrogation to the discharged mortgages needed to be considered as an exception to indefeasibility.']

Ratio Decidendi

The plaintiffs were not entitled to be subrogated to the mortgages formerly held by the National Australia Bank over the defendant's properties because those mortgages had been effectively released and registered as discharged before the plaintiffs paid the guaranteed debt. Section 3 of the Law Reform (Miscellaneous Provisions) Act 1965 applies to securities held by the creditor and does not preserve or revive a security previously discharged by reason of an earlier payment and settlement. The principles allowing a surety's liability to be discharged or reduced when a creditor releases security assume that the release is effective as between co-sureties; otherwise no such reduction would...

Court Disposition

Plaintiffs' summons dismissed.

Orders

• ["The plaintiffs' summons be dismissed." 'Within two business days the plaintiffs remove caveats AI13666 and AI13667.' "Prima facie the plaintiff should pay the defendant's costs of the proceedings." 'The Court will hear the parties on costs.']