Cockburn & Ors v Gio Finance Ltd (No 2)

[2001] NSWCA 177

NSW Court of Appeal

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Interrogate

Catchwords

1. Equity
2. › Contribution
3. › Co-ordinate liabilities
4. › Whether liabilities to make good the one loss
5. › Whether mortgage avoided ab initio for undue influence gives rise to relevant loss
6. › Whether insurance company and solicitor under co-ordinate liabilities where one liability depends on avoidance and other on affirmation of transaction
1. Equity
2. › Rescission
3. › Undue influence
4. › Mortgage and guarantee void ab initio
5. › Effect of rescission on existence of loss
6. › Whether rescission operates from act of party or court order
1. Equity
2. › Contribution
3. › Common burden requirement
4. › Whether liabilities of different character can be co-ordinate
5. › Whether discharge of one co-obligor's liability must discharge the other

Quick Take

Where a mortgage or guarantee is set aside ab initio for undue influence, the lender cannot claim equitable contribution from a solicitor whose negligence facilitated the transaction, because the liabilities are not co-ordinate: the lender's liability depends on the transaction being avoided while the solicitor's liability depends on it being affirmed. The avoidance of instruments that are to be regarded as never having been validly entered into does not give rise to a loss capable of founding a contribution claim. The question whether equity will assist a party seeking contribution to a liability arising from undue influence for which it bears responsibility was left open.