Lavin v Toppi

(2014) 87 NSWLR 159; [2014] NSWCA 160

NSW Court of Appeal

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Interrogate

Catchwords

1. Equity
2. › Contribution
3. › Co-sureties
4. › Coordinate liabilities
5. › Whether covenant not to sue one co-surety extinguishes right of other co-surety to equitable contribution
6. › Whether liabilities remain 'co-ordinate' after settlement deed
7. › Whether payment by co-surety conferred benefit on settled co-surety
1. Equity
2. › Contribution
3. › Co-sureties
4. › When right to contribution arises
5. › Whether right arises before actual payment
6. › Distinction between contribution at common law and in equity
1. Equity
2. › Contribution
3. › Co-sureties
4. › Effect of guarantee terms on right to contribution
5. › Whether contractual provisions preserving creditor's rights exclude co-surety's equitable right to contribution
1. Practice and Procedure
2. › Dismissal of proceedings
3. › Distinction between judgment and dismissal
4. › Whether consent orders dismissing proceedings operate as judgment
5. › Civil Procedure Act 2005 (NSW), ss 90, 91

Quick Take

A co-surety's right to equitable contribution is not lost where the creditor settles with another co-surety by accepting partial payment, covenanting not to sue, and agreeing to dismissal of proceedings. The right to contribution arises in equity no later than when the creditor demands payment and commences proceedings, and cannot be defeated by a private compromise to which the contributing co-surety is not a party. Standard guarantee clauses preserving the creditor's rights against co-guarantors do not exclude the equitable right to contribution between co-sureties. The distinction between dismissal of proceedings and entry of judgment is preserved by ss 90-91 of the Civil Procedure Act 2005 (NSW), and consent orders dismissing proceedings do not operate as a judgment in favour of the defendant.