I FACTUAL BACKGROUND In Lavin v Toppi, the High Court of Australia considered the application of equitable contribution for co-guarantors/co-sureties to a loan where a creditor had covenanted not to sue one of the guarantors. Ms Lavin and Ms Toppi were directors and equal shareholders of the company Luxe Studios Pty Ltd (“Luxe”). In 2005, Luxe purchased a property in Sydney for the purpose of running a photographic studio, funded by a loan from the National Australia Bank (“the Bank”). Further loans were made by the Bank in 2007 and 2008. These were consolidated into one loan for the amount of $7,768,000, which was guaranteed by: • Ms Lavin and her associated company (“the appellants”); • Ms Toppi and her husband (“the respondents”); and …show more content…
In support of this conclusion, the court cited the reasoning of Williams, emphasising the independence of the right of contribution amongst co-sureties from any present rights of a creditor. In further support, the court considered the specific nature of covenants not to sue, noting that they are not intended to discharge liability, so as to not release all co-guarantors, but rather to prevent any enforceability through legal proceedings. The court resultantly concluded that the covenant not to sue did not extinguish, but in fact assumed the continued existence of the appellants’ and respondents’ shared coordinate liabilities, entitling the respondents to recover …show more content…
In this regard, the court approved of comments in Friend v Brooker that: Equity follows the law in the sense that it does not seek to direct the manner of exercise of the rights of the creditor, but equity does make an adjustment between the debtors. Thus equity does not interfere with the action of the creditor but seeks to ensure the sharing of the burden between those subjected to it. In this way, equity and the doctrine of contribution do not inadvertently create unfairness by restricting the rights of a creditor, but instead strive to achieve a fair outcome within the constraints of common law
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3. Assuming that she was, a question whether the respective defendants, any, all, or who of them, were proper subjects for the injunction prayed, as holding the bonds without sufficient title, and herein -- and more particularly as respected Hardenberg, and Birch, Murray & Co. -- a question of negotiable paper, and the extent to which holders, asserting themselves holders bona fide and for value, of paper payable "to bearer," held it discharged of precedent equities.
Equity is frequently referred to as a supplement to the common law. Cruzon defines Equity as a system of law developed by the court of chancery in parallel with the common law. It was designed to complement it, providing remedies for situations that were unavailable at Law. Because of this, Equity provided a dimension of flexibility and justice that was often times lacking because of the common law’s rigidity. This rigidity stems from the fact that, while courts sometimes altered their jurisdictions and procedures, the fundamental premises and noticeable forms of the common law went largely unchanged between the 13th and 19th centuries.
...e requirement of an advantage to creditors is complied with. Through strict formalities the court can ensure that based on the detailed evidence provided by the debtor, with regards to his assets, income, expenditure and detailed explanation as to why he or she is insolvent, the court can base its decision on more accurate evidence.
-Equity: seen over by the Chancery Court; designed to give relief from strict decisions made by the common law
Equity means giving every individual what he or she merits or, in more conventional terms, giving every individual his or her due. Equity and reasonableness are nearly related terms that are frequently today utilized conversely. There have, be that as it may, additionally been more unmistakable understandings of the two terms. While equity normally has been utilized with reference to a standard of rightness, decency frequently has been utilized as to a capacity to judge without reference to one 's emotions or intrigues; reasonableness has additionally been utilized to allude to the capacity to make judgments that are not excessively general but rather that are concrete and particular to a specific case. Regardless, an idea of desert is significant to both equity and decency. Case in point, are requesting what they think they merit when they are requesting that they be treated with equity and decency. At the point when individuals contrast over what they accept ought to be given, or when choices must be
The pari passu principle is derived from the maxim ‘equality is equity’: ‘The maxim that equality is equity expresses in a general way the object both of law and equity, namely to effect a distribution of property and losses proportionate to the several claims or to the several liabilities of the persons concerned. Equality in this connection does not necessarily mean literal equality, but may mean proportionate equality.’
Having evaluated the current state of English contract law, mainly made up of piecemeal solutions, it can be seen that despite being satisfactory and doing its job, there still remain gaps within the law of contract where unfairness is not dealt with. Moreover, due to the ad hoc nature of those piecemeal solutions, the latter have often produced inconsistent justice and have manifested cases of unfairness. Hence, “a relatively small number of respected Justices have endeavored to draw attention to the fact that the application of a general principle might be useful and even necessary in English law.”
...aw in the US and Australia where the doctrine can be used to found a cause of action to remedy the non-performance of a promise unsupported by consideration. In the UK however, it is a means where contractual rights may be suspended, but not by which new rights can be formed. In the US, where the doctrine can be used as a cause of action and has been used in multiple cases, commentators have claimed that the doctrine is a ‘flexible means of achieving fairness’ and ‘cannot be reduced to a precise formula or series of tests’ .
Current English land law on the co-ownership of interests of land has developed quite a contentious history pertaining to the relationship between the acquisition of rights and the quantification of the shares. In terms of co-ownership, there are huge variances and legal consequences when legal ownership is in one person’s name compared to two. These differences can be seen in various landmark cases which have created precedent and developed refined principles such as Lloyds Bank plc v Rosset and the Stack v Dowden. For the courts, it has often been relatively complex to distinguish between constructive and resulting trusts and to decide on the procedure to be used for the quantification of equitable entitlement once the decision to impute has been established. The quantification of resulting trusts is carefully considered in both, Midland Bank v Cooke and Stack v Snowden. In many co-ownership cases dealing with the acquisition of rights and the quantification of shares, the outcomes aren’t always proportionate. Reasons can include the ambiguities in the identification and changes of common intention and contributions types. In speaking to this issue, Baroness Hale stated in Stack v Dowden that “each case will turn on its own facts” and furthermore elaborated on the conditions for a common intention construct arising. It is furthermore important to critically discuss the repercussions these cases have for the future of co-ownership law to reconcile existing sources of confusion.
Part of the grounds for arguing in favor of the common law system over the codified system is its characteristically equitable qualities. Since antecedents are pursued in all cases, everyone gets the same treatment. This same legal procedure is administered to everyone in spite of their position or creed. Therefore, this system of going by antecedents which had hitherto been set usually leads to equity and fairness. This system of law also has the advantage over the codified system by offering protection to persons via the law of tort.