CASE ANALYSIS: LAVIN v TOPPI In Lavin v Toppi, the High Court clarified the principles governing contribution between co-sureties where one surety pays more than its share of a guaranteed debt. I. MATERIAL FACTS The first appellant (Ms Lavin) and the first respondent (Ms Toppi) were guarantors, jointly and severally liable for a consolidated loan in the amount of $7,768,000 (the loan) which was provided by the National Australia Bank (the Bank) to Luxe Studios Pty Ltd (Luxe), a company of which the parties were directors and equal shareholders. In 2009, Luxe went into receivership and the Bank made demands upon each of the guarantors for payment of the balance of the loan. The proceeds of the sale of a property owned by Luxe were paid …show more content…
In reaching this conclusion the court drew upon the statement of Glanville Williams that “the right to contribution among co-debtors is independent of any present rights of the principle creditor.” Further, Wolmershausen v Gullick was applied as authority for the proposition that the right to contribution exists between co-sureties despite the fact that enforcement by the creditor may be barred against one debtor. Therefore, because the covenant did not extinguish Ms Lavin’s liability under the guarantee, it followed that the parties continued to share co-ordinate liabilities so as to entitle Ms Toppi to recover contribution from Ms …show more content…
In the present case, equity intervened to prevent Ms Toppi from shouldering a disproportionate share of the debt, not by interfering with the action of the Bank, but rather by providing for the remedy of contribution from the time that the parties were called upon to satisfy the guarantee. Thus, equity can be said to follow the law in the sense that it does not seek to direct the manner of exercise of the rights of the creditor, but instead it makes an adjustment between the
The decision of the House of Lords in City of London Building Society v Flegg marks a key stage in how the balance is drawn between occupiers and creditors in priority disputes; the seeds of which were originally planted in the Law of Property Act 1925. It posed a serious challenge to the conventional understanding of overreaching and the machinery of conveyancing.Ref ?
A Quistclose trust arises when money is paid to a recipient for a specific purpose, if that purpose fails the money is held on trust for the payer. It mostly arises in insolvency cases where the proprietary rights have to be established. However, this type of trust has been thought to be inconsistent with the traditional trust principle. Many have suggested the Quistclose trust must be treated as any other fully fledged security device taking into account the protection it offers the payer on insolvency and should therefore be registrable. This essay critically analyses the concept of Quistclose trust, whether it differs from the resulting trusts.
Gummow and Bell JJ concluded that clause 1 of the Deed signed Rural’s debts and its interests under the loan agreements to Equuscorp. Their Honours observed that the phrase “other remedies for these matters” located in clause 2 assigned a claim in restitution for money had and received . Heydon J agreed with this decision on similar grounds .
Had Mr Virgo disclosed all information to the Amadio’s, especially when Mr Amadio made the statement which suggested he was not properly informed of the terms of the mortgage, and the Amadio’s understood everything, they would not have been able to take to court the Commercial Bank of Australia on the grounds of unconscionable conduct. The fact that their ‘special disadvantage’ was exploited gave passage for them to receive equitable relief for unconscionable
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
Litigation seeking judgment has started against the borrowers and the guarantors. All corporate entities were served on 1/13/2017, and
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.”
Terence Etherton (2008) – Constructive trusts: a new model for equity and unjust enrichment. Cambridge Law Journal
“[T]he pari passu principle providing for equality of division among creditors is said to be one of the (if not the most) fundamental principles of the law of insolvency and is at the very heart of the who...
Traditionally in English contract law, a common law rule called the ‘penalty doctrine’ has applied. This rule prohibits the enforceability of contractual clauses that stipulate the payment of an extravagant level of damages in the event of breach. Recently, this doctrine has come into question in Talal El Makdessi v Cavendish Square Holdings BV; judgment from the Supreme Court on the case is currently awaited. In Makdessi, the Supreme Court must decide whether the penalty doctrine should remain. This essay submits there is no place for the doctrine in present-day English law.
Interpretation of this case with the help of above two case is done in a very detailed and interesting manner with clear position. He says that when agency is pre-existing, the provisions of necessity should be an expansion of the agent’s obligations and rights attached to his authority, allowing Sheen J’s balanced examination. Hence no need to create an authority rather evaluate it within that network of rules. In case, agent exceeds his actual authority, the rules of apparent authority should be applied. This approach would let principles of agency to operate in their own context simultaneously acknowledging that, outside a pre-existing agency, claims for reimbursement should be
K.G White, Bankers Guarantees and the Problem of Unfair Calling in JOURNAL OF MARITIME LAW AND COMMERCE 124 (1980).
As set out by Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Soci...
The main aim of this article is to undertake a analysis of the effect that the advantage to creditors requirement has on sequestration applications. In terms of the Insolvency Act 24 of 1936 there are two processes that a debtor may sequestrate his estate. Either by voluntary surrender of his estate or by compulsory sequestration. In both these instances there is a requirement that the granting of the sequestration must be to the “advantage of the creditors”. A discharge of debtors from debts is a something yet to be realized if the advantage requirement is not relaxed. Although the Act does not outline what constitutes an advantage of creditors, the courts have interpreted it to encapsulate a benefit to creditors.
Some of these challenges are; debtors who aren’t insolvent who are looking for debt relief; inadequate compliance with the requirements of sequestration by the debtors; the cost of the sequestration being greater than the dividend the creditors will receive; and finally debtors seeking relief through sequestration rather than through application of other debt relief procedures. These challenges will be addressed specifically with regard to their impact on the requirement for an advantage to creditors.