Carr v Thomas

In *Carr v Thomas*, the dispute concerned the effect of a deed of release granted by the plaintiff to one of several parties who were jointly and severally liable to the plaintiff. The appeal was heard by Beazley JA, Ipp JA, and McColl JA in the Court of Appeal of New South Wales.

The central legal issues before the Court of Appeal were whether the deed constituted a covenant not to sue, and if so, whether it operated as a release of all obligations, thereby discharging the liability of all co-obligors. Further, the court considered whether a party with the benefit of such a covenant could be subjected to a claim for contribution by other co-obligors who remained liable to the original obligee.

The Court of Appeal reasoned that the deed, properly construed, was a covenant not to sue the released party, rather than a release of the underlying obligation. Applying established equitable principles, the court held that a covenant not to sue one of several co-obligors does not, in equity, release the others from their liability. Consequently, the released party could still be subject to a claim for contribution from the other co-obligors.

The Court of Appeal allowed the appeal, set aside the orders of the trial judge, and dismissed the notice of motion for summary dismissal of the cross-claim. The respondent was ordered to pay the appellants' costs at first instance and on appeal, with a certificate under the *Suitors' Fund Act 1951* granted to the respondent in respect of the costs of the appeal, if otherwise entitled.