Contract - Guarantees - Co-guarantors - Contribution in equity as between contributing co-sureties - Release of one co-surety discharges other sureties as if creditor had released them from their obligations - Whether the availability of equitable contribution depends upon person claiming it having actually paid or being about to be required to pay an obligation from his own money - Whether surety, against whom creditor has obtained judgment on guaranteed debt is entitled to contribution from co-surety before surety has paid that debt-Failure of surety to demonstrate ability and willingness to pay his just proportion of guaranteed debt is factor to be taken into account in determining what, if any, relief is available to the surety in a contribution action - Futility of granting declaratory relief - Covenant not to sue - Whereas release of one of a number of joint, or joint and several, debtors releases all of them from the joint debt, a covenant not to sue does not-Distinctions between release and covenant not to sue - Jurisprudential provenance of rule that an indemnifier is estopped from averring contrary to a judgment handed down in previous relevant proceedings to which his/her indemnified was a party - Whether such an estoppel can arise in respect of a non-party co-guarantor - Principles - Res judicata - Cause of action estoppel - Issue estoppel - Anshun estoppel - General rule that only parties to the proceedings and their privies are bound by a res judicata, subject to a limited exception in respect of a non-party bound by contract to indemnify a party for a liability the subject of the first proceedings - Examination of indemnifier's exception to general rule that only parties and their privies are bound by a res judicata - Evidence - Admissibility by estoppel route
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Jeans v Bruce [2004] NSWSC 539
Case
[2004] NSWSC 539
Decision Date
CaseChat Overview and Summary
The case of Jeans v Bruce involved a dispute between two co-guarantors of a debt. The plaintiff, Jeans, was seeking contribution from the defendant, Bruce, who was also a co-guarantor of the debt. The case was heard in the Supreme Court of Western Australia. The primary legal issues the court had to decide were whether the availability of equitable contribution between co-guarantors depended on the party claiming it having paid or being about to pay the obligation from their own funds, and whether a surety against whom a creditor had obtained a judgment on the guaranteed debt was entitled to contribution from a co-guarantor before the surety had paid the debt. Additionally, the court had to determine whether the futility of granting declaratory relief could be a factor in deciding what, if any, relief was available to a surety in a contribution action, and whether a covenant not to sue had the same effect as a release in the context of joint and several debtors.
The court reasoned that the availability of equitable contribution between co-guarantors did not necessarily depend on the party claiming it having paid or being about to pay the obligation. It found that the inability of the plaintiff to demonstrate their ability and willingness to pay their just proportion of the guaranteed debt was a factor to be taken into account in determining what, if any, relief was available to the surety in a contribution action. The court also held that a covenant not to sue did not have the same effect as a release in the context of joint and several debtors, as a release of one of a number of joint, or joint and several, debtors releases all of them from the joint debt, whereas a covenant not to sue does not. Furthermore, the court examined the principles of res judicata, cause of action estoppel, issue estoppel, and Anshun estoppel, and found that only parties to the proceedings and their privies were bound by a res judicata, subject to a limited exception in respect of a non-party bound by contract to indemnify a party for a liability that was the subject of the first proceedings.
The court ultimately found in favour of Bruce, holding that Jeans was not entitled to contribution from Bruce before Jeans had paid the debt. The court also found that the futility of granting declaratory relief was a factor to be taken into account in deciding what, if any, relief was available to Jeans in a contribution action. The court held that Bruce was not bound by the estoppel that arose from the previous proceedings, as he was not a party to those proceedings and was not bound by contract to indemnify a party for a liability that was the subject of the first proceedings. The court therefore dismissed Jeans' claim for contribution and declaratory relief.