Lavin v Toppi

The dispute in *Lavin v Toppi* concerned a claim for contribution between co-sureties. The plaintiff, Mr. Lavin, sought to recover from the defendant, Mr. Toppi, a proportion of the amount Mr. Lavin had paid under a guarantee. The co-sureties had guaranteed the indebtedness of a company, and Mr. Lavin argued that Mr. Toppi, having paid less of the company's debt and obtained a covenant not to sue from the bank, was still liable to contribute to Mr. Lavin's payment. The matter was heard in the Court of Appeal of New South Wales.

The central legal issues before the Court of Appeal were whether Mr. Toppi's liability to the bank remained "co-ordinate" with Mr. Lavin's, despite Mr. Toppi having paid less of the borrower's indebtedness and having received a covenant not to sue from the bank. The court also had to consider whether Mr. Lavin's payment conferred a benefit on Mr. Toppi, whether the dismissal of the bank's proceedings against Mr. Toppi meant their liabilities were no longer co-ordinate, and whether the decision in *Carr v Thomas* [2009] NSWCA 208 was clearly wrong, or if Mr. Toppi had engaged in disentitling conduct.

The Court of Appeal held that the principles of contribution between co-sureties are engaged when one surety pays more than their proportionate share of the guaranteed debt. The court found that Mr. Toppi's liability remained co-ordinate with Mr. Lavin's, and that the covenant not to sue did not extinguish this co-ordinate liability for the purposes of contribution. The court affirmed that the dismissal of the bank's proceedings against Mr. Toppi did not alter the co-ordinate nature of their liabilities. The court also found that *Carr v Thomas* was not clearly wrong and that Mr. Toppi had not engaged in disentitling conduct.

The appeal was dismissed, with costs awarded to the respondent.