QUEENSLAND. Principal and Surety-Guarantee-Contribution between co-sureties-Joint and
several liability-Judgment on guarantee against one of the sureties-Insolvencu of judgment debtor - Acceptance by judgment creditor of smaller sum in BRISBANE,
satisfaction and discharge - Limitation of action - Time when right of action June 19, 20,
arose-Statute of Frauds and Limitations 1867 (Q.) (31 Vict. No. 22), sec. 16- Insolvency Act 1874 (Q.) (38 Vict. No. 5), secs. 163, 178.
A creditor obtained judgment against the appellant, one of several sureties who under a deed of guarantee had contracted jointly and severally. The appellant, being adjudicated insolvent on the creditor's petition, paid the sum of £800 to the creditor in satisfaction of the judgment debt and the creditor released him from the judgment debt and all claims in respect of it; and the adjudication of insolvency was thereupon annulled. In an action by the appellant against one of his co-sureties for contribution in respect of the sum paid to the creditor,
Held, that the release of the appellant from the judgment debt as effectively discharged the other sureties as if the creditor had released him from his obligation under the guarantee that the liability of the sureties under the guarantee was fixed by the release at £800, and that the appellant, who had paid the whole of that debt, was entitled to contribution.
Held, also, that the appellant's right of action for contribution did not arise until he had paid the debt, and, therefore, that his claim was not barred by the Statute of Frauds and Limitations of 1867 (Q.).
Decision of the Supreme Court of Queensland (Full Court): Walker V. Bowry and Willey, (1924) S.R. (Q.) 142, reversed.
James Walker brought an action in the Supreme Court against Alfred Bowry and another, claiming, in substance, contribution of £400 from Bowry in respect of £800 which had been paid by Walker to the Bank of Australasia Ltd. Walker, Bowry and two others were jointly and severally liable to the Bank on an instrument of guarantee for the debt of a mining company. The company went into liquidation. The Bank recovered judgment on the guarantee against Walker alone. Walker was adjudicated insolvent. The Bank proved its debt; and subsequently accepted £800 from Walker in full satisfaction, and released and discharged him from the debt and all claims in respect thereof. The adjudication was annulled. After payment of the sum of £800 Walker brought this action against Bowry and another co-surety.
The action was tried before Blair J., who directed certain accounts and inquiries and ordered judgment to be entered for the plaintiff against both defendants for the amounts found to be due. The inquiries established that the defendant Bowry alone was in a position to make any contribution, and Douglas J. gave judgment for the plaintiff against Bowry for £400 and interest thereon at the rate of…
Grounds of appeal
[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
Walker v Bowry [1924] HCA 28
Case
[1924] HCA 28
Decision Date
CaseChat Overview and Summary
This case involved an appeal to the High Court of Australia from a decision of the Supreme Court of Queensland. The appellant, James Walker, had sought contribution from his co-surety, Alfred Bowry, in respect of a sum paid by Walker to a creditor. Walker and Bowry, along with two others, had jointly and severally guaranteed a company's debt. The creditor had obtained judgment against Walker alone, and following Walker's adjudication in insolvency, the creditor accepted £800 from Walker in full satisfaction of the debt and released him from all claims. The insolvency adjudication was subsequently annulled.
The legal issues before the High Court were whether Walker was entitled to contribution from Bowry, and if so, whether his claim was barred by the Statute of Frauds and Limitations 1867 (Q.). Specifically, the court had to determine the effect of the creditor's release of Walker on the liability of the other co-sureties, and when Walker's right of action for contribution arose.
The High Court, allowing the appeal, held that the creditor's release of Walker from the judgment debt effectively discharged the other co-sureties, including Bowry. This was based on the principle that in a contract of suretyship, the joint liability of co-sureties is part of the consideration for each surety's contract, and a release of one surety discharges the others. The court reasoned that the liability of the sureties under the guarantee was fixed at £800 by the release, and as Walker had paid this entire sum, he was entitled to contribution from his co-sureties. Furthermore, the court determined that Walker's right of action for contribution did not arise until he had made the payment, meaning his claim was not time-barred by the Statute of Limitations.
Consequently, the High Court reversed the decision of the Supreme Court of Queensland, restoring the original judgment in favour of Walker. The respondent, Bowry, was ordered to pay the appellant's costs of the appeal to the High Court and the appeal to the Full Court of Queensland.