FINANCE CORPORATION OF AUSTRALIA LTD v BENTLEY [1991] NSWCA 94

FINANCE CORPORATION OF AUSTRALIA LTD v BENTLEY

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

KirBY P, MAHONEY and HANDLEY JJA 17 July 1991, 9 May 1991

[1991] NSWCA 94

MORTGAGES — equitable duties of mortgagee — financier owed two debts — each debt secured on the same land — each debt guaranteed by two guarantors — second debt guarantee of one guarantor secured over land in which guarantor's wife has an interest — financier sells land in exercise of power of sale as mortgagee — equitable requirements (if any) as to the application of the fund in discharge of the debts — whether (by way of analogy of marshalling or otherwise) financier/mortgagee obliged to discharge unsupported mortgage before it discharges the mortgage which has collateral support — trial judge (Needham J) holds that it would be inequitable for the financier/mortgagee to discharge the first debt, thereby extinguishing the interest of the guarantor's wife — appeal — held: (1) (per Mahoney JA) Handley JA concurring; Kirby P dissenting) Neither on the principles of marshalling nor by reference to the law protecting guarantors or sureties nor statutory provisions governing mortgagor and mortgagee was there any principle that rendered the proposed priority decided upon by the financier/mortgagee inequitable in the relevant sense. Banner v Berridge (1881) 18 Ch D 254, 279; Finance and Investments Pty Limited v Van Kempen (1984) 6 NSWLR 305, 310 applied; Duncan, Pox and Robinson and Co v The North and South Wales Bank and Ors (1880) 6 App Cas 1 at 12-12 (HL) considered; (2) Appeal accordingly allowed — short minutes ordered.

PARTIES — absent party — party obviously affected by order omitted from proceedings — proper approach — reference by Kirby P to Taylor v Taylor (1979) 143 CLR 1, 4; Chapuis v Filo (1990) 19 NSWLR 490, 511 (CA). Supreme Court Act 1970, s75A,81. Supreme Court Rules Pt8 Rules6,7,8.