Bofinger v Kingsway Group Limited

Guarantee and indemnity – Surety - Right to subrogation to securities - Three separate loans made to company, each secured by mortgage over company's property - Appellants guarantors of each loan - Appellants sold personal properties and used proceeds to reduce first loan - First mortgagee exercised power of sale over company's property to satisfy outstanding amounts owing under first loan and transferred surplus to second mortgagee - Whether appellants have right to subrogation to securities in priority to puisne mortgagees - Whether appellants' right to subrogation excluded by terms of guarantees to puisne mortgagees - Whether rule in Otter v Lord Vaux (1856) 2 K & J 650 [69 ER 943] applied to prevent appellants from exercising right to subrogation or should be extended to so apply - Whether transfer of surplus required to be unconscionable for doctrine of subrogation to apply.

Equity – Remedies - Constructive trust - Nature of constructive trust - Surplus transferred by first mortgagee to second mortgagee - Whether first mortgagee constructive trustee of surplus - Whether obligation to account.

Words and phrases – "subrogation", "unconscientious", "unconscionable", "unjust enrichment".

Statute of Frauds 1677 – s 4. Conveyancing Act 1919 (NSW), s 10.

Law Reform (Miscellaneous Provisions) Act 1965 (NSW) – s 3.

Real Property Act 1900 (NSW) – ss 57(1), 58.

Uniform Civil Procedure Rules 2005 (NSW) – r 28.2.