Bofinger v Rekley [2007] NSWSC 1138

In this matter Bransgroves Lawyers acted for the second mortgagee Rekley. The Bofingers gave a guarantee and mortgage over their house to secure the obligations of their development company B&B. The loan to B&B was secured by a mortgage over a development site owned by B&B. The project got into financial trouble and the Bofingers voluntarily sold their home and paid out part of the 1st mortgage over the development site. The development was completed and all the units sold. The Bofingers brought these proceedings seeking a declaration that by paying out part of the 1st mortgage they stood in the 1st mortgagees shoes and were entitled to the surplus sale proceeds of the development. Justice Peter Young, Chief Judge in Equity, rejected the Bofinger’s argument holding that the doctrine of subrogation did not apply as there was no unconscionable conduct.

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