The applicant, Claudio Posocco, sought a declaration that his guarantee for a mortgage was discharged.
This application was a re-hearing ordered by the Court of Appeal, based on fresh evidence of a foreclosure judgment obtained by a prior mortgagee.
Posocco argued that the foreclosure extinguished his guarantee for a junior mortgage.
The court dismissed the application, distinguishing the facts from *Rushton v. Industrial Development Bank* by noting that the mortgages were distinct, not a single mortgage encompassing multiple parcels.
Relying on *Isman v. Sinnott*, the court held that foreclosure of a first mortgage by a party who also held a junior mortgage did not extinguish the rights under the junior mortgage's covenant.
Additionally, the court found that the guarantee's contractual terms explicitly made Posocco liable as a principal debtor even in the event of prior foreclosure, and that the property had not yet been disposed of, leaving open the potential for reconveyance.