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Berhero Pty Ltd v Hinds

Berhero Pty Ltd v Hinds

Case [2023] NSWSC 1022 30 August 2023

Contract Formation

Breach of Contract

Expert Evidence

Admissibility of Evidence

Commercial Law

Contract Law

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Supreme Court

New South Wales

Medium Neutral Citation: Berhero Pty Ltd v Hinds [2023] NSWSC 1022
Hearing dates: 13 June 2023
Date of orders: 30 August 2023
Decision date: 30 August 2023
Jurisdiction: Equity - Commercial List
Before: Rees J
Decision:
Judgment for defendants.

Catchwords:
MORTGAGE BROKER — property developer engages broker to obtain $13.5M finance — vendor prepared to be paid in stages — first payment is $6.35M — developer wants 100% debt funding — broker provides Loan Term Sheet with features of loan required for purchase of land and development — broker entitled to fee on procuring discussion paper from lender ‘in the terms of’ the term sheet —application for finance misrepresents that developer has already purchased the land — seeks finance to finalise the development — bank issues discussion paper for $13.5M facility – lending covenants mean only half of funds needed for first payment will be available —contractual construction – whether contract substantially performed – principles and case law review at [66]-[69], [72]-[74] — no substantial performance — broker not entitled to fee.
EXPERT EVIDENCE — expert in credit risk and lending policy — expert considers loan application and discussion paper — analysis of cashflows and application of lending conditions — whether report linked reasoning to expertise — principles at [81]-[83] — whether assumptions proved — report admitted.

Cases Cited:
Allianz Australia Ltd v Sim [2012] NSWCA 68
Australian Securities and Investments Commission v Rich [2005] NSWCA 152
Barrington Winstanley Group Pty Ltd v Edmonds [2022] NSWSC 531
Bolton v Mahadeva [1972] 1 WLR 1009
Cayden Pty Limited t/as Acuity Funding v Nouh [2008] NSWSC 1219
Connor v Stainton (1924) 27 WALR 72
Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588
Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640
Fuller v Avichem Pty ltd (t/as Adkins Building & Hardware [2019] NSWCA 305
Hart v Federal Commissioner of Taxation (No 2) [2016] FCA 897
Hoering v Isaacs [1952] 2 All ER 176
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451
Simpson Steel Structures v Spencer [1964] WAR 101
Zamperoni Decorators Pty Ltd v Lo Presti [1983] VR 338

Category: Principal judgment
Parties: Berhero Pty Ltd (Plaintiff)
Paul Hinds (First Defendant)
RV Developments Australia Pty Ltd (Second Defendant)
RV Developments Australia Pty Ltd as Trustee for RV Developments Australia Unit Trust (Third Defendant)
Representation:
Counsel:
Mr B Le Plastrier (Plaintiff)
Mr S Golledge SC/Mr J Douglas (Defendants)
Solicitors:
ClarkeKann Lawyers (Plaintiff)
James Conomos Lawyers (Defendants)

File Number(s): 2019/269928

JUDGMENT

HER HONOUR: A mortgage broker trading as “Acuity Funding” seeks to recover its fee from defendant property developer, Paul Hinds, and his company, RV Developments Australia Pty Ltd. The fee was some $260,000 when charged but, with interest (at 2% per month), now stands at some $1.2 million.
The broker elicited an expression of interest (also known as a discussion paper) from Australian and New Zealand Banking…

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.

Continue reading Berhero Pty Ltd v Hinds

Details

AGLC: Berhero Pty Ltd v Hinds [2023] NSWSC 1022
Case: [2023] NSWSC 1022
Decision Date: 30 August 2023

CaseChat Overview and Summary

Berhero Pty Ltd brought a claim against Hinds, a mortgage broker, seeking a declaration that the broker was not entitled to a fee. The dispute arose from the broker's engagement to secure $13.5 million in finance for Berhero to purchase and develop a property. Berhero intended to pay the vendor in stages, with the first payment being $6.35 million. The developer sought a loan with 100% debt funding. The broker provided a Loan Term Sheet detailing the loan's features and was entitled to a fee upon procuring a discussion paper from the lender that matched the term sheet. However, the application for finance falsely represented that the land had already been purchased, seeking finance to finalise the development. The bank issued a discussion paper for a $13.5 million facility, but the lending covenants meant only half of the funds needed for the first payment would be available.

The court was required to decide whether the broker had substantially performed the contract to be entitled to the fee and whether the expert evidence presented by Berhero was admissible. The court examined the principles of substantial performance and relevant case law, concluding that the broker had not substantially performed the contract as the discussion paper did not match the Loan Term Sheet. The court also considered the admissibility of the expert evidence, examining whether the report linked the reasoning to the expert's expertise, and whether the assumptions in the report were proved. The court found that the expert evidence was admissible.

The court concluded that the broker was not entitled to the fee as the contract was not substantially performed. The court also considered the expert evidence but found it did not affect the outcome of the case. The final orders were that Berhero was not liable to pay the broker's fee.

Orders