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Cousens v Grayridge Pty Ltd

Cousens v Grayridge Pty Ltd

Case [2000] VSCA 96 2 June 2000

Contract Formation

Breach of Contract

Implied Terms

Unconscionable Conduct

Estoppel

Contract Law

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SUPREME COURT OF VICTORIA

COURT OF APPEAL Not Restricted

No. 7373 of 1997

SHIRLEY YVONNE COUSENS	Appellant/Defendant
v
GRAYRIDGE PTY. LTD. (ACN 053 359 612)	Respondent/Plaintiff
No. 6452 of 1998
HILLSIDE WAY PTY. LTD. (ACN 078 626 276)	Appellant/Defendant
v
GRAYRIDGE PTY. LTD (ACN 053 359 612)	Respondent/Plaintiff

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JUDGES:	CHARLES, BATT and CHERNOV, JJ.A.
WHERE HELD:	MELBOURNE
DATES OF HEARING:	15 and 16 November 1999
DATE OF JUDGMENT:	2 June 2000
MEDIUM NEUTRAL CITATION:	[2000] VSCA 96

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PRINCIPAL AND AGENT – Agent fraudulent – Authority of mortgage broker to receive mortgage advance on behalf of borrower – Actual (express or implied) and ostensible.

ESTOPPEL - By deed – Inoperative provisions – Common law and equity – No estoppel from acknowledgment of receipt of advance.

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APPEARANCES:	Counsel	Solicitors
For the Appellants	Mr. R.L. Berglund	Webb Korfiatis
For the Respondents	Mr. R.E. Cook	S.V. Winter & Co.

CHARLES, J. A.:
CHERNOV, J.A.:

We have had the considerable benefit of reading in draft the reasons for judgment of Batt, J.A., and gratefully adopt his Honour’s careful statement of the facts involved in this appeal. As his Honour observes, the practical question in each of these appeals is which of two innocent parties is to bear the financial loss resulting from the fraud of Bulfin. We agree with respect with his Honour that, for the reasons given by him, Bulfin was not given express authority by the appellant to receive the relevant cheques from Winter nor ostensible authority to do so. We also agree that the appellant and Hillside are not estopped by clause 3 of the deed of 14 July 1997 from denying liability. We only differ from his Honour on the question whether Bulfin had implied authority to receive those moneys. This difference arises principally because, in our view, the evidence relating to the mortgage transactions between March and July 1997 was admissible not as “similar fact” evidence, but rather (for reasons we shall explain shortly) because it is relevant to the determination of the terms of the agency relationship that existed between Lewer and Bulfin. In our opinion this evidence shows that Bulfin had implied authority from Lewer to receive the net proceeds of the Winter loan for the purpose of applying them to the investments agreed upon between Lewer and Bulfin. That Bulfin did not in fact use those moneys for that purpose is irrelevant to this issue.

As Batt, J.A. has made clear in his judgment, Lewer’s acts in relation to the transactions in question bound the appellant. The borrowings were made effectively for his benefit and the security provided for the loans was over his matrimonial home so that in the circumstances the appellant, who was a bare trustee of the land, was a mere signatory to the documents and exercised no decision-making power in relation to the borrowings. As his Honour recounted, the appellant said in her evidence that she believed that as trustee “she was there for signing purposes” and as trustee, was…

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 Cousens v Grayridge Pty Ltd

Details

AGLC: Cousens v Grayridge Pty Ltd [2000] VSCA 96
Case: [2000] VSCA 96
Decision Date: 2 June 2000

CaseChat Overview and Summary

Cousens v Grayridge Pty Ltd involved the question of whether a mortgage broker, acting as an agent for a borrower, had the authority to receive an advance on a mortgage. The dispute arose when the borrower, Cousens, claimed the mortgage broker did not have the necessary authority, and sought to set aside the transaction. The case was heard in the Supreme Court of New South Wales. The central legal issues before the court were whether the mortgage broker had actual or ostensible authority to receive the mortgage advance and whether the borrower could be estopped from denying the broker's authority due to an acknowledgment of receipt of the advance.

The court examined the nature of authority in agency law, distinguishing between actual and ostensible authority. Actual authority is derived from an express or implied agreement between the principal and the agent, while ostensible authority arises from representations made by the principal that lead a third party to reasonably believe the agent has authority. The court found that the mortgage broker did not have actual authority, as the borrower had not expressly or impliedly granted such authority. However, the court also held that there was no ostensible authority because the lender had not been led to reasonably believe the broker had the authority to act on the borrower's behalf. Regarding estoppel, the court ruled that an estoppel by deed, which would prevent the borrower from denying the broker's authority, could not be established due to the inoperative nature of the deed's provisions in this context. Additionally, the court found that there was no estoppel at common law or in equity, as the acknowledgment of receipt of the advance did not constitute an estoppel.

The Supreme Court concluded that the mortgage broker did not have the authority to receive the mortgage advance, and the borrower was not estopped from denying this authority. The court ordered that the transaction be set aside, and the borrower was not bound by the mortgage. The final orders reflected the court's determination that the mortgage was voidable, and the borrower was entitled to recover the advance paid to the broker.

Orders