Crown & Gleeson Business Finance Pty Limited v Walster

The case of Crown & Gleeson Business Finance Pty Limited v Walster involved a dispute between the mortgagee, Crown & Gleeson, and the mortgagor, Walster. Walster was induced by the finance broker to mortgage his home to assist his employer in obtaining high interest rate bridging finance for business purposes. Following a default under the mortgage, Walster sought to have the mortgage set aside, alleging that he was induced by misleading or deceptive conduct and/or negligent misrepresentation to mortgage his home. Specifically, it was claimed that he was told long-term finance had been arranged, a statement that had no reasonable basis.

The legal issues before the court were whether the finance broker's conduct amounted to misleading or deceptive conduct under the Australian Consumer Law and whether there was a negligent misrepresentation that induced Walster to mortgage his home. The court had to determine the nature and extent of the broker's duty of care to Walster, and whether the broker's representations were such that they could justifiably lead to Walster's decision to mortgage his home.

The court found that the finance broker had engaged in misleading or deceptive conduct and that there was a negligent misrepresentation. The broker's statement that long-term finance had been arranged had no reasonable basis and was made with the intention that it would influence Walster's decision. The court concluded that the broker's conduct was such that it warranted the setting aside of the mortgage. The relief granted was the cancellation of the mortgage, effectively returning Walster's home to its status prior to the mortgage being created.