First Mortgage Managed Investments Pty Limited v Pittman

In *First Mortgage Managed Investments Pty Limited v Pittman*, the New South Wales Court of Appeal considered an appeal by First Mortgage Managed Investments Pty Limited (FMI) against a primary judge's finding that a loan contract and third-party mortgages were unjust under the Contracts Review Act 1980 (NSW). The primary judge had declared these agreements wholly unenforceable.

The central legal issues before the Court of Appeal were whether the primary judge erred in upholding the finding of injustice, in declaring the loan contract and mortgages wholly unenforceable, and whether an allowance should have been made for moneys used by the borrowers to discharge existing mortgages, particularly in light of whether those earlier mortgages were themselves unjust.

The Court of Appeal allowed the appeal in part. While acknowledging the primary judge's finding of injustice, the Court reasoned that the declaration of the loan contract and mortgages as wholly unenforceable was too broad. The Court indicated that an allowance should have been made for the portion of the loan funds that were applied to discharge the borrowers' pre-existing, and potentially unjust, mortgages. This approach aimed to prevent unjust enrichment by ensuring the borrowers were not relieved of the obligation to repay moneys that had been used to their benefit in extinguishing prior encumbrances.

The Court directed the parties to file agreed short minutes of order giving effect to its reasons for judgment within 14 days, with provisions for default if agreement could not be reached. There was no order as to the costs of the appeal.