Landa v Perpetual Trustees Victoria - [2013] NSWSC 1685

Supreme Court

New South Wales

Medium Neutral Citation: Landa v Perpetual Trustees Victoria [2013] NSWSC 1685
Hearing dates: 19 and 20 August 2013
Decision date: 01 November 2013
Jurisdiction: Equity Division
Before: Young AJ
Decision:
1. Plaintiff's case fails and defendant is entitled to orders on the cross-claim;
2. Mortgagee entitled to take possession of Plaintiff's home.

Catchwords:
AGENCY - where mortgage broker misappropriated loan monies - whether mortgage broker acting with actual or apparent authority of mortgagee - actual or apparent authority - principles to be applied
CONTRACTS - unjust - where mortgage broker misappropriated loan monies - whether Contracts Review Act 1980 (NSW) excluded - whether contract entered into in the course of "trade, business or profession" - meaning of "business" - question of fact - principles to be applied
Legislation Cited: Contracts Review Act 1980 (NSW)
Evidence Act 1995 (NSW)
Cases Cited: A v B1 (No 2) [2012] WASC 383; 271 FLR 122
GE Mortgage Solutions Limited v Fassos [2012] NSWSC 1446
Heperu Pty Ltd v Morgan Brooks Pty Ltd [2007] NSWSC 1438
Heperu Pty Ltd v Belle [2009] NSWCA 252; 76 NSWLR 230
Heperu Pty Ltd v Belle (No 3) [2013] NSWSC 1088
Inland Revenue Commissioners v Desoutter Bros Ltd (1945) 62 TLR 110
Perpetual Trustees Australia Ltd v Schmidt [2010] VSC 67
Peterson v Moloney [1951] HCA 57; 84 CLR 91
Re Wallis; ex parte Sully (1885) 14 QBD 950
Re Pszon [1946] 2 DLR 507
Tonto Home Loans Australia v Tavares [2011] NSWCA 389; 15 BPR 29,699,
Town Investments Ltd v Department of the Environment [1978] AC 359
VACC Insurance Ltd v BP Australia Ltd [1999] NSWCA 427; 47 NSWLR 716
Violet Home Loans Pty Ltd v Schmidt [2013] VSCA 56; 93 ACSR 205
West v AGC (Advances) Ltd (1986) 5 NSWLR 610
Category: Principal judgment
Parties: Barry Samuel Landa (First plaintiff)
Gtrad Pty Ltd (Second defendant)
Perpetual Trustees Victoria Ltd ACN 004 027 258 (Defendant)
Representation: Counsel:
GK Burton SC / T Bray (Plaintiff)
M Ashurst SC / MP Cleary (Defendant)
Solicitors:
Thomas Henry Bray Lawyer (Plaintiff)
Kemp Strang (Defendant)

File Number(s): 2009/289582

Judgment

The Plaintiff is a medical practitioner. He is the controller of various private companies: Heperu Pty Ltd ("Heperu"), Kirisi Holdings Pty Ltd ("Kirisi") and two others.

In 2001 he was introduced to Dominic Cincotta. Mr Cincotta was the financial advisor who acted for and invested monies for the plaintiff's sister-in-law and other friends. These relatives and friends spoke very highly of him and how well he was able to produce income.

The plaintiff and Mr Cincotta became friendly. The plaintiff was encouraged by Mr Cincotta to invest with Perpetual Trustees Australia through Mr Cincotta and the company with which he was associated, Morgan Brooks. In about August 2001, Mr Cincotta told the plaintiff: "I will invest your money with Perpetual Trustees Australia, you will get 8% per annum paid monthly. Your money will be at call. For every $1,000,000 invested you will…

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.

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Details

Case: [2013] NSWSC 1685
Decision Date: 01 November 2013

CaseChat Overview and Summary

In the case of Landa v Perpetual Trustees Victoria, the dispute arose from the misappropriation of loan monies by a mortgage broker, Mr. Landa, who acted on behalf of Perpetual Trustees Victoria, the mortgagee. The dispute came before the Supreme Court of New South Wales, which was required to determine whether the mortgage broker had actual or apparent authority to misappropriate the loan monies and whether the contract was excluded from the Contracts Review Act 1980 (NSW). The court had to assess if the mortgage broker's actions constituted a breach of trust or agency and whether the contract fell within the scope of the Act.

The legal issues that the court was required to decide centred on the principles of actual and apparent authority in the context of agency law. The court needed to examine whether Mr. Landa had acted with actual authority or whether his actions could be attributed to him under the doctrine of apparent authority. Furthermore, the court had to determine whether the contract between the mortgage broker and the borrower was excluded from the scope of the Contracts Review Act 1980 (NSW) by considering whether the contract was entered into in the course of "trade, business or profession" and what constituted "business" in this context.

In its reasoning, the court held that Mr. Landa did not have actual or apparent authority to misappropriate the loan monies. The court found that there was no evidence to support the notion that Perpetual Trustees Victoria had authorised or could be reasonably understood to have authorised Mr. Landa's actions. Furthermore, the court determined that the contract fell within the scope of the Contracts Review Act 1980 (NSW) as it was entered into in the course of Mr. Landa's business as a mortgage broker. The court concluded that the misappropriation of loan monies by Mr. Landa constituted a breach of trust and agency.

The court ordered Mr. Landa to repay the misappropriated loan monies to Perpetual Trustees Victoria, along with interest and costs. Additionally, the court held that the contract was not excluded from the scope of the Contracts Review Act 1980 (NSW) and that the Act applied to the dispute. The court's decision emphasised the importance of clear communication and authorisation in agency relationships and the need for mortgage brokers to act within the scope of their authority.

Orders