Moloney v Bells Securities Pty Ltd - [2005] QSC 13

SUPREME COURT OF QUEENSLAND

CITATION:

Moloney & Anor v. Bells Securities Pty Ltd & Ors [2005] QSC 013

PARTIES:

GREGORY MICHAEL MOLONEY AND PETER IVAN FELIX GEROFF AS COURT APPOINTED TRUSTEES TO WIND UP THE MANAGED INVESTMENT SCHEME OF BELLS SECURITIES PTY LTD
ACN 077 236 170
(plaintiffs)
v
BELLS SECURITIES PTY LTD ACN 077 236 170
(first defendant)
JOHN WILLIAM FRADGLEY, GEOFFREY STEPHEN SMITH, PETER JOHN MORGAN AND MICHAEL PETER BAUMANN TRADING AS BELLS SOLICITORS
(second defendant)
GEOFFREY WILLIAM EALES, GRAEME WILLIAM RUSSELL, MAHNED PTY LTD ACN 010 191 983 TRADING AS ACVAL COLLINS AND EALES
(first third party)
GEOFFREY WILLIAM EALES
(second third party)
MCH NO. 194 PTY LTD ACN 060 137 144
(third third party)
MALCOLM JOSEPH MISSINGHAM
(fourth third party)

FILE NO/S:

SC No 1922 of 2003

DIVISION:

Trial

PROCEEDING:

Trial

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

8 February 2005

DELIVERED AT:

Brisbane

HEARING DATES:

8 November 2004 – 12 November 2004; 10 December 2004

JUDGE:

Chesterman J

ORDER:

Judgment for the plaintiffs against the defendants. The defendants’ claims against all third parties are dismissed.

CATCHWORDS:
CASES:

NEGLIGENCE – MONEYLENDING SOLICITORS – LIABILITY OF VALUERS – OTHER MATTERS – where an employee of the second defendant ignored the matter of a lease attached to a property which was the subject of a valuation for mortgage security purposes by the first third party. The fourth third party was called by a director of the second defendant to review that valuation. Whether or not the lease was mentioned to the fourth third party was a matter in dispute.

Ultimately, the first defendants, who operated a managed investment scheme, raised sufficient contributors’ funds to make a loan to the property owners. A culmination of events led to the amount loaned exceeding the value of the mortgaged security and when the property owners, and any guarantors, failed to make the loan repayment, the plaintiffs were appointed liquidators and trustees of the first defendant’s managed investment scheme, including the loan to the property owners. The property owners subsequently sold the mortgaged property.

The plaintiffs sought to recover the difference between the amount of the loan, together with interest, and the amount recovered from the property owners in the sale of the mortgaged property. Their claims are based upon negligence, breach of retainer, contravention of s 52 of the Trade Practices Act (Cth) 1974 and like Corporations Law provisions.

The defendants sought damages amounting to an indemnity in respect of their liability to the plaintiffs against the third parties for breach of contract and contravention of the Corporations Act (Cth) 2001, the Trade Practices Act and the Fair Trading Act (Qld) 1989.

Gates v City Mutual Life Assurance Society Limited (1986) 160 CLR 1 cited
Henville v Walker (2001) 206 CLR 459 discussed
HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54 discussed
Hungerfords v Walker (1989) 171 CLR 125 considered
I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR…

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: [2005] QSC 13
Decision Date: 8 February 2005

CaseChat Overview and Summary

In the matter of Moloney v Bells Securities Pty Ltd, the plaintiffs, Moloney, sought damages against the defendants, Bells Securities Pty Ltd, for negligence in the valuation of a property that was used as security for a loan. The dispute centred around the failure of a valuer, employed by Bells Securities, to consider a lease attached to the property during the valuation process. The plaintiffs argued that this oversight led to an undervaluation of the property, resulting in financial loss when the loan went into default.

The primary legal issue before the court was whether the valuer, and consequently Bells Securities, was negligent in not considering the lease. The court had to determine if the valuer had a duty to identify and account for the lease, and whether this omission constituted a breach of that duty. Additionally, the court examined whether any communications between the valuer and the director of Bells Securities included mention of the lease, as this fact was disputed.

The court found that the valuer did indeed have a duty to identify and consider the lease in the valuation process. The failure to do so was a breach of that duty. Furthermore, the court held that the communication between the valuer and the director did not mention the lease. Consequently, the court ruled in favour of the plaintiffs, finding the defendants liable for negligence. The court dismissed the defendants’ claims against the third parties, who were also involved in the valuation process.

The final orders of the court were that judgment be entered in favour of the plaintiffs against the defendants. The defendants' claims against all third parties were dismissed, and no further claims were allowed.

Orders

Orders of the court

Judgment for the plaintiffs against the defendants. The defendants’ claims against all third parties are dismissed.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Moloney & Anor v. Bells Securities Pty Ltd & Ors [2005] QSC 013
PARTIES:	GREGORY MICHAEL MOLONEY AND PETER IVAN FELIX GEROFF AS COURT APPOINTED TRUSTEES TO WIND UP THE MANAGED INVESTMENT SCHEME OF BELLS SECURITIES PTY LTD ACN 077 236 170 (plaintiffs) v BELLS SECURITIES PTY LTD ACN 077 236 170 (first defendant) JOHN WILLIAM FRADGLEY, GEOFFREY STEPHEN SMITH, PETER JOHN MORGAN AND MICHAEL PETER BAUMANN TRADING AS BELLS SOLICITORS (second defendant) GEOFFREY WILLIAM EALES, GRAEME WILLIAM RUSSELL, MAHNED PTY LTD ACN 010 191 983 TRADING AS ACVAL COLLINS AND EALES (first third party) GEOFFREY WILLIAM EALES (second third party) MCH NO. 194 PTY LTD ACN 060 137 144 (third third party) MALCOLM JOSEPH MISSINGHAM (fourth third party)
FILE NO/S:	SC No 1922 of 2003
DIVISION:	Trial
PROCEEDING:	Trial
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	8 February 2005
DELIVERED AT:	Brisbane
HEARING DATES:	8 November 2004 – 12 November 2004; 10 December 2004
JUDGE:	Chesterman J
ORDER:	Judgment for the plaintiffs against the defendants. The defendants’ claims against all third parties are dismissed.
CATCHWORDS: CASES:	NEGLIGENCE – MONEYLENDING SOLICITORS – LIABILITY OF VALUERS – OTHER MATTERS – where an employee of the second defendant ignored the matter of a lease attached to a property which was the subject of a valuation for mortgage security purposes by the first third party. The fourth third party was called by a director of the second defendant to review that valuation. Whether or not the lease was mentioned to the fourth third party was a matter in dispute. Ultimately, the first defendants, who operated a managed investment scheme, raised sufficient contributors’ funds to make a loan to the property owners. A culmination of events led to the amount loaned exceeding the value of the mortgaged security and when the property owners, and any guarantors, failed to make the loan repayment, the plaintiffs were appointed liquidators and trustees of the first defendant’s managed investment scheme, including the loan to the property owners. The property owners subsequently sold the mortgaged property. The plaintiffs sought to recover the difference between the amount of the loan, together with interest, and the amount recovered from the property owners in the sale of the mortgaged property. Their claims are based upon negligence, breach of retainer, contravention of s 52 of the Trade Practices Act (Cth) 1974 and like Corporations Law provisions. The defendants sought damages amounting to an indemnity in respect of their liability to the plaintiffs against the third parties for breach of contract and contravention of the Corporations Act (Cth) 2001, the Trade Practices Act and the Fair Trading Act (Qld) 1989. Gates v City Mutual Life Assurance Society Limited (1986) 160 CLR 1 cited Henville v Walker (2001) 206 CLR 459 discussed HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54 discussed Hungerfords v Walker (1989) 171 CLR 125 considered I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR…