Papantoniou v Brown

The appeal concerned a dispute between a solicitor, Ms Papantoniou, and two brothers, the respondents. The solicitor had agreed to purchase the brothers' sisters' shares in a co-owned property, with the purchase price to be funded by a loan secured by the property, and the brothers guaranteeing that loan. The solicitor acted for one of the brothers in this transaction. The solicitor subsequently defaulted on the loan, leading the lender to take possession of the property. The brothers sought to set aside the mortgage and guarantee, and the primary judge granted relief under the Contracts Review Act 1980 (NSW) in respect of the original agreement. The appeal was heard by Beazley P, Macfarlan JA, and Sackville AJA.

The central legal issues before the Court of Appeal were whether the grant of relief under the Contracts Review Act was available on the pleadings, and whether the solicitor had been denied procedural fairness.

The Court of Appeal allowed the appeal, setting aside the primary judge's orders that granted relief under the Contracts Review Act and dismissed the cross-claims. The Court found that the primary judge erred in granting relief under the Contracts Review Act on the basis of the pleadings. Furthermore, the Court determined that the solicitor had been denied procedural fairness. The Court noted that an account would need to be taken between the solicitor and the brothers to determine the amount payable by the solicitor to the brothers, with directions given for the parties to bring in agreed short minutes of order to quantify this amount and apportion it between the brothers, or to file their respective proposals if agreement could not be reached.